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Thursday April 18 2019, Weekly News Digest

News Comments Today’s main news: Funding Circle sets new high on loans under management. SoFi partners with Lemonade, Root. Salary Finance hires SoFi co-founder, raises $32.8M. Dianrong to raise $100M. Klarna may be headed to the stock market. Linked Finance sees record quarter. Today’s main analysis: European online alternative finance grows 36%. (A MUST-READ REPORT […]

The post Thursday April 18 2019, Weekly News Digest appeared first on Lending Times.

News Comments

Today’s main news: Funding Circle sets new high on loans under management. SoFi partners with Lemonade, Root. Salary Finance hires SoFi co-founder, raises $32.8M. Dianrong to raise $100M. Klarna may be headed to the stock market. Linked Finance sees record quarter.
Today’s main analysis: European online alternative finance grows 36%. (A MUST-READ REPORT FROM THE CAMBRIDGE CENTRE FOR ALTERNATIVE FINANCE)
Today’s thought-provoking articles: LendIt Fintech USA 2019 slide presentations. Are crypto-tracking stocks a viable alternative to a Bitcoin ETF? Nearly 1 in 4 millennial homebuyers want to buy a home before getting married. Challenger banks overtake traditional banks in customer satisfaction.

United States

SoFi partners with Lemonade, Root. SoFi is moving aggressively into insurance products.
LendIt Fintech USA 2019 slide presentations. Everyone should be able to find something of interest here. Start with the keynote speaker addresses: Mike Cagney of Figure, Renaud Laplanche of Upgrade, and Rob Frohwein of Kabbage.
Are crypto-tracking stocks viable alternatives to a Bitcoin ETF? A super-interesting read, with a little nugget about crypto lending.
Nearly 1 in 4 millennial homebuyers want a home before marriage. Interesting study from LendingTree.
Groundfloor doubles year-over-year revenue. Groundfloor is one of the few opportunities for non-accredited investors. They are looking better every day. Disclosure: I own stock in and have an account with Groundfloor.
Reali acquires Lenda, opens a mortgage lending platform.
Avant to settle with Federal Trade Commission for $3.85 million.
Returnly raises $19 million for online returns.
Small businesses turn more often to online lenders.
Mastercard acquires Vyze. This looks like a move to compete directly with Affirm.
Earnest launches private student loans.
Banks to turn to Avant, Amount to jump start digital lending.
Digital lenders consider stricter credit approvals.
Smart ways to invest $1,000.
Nearly 60% of millennials consider lottery a viable retirement plan.
Direct Lending Investments had more than 950 investors.
360 Mortgage launches no-income, no-asset mortgage program.
Virginians are suing online lenders who charge 900% interest.
Lendio opens franchise in Phoenix.
BlueVine, Ocrolus partner.

United Kingdom

Funding Circle sets record high on loans under management. Congratulations.
Salary Finance hires SoFi co-founder, raises $32.8 million. The plan is to expand into the U.S.
Welendus closes funding round, plans to expand into India.
New rules coming for P2P lending, crypto.

European Union

Klarna is preparing for a stock market listing. No other details at this time.
Klarna expands relationship with Acne Studios.
Linked Finance has a record quarter. Congratulations.
Online alternative finance in Europe grows 36% to 10 billion euros. This report from the Cambridge Centre for Alternative Finance is a must-read.
Top 5 real estate crowdfunding platforms to invest in.

China

Other

International: Challenger banks overtake traditional banks in customer satisfaction. This is an awesome read. Challenger banks in many countries have had an uphill battle, but the tide is turning. People are now realizing that it is not only convenient to bank online, but the service is good too.
Asia: The Korean fintech opportunity.
MENA: A roadmap for fintech firms entering fast-growing emerging markets. A LendIt Fintech report.
Canada: Lendified raises $15 million.
Australia: April holidays will impact 1 in 4 SMEs.
Brazil: Sky-high interest rates are choking economic growth.
India: P2P lenders seek limit on lending relaxation.
Brazil: More on credit card interest rates.
India: Fintechs see a lucrative opportunity in open banking.
Asia: Singapore, Cambodia partner on cross-border fintech.
Australia: Talking about the big banks.

News Summary

United States

SoFi announces partnerships to expand insurance offering (Insurance Business Mag), Rated: A

SoFi has announced two new partnerships in the insurance space. The partnerships expand SoFi’s portfolio of offerings to include homeowners’ and renters’ insurance through Lemonade and auto insurance through Root.

LendIt Fintech USA 2019 Slide Presentations Now Live (LendIt Fintech), Rated: AAA

Keynote Presentations

Beyond the Hype: How Blockchain Changes Everything | Mike Cagney, Figure
Three Fintech Questions that Matter in 2019 | Renaud Laplanche, Upgrade
You Might Need Glasses, Your Vision Sucks | Rob Frohwein, Kabbage

Advancements in Credit, Underwriting and Identity

Go with the flow? What cash flow data has to say about thin file borrowers | Melissa Koide, FinRegLab
What are the data points telling us about the current credit market | Joseph Breeden, Prescient Models, Ram Ahluwalia, PeerIQ, Jason Laky, TransUnion Ashish Gupta, Prosper, Moderator: Julian Hebron, The Basis Point

Small Business Lending Innovation

Evolving the SMB Toolkit to Meet New Demands in Lending | Omri Dahan, Marqeta

Niche Lending: Looking for Yield

An In Depth Look at the Patient Lending Market | John Dwight, Simplee, Rob Seidman, HCS, Camilo Concha, LendingUSA, Howard Michalski, Sortis Holdings Moderator: Mike Sobek, medZero
Wealth Tech : Uncorrelated Returns from Alternative Assets | Milind Mehere, Yieldstreet
Understanding Chinese Auto Backed Assets | Richard Yi, Wangjin Financial

Are Crypto-Tracking Stocks Viable Alternatives to a Bitcoin ETF? (Finance Magnates), Rated: AAA

As the world continues to wait for the US SEC’s decision on the Bitcoin ETF applications that are still being processed months after a decision was expected, some investors may find themselves seeking alternative methods of entering into the Bitcoin market without actually having to do the dirty deed of investing in Bitcoin itself.

Crypto lending serviceshave recently reported record profits; crypto futures exchanges are also reporting higher-than-ever trading volumes.

Source: @CMEGroup on Twitter

Nearly 1 in 4 Millennial Homebuyers Want to Buy a Home Before They’re Married (LendingTree), Rated: AAA

Young adults are getting married later than previous generations. In 1980, the median age for men and women at their first marriage was 24.7 and 22, respectively. In 2018, the ages increased to 29.8 and 27.8, for men and women, respectively.

Millennials make up the largest share of homebuyers at 37%, according to a report from the National Association of Realtors.

Nearly a quarter (24%) of millennial first-time homebuyers want to own a home before getting married.

On the flip side, this means just over 3 in 4 millennial buyers (76%) want a marriage before a mortgage. Additionally, 27% of millennial buyers are postponing parenthood until they’ve achieved homeownership. Among homebuyers of all ages, nearly 2 in 5 are waiting to get a pet until after purchasing a house.

More than a quarter (26%) of first-time buyers have poor credit.

Just 15% of first-time buyers have a score of 740 or higher. Nearly 2 in 5 (38%) aren’t satisfied with their credit score, yet more than a quarter of those who are dissatisfied haven’t taken steps to improve their score. By contrast, more than 70% of repeat homebuyers are satisfied with their credit score.

GROUNDFLOOR Doubles Year Over Year Revenue (PR Newswire), Rated: A

GROUNDFLOOR, an investing and lending platform that allows anyone to invest fractionally in real estate, is today announcing its Q1 results and momentum. Despite the government shutdown of the U.S. Securities and Exchange Commission for 35 days, GROUNDFLOOR still experienced 123% percent non-GAAP Q1 revenue growth compared to the prior year Q1.

Additional Q1 momentum for GROUNDFLOOR includes:

Achieving a 166% increase in unit volume for loans closed in Q1 ’19 vs. Q1 ’18
More than doubling loan application volume for Q1 ’19 vs. Q1 ’18 (121% increase)
Selling more than $14.5M in real estate investments to retail investors on the platform
Surpassing more than 60,000 registered users
Eclipsing $100MM in loans to real estate developers to-date in more than two dozen states
Expanding product offerings, such as new construction loans and a fixed annualized notes product returning 5 percent on a 90-day term
Launching a second online public offering to purchase stock in GROUNDFLOOR directly

Real estate startup Reali acquires online lender Lenda, expands into mortgages (Housingwire), Rated: A

Reali announced Wednesday that it acquired Lenda, an online mortgage lender that launched in 2013 and currently operates in 12 states.

And with the acquisition, Reali is launching Reali Loans, a mortgage lending operation of its own.

Avant to pay $ 3.85M to settle allegations of deceiving borrowers (American Banker), Rated: A

The online lender Avant will pay $3.85 million to settle Federal Trade Commission allegations that it misled customers who were seeking to repay their loans.

The FTC said Monday that its commissioners approved the settlement by a 5-0 vote.

A Max Levchin-Backed Startup Raises $ 19 Million To Tackle Online Returns (Forbes), Rated: A

A San Francisco-based startup called Returnly is seeking to solve at least a portion of the headache—namely, the payment delay—by issuing instant store credit when you decide you don’t want an item. The company says that by assessing a shopper’s risk, it can offer store credit to 85% of customers on the spot, without first requiring that the item has been received or even put in the mail.

Returnly announced on Wednesday that it has raised $19 million in a Series B funding round, led by venture capital firm Craft Ventures and with participation from Max Levchin, the PayPal cofounder who currently runs Affirm.

Small businesses turning far more often to online lenders (American Banker), Rated: A

Last year 32% of credit-seeking small businesses applied to an online lender, up from 19% in 2016, according to the survey, which was released Tuesday. Over the same period, large banks, small banks and credit unions all saw either steady application rates or a slight decline in interest from those same small businesses, which typically had fewer than 10 employees.

Mastercard Redefines Choice at Checkout with Acquisition of Vyze (Business Wire), Rated: A

Mastercard (NYSE: MA) today announced it has acquired Vyze, a technology platform that delivers more choice – and purchasing power – to people who want their point-of-sale payment options to match the flexibility and convenience of today’s shopping experiences.

Increasingly, consumers are seeking alternative financing options,¹ leaving merchants and financial institutions with a need to deliver these services at the point of sale. In the U.S. alone, these solutions represent a more than $1.8 trillion opportunity, according to Accenture.

Earnest Launches Private Student Loans (PR Newswire), Rated: A

Earnest today announced that it’s modernizing student loans with a new in-school student lending offering.

Built based on feedback from students and people with student debt, an Earnest student loan incorporates four unique differentiators:

Innovative eligibility check – A quick two-minute eligibility check requires only basic personal information, school details, and an estimated credit score.
Cosigner invite – Earnest’s application makes it simple and easy to invite a cosigner to the process.
Checkout – Clients can customize their loan according to their individual financial needs with easy-to-understand terms and a clear understanding of their monthly payments after graduation.
9-Month grace period – Earnest found through talking with recent graduates that they wanted the flexibility of a longer grace period after graduation to get settled. Earnest offers a 9-month grace period after graduation compared to the 6-month industry standard.

Banks turn to a former rival to jump-start digital platforms (American Banker), Rated: A

In the “If you can’t beat ‘em, join ‘em” world of bank-fintech relations these days, TD Bank’s recent agreement with the online lender Avant fits right in.

Avant is expanding its efforts to license technology to traditional banks, and TD Bank in March announced it will use the Chicago company’s technology platform, called Amount, to power the bank’s unsecured loan product, TD Fit Loan. HSBC, Regions Banks and Banco Popular also use Amount.

Digital Lending Companies Considering Stricter Credit Approvals (Investing News), Rated: A

Over the past decade, the digital-lending industry has evolved to become more sophisticated. For example, companies are integrating big data and proprietary algorithms to analyze a borrower’s credit risk score in a matter of seconds, according to Juniper Research.

According to the firm, MPLs are projected to generate US$588 billion in loan origination value annually by 2023. This is estimated to account for 41 percent of SME funding around the world.

The research firm further reports that revenue from MPLs are predicted to grow at a 48 percent CAGR. This brings MPL platform revenue to US$137 billion annually by 2023, a 400 percent return from the estimated US$30 billion in revenue in 2019.

7 Smart Ways To Invest $ 1,000 (Forbes), Rated: A

2. Lend to those in need and earn some interest.

Lending Club is one such peer-to-peer lending service I tried out, and I found it to be very easy to use and reliable (see my

Nearly 60% Of Millennials Look To Lottery For Retirement, Survey Says (FA-Mag), Rated: A

The odds of winning the $654 million Mega Million prize last year were put at one in 302 million, while the $345 million Powerball offered one chance in 292 million. But those astronomical odds apparently haven’t deterred the many Americans who are banking on using a lottery jackpot for their retirement nest egg.

Thirty-one percent of Americans don’t invest because they think it’s risky, but 39 percent, including 59 percent of millennials, feel it’s reasonable to think of the lottery jackpot as a potential means of retirement, according to the survey.

Miillennial men in particular (66 percent) believe the lottery is a reasonable retirement plan, compared to 58 percent of millennial women. However, if they did win the lottery, more millennial men (61 percent) than women (42 percent ) would save or invest the entire amount.

Direct Lending Investments Had Over 950 Investors (deBanked), Rated: A

Documents filed in a New York Supreme Court case by the receiver managing Direct Lending Investments (DLI), revealed that DLI had more than 950 investors worldwide with collective investments on the books totaling over $780 million.

No-income, no-asset mortgages are back (at one lender, at least) (Housingwire), Rated: A

And now, NINA loans are back, as 360 Mortgage Group announced this week that it is launching a no-income, no-asset mortgage pilot program.

Some online lenders charge 900% interest and ignore Virginia law. So borrowers are suing. (Pilot Online), Rated: A

A loose-knit group of Virginians, stung by triple-digit interest rates on payday and other loans, is trying to do what the General Assembly won’t — make sure all lenders, including online ones, follow Virginia laws.

The latest lawsuit, filed last week, alleges that four web sites — Golden Valley Lending, Silver Cloud Financial, Mountain Summit Financial and Majestic Lake Financial — set up in the name of the Habematolel Pomo of Upper Lake tribe in northern California were actually operated by non-tribal members in a Kansas City suburb, including the son of a payday loan executive convicted of fraud and racketeering.

Lendio Franchise Opens in Phoenix to Expand Access to Capital for Local Businesses (Lendio), Rated: B

Lendio has announced the opening of a new Lendio franchise in Phoenix. Through the Lendio Franchising program, Sam Foreman will help local businesses apply for loans, review their options and secure funding, easing the financial hurdles for area small business owners.

BlueVine Partners with Ocrolus for Faster Processing of Financing Applications (Ocrolus), Rated: B

Ocrolus today announced a partnership with BlueVine. BlueVine leverages Ocrolus technology to accelerate growth and scale operations efficiently, creating a faster and more seamless experience for its customers.

United Kingdom

Peer-to-peer lender Funding Circle’s loans under management soar to record highs (City A.M.), Rated: AAA

Loans under management grew 44 per cent to £3.4bn compared to £2.3bn in the first quarter of the previous year, and revenue growth soared by 40 per cent.

The firm reported that loan originations were up 23 per cent from £525m in the first quarter of 2018 to £644m between January and March this year.

Salary Finance raises $ 32.8m, hires SoFi co-founder for US push (Finextra), Rated: AAA

Salary Finance, a UK-based startup focused on salary-linked savings and loans for employees, has raised $32.8 million and hired SoFi co-founder Dan Macklin for a US expansion.

Welendus closes funding round as it prepares for India expansion (P2P Finance News), Rated: A

WELENDUS, the peer-to-peer lender focused on short-term loans, has closed its last seed funding round, as it prepares to expand into India.

City watchdog readies new rules for cryptoassets and P2P (FN London), Rated: B

The Financial Conduct Authority is prepping new rules for cryptoassets and peer-to-peer lending, two rapidly growing areas of fintech.

China

China’s P2P lending platform Dianrong raising $ 100m (Deal Street Asia), Rated: AAA

Shanghai-based peer-to-peer lending platform Dianrong is looking to raise $100 million in fresh funding, according to a Financial Times report, a move that should give it enough buffer to meet China’s strict capital requirement for P2P players.

The GIC-backed firm has not made any official statement about its fundraising plan but analysts said the move is part of the firm’s efforts to meet Beijing’s proposed Rm500 million ($74.5 million) capital requirement for P2P operators nationwide.

National Rules on Online Lending Still Far From Sight (Caixin Global), Rated: A

It will not be soon for China’s commercial banks, consumer finance service firms and other institutions to see a national regulation governing internet-based lending activities, despite recent progress on specific rules for online peer-to-peer lending and microloans, Caixin learned.

Large P2P lenders ordered to ready disclosures for regulators (technode), Rated: A

Large platforms with loan balances of more than RMB 5 billion ($750 million) must register with the information disclosure database by the end of May.

European Union

Tech unicorn Klarna could quickly be prepared to contemplate bourse itemizing (Infosurhoy), Rated: AAA

Swedish tech unicorn Klarna is nearing the point where it could seek a stock market listing, but it’s unlikely to be this year, the CEO and co-founder of the fast-growing online payments services firm said.

Klarna Expands Relationship with Acne Studios (Business Wire), Rated: B

The Stockholm-based fashion house Acne Studios has expanded their existing European partnership with Klarna. Showing at Paris Fashion Week, Acne Studios encompasses women’s and men’s ready-to-wear, shoes, accessories and denim, but also moves across the borders of fashion, art and design. With Klarna now available in Acne Studios’ online store, shoppers in the U.S. can choose to checkout with four equal payments – with no interest or fees.

Linked Finance marks record quarter (Tech Central), Rated: AAA

The first quarter of 2019 saw the platform provide more than €11.3 million in loans to Irish SMEs, an increase of 32% over the same period last year.

Since its establishment in 2013, Linked Finance has helped provide more than 2,000 loans and €92 million in funding to businesses across Ireland. Lenders who have supported SMEs through the platform have earned more than €7.1 million in interest and received more than €50.4 million in repaid principal since the business launched in 2013.

Linked Finance issued its largest loans ever in the quarter with a number of €300,000 loans provided. The average loan increased to €70,000.

Total Online Alternative Finance Grows 36% Topping €10 Billion (Crowdfund Insider), Rated: AAA

According to CCAF, in 2017 the alternative finance market grew by 36% to € 10.44 billion – dominated by the UK.

Excluding the UK, European online alternative finance industry grew 63% from €2.06 billion to €3.37 billion in 2017.

The top three European markets following the UK, include:

France at €661 million
Germany at €595 million
The Netherlands at €280 million
The Nordic countries collectively generated €449 million, making them the third-largest regional market in Europe following France and Germany.

Source: Cambridge Centre for Alternative Finance

Read the full report here.

Top 5 Real Estate Stocks To Invest In (Prague Post), Rated: A

But before I share these top real estate crowdfunding companies, I would first want to tell you about the characteristics which a best performing real estate should have. Well, they must have:

Pricing power
High usage rates
Regular dividend

International

Challenger banks overtake traditional banks in customer satisfaction, in 4 charts (Tearsheet), Rated: AAA

Challenger banks have leapfrogged to the forefront in overall customer satisfaction, according to a new study from FIS.

63 percent of direct bank customers report being “extremely satisfied”, compared to 52 percent of credit union customers and just 19 percent of customers of the top 50 global banks.

73 percent of all consumer interactions with banks in the US are done digitally.

Nearly two-thirds (65 percent) of younger millennials (between ages of 18 and 26) reported that they have not used any branches at all in the prior month.

Source: Tearsheet

Australia

April holidays to negatively impact 1 in 4 SMEs (My Business), Rated: AAA

According to new research commissioned by SME lender OnDeck, Australia’s small to medium enterprises (SMEs) are bracing for “a double whammy” of disruption from the back-to-back Easter/Anzac Day public holidays.

Over one in four (27 per cent) of SMEs expect the Easter/Anzac Day period to disrupt normal trading.

LET’S TALK: THE BIG 4 BANKS (Dynamic Business), Rated: A

Leo Tyndall, CEO and Founder Marketlend

In the wake of the Royal Commission we’re seeing a tightening of finance for SMEs with even long time customers being turned away for loans. For years, banks have taken too long and required too much, like property collateral, from SMEs. Innovations like marketplace lending are giving SMEs transparent and prompt access to.capital when they need it.

Stephen Barnes, Principal at Byronvale Advisors Pty Ltd

I would say that the term ‘redundant’ may not be so appropriate but certainly through a number of factors the ‘Big 4’ may be less able to meet the needs or timeliness requirements of small business. A large number of small business owners need to use personal assets, usually the family home, as security for loans.

India

P2P firms seek RBI relaxation on lending limit (Business Standard), Rated: AAA

A little more than a year after the Reserve Bank of India (RBI) came out with guidelines for peer-to-peer (P2P) lending companies to convert into non-banking finance companies (NBFCs), micro and small enterprises (SME) lending has turned out to be the focus area for these companies.

However, the current regulation does not allow a single lender to lend more than Rs 10 lakh across P2P platforms at a time. This is hampering growth prospects, say P2P players. The association of P2P lenders has sought relaxation in the norm, and requested the RBI to raise the limit to Rs one crore, according to sources in the industry.

Fintech startups spot a lucrative space in ‘open banking’ (Economic Times), Rated: A

Fintech startups have started offering a broader set of banking services beyond payments and lending, pointing to a deep integration with lenders that has the potential to change the way customers access banking products.

Asia

Riding the Korea FinTech Wave (Finextra), Rated: AAA

South Korean Financial Services Commission (FSC) has identified three sectors — payments, data, and lending — to protect consumers, foster fintech innovation, and ultimately remove uncertainties that may restrict investments into Korea.

Legal Framework Around Marketplace Lending

South Korea is a country that has gone through two economic crises which has made banks extremely conservative especially in terms of lending. As such, 40% of the population cannot receive loans from tier one banks and must resort to secondary markets such as savings banks with extremely high interest rates above 20% and shady underground loan sharks.

Cambodia, Singapore In X-Border FinTech Pact (Cambodia Daily), Rated: A

Deputy Managing Director of MAS Jacqueline Loh said the relationship demonstrates a FinTech that may extend to other countries in the ASEAN region.

MENA

A ROADMAP FOR FINTECH FIRMS ENTERING FAST-GROWING EMERGING MARKETS (LendIt Fintech), Rated: AAA

This paper provides case studies and market analysis from the Arab Middle East and Africa as examples of fast-growing economies, open to best-in-class solutions, with both wealthy and underbanked populations. Key go-to-market findings serve to inform fintech firms, investors and others about participating in the region.

Download the report here.

Canada

TORONTO FINTECH, LENDIFIED, RAISES $ 15 MILLION CAD SERIES A (Betakit), Rated: AAA

Lendified, a Toronto-based FinTech, announced today that it has closed a $15 million CAD Series A funding round, in order to continue its growth within Canada.

The round was co-led by WD Capital Markets and INFOR Financial, and saw funding from CI Financial Corp., Windsor Private Capital, FirePower Capital, and a group of investors including Glenn Murphy, founder of FIS Holdings and former CEO of Gap Inc. and Shoppers Drug Mart.

Latin America

How sky-high interest rates are choking economic growth in Brazil (The Brazilian Report), Rated: AAA

Brazilian Credit Card Interest Rates: Enough to Choke a Horse or Risk Based Pricing? (Payments Journal), Rated: A

Bank accounts for consumers is still relatively low, with only 68%, compared to 79% in China. Debit cards, however, outpaced credit by 2:1.

While you may see a slight uplift in the U.S. and U.K markets, consider this:

Annual consumer rates for credit cards topped 270 percent for unpaid balances.
As Brazil suffered its worst economic crisis in history, the banks raised credit card rates to a stunning 500 percent per annum on unpaid bills.
With Brazilians relying on credit an paying for everything from everyday goods to luxury items in installments, massive interest rates are being embedded into these payments.

Authors:

George Popescu

Allen Taylor

The post Thursday April 18 2019, Weekly News Digest appeared first on Lending Times.

Thursday February 28 2019, Weekly News Digest

News Comments Today’s main news: SoFi to roll out crypto trading with Coinbase. Walmart now offers Affirm loans. Funding Circle fund ups the ante on buyback strategy. Orca launches IFISA. LendDenClub cross 1 million borrowers, lenders milestone. Today’s main analysis: 2019 securitization update. How marketplace lending is a growing and dynamic global market. (A MUST-READ) Today’s thought-provoking articles: The 2009 […]

The post Thursday February 28 2019, Weekly News Digest appeared first on Lending Times.

News Comments

Today’s main news: SoFi to roll out crypto trading with Coinbase. Walmart now offers Affirm loans. Funding Circle fund ups the ante on buyback strategy. Orca launches IFISA. LendDenClub cross 1 million borrowers, lenders milestone.
Today’s main analysis: 2019 securitization update. How marketplace lending is a growing and dynamic global market. (A MUST-READ)
Today’s thought-provoking articles: The 2009 housing market compared to today. Personal loan interest rates for February 2019. Why Midwest BankCentre created a separate digital-only bank. Some bankers are worse off than in 2009. Dragon Victory International analysis.

United States

SoFi to offer crypto trading through Coinbase partnership. This is the most interesting news story of the week. The largest cryptocurrency exchange partnering with one of the largest marketplace lenders to offer cryptocurrency trading will be a huge feather in the cap for both companies.
Walmart now offers Affirm loans. We saw this one coming. In fact, I wonder why it took so long. Affirm snagging Walmart as a customer will catapult it to PayPal status fast.
More on Affirm’s, Walmart’s partnership.
Affirm CEO breaks it down.
2019 securitization update, Square charter status. Square is finally seeing some opposition to its banking aspirations. Excellent analysis from PeerIQ.
The housing market of 2009 compared to today. A LendingTree analysis showing the markets where median home values have increased the most and the least. California is hot. The Mid-Atlantic and Eastern states are not.
Personal loan interest rates for February 2019. A great breakdown from Nerdwallet.
Why a small bank launched a separate digital-only branch. I think we’re going to see more of this. As more consumers demand digital banking, and Millennials are all over it, more brick-and-mortar banks will see the opportunity to launch digital-only branches as separate entities. It’s actually a smart move.
SoFi to offer zero-fee ETFs.
FTC orders SoFi to stop misleading consumers.
Figure raises $65 million.
Gen Xers have the largest auto loan burden.
Elevate Credit posts earnings results.
Elevate’s CIO wins award.
Hunt Real Estate Capital buys RealtyMogul’s loan underwriting program.
Kabbage says it’s prepared for the coming recession.
Kabbage named one of the top workplaces among midsize companies in Atlanta.
CrowdStreet has new self-directed IRA offering.
Liquid P2P, Interest Radar partner.
Direct Lending Investments suspends investor withdrawals.
HSBC partners with Neptune Financial.
Venmo debuts rainbow-colored card.
Mastercard says digital identities will be very important in a few years.
Credit Karma wants to be known for more than free credit scores.
Brex launches credit card for e-commerce.
YieldStreet raises $62 million.
Guaranteed Rate listed as top loan originator.
Americans focus on debt management more than retirement savings.
Banking regulator challenging New York on fintech charters.
Blockchain can be used for P2P lending.
LoanStreet makes new hires.
White Oak Business Capital hires new head of markets.

United Kingdom

International

Some bankers are worse off than in 2009. A look at global IPOs.
Report on how marketplace lending is still a growing and dynamic market. A must-read from DBRS.
Enova expands worldwide credit access.
Blossom Capital gets $85 million from Robinhood, Funding Circle investors.
How lending can earn your Bitcoin online. I’d like to see a service where small lenders can lend fiat and earn Bitcoin.

Other

India: LenDenClub crosses 1 million borrower, lender milestone. Congratulations! Excellent achievement.
Mexico: PayPal to expand small business loans into country with new partnership. PayPal has begun its slow expansion internationally. Could it someday be a global powerhouse?
China: Analysis of Dragon Victory International. A very interesting look from Seeking Alpha.
Latin America: ID Finance Latam revenues climb 403%.
India: Why startups, investors see big potential in lending.
Ireland: Grid Finance suspends investments below 100,000 euro.
Brazil: N26 expands into Brazil.
China: Is the Chinese P2P lending boom over?
Singapore: Fintech investments rose to $365 million USD in 2018.
India: UDS ban will benefit P2P lending.
Australia: How should accountants talk about fintechs?
Singapore: Validus Capital raises $15 million for SME financing.
China: BHB raises $20 million using fake bios of founding team.
Africa: Fintechs inspire with mobile technology.
China: Futu Securities downsizes U.S. IPO.

News Summary

United States

Fintech startup SoFi — known for its online lending services — is partnering with major United States-based crypto exchange Coinbase to roll out crypto trading support, according to a CNBC report Feb. 26.

Millennial online lender SoFi to offer zero-fee ETFs, an unexpected rival for index fund giants Vanguard, iShares (CNBC), Rated: A

The race to zero-fee exchange-traded funds has found an unlikely competitor: Online lending and personal finance platform SoFi, which has filed for two index ETFs that will waive management fees for the first year. In making the move to zero-fee ETFs, the online lender is crashing an ETF party dominated by Vanguard and BlackRock‘s iShares.

FTC orders SoFi to stop misleading consumers (MPA Mag), Rated: B

The Federal Trade Commission has ordered online lender SoFi to stop lying about how much borrowers can save by refinancing with the company.

Digital lender founded by ex-SoFi CEO raises $ 65M to fuel expansion (American Banker), Rated: A

The new company founded by Mike Cagney, the former embattled chief executive of Social Finance, plans to announce a $65 million funding round on Wednesday, bolstering firm’s expansion into other financial services, including wealth management.

With the new venture, Cagney is using some of the strategies from his tenure at SoFi — like diversification into areas typically only occupied by traditional banks. However, the new company, Figure, is focusing on different customers, and it’s taking steps to avoid scandals similar to the ones that saw Cagney step down from the SoFi helm.

Walmart teams with Affirm to offer point-of-sale loans (American Banker), Rated: AAA

Walmart will offer its customers point-of-sale loans for the first time — both on its website and in nearly 4,000 U.S. stores — under a partnership with the Silicon Valley lender Affirm.

Under the deal, Walmart shoppers will be able to get Affirm loans of three, six or 12 months to finance purchases ranging from $150 to $2,000. The loans are already being offered in Walmart stores, and they will be available to Walmart’s online shoppers in the coming weeks.

Affirm’s latest partnership brings its alternative financing to Walmart’s US stores and website (TechCrunch), Rated: A

The companies announced this morning that Affirm’s financing options would be made available in more than 4,000 Walmart Supercenters across the U.S., and will roll out to Walmart.com in the weeks ahead.

The offering will go live across Walmart Supercenters nationwide, except in Iowa, West Virginia and Puerto Rico, and will be soon available on Walmart.com.

Loan app Affirm CEO breaks down new Walmart partnership (CNBC), Rated: A

Loan app Affirm CEO breaks down new Walmart partnership from CNBC.

ABS Vegas – 2019 Securitization Update; Square Charter Status (PeerIQ), Rated: AAA

In regulatory news, Square’s ILC charter application has received opposition from 37 community groups. The groups are concerned about Square’s CRA activities and have asked the FDIC to bolster Square’s CRA requirements. Before this letter from community advocates, nearly all of the 15 letters the FDIC received were in favor of Square’s bid. Square is the furthest along the path to getting an ILC charter and its experience will determine whether other FinTechs follow its lead.

Structured Credit Investor magazine explores the challenges facing the maturing marketplace lending sector. Issuers need to distinguish between the borrower experience that they provide and manage liquidity. The article also makes the point that the sector is ripe for consolidation, although we haven’t seen any M&A yet.

2019 Securitization Update

The first two months of 2019 saw 5 securitization deals totaling $1.7 Bn in new issuance. The issuance volume represents a 23% drop over that seen in the first two months of 2018, as the market recovers from the volatility in equity and credit markets seen at the end of 2018. Total securitization issuance now stands at $46.2 Bn, with 147 deals issued to date.

Source: PeerIQ

The Housing Market’s 10 Year Challenge — Comparing The Housing Market of 2009 to Today (LendingTree), Rated: AAA

When the real estate bubble burst in late 2008, many Americans saw their home values fall drastically, but a lot has changed in the 10 years since — housing prices have rebounded from their lows during the Great Recession. And though prices are now starting to cool, in many cases, home values have even exceeded their 2006 highs.

On average, median home values have increased by nearly $50,000 across the 50 largest metros in the United States since 2009.

Metros where housing prices have recovered the most since 2009

San Jose, Calif.

Median home value 2009: $638,300
Median home value 2017: $957,700
Median home value change: $319,400
Median unemployment rate change: -6.4%
Median household income change: $32,991

San Francisco

Median home value 2009: $591,600
Median home value 2017: $849,500
Median home value change: $257,900
Median unemployment rate change: -5.4%
Median household income change: $27,889

Los Angeles

Median home value 2009: $463,600
Median home value 2017: $617,100
Median home value change: $153,500
Median unemployment rate change: -5.0%
Median household income change: $11,467

Source: LendingTree

Gen Xers Carry the Biggest Auto Loan Burden; Study Finds (One World Herald), Rated: A

According to the loan comparison website, the median balance of Gen Xers who have auto loans is $18,741 is higher than other age groups. It is 9% more than baby boomers’ $17,185 median balance. This is higher than millennials’ $16,200 and 37 percent more than the lowest median balance of $13,666 held by Gen Z.

Personal Loan Interest Rates for February 2019 (Nerdwallet), Rated: AAA

Personal loan interest rates, whether you’re considering a loan from a bank, credit union or online lender, generally range from about 6% to 36%. The actual rate you receive depends on factors such as your credit score and history, annual income, existing debt and where you get the loan.

Online lenders offer the lowest starting interest rates on personal loans to borrowers with good to excellent credit.

Source: Nerdwallet

LightStream and Marcus both require a minimum credit score of 660. LightStream accepts joint applications, and one applicant can have a credit score lower than its minimum. SoFi has a slightly higher credit score requirement and requires at least $45,000 in annual income.

Elevate Credit (ELVT) Posts Earnings Results, Meets Expectations (Fairfield Current), Rated: A

Elevate Credit (NYSE:ELVT) announced its quarterly earnings results on Monday, February 11th. The company reported $0.09 earnings per share (EPS) for the quarter, meeting the Zacks’ consensus estimate of $0.09, Bloomberg Earnings reports. The business had revenue of $207.29 million for the quarter, compared to the consensus estimate of $212.42 million. Elevate Credit had a return on equity of 15.72% and a net margin of 1.59%. Elevate Credit updated its FY 2019 guidance to $0.55-0.65 EPS.

Source: Fairfield Current

Hunt Real Estate Capital buys RealtyMogul’s proprietary loan underwriting program (Housing Wire), Rated: A

Hunt Real Estate Capital, which offers financing for all types of commercial real estate, will soon have a new underwriting system to help it originate those loans, as the company is buying a proprietary loan underwriting system from RealtyMogul.

Elevate’s Joan Kuehl Named Dallas ORBIE CIO of the Year (The Progress), Rated: B

Elevate Credit, Inc. (“Elevate”) today announced that Executive Vice President and Chief Information Officer Joan Kuehl has been named the Large Enterprise CIO of the Year by the Dallas ORBIE CIO of the Year Awards. The award honors chief information officers who have demonstrated excellence in technology leadership.

A Recession Coming? Small Business Lending Platform Kabbage Says It’s Prepared (Forbes), Rated: A

The world is bracing for a recession, with the latest data showing in the U.S. expect it to occur by the end of 2021

If those predictions prove true, it will be the first major economic downturn for some of the nation’s leading fintechs. Born out of the ruins of the recession, these startups have enjoyed nearly a decade of success buoyed by strong economic growth, a bull run in the stock market and low unemployment.

Here’s more on the AJC Top Workplaces midsize companies (AJC.com), Rated: B

Kabbage has been named to the list for five consecutive years and this is its first year in the top five. The private financial technology company, founded in 2009, has 489 global employes and 367 at its U.S. headquarters in Atlanta. Flexibility at work and perks, such as a daily catered lunch and snacks, are among reasons employees appreciate working for Kabbage. Wellness benefits include fitness classes, health equipment onsite, biweekly meditation classes, CPR training, an annual flu shot clinic and sponsoring sports clubs. It also fully pays health benefits for individuals and provides annual bonuses and a 401(k) match. Through its sabbatical program, employees of five years can receive six weeks of paid time off and an additional $6,000. In 2018, Kabbage participated in the Atlanta PRIDE parade and also took a stand against gun violence after the mass shooting at Stoneman Douglas High School. Workers in 2019 will build a Habitat for Humanity home as part of its Kabbage Kares program, which also has supported PAWS Atlanta, Easter Seals and the Epilepsy Foundation.

Diversifying a Self-Directed IRA Made Simple with New Offering from CrowdStreet (The Progress), Rated: A

CrowdStreet, an online marketplace for direct equity investment in commercial real estate (CRE), today launched a streamlined, investor-friendly approach to investing qualified retirement account funds into commercial real estate offerings. This new option makes it easier than ever for individuals to access CRE investments with their self-directed IRAs (SDIRA), thus reducing their investment exposure to a volatile stock market and achieving more independence in managing their investments.

Liquid P2P and Interest Radar Announce Strategic Partnership (Liquid P2P), Rated: A

Liquid P2P and Interest Radar are pleased to announce that they have entered into a strategic partnership. The two third-party investing services for online peer-lending giant Lending Club will combine strengths under a single platform to deliver a more comprehensive automated tool with a patent-pending liquidity solution.

Direct Lending Investments Suspends Investor Withdrawals (Lend Academy), Rated: A

Earlier this month Brendan Ross, the CEO of Direct Lending Investments, Inc., sent a letter to investors notifying them that they have suspended withdrawals and redemptions effective February 8, 2019. Lend Academy was able to obtain a copy of this investor letter, dated February 11, that provides some color into what happened. The reason given was the delinquency of a large holding, VOIP Guardian, a telecom receivables factoring company.

Fintech deal will provide access to midsize businesses in U.S. (American Banker), Rated: A

Add HSBC to the list of banks partnering with commercial online lenders.

The bank on Tuesday announced a partnership with Neptune Financial, a San Francisco online lender that focuses on businesses with $10 million to $100 million in assets. The bank estimates that, with the access it will get to Neptune customers, the deal represents a $1.5 trillion opportunity.

Venmo debuted a limited-edition rainbow-colored card (Business Insider), Rated: A

Venmo, the PayPal-owned peer-to-peer (P2P) giant, debuted a limited-edition rainbow-colored version of its physical card product. The card will function the same as regular Venmo cards, allowing customers to pay wherever Mastercard is accepted, split costs and tips, withdraw funds from select ATMs, and manage their Venmo balance, but it will only be available for as long as supplies last, according to Venmo.

Source: Business Insider

Why digital identities will be so important in the next few years, according to Mastercard’s vice chairman (CNBC), Rated: A

The pace with which we are moving toward the internet of things is “very rapid” but we “can’t have the internet of everyone without the inclusion of everyone,” according to the vice chairman of payments giant Mastercard.

“You have to start focusing on how does the human get involved, and that’s going to be through having a digital identity,” Ann Cairns told CNBC’s Karen Tso on Monday at the Mobile World Congress in Barcelona.

Credit Karma’s Dana Marineau: ‘We want users to think of us as more than just free credit scores’ (Tearsheet), Rated: A

Today’s marketer on the hot seat is Dana Marineau, Credit Karma’s vice president of brand, creative and communications. People love Credit Karma for its free credit scores, but the company provides so many other free tools. Dana’s team is tasked with elevating the brand beyond just free credit scores, as a place to get help with financial decisions and achieve financial progress. She brings a 15 year experience at EA, working on many of the top sports games in the business.

Why this small bank created a separate, digital-first brand (American Banker), Rated: AAA

When Midwest BankCentre, a community bank in St. Louis, launched the digital-first Rising Bank in February, it joined the ranks of other financial companies —generally large players such as JPMorgan Chase, Wells Fargo and MUFG Union Bank — that have created separate, digital-only brands. Unlike them, the $1.9 billion-asset Midwest hopes to keep a community bank feel at the internet-only unit.

The Future Is Plastic: Fintech Unicorn Brex Launches New Credit Card For E-Commerce Merchants (Forbes), Rated: A

Brex, a San Francisco credit card startup that reached a valuation of $1.1 billion late last year, 22 months after its founding, is launching its second product, a physical credit card for e-commerce companies. Its first card, targeted to venture-backed tech startups, has attracted more than 3,000 customers by providing higher spending limits and simplifying the application process.

YieldStreet raises $ 62M to democratise alternative investments in shipping, real estate and more (TechCrunch), Rated: A

YieldStreet — which provides a platform for making alternative investments in areas like real estate, marine/shipping, legal finance, commercial loans and other opportunities that in the past were only open to institutional investors — is today announcing that it has raised $62 million in a Series B round of funding.

Guaranteed Rate Leads Mortgage Executive Magazine’s List of Top Loan Originators in America (GlobeNewswire), Rated: A

For the seventh consecutive year, Guaranteed Rate has the most loan originators of any lender on Mortgage Executive Magazine’s annual list of the “Top 200 Mortgage Originators in America,” including the number one originator.

Guaranteed Rate led the way with 36 originators ranking within Mortgage Executive Magazine’s Top 200, including three of the top five. Shant Banosian of Boston, Mass., was named the nation’s 2018 Top Originator by funding $536 Million in total loan volume.

Americans Focus On Debt Management But Lose Focus On Retirement Savings (Forbes), Rated: A

Our minds are wired to prioritize the near-term over the long-term. We shouldn’t be surprised that a new survey by

U.S. banking regulator fights NY lawsuit over fintech charters (Reuters), Rated: A

The U.S. Office of the Comptroller of the Currency has asked a Manhattan federal court to dismiss a lawsuit by a New York financial regulator over its plan to issue banking charters to fintech companies, saying the lawsuit is premature.

Blockchain and data protection: the main concerns (JDSupra), Rated: A

Blockchain’s usage is no longer limited to digital crypto currencies, as blockchain databases may be deployed in innumerable circumstances and scenarios, including, for instance, within the financial services and insurance sectors for money transfer, peer-to-peer lending and transfer of securities, as well as automatic execution of contracts.

LoanStreet positions for growth with new hires (LoanStreet Email), Rated: B

After the launch of LoanStreet’s commercial lending product and the announcement of their $6.5 million funding round, LoanStreet – the first fully-integrated platform that streamlines the process of sharing, managing, and originating loans – has appointed three credit union industry veterans to support LoanStreet’s aggressive growth.

These new hires include Mike Doherty, Managing Director and Head of Credit Union Sales; Tony Harter, Business Development Director; and Joe Parvin, Business Development Director.

White Oak Business Capital Hires Carol Bader Apicella to Expand Northeast and Mid-Atlantic Markets (GlobeNewswire), Rated: B

White Oak Business Capital, Inc. (“WOBC”), an affiliate of White Oak Global Advisors, LLC, has announced that Carol Apicella has joined the firm as Senior Vice President and Senior Business Development Officer. Apicella will be responsible for expanding the firm’s markets in the Northeast and Mid-Atlantic.

United Kingdom

Funding Circle fund adds firepower for buyback strategy (AltFi), Rated: AAA

The portfolio, an investment trust, of loans originated by Funding Circle lowered its dividend expectations amid lower projected returns last year prompting a discount to its net asset value.

Following a move to a more than 10 per cent discount last year it started share buybacks in a bid to narrow its discount. It has now made additional capital available from its free cash flow to be deployed into share buybacks, the fund said yesterday.

Orca Innovative Finance ISA Launches, Enables Diversified P2P Investment (Crowdfund Insider), Rated: AAA

Orca Money is finally launching its long-anticipated Innovative Finance ISA (IFISA). Orca’s spin on the savings vehicle allows investors to spread their money across multiple peer-to-peer lenders (P2P) thus providing a heightened degree of diversification. Additionally, Orca Money conducts due diligence on behalf of IFISA investors.

Currently, the Orca IFISA allows access to 5 P2P platforms: Lending Works, Assetz Capital, Landbay, Octopus Choice and Lending Crowd.

Experian, ClearScore scrap merger plans (Reuters), Rated: A

Experian Plc, the world’s biggest credit data firm, said on Wednesday that it had agreed with rival ClearScore to abandon their proposed merger, after Britain’s competition watchdog indicated that it may block the deal.

NatWest launches account aggregation as Open Banking takes hold (AltFi), Rated: A

It’s been a long time coming, but Open Banking is finally spreading through the traditional banking industry, this week with the launch of account aggregation for NatWest customers.

The RBS subsidiary becomes the UK’s 4th bank to let customers connect rival current accounts.

Will Open Banking boom in 2019? (AltFi), Rated: A

It has been over a year since the Open Banking UK initiative under the Competition and Markets Authority order and Second Payment Services Directive (PSD2) was launched and has become one of the industry’s biggest technology and regulatory shake ups in recent years. It is no surprise that the initiative’s first year has seen a relatively low consumer uptake. This has been coupled with reports that consumers’ knowledge of the scheme appears to be markedly low.

Aave Launches Platform to Pay Bills Using Crypto (Finance Magnates), Rated: A

In an attempt to bring crypto closer to the mainstream, the London-based fintech startup has announced the launch of Aave Pay.

The app will allow its users to pay their utility bills using digital coins by converting crypto into fiat in real-time using bank transfer facility. The company is claiming that the platform can be used to business expenses as well including employee salaries, income taxes, and other commercial or corporate expenses.

Investing in crowdfunded development projects – what you need to know (Property Investor Today), Rated: A

You can invest in peer to peer development loans for the short term or in an Innovative Finance ISA for a longer commitment period, but with the potential to earn tax free returns.

By comparison, a peer to peer lending platform with its own development company will have much more control over its projects and be able to give you more detailed and trustworthy updates.

Failed Lender Reaching ‘From Beyond The Grave,’ MPs Warn (Law360), Rated: A

Failed payday lender Wonga is damaging the finances of thousands of customers “from beyond the grave” because they cannot seek redress for allegedly missold loans as the company was not covered…

International

Some Bankers Are Doing Even Worse Than in 2009 (The Washington Post), Rated: AAA

It may not feel like it, but some corners of banking are suffering as badly as they did during the depths of the financial crisis. Global volumes of initial public offerings and share placings in January and February have been nearly 60 percent lower than in the same period last year. The numbers are worse than the first two months of 2009. If activity doesn’t pick up soon, it would be worrying evidence of the fragility of investor sentiment.

The hope is that the lull is temporary, and technical. The government shutdown in Washington has gummed up U.S. IPOs. Uncertainty over the U.K.’s future relationship with Europe just drags on. And the December stock-market wobble probably killed off deals that were being planned for the window that traditionally opens between January and the start of the full-year earnings season in late February.

Marketplace Lending – A Growing and Dynamic Global Market (DBRS Email), Rated: AAA

I wanted to share with you a new joint report from our U.S. and European structured finance teams. The new report, attached to this email, analyzes the growth of the marketplace lending market around the globe.

The commentary includes the following topics:

— The evolution in finance, from traditional banking to FinTech.
— FinTech’s influence on marketplace lending around the globe.
— Growth hurdles.
— Securitization considerations.

See the full report here.

Bank on it: How Enova’s software expands credit access worldwide (Built in Chicago), Rated: A

Not all credit histories are created equal.

That’s the case for a large part of the world’s population who can’t get access to a loan from a traditional credit provider — like a bank — creating a world in which the hardest working people don’t always get access to the credit they need. Enova, however, believes it has a solution. The fintech company draws on the power of machine learning and data to offer products that expand access to credit for consumers and small businesses.

Blossom Capital scores $ 85m from Robinhood and Funding Circle backers (AltFi), Rated: A

Blossom Capital, which has already backed five startups including rental marketplace Fat Lama, today raised $85m which it will use to lead Series A rounds of between $5m and $10m in Europe.

Eight Simple Ways to Earn Bitcoin Online Legally (The Crypto Updates), Rated: B

Earn Bitcoins as the interest payments: If you have earned some Bitcoins already, you can put the Bitcoins to earn for you. Lend them out at particular interest rate. You can lend the Bitcoins directly to someone known at a greed interest rate and repayment period. You need to assess trustworthiness of borrower. Peer to peer Bitcoin lending is another way to let the earned Bitcoins earn for you. There are many peer-to-peer lending websites where the borrowers post the borrowing requests. Over these websites, you can act as a lender. It is also possible to fund the small portion of numbers of loans to reduce the risk.

European Union

Grid Finance suspends taking investments below € 100,000 (Irish Times), Rated: AAA

One of the largest providers of peer-to-peer loans in the State has shut down a key part of its business aimed at smaller investors, blaming an absence of regulation in the crowdfunding space.

Grid Finance, which is backed by Enterprise Ireland, wrote to holders of its “Brick” accounts – that facilitate the investment of up to €100,000 – in recent days stating that it would withdraw the offering from the marketplace.

China

Dragon Victory International: Exposure To The Chinese Crowdfunding Market At A Regulatory-Driven Discount (Seeking Alpha), Rated: AAA

In recent years as China winds down its industrial and manufacturing powerhouse growth, it’s looking to other developed nations to determine which platforms it should invest in and pave the way to sustained economic growth. As most other major developed nations have done over the past century, financial services and engineering have been a very profitable platform and companies in China are quick to launch their own services to capitalize on the triple-digit growth in online financial services exhibited since 2003.

Similar to Hexindai (HX), which I’ve previously covered as a leading online lender which is capitalizing on the middle class appetite for debt to finance their lives and vacations, Dragon Victory International Limited (LYL) is taking on the crowdfunding segment in the People’s Republic of China. Similar to countless other platforms around the world, the company’s services are around financing new companies and capitalizing entrepreneurs through public funding and they already have over 4.5M users who use their services, a number nearly doubling each year.

Source: Dragon Victory International F-1 filings

China Fintech Today: The P2P Boom Is Truly Over (SupChina), Rated: A

This year, the government has continued to lead a reorganization of the industry:

More companies will die: As of February 17, only 60 percent of online lending institutions had disclosed their operational information for January 2019, including five problematic platforms.
However, the current asset quality of the online lending industry has improved significantly according the data from firms that did report.
As of the end of January 2019, the accumulated amount of the online P2P online loan industry was about 7.78 trillion yuan ($1.16 trillion). The total loan amount in January was 91.4 billion yuan ($13.61 billion), down 55.1 percent year-on-year and down 1.3 percent from the previous month.
Further consolidation of industry players is certain. Some experts quoted in media reports predict that the scale of future online loans will continue to shrink because of regulation.
Some listed companies, such as Aoma Electric and Panda Financial Companies, have abandoned their P2P businesses.
Aoma Electric issued a letter of concern to the Shenzhen Stock Exchange on February 14, attributing the decision to the broader economic slowdown, and a high number of overdue loans.
Panda Gold Control in 2018 was also dragged down by its P2P business, and expects a net loss of 41.16 million ($6.13 million) to 57.63 million yuan ($8.58 million) in 2018. Faced with the uncertainty of the P2P sector, Panda Gold Control chose to divest.

A Crypto Project That Raised $ 20 Million Is Caught Faking Its Founding Team (CoinDesk), Rated: A

Launched on Dec. 2, BHB claims to offer an ethereum-based solution for peer-to-peer lending, but by Jan. 18, local media reports were already accusing the project of operating an illegal pyramid scheme. Now, CoinDesk is able to reveal inconsistencies in the information provided about its founding team that further suggest something may be amiss at the China-based project.

However, the image of Bobby White used in BHB’s marketing materials is identical to that of an economics professor at China’s Tsinghua University named Alexander White. Meanwhile, the image of Gregory Moss is the same as one used by a philosophy professor at The Chinese University of Hong Kong, who is also named Gregory Moss.

Tencent-backed brokerage firm downsizes US IPO amid weak market demand (Technode), Rated: A

Tencent-backed online brokerage firm Futu Securities has set the terms for its US initial public offering (IPO) to raise up to $130 million, which will value the company at more than $1 billion. The company previously set its target at as high as $300 million when it filed for the US listing in December.

Chinese tech behemoth, Tencent, owns over 38% of the company, has shown interest in purchasing up to 25% of the new shares issued.

Australia

How should accountants talk to clients about fintechs? (In the Black), Rated: A

Like the ombudsman’s office, ASIC has also made information available to educate consumers and advisers, including on its MoneySmart Borrowing Basics and Peer-to-Peer Lending sites.

Is any flexibility possible, Shiel wonders, with a peer-to-peer lending model in which the borrower likely doesn’t know who is providing the funds?

India

LenDenClub crosses 1,00,000 borrowers and lenders milestone (News Barons), Rated: AAA

LenDenClub, one of India’s fastest growing peer-to-peer (P2P) lending platforms, recently crossed an important landmark with more than 1,00,000 borrowers and lenders on its platform. The breakdown of borrowers to lenders is 83,300 and 16700, respectively. The company crossed this milestone by keeping up with latest market trends, and saw an increase in the use of its product InstaMoney, which was launched in June 2018.

Why Do Fintech Startups and Investors See a Huge Potential in Lending? (Entrepreneur), Rated: AAA

Today, thanks to the ongoing digitization, borrowing has become as easy as it can get in India. For contrast, all it takes now is the touch of a few buttons, answers to a few verification-related questions, and anyone can receive a loan in a matter of hours or days, if not minutes. And all of this is without any collateral and while enjoying the comfort of your home. Now, compare this with taking a day off to go to the bank, doing extensive paperwork, visiting frequently to check the progress of your loan application, and ultimately, getting your application rejected because of the loan officer’s misjudgement. All while wasting two months of time in the constant to and fro and taking multiple days off from your office.

It is beyond doubt that the advent of fintech startups has altered the game of lending in India. It has become both simpler and convenient to borrow using their revolutionary approaches driven by state-of-the-art technologies. Currently, more than 1,500 fintech startups (of all shapes and sizes) are catering to the Indian market, and more than half of these startups have been launched over the last 3 years. This gives us a clear picture of how lucrative the sector is becoming for our startup ecosystem. But what is essentially fuelling this trend? Let’s find out.

Banning of UDS to benefit P2P Lending Industry (Inventiva), Rated: A

The latest ordinance of the Banning of Unregulated Deposits (UDS) 2019, was passed by the government to provide a comprehensive mechanism to ban UDS as well as to protect the interest of depositors. This is in line with the Reserve Bank of India’s guidelines on the NBFC-P2P sector, issued in October 2017 to regulate the unorganized lending business in the country.

Asia

Singapore fintech investments rose two-fold to US$ 365m in 2018 (SBR.com.sg), Rated: AAA

US$102.2m of the total funds raised went to lending fintech companies such as the homegrown Funding Societies.

Fintech investments in Singapore more than doubled to US$365m in 2018 from US$180m in 2017, putting the country amongst the top five fintech markets by funds raised last year in Asia Pacific, behind China, India, Australia and Japan, according to Accenture’s analysis of CB Insights data. The number of deals in the country rose to 71 from 61 in 2017, making it the third busiest market in the region, behind only China and India.

Source:

Validus Capital raises $ 15m for SME financing (Fintech Futures), Rated: A

Validus Capital, a Singapore-based SME financing platform, has raised SGD 20.5 million ($15.2 million) in a Series B funding round, led by FMO, a Dutch public-private development bank.

Latin America

PayPal expands its small business loans initiative to Mexico (Leaprate), Rated: AAA

Online payment giant PayPal launched its Working Capital initiative in 2013 as an alternative method for business to access working capital much faster than through traditional means. Many small and medium-sized business (SMB) clients embraced the program and since then the company has advanced more than $6 billion in loans to over 170,000 businesses in the UK, US, Germany and Australia.

PayPal also recently revealed that it has partnered with Konfio, a Mexican online lender that utilizes unconventional data sources to facilitate fast credit assessments, in a deal that will allow PayPal to extend its Business loan and working capital programs to Mexican businesses.

ID Finance eyes ‘pivotal moment’ for Latam fintech as revenue in region climbs 403% (Fintech Finance), Rated: A

ID Finance, the fintech company operating in Europe and Latin America, saw revenue of $49m in 2018. This represents growth of 236% for the business, which was formally separated from its operations in Russia and CIS region last year.

The company is enjoying particularly strong growth in Latam, one of the world’s fastest growing markets for fintech adoption thanks to high mobile penetration and a sizeable underbanked population – according to the World Bank 61% of Mexico’s population is excluded from the traditional banking system, while 40% of Brazil’s 207m population are blacklisted. The company now has 141 employees in Latam and saw revenue growth of 403% in the region last year.

Challenger bank N26 expands to Brazil (Fintech Futures), Rated: A

Germany-based mobile challenger bank N26 is powering on yet again as it has revealed its plans to expand to Brazil.

Africa

How FinTech Companies Inspire Africa With Mobile Technology (PYMNTS), Rated: AAA

With the potential for rapid growth and job creation, FinTech firms in Africa have caught the attention of global investors. According to the London Stock Exchange Group’s 2019 “Companies to Inspire Africa” report, which highlights these firms, the FinTech sector has the second highest growth rate representation of technology and telecoms as well as financial services. As it stands, companies in this space represent more than a quarter of 360 featured firms from 32 different countries. Pan-African payments firm Cellulant is among the companies that appeared in the first and second editions of the report.

Authors:

George Popescu

Allen Taylor

The post Thursday February 28 2019, Weekly News Digest appeared first on Lending Times.

What Happened at the Money 20/20 2018 Conference in Las Vegas?

Its a good thing that everything that happens in Vegas doesn’t stay in Vegas, which is where the Seventh Annual Money20/20 Conference took place on October 19-21, 2018. With the goal to “fearlessly take on the mission of creating a simpler, fairer, faster and more inclusive financial system for individuals, businesses, and society as a whole,” the three-and-a-half […]

Themes included :

Payments and Platforms
Banking and Personal Finance
AI and Deep Learning
Cybersecurity and Fraud
Alt Lending and Credit
Blockchain and Crypto
Digital Identity and Biometrics
And much more

While this is going to serve as a brief overview of the Conference, some of the notables who spoke, and bigger announcements, there will be special interest on Alternative lending and credit. We’ll also look at the all-important payments race.

A lot of the coverage is available on YouTube where Money20/20 has its own channel, so, if you missed the conference, you still have free access to some of the information.

Day One

Apple Co-founder Steve Wozniak is always a good bet to help you get a financial conference rolling. The business legend’s assurances that the claims that artificial intelligence (AI) and robotics, along with other forms of technology, are going to cut into human productivity are unwarranted helped to establish an ongoing theme that tech is necessary for the broader inclusiveness of our collective financial future.

Jennifer Bailey, VP Internet Services for Apple Pay, detailed some of the expansions of the new iPhone X, which include face ID security.

Other notable speakers from the first day of the conference included John Collison of Stripe, Michael Mebach, CPO of Mastercard (who spoke on how to build a seven-trillion-dollar middle class), Anand Sanwal of CB Insights, and Bill Ready of PayPal.

Day Two

Day Two’s lineup of speakers was headed by none other than Virgin’s own Richard Branson, who told a remarkable story about how he created Virgin by renting a plane and selling seats to the other passengers scheduled to be on the American Airlines flight that was delayed. Sallie Krawcheck, Ellevest’s CEO and co-founder, had some valuable remarks on diversity, and Vanessa Colella, head of Citi Ventures and CIO of CitiGroup, shared some keen insights on partnerships.

Possibly the speaker from the conferences second day who made the biggest impression was Nikolay Storonsky, CEO of Revolut. The way money is moved is changing rapidly, but if Storonsky is correct in his predictions, it may change even faster. He predicts that in 10 years, two or three large fintech players will take 95 percent of banks’ business marking an industry overhaul akin to how Amazon bypassed the retail industry and Uber took on taxis.

Day Three

Patrick Gauthier, VP of Amazon Pay, spoke to Tracey Davies’s central theme when he talked about the use of technology to make things simpler and more natural between the merchant and the consumer. Harley Finkelstein, CEO of Shopify, pointed out that middlemen will not be totally going away in the financial realm of the future, but they will have to “provide a disproportionate amount of value for their profit margin in the future.”

Other notable speakers included Asiff Hijri, president and COO of Coinbase, who framed the crypto world well when he spoke of the two base use cases of the space, the store of value of bitcoin and the ability to build apps on top of Ethereum, while noting that we’re still looking for that breakthrough app. His quote “Fintech before crypto, and the promise of a stablecoin…is like mobile before the iPhone came along” might be one of those “remember when” moments.

NBA legend Shaquille O’Neal also spoke on the third day of the conference. Now an advisor and advocate of Steady, the platform which helps Americans find work, says his partnership with these efforts is driven by recollections of a past where the only investments that paid off were those he embarked on in order to help others.

Day Four

Much of what happened on Day Four is listed below, including the Uber/Barclays and the Grab/Mastercard partnerships, but the day also had some other mentionable happenings.

Marisol Menendez, head of open innovation for BBVA, introduced the overall winner of the 10th annual BBVA Open Talent competition, the reward going to Sedicii; founder Rob Leslie accepted the award. Sedicii provides a service that identifies data between two organizations without exposing the underlying data.

Also, adding some hope for the financial sector in general, Ripple’s Co-Founder and Executive Chairman Chris Larson stated that he thinks digital assets can help guard against another financial crisis by solving some of the key problems of global liquidity. He also predicts that a fluid digital asset (he thinks it will be XRP, of course) will make more fluid the trillions of dollars that are tied up due to the “clunkiness” of current systems.

Focus on Alternative Lending and Credit Cards

As instant payments and expanded remittance options gain more prominence in the world of payments and commerce, an app designed to speed up the remittance process, designed via Visa APIs, took top honors at the conference.

American Express and Amazon announced a partnership, which will produce a no-annual-fee business card. Cardholders (Amazon Prime members) will get to choose if they want to receive five percent rewards on any Amazon purchase (Whole Foods included) or 90-day payment terms, a reward that might benefit small businesses with cash flow issues.

Goldman Sachs’s Marcus Platform announced a new wealth management offering designed to make the financial market more inclusive for average Americans. The offering will focus on online savings accounts and personal lending, the end game being to educate customers on some of the ins and outs of the financial sector.

Grab Financial and M and A Mastercard announced a partnership that will make prepaid cards available to underbanked and underserved customers in Southeast Asia in order to bring them into the financial realm and allow them to conduct business globally.

Gregory Wright, CPO and SVP of Experian, touched on a common theme from the conference, that of businesses going forward by putting consumers first. He reinforced the platform’s focus on putting the consumer at the center of the lending decision by giving the consumer more control over his or her data to allow them to make a more informed lending decision. The goal is for lenders to make better decisions at lower risk while giving more consumers access to credit.

David Richter, global head of business and corporate development for Uber, joined with Curt Hess, CEO of BarclayCard US, to announce the unveiling of the Uber Visa card. A native app specifically designed for the Uber platform, the app will make it more engaging and enjoyable for Uber riders and Uber eaters to experience the platform. The card will also offer real-time notifications of rewards and balances, rather than customers having to wait a month for a statement as credit cards traditionally do.

Other Noteworthy Announcements

ViSync took the grand prize in the conference’s hackathon challenge. According to a Visa spokesperson, their entry, an app designed to help send remittance payments overseas, should make it easier for migrant workers to send money back to their home countries.
FICO announced an “Ultra” FICO rating. The new device will consider how people manage their checking accounts and will incorporate things like overdraft history to determine credit scores. The goal is to help younger people and others with little or no credit and people who are rebuilding their credit after a couple of setbacks.
Tracey Davies, president of Money20/20, also announced the Rise Up! program, the pilot of which took place at this event. Rise Up! seeks to increase inclusion into the financial sector on all levels. This pilot program, which will expand to other demographics in the future, focused on gender (women make up 50 percent of the population, but only 20 percent of leadership roles in the financial sector.). Of the 300 women who applied to the program, only 35 were selected. Those who were selected were privy to special seminars and one-on-one access to various leaders from the financial space.

The Payments Race

Knowing how we build points of sale, I wonder if the organizers of the original event knew just how apropos the payments race would be to the overall message of the Money20/20 events. Whether they did or not, the event serves to draw a good picture of how we use and interact with different forms of currency in our daily lives.

Closely resembling the scavenger hunt of the television series The Amazing Race, five participants were given six days to make it to Las Vegas for the opening day of the convention. They drew to see which host city will host most of their scavenging, and then they all have to make it to their city and then to Vegas. Along the way, they got points for things like the number of states they visited and the different modes of transportation they use.

The catch is this: Each participant was only allowed to use one form of payment; the options were

Team Checks
Team Cash
Team Credit Cards
Team Devices (Apple Pay and such)
Team Crypto

The episodes—all of which can be seen on YouTube—show the obstacles in trying to perform these tasks with only the given form of payment.

As you can imagine, Team Checks had a hard time of it, and they had to rely on the goodness of many others to navigate their journey. Team Cash didn’t face as many obstacles, but travel required some finagling as they got deeper into the trip. Team Crypto had some transportation issues early on, but also relied on the kindness of others to make the necessary accommodations.

Team Credit seemed to have the most ease traveling—they just rented an RV and drove—and the representative from Team Devices said after it was all over that using only devices proved to be easier than she thought it was going to be; she did have to go to some pretty significant lengths to rent a car.

In all, the little series of videos showed the importance of various forms of payment and that we still haven’t gotten to the point where we can survive conveniently on one single form of payment; still, everything from the conference seems to speak to the reality that we’ll get there.

And how did the race turn out? Well, I haven’t seen an actual crowning, but Team Crypto was the first to get to the Las Vegas sign, which was basically the finish line—I haven’t seen anything that mentioned how each fared at the number of states visited or modes of transportation used. If Team Crypto did prove the winner, it was their second straight title.

The event will return to Vegas next year, the dates being October 27-30, 2019.

Author:

Written by Paul Keenan.

Wednesday June 27 2018 Daily News Digest

Bank of Amazon unbundling financial services

News Comments Today’s main news: Consumer debt surpasses mortgage debt. Funding Circle, INTRUST Bank expand partnership. Revolut offers app store for business banking. VPC Specialty Lending hits record monthly returns. Today’s main analysis: Amazon’s big push into lending, and beyond. Today’s thought-provoking articles: The past and future of banking. Should income investors consider P2P lending? Banks can’t partner themselves into […]

News Comments

Today’s main news: Consumer debt surpasses mortgage debt. Funding Circle, INTRUST Bank expand partnership. Revolut offers app store for business banking. VPC Specialty Lending hits record monthly returns.
Today’s main analysis: Amazon’s big push into lending, and beyond.
Today’s thought-provoking articles: The past and future of banking. Should income investors consider P2P lending? Banks can’t partner themselves into digital relevancy.

United States

Consumer debt surpasses mortgage debt. This is an interesting trend, and as companies like Affirm and Klarna grow an interest in instant financing, I see trend continuing.
Funding Circle, INTRUST Bank expand partnership. This makes me wonder if Funding Circle’s long-term strategy is to expand these types of partnerships nationally, and if they do, will they take INTRUST with them or partner with other regional banks?
Amazon’s push into lending, and beyond. As it stands now, I don’t see Amazon competing with most online lenders. Their niche is lending to small businesses that sell on the Amazon platform. Of course, that could change at any time.
The past and future of banking. This is something every alternative lender should consider. How much of the P2P lending pie will banks ultimately have, and are we willing to give up any of our portion?
Banks can’t partner themselves into digital relevancy. Do they have a choice?
Marcus is not adding credit cards any time soon.
Finn’s challenges.
Sharestates launches new loan programs.
Venmo launches a debit-card with MasterCard.
PayPal acquires Simility.
P2Binvestor raises $17 million.
CrowdOut Capital surpasses $100 million in loans to middle market companies.
Interview with James Gutierrez of Insikt. Lend Academy podcast.
StraightUp merges with Slice.
Fair Financial to go national.
Most Americans will not pay for summer vacation with a loan.
Depository Network offers decentralized network for P2P lenders.
Invoice factoring edges out short-term borrowing competition.
Wells Fargo revamps premium credit card.
AFR expands technology offering.
House passes telecom, utility payments bill.

United Kingdom

International

Other

News Summary

United States

Consumer Debt Now Surpasses Mortgage Debt (Investopedia) Rated: AAA

Mortgages may represent the largest debt for households, but as a percentage of disposable income, home loans are comprising less of a liability, LendingTree found.

In a research report, the online lender, which analyzed data from the Federal Reserve, said that mortgage-related household debt has declined 5.5%, while consumer credit, which includes revolving credit and installment loans, jumped 45%. Of that, 42% was student loan debt. What’s more, LendingTree found that American household debt is on track to hit $1 trillion above the 2008 peak by the end of June. The debt figure has been increasing at a 3.4% annual rate and includes mortgage debt.

By the end of the second quarter, LendingTree is forecasting total mortgage and consumer debt to reach $15.7 trillion compared with $14.7 trillion 10 years ago.

INTRUST Bank and Funding Circle expand partnership (PR Newswire) Rated: AAA

Funding Circle, the small business loans platform, and INTRUST Bank, a leading US regional bank headquartered in Kansas, today announced the next phase of their strategic partnership to support the growth of US small businesses. Following the successful launch of this partnership earlier this year, the second phase increases INTRUST’s funding commitment and kicks off a targeted, co-branded marketing campaign, giving business owners across Kansas, Missouri, Oklahoma, and Arkansas greater access to fast and flexible financing.

To date, over 150 American small businesses have received loans backed by INTRUST through the Funding Circle platform. The upsized commitment is anticipated to increase this number above 500.

Amazon and Their Push Into Fintech (Lend Academy) Rated: AAA

Last week CB Insights released this really interesting report titled, Everything You Need To Know About What Amazon Is Doing in Financial Services.

Source: Lend Academy

The report provides an in depth look at the moves Amazon has made in payments, lending, the new Amazon Cash program and also takes a look at how the company has been developing fintech programs internationally.

By the simple addition of a debit card, Amazon could move the unbanked into a quasi bank account that could be used at places beyond Amazon.

They have had a small business lending operation since 2011 and much fanfare was made about the $3 billion they have loaned through June 2017. But that doesn’t even put them in the top three online small business lenders in that time period. OnDeck, Kabbage and CAN Capital all loaned more.

To be fair Amazon is not trying to be a general purpose lender. Their SMB lending operation is targeted solely at Amazon marketplace sellers as a way to help them grow their business so they will sell more products on Amazon. It is not clear they have a desire to do more than that.

Source: CB Insights

The Banking Industry: Past and Future (The Motley Fool) Rated: AAA

INDUSTRY FOCUS // Financials // 06-25-2018

One of the big things that’s happened over the past 25 years is that the big banks have gotten bigger. We now have what are known as the Big Four banks in the U.S. — Citigroup, Bank of America, Wells Fargo and JPMorgan Chase. All of those have grown substantially through acquisitions, not just from the financial crisis, which saw a lot of consolidation, but beforehand. Actually, three of the four were actually acquired themselves, and the acquiring companies just decided to keep the names because they were more recognizable.

Douglass: I believe that peer-to-peer lending will represent at least 25% of total lending spent in 25 years. Now, I only say 25%. For me, it’s very clear that peer-to-peer lending has become a lot more widespread and a lot more feasible than it was previously. I do expect the peer-to-peer lenders — or a bank, perhaps, who hops in — to help solve for one of the current difficulties, which essentially is poor underwriting by some of the peer-to-peer facilitators right now, meaning that the investors who are putting the money in aren’t making the kind of money that they’d hoped to — I believe those will ultimately be solved.

But, I only say 25% because banks have legitimately trillions of dollars to lend, and they will absolutely be looking for ways to deploy that capital effectively. So, I would expect that they will be helping facilitate a lot of these peer-to-peer loans. I believe they will be, in some cases, investing alongside. I think they will often invest in alone, and perhaps then sell it to peer-to-peer lenders for an arbitrage so that they can do it all again, sort of like you see with agency-backed mortgages.

Marcus Is Not Adding Credit Cards Products … Yet (Bank Innovation) Rated: A

Marcus, the consumer lending arm for Goldman Sachs, wants to become the one-stop shop for many of your financial matters, except for one: credit cards — at least for now. Right now, Marcus is heavily focused on launching a savings platform in the U.K. in the coming months, Talwar said.

The challenges for a new ‘bank’ with a famous parent (American Banker) Rated: A

When JPMorgan Chase set out to make its digital-only brand Finn, it quickly rejected the idea of using it to lure millennial customers over to the institutional side of the bank.

Finn has also found that for the 27 states where JPMorgan Chase is part of a shared ATM network but has no ATMs or branches of its own, customers have difficulty depositing cash. While those same customers can still withdraw cash and often don’t carry money with them, customers that work for tips have a hard time keeping Finn as their main banking account.

Sharestates Launches New Loan Programs (PR Newswire) Rated: A

Sharestates announced the launch of a Long-Term Portfolio Loan Program to facilitate the needs of borrowers throughout the life cycle of their real estate projects.

Some highlights of the Long-Term Portfolio Loan Program include 30 and 40-year mortgage terms, interest rates ranging from 5.99 to 7.5%, loans with a 10-year interest only period, followed by 20 or 30 years of amortization, as well as the ability to cover three or more properties under a single loan.

Venmo officially launches its own MasterCard-branded debit card (TechCrunch) Rated: A

Venmo today is officially introducing its own debit card in partnership with MasterCard, following beta tests of a Visa-branded debit card last year. The new card will allow Venmo users to pay anywhere MasterCard is accepted in the U.S., and will record transactions to the user’s Venmo account for easy splitting with friends. It can also be used at an ATM to withdraw funds from the Venmo’s account’s balance.

Unlike the beta version of the card, the MasterCard-branded Venmo card can be used to withdraw up to $400 per day at ATMs displaying the MasterCard, Cirrus, PULSE, or MoneyPass acceptance marks. No fees apply for U.S. MoneyPass ATMs, while the others will charge a $2.50 ATM domestic withdrawal fee.

There are no fees for using the card for purchases, even if you get cash back at the point of sale. However, if a signature is required to get cash back at a bank, you’ll pay a $3.00 Over the Counter Domestic Withdrawal Fee, the company says.

PayPal gets anti-fraud ability with $ 120m acquisition of Simility (Fintech Futures) Rated: A

Following on from its $400 million purchase of Hyperwallet on 20 June, it has now acquired fraud prevention and risk management platform Simility for $120 million.

Following the close of the deal, merchants on the PayPal platform will gain access to fraud tools that can be customised through their existing account management dashboard.

Crowd lending fintech raises more than $ 17M (American Banker) Rated: A

The crowd lending startup P2Binvestor has secured more than $17 million in funding from more than 20 participants to expand its bank partnership program, the company announced Thursday.

CrowdOut Capital Surpasses $ 100 Million in Loans to Middle Market Companies to Fuel Growth (Business Wire) Rated: A

CrowdOut Capital, the first tech-enabled online marketplace to fund corporate loans for middle market companies, announced it funded more than $112 million in loans in less than two years. Accredited investors choose from the company’s vetted loan offerings on a deal-by-deal basis.

CrowdOut funds loans as small as $3 million to companies with annual revenues between $10 – $500 million to fuel growth.

James Gutierrez of Insikt (Lend Academy) Rated: A

My next guest on the Lend Academy Podcast has spent his career doing just that. James Gutierrez is the CEO and Founder of Insikt. Since I last had James on the show a lot has changed but their mission is still to improve the financial health of the underserved consumer.

Banks can’t partner themselves into digital relevancy (American Banker) Rated: AAA

For banks, these partnerships won’t generate the quantum leap they need to move beyond a decades-old, product-centric mentality to deliver next-generation financial services that consumers deserve. At best, financial institutions may gain a workable solution that squats awkwardly in the existing infrastructure and brand. At worst, after a lot of time and effort — and increasing their infrastructure costs — banks will fail to deliver any noticeable difference to customers beyond a flurry of press releases.

StraightUp Announces Merger With Slice (PR Newswire) Rated: A

StraightUp, an innovative real estate-focused platform giving investors access to previously unavailable development opportunities, announced today a merger with Slice, the first blockchain-based REIT for investors around the world.

StraightUp was designed to democratize access to previously unattainable high-potential investment opportunities in New York City. As a result of merging with Slice, the new and improved platform will give international investors access to premium equity opportunities in desirable cities across the country, including New York City, Los Angeles and San Francisco.

Mobile app for underbanked looks to go national (American Banker) Rated: A

You could easily mistake Anne Leland Clark, a Twin Cities nonprofit executive, for a banker with with big, national ambitions as she discusses her organization’s digital platform for the underbanked.

The product, known as Fair Financial, launched in a pilot program this week to serve about 500 local customers over the next 18 months.

Majority of Americans Won’t Use a Credit Card to Pay for This Summer’s Vacation (Herald Courier) Rated: A

The survey of over 1,000 U.S. respondents, conducted by Affirm, found that Americans typically take their biggest vacations of the year over the summer, and cost is a major factor when planning travel.

55 percent of Americans said it’s very important to have the cost of the vacation paid off before going. The cost of a trip can linger even after the vacation is over: 32 percent of people said they regretted taking a vacation altogether.

House passes bill allowing telecom, utility payments in credit scores (American Banker) Rated: B

The legislation, authored by Rep. Keith Ellison, D-Minn., is aimed at helping consumers, those in particularly lower-income and minority households, build their credit histories.

Under the bill, information about a consumer’s utility or telecommunications service may be reported only to the extent that the information relates to payment by the consumer for such service.

Depositing the Future (NullTX) Rated: A

What differentiates Depository Network from both of those companies/platforms is the fact that Depository Network is actually not a lending platform. Rather, it is a depository infrastructure that other P2P lending platforms, banks and credit institutions can utilize. Depository Network is the world’s first fully decentralized multi-platform collateral network that connects traditional lending and blockchain technology.

Invoice Factoring Edges Out Competition Among Short-Term Borrowing Options (PR Newswire) Rated: A

When a business needs to raise capital, the more short-term the borrowing options, the better. For every option, though, business owners must weigh the increased cash flow against the trade-off. Interstate Capital looked at a breakdown of options – from bank loans to savings – invoice factoring comes out on top.

AFR Announces Expanded Technology Offering (AFR Wholesale) Rated: B

American Financial Resources, Inc. (AFR) announces that it has completed a pilot and will now be providing its broker network with notification when a house for which AFR owns the servicing is listed for sale. This will enable AFR’s broker partners an opportunity to reconnect with the homeowner and, ideally, assist with their next mortgage, on both the relisted property as well as the borrower’s next home.

Wells Fargo revamps premium card to compete on rewards (Payments Source) Rated: B

Two years after JPMorgan Chase & Co. launched an arms race in credit-card rewards with its Sapphire Reserve card, Wells Fargo will now offer three points per dollar spent on dining, travel and streaming services such as Netflix on its Propel card. Other purchases will earn one point per dollar, and points are redeemable at one cent per point.

United Kingdom

Revolut Now Offers an App Store for Business Banking (Crowdfund Insider) Rated: AAA

Revolut, a digital only bank that says it is signing up over 120 businesses per day, has launched a new services for their business customers – Revolut Connect. This new feature is described as an “App store” for businesses to help provide easier access to digital tools.

With more than 60,000 businesses uses their bank now, Revolut Connect is designed to help firms easily connect and build integrations for the most popular business apps, including accounting platforms like FreeAgent, communication tools like Slack, Apps to help with tax, payroll, expense management and more. Revolut adds that many more popular Apps are in the queue. Revolut wants to create a one stop mobile experience where businesses may manage all of their financial needs in a single mobile friendly application.

VPC Specialty Lending sees record monthly returns (AltFi News) Rated: AAA

The £289m VPC Specialty Lending investment trust has recorded its highest monthly return to date for May 2018, according to stock market filings.

Its net asset value [NAV] total return for the month of May, the latest numbers released by VPC, was 1.03 per cent for the month. Returns comprised 0.94 per cent of income gains and 0.09 per cent of capital gains.

Should Income Investors Consider P2P Lending? (Morningstar) Rated: AAA

Peer-to-peer investment trusts now have around £1 billion of assets under management between them, but the jury is still out on whether or not they are worth backing.

P2P trusts launched four years ago as direct peer-to-peer lenders including Zopa and Funding Circle were fast gaining traction. The trusts promised exposure to hundreds, or even thousands, of different peer-to-peer loans, in return for a juicy dividend yield.

Majority of brokers’ biggest frustration is lenders changing their mind on a deal (Mortgage Introducer) Rated: A

Over half (56%) of brokers said the lenders changing their mind on a deal frustrates them the most about the specialist finance market, LendInvest found from surveying brokers at the NACFB Commercial Finance Expo in Birmingham.

A quarter (24%) identified the lack of good service as their main frustration. Rates not being good enough was an issue for 14% of those surveyed, while only 6% of those surveyed cited lack of choice as their biggest frustration.

Acceptance of robo advice on the rise (Financial Reporter) Rated: A

According to a recent poll carried out at the Intelliflo Change the Game conferences held in Manchester and London, robo-advice is now regarded as less of a threat to business for advisers than it has been in recent years.

Last year, both options gained equal top share in the poll (37% each of 315 respondents), while this year,’ robo-advice’ dropped to 25.5% (419 respondents), with ‘large product providers going direct’ down slightly but still the top concern at 32.5%.

A guide to liquid IFISAs (Peer2Peer Finance) Rated: A

But the rising popularity of the secondary market and ‘instant access’ accounts have created enhanced liquidity for P2P investors. On an array of platforms, lenders can sign up for long-term loans before selling their stake to others, while some of the bigger platforms allow free or low-fee withdrawals.

We’ve put together a guide to all the platforms offering IFISAs with extra liquidity…

Ablrate
Abundance
Assetz Capital
CapitalRise
Crowd2Fund
Folk2Folk
Funding Circle
FundingSecure
HNW Lending
JustUs
Landbay
LandlordInvest
LendingCrowd
Lending Works

China

Chinese online lending platform Hui Ying Financial lowers US IPO deal size to $ 32 million (Nasdaq) Rated: AAA

Hui Ying Financial Holdings, which operates an online peer-to-peer lending platform in China, lowered the proposed deal size for its upcoming IPO on Tuesday.

The Shanghai, China-based company now plans to raise $32 million by offering 5.6 million shares at a price of $5.85. The company had previously filed to offer 6.8 million shares at the same price. Hui Ying Financial Holdings will raise -19% less in proceeds than previously anticipated and command a market value of $436 million. Shares are currently listed on the OTCQB under the symbol SFHD.

European Union

Raisin and Banco BNI Europa Deepen Collaboration (Crowdfund Insider) Rated: AAA

Fintechs Banco BNI Europa and Raisin have furthered the collaboration between the two firms. Banco BNI Europe says it has entered into a cooperation to allow Portuguese savers to gain access to the best savings rates available from across Europe.

International

Global Debt Registry Launches Decentralized Ledger for the Loan Market (Payment Week), Rated: A

Global Debt Registry (“GDR”)today announced the launch of its loan registry designed to verify and provide transparency on loan data on the cloud-based IBM Blockchain Platform. All loan level collateral positions and verification activity will now be immutably recorded on the decentralized registry with highly secure permissioning and access controls to provide new levels of efficiency to the $400bn asset backed securities (ABS) market.

Mobilum Crypto Payment Processor Partners With EthicHub Crowdlending Platform (Bitcoin Exchange) Rated: B

Mobilum is a cryptocurrency enabled payment processing platform which allows for cryptocurrency payments in real time at points of sale via an already existing debit or credit cards of the customer and the issuer of the Mobilum token. Mobilum recently announced its partnership with EthicHub, an affiliation that is expected to bolster a mutual sharing of investment opportunities for users on both platforms.

EthicHub’s crowd lending projects have provided financial solutions for small projects especially those involving farmers in less economically disadvantaged parts of the world, an accomplishment for which it was awarded the Best financial inclusion project at LaBitConf in Bogota as well as the award of the “Start-up with the Greatest social impact” at Unconference Fintech Awards in Madrid, Spain.

Australia

Mortgage Choice partners with P2P lender (The Adviser) Rated: AAA

Mortgage Choice has announced that it has partnered with RateSetter in a move that would provide its 600 brokers with access to personal loans and green loans offered by the P2P lender.

RateSetter CEO Daniel Foggo claimed that the partnership was part of the lender’s plan to develop its broker relationships.

ING distribution boss joins RateSetter (Independent Financial Adviser) Rated: B

ING’s former head of third-party distribution, who led relationships with financial advice and mortgage broking networks, has left to join fintech peer-to-peer lender RateSetter.

India

All Financial Transactions on Faircent Conducted through Escrow Account (BW CI World) Rated: AAA

Faircent.com was the first platform in India to meet all guidelines prescribed by RBI and receive the NBFC-P2P certification in May, this year. This is a validation of the business model that we have painstakingly built over the last five years.

All financial transactions on our platform are undertaken through an escrow account under the trusteeship of ITSL (an IDBI Trusteeship Services Ltd). Borrowers are evaluated by our fully-automated credit evaluation mechanism across more than 400 data points to understand their ability, stability and intent to repay before they are listed on the platform.

Canada

Finastra to sell Canadian-based Collateral Management Corporation business to Teranet (Finastra) Rated: AAA

Finastra today announced that it has entered a definitive agreement to sell its Canadian-based Collateral Management Corporation (CMS) business to Teranet. The transaction is expected to close in July 2018, subject to required regulatory approvals and customary closing conditions.

CMS will join Teranet as a new complementary line of business. Jointly, they will deliver enhanced, integrated solutions to a broad set of financial services customers, leveraging investments in technology, rich insightful data, and market leading electronic registry and workflow platforms.

Authors:

George Popescu

Allen Taylor

Monday June 18 2018, Daily News Digest

News Comments Today’s main news: Opendoor secures $325M in financing. RateSetter IFISA tops 100M GBP. China Rapid Finance’s earnings call slides. Alior Bank, solarisBank, Raisin, Mastercard partner on European digital bank. Harmoney to lend through its own platform. Amazon launches lending platform in India. Today’s main analysis: Rising interest rates and inflation. Today’s thought-provoking articles: Is P2P lending dying? The economic […]

News Comments

Today’s main news: Opendoor secures $325M in financing. RateSetter IFISA tops 100M GBP. China Rapid Finance’s earnings call slides. Alior Bank, solarisBank, Raisin, Mastercard partner on European digital bank. Harmoney to lend through its own platform. Amazon launches lending platform in India.
Today’s main analysis: Rising interest rates and inflation.
Today’s thought-provoking articles: Is P2P lending dying? The economic impact of lending through Funding Circle. How the big 3 UK P2P lenders shaped the industry. California law could force online lenders to disclose rates.

United States

Opendoor secures $325 million. Congratulations! If Opendoor secures more funding from SoftBank, it can expand even faster.
Rising rates and inflation. This is a must-read PeerIQ analysis.
Is P2P lending dying? No. The industry is experiencing a cooling off period, but there are still signs of growth.
California law could force online business lenders to disclose rates. This may not be a bad thing. More transparency could make the industry more trustworthy, which would benefit all alternative lenders. Businesses can still get a better deal through most online lenders than through banks.
Braviant Holdings gets $50 million credit facility.
How will the Fed’s interest rate hike impact the average Joe?
Zelle is on track to be more popular than Venmo.
Credit union SMB loan approvals hit record lows.
Digital-only banks grapple with integrating human interaction.
Real estate finance is changing.
Why digital banking, robo advice are pairing up.
Wells Fargo simplifies pricing to compete with Square.
New tech, customer experiences drive banking.
Puddle shuts down.
RealtyMogul, Comunidad Realty Partners sell Dallas investment property.

United Kingdom

International

Fintechs are staring down the future of banking.

Australia/New Zealand

India

Other

News Summary

United States

Opendoor now has $ 325 million more. SoftBank could come next. (Recode) Rated: AAA

Opendoor has already taken out $1.5 billion in loans for home buying. And the company now says it has accepted another $325 million in new financing that values it at more than $2 billion, according to a person familiar with the matter.

Opendoor will expand to 50 cities with the $325 million round. But SoftBank, with its huge $100 billion checkbook, could help Opendoor expand to even more as soon as later this year. The Japanese investor typically invests hundreds of millions of dollars into private companies, and that sort of check would be expected here, though some of the money tends to buy out existing investors.

Rising Rates and Inflation (PeerIQ), Rated: AAA

The Fed raised interest rates for the 2^nd time in 2018 and the target Federal Funds Rate now stands at 1.75% – 2%. The committee indicated that it would raise rates twice more in 2018, a departure from the previous stance of 3 rate hikes in 2018.

The Fed summarizes member views using the “dot-plot”. The dot plot consolidates every committee member’s estimates of rates at the end of 2018, 2019, 2020 and the for long-term. The green line shows the median estimate indicating that most Fed members expect rates to be between 2.25% – 2.5% at the end of 2018, and between 3% – 3.25% at the end of 2019.

Source: Federal Reserve, Bloomberg

Source: Bloomberg, PeerIQ

Forward Rates – Where do we go from here?

Source: Bloomberg, PeerIQ

Braviant Holdings Announces $ 50 Million Credit Facility with Keystone National Group (PR Newswire) Rated: A

Braviant Holdings, a provider of tech-enabled credit solutions for underserved Americans, has entered into a $50 million senior secured credit facility with institutional investment firm Keystone National Group.

The Keystone debt facility allows Braviant to expand its newly launched near prime lending platform, Chorus Credit. Chorus is Braviant’s latest offering in support of the company’s mission to promote financial inclusion for 51 million adults considered underbanked by the FDIC. While the FDIC estimates that these adults make up 19.9% of U.S. households, data from the Fair Isaac Corporation, better known as FICO, suggests that 43% of U.S. consumers have below 700 credit scores. In the traditional banking sector, a lower than average FICO score severely limits access to credit for almost half of the nation’s population. Chorus aims to close the credit gap for middle America by offering $2,500 to $10,000 personal loans that are repaid in small, affordable installments.

Is P2PLending Dying? (P2P Lending Expert) Rated: AAA

Seriously. I’m asking. Is p2plending dying? Returns have sucked the last couple of years for all investors, but especially us retail investors since the 2015 and 2016 vintages have performed so poorly. My own returns are 400-500 basis points lower than my returns on my 2013 and 2014 vintage loans were and I know some colleagues and friends who have lost money on these investments.

But can the industry survive?

Source: P2P Lending Expert

How Will the Fed’s Interest Rate Hike Impact the Average Joe? (Dough Roller) Rated: A

On Wednesday, The Federal Reserve decided it was going to increase the federal funds rate by 25 basis points, from 1.75% to 2%. This is the second rate increase already this year. In March, new chairman Jerome Powell and the Fed increased the federal funds rate from 1.5% to 1.75%. The Fed also indicated that they’d be targeting two more increases this year alone.

As I said before, when the Fed increases rates, it usually means something is going well for the economy. And all signs are pointing to that being the case. Unemployment is currently at 3.8%. In the last 50 years, unemployment has only been this low two times. That’s significant, and it means that more people are finding jobs. It may also signify a strengthening job market for you. The Fed projects unemployment will drop to 3.6 percent by the end of the year, too.

Zelle is on track to be more popular than Venmo in 2018 (Business Insider) Rated: A

Zelle is a year-old service that lets you instantly transfer money to someone else, much like Venmo or Square Cash.

But Zelle differs from either service in a major way: because it was built by seven of the largest US banks, it’s often able to integrate more seamlessly with your bank’s mobile app. While other services make you wait a few days for the money you received from friends to show up in your bank account, Zelle can transfer the money almost instantly.

For those reasons, analysts at eMarketer expect Zelle to “leapfrog” other payments services before the end of the year.

Credit Union SMB Loan Approvals Hit Record Lows (PYMNTS) Rated: A

The latest data from the monthly Biz2Credit Small Business Lending Index suggests a slump in small business lending among U.S. credit unions.

A press release issued on Wednesday (June 13) detailed the May Index’s latest findings, which found that large banks with more than $10 billion in assets are approving of nearly 30 percent of small business loan applications, a two-tenths of a percent increase from April levels. That figure is also a new high for post-recession big bank lending to small businesses.

Digital-only banks grapple with integrating ‘human’ interaction into their products (Tearsheet) Rated: A

Digital-only banks cater to younger customers who don’t want to talk to bankers at brick-and-mortar branches — or bother visiting a branch at all. Or so they think.

Recent customer surveys indicate otherwise, according to research findings released this month from Celent, commissioned by Samsung. It revealed that customers want some kind of human interaction for complex issues. The study found that about half of U.S. banking customers aged 18 to 44 said they banked digitally, but prefer to resolve some matters in-person. Overall, most customers surveyed preferred dealing with humans on matters like setting up financial goals or getting investment advice. To respond to fraud, a lost or stolen card, or identity theft, a majority of those surveyed across age categories preferred to phone the contact center or address it in a physical branch.

Source: Tearsheet

Real Estate Finance Is Changing, Thanks to ‘Fintech’ Startups (The Bridge) Rated: A

If your student loan debt is larger than your salary, investing in real estate might sound like a joke. But it’s doable, said Dave Conroy of the startup Meridio, a website in beta testing that lets users invest amounts of money that you might have in your wallet right now–even $20–into specific properties. Using blockchain technology keeps each transaction cost low, said Conroy, whose company is an offshoot of Bushwick-based ConsenSys, which is building myriad applications based on the Ethereum platform.

For investors, the service would reduce transactions costs and make a real-estate portfolio more liquid. For owners, it would unlock more capital and streamline transactions. While Meridio won’t provide market intelligence about properties to invest in, prospective investors can call on their own experience, says Conroy, who previously worked for the National Association of Realtors.

Why digital banking and robo advice are pairing up (Financial Planning) Rated: A

Banks and digital wealth startups are headed toward the same goal from different starting points.

Each side is increasingly seeking to package automated investment advice with checking because customers are expressing an interest in getting both services from one provider.

Fifth Third Bancorp’s securities unit teamed up with Fidelity recently to offer automated advice, while the microinvesting app Acorns rolled out a debit card called Spend and opened up 50,000 checking accounts in two days.

Wells Fargo simplifies payments pricing to compete with Square (Payments Source) Rated: A

Wells Fargo will simplify the prices it charges small businesses to accept credit and debit card transactions as the bank responds to pressure from startups such as Jack Dorsey’s Square Inc.

The changes, which are tailored for small businesses that process $100,000 a year or less, eliminate many of the complicated pricing policies that varied from client to client, according to Danny Peltz, who leads treasury management and merchant services at the company. Business customers will also be able to apply online for payment processing capabilities with Wells Fargo, Peltz said.

New Technologies and New Customer Experiences Drive Banking Today (Lend Academy) Rated: A

American Banker’s Penny Crosman sat with Cathy Bessant, Chief Operations and Technology Officer, Bank of America to discuss the bank’s use of AI. She described how the bank has inventors all over the world in their distributed innovation model.

Peer to Peer Micro-Credit Site Puddle Shuts Down (Crowdfund Insider) Rated: A

Puddle, an online lender that provided micro-credit in a peer to peer platform, is shutting down.

In an email circulated by the company, Puddle founders stated that after five years of operation the businesses model was “unsustainable.”

RealtyMogul, Comunidad Realty Partners Sell Dallas Area Investment Property (Herald Courier) Rated: B

RealtyMogul, a pioneer in providing private real estate to discerning investors, announced that it has sold an investment property in partnership with Comunidad Realty Partners at greater than 1.5 times its purchase price.

The property, Lodge at Main, a 208-unit multifamily apartment complex in the Dallas/Fort Worth, Texas area was acquired in 2015.

California may force online business lenders to disclose rates (American Banker) Rated: AAA

A bill pending in California aims to tame the disorderly, confusing and largely unregulated world of online small-business lending by mandating that borrowers receive standard price disclosures.

The bill, which passed the Senate without a vote to spare and has failed to garner much support from either the online lending industry or its critics, still faces a tough fight in the state Assembly. But if the measure does get enacted in California, it could serve as a blueprint for other states.

The legislation tackles the question of whether commercial lenders should be required to disclose the price of financing in a way that enables borrowers to compare multiple offers. Just as nettlesome is the question of how any such comparison metric should be calculated.

Source: American Banker

The bill would apply to small businesses that borrow $500,000 or less.

United Kingdom

RateSetter Reports IFISA Tops £100 Million in Record Time (Crowdfund Insider) Rated: AAA

UK based peer-to-peer lender RateSetter is reporting that subscriptions to its IFISA have surpassed £100 million. This milestone took four months to reach and, according to RateSetter, faster than any other P2P lender. To date, RateSetter has originated over £2.5 billion in online loans to both businesses and individuals. RateSetter states that more than 10,000 IFISA accounts have now been opened. The average annual return received by investors stands at 4.4% with more than £100 million in interest having been paid.

Peer-to-peer lender Ratesetter to raise £30m as London float looms (City A.M.) Rated: A

Peer-to-peer lending business Ratesetter is working on a £30m fundraising which is expected to be a prelude to a London float.

According to Sky News Ra

tesetter is working with investment bank Lazard and broker Peel Hunt to raise £30m from investors.

The funding round would value Ratesetter at about £280m.

The fundraising is expected to be a precursor to a stock market flotation which could take place as early as next year.

THE ECONOMIC IMPACT OF LENDING THROUGH FUNDING CIRCLE (Funding Circle) Rated: AAA

In the UK, where Funding Circle has been established the longest, the platform is now competing directly with banks in the small business lending market – with net lending through the platform exceeding that of the entire UK banking system for two successive quarters at the end of 2017. A survey of Funding Circle’s customers undertaken for the study suggests 89 percent of the platform’s UK small business customers would approach
Funding Circle first again in future, rather than going to a bank.

Source: Funding Circle

Read the full report here.

Funding Circle CEO on the Fintech Frenzy in Europe (Yahoo Finance) Rated: A

How the big three shaped P2P (Peer2Peer Finance) Rated: AAA

ALTHOUGH we still tend to think of peer-to-peer lending as a young sector, it is now 13 years since Zopa became the first lender in the market. It was joined five years later by Funding Circle and RateSetter and since then the big three have dominated the P2P market.

Here are some of the key moments in their journeys.

London Block Exchange To Strike Deal With UK Bank (Crypto Daily) Rated: A

London Block Exchange, a UK based crypto provider is alleged to be pairing up with a new UK based bank, ClearBank.

If this news is indeed true, this will mark the first time a lender has struck a deal with a cryptocurrency-based entity.

The UK proves its tech chops, Google’s massive diversity gap and Brexit cause business tensions (Elite Business) Rated: A

Out of Europe’s 34 unicorns, the UK has produced 13. These have a combined value of $23bn, equal to 38% of the European total. This puts the UK ahead of Germany and France, which have six and three scaleups valued over $1bn respectively. Given the nation has already spawned success stories like Deliveroo and Funding Circle, it’s hardly surprising that VC investment is also booming in the UK. Last year British startups raised $7.9bn compared to Germany’s $3.2bn and France‘s $2.8bn.

Brexit has made UK SMEs worry about talent

Having polled companies in 11 countries, researchers revealed that UK entrepreneurs were much less confident about the conscious uncoupling than those in the EU. Overall, 57% of respondents felt that their biggest challenge was that they had too little time and that they were doing everything themselves. This was double the 24% who thought hiring the right people were their biggest worry.

Alternative finance funds see mixed success (Peer2Peer Finance) Rated: A

Over the past year, P2P Global Investments (P2PGI), VPC Specialty Lending Investments and Ranger Direct Lending (RDL) have moved away from pure P2P to boost returns and narrow their discounts, while the Funding Circle SME Income Fund (FCIF) has remained true to its roots, all with varying outcomes.

The FCIF investment trust solely backs loans originated via the Funding Circle platform and saw its net asset value (NAV) return 6.9 per cent last year, while trading on a healthy premium.

In comparison, RDL – which has recently announced its intention to close – returned 5.4 per cent, VPC – which has shifted from P2P towards balance sheet lenders – saw its NAV total return grow by 3.07 per cent, while P2PGI – which last year merged its manager MW Eaglewood with Pollen Street Capital and is focusing more on asset-backed alternative lenders – reported a NAV return of 3.03 per cent during 2017. RDL and P2PGI are both trading at double-digit discounts to NAV.

Updated Crowd2Fund app includes IFISA management tools (Peer2Peer Finance) Rated: B

PEER-TO-PEER platform Crowd2Fund has relaunched its app to include Innovative Finance ISA (IFISA) management features via their smartphones.

Digital Challenger Redwood Bank Raises £9.8 Million (Crowdfund Insider) Rated: A

Redwood is targeting the SME market. Products include mortgages for business owners and professional landlords, as well as a range of savings accounts. Redwood seeks to offer British businesses fast, simple, transparent loans and savings accounts, coupled with superlative service. They also promise that money is being invested back into British business and into the communities they are a part of. Warrington Borough Council has a 33% stake in the firm that was pegged at £30 million.

BIS wants tighter rules for funds offering credit, fintech (Reuters) Rated: A

Regulations introduced after the financial crisis a decade ago to smooth out banking booms and busts should be extended to funds that provide credit, or shadow banks, and fintech firms, the Bank for International Settlements (BIS) said on Sunday.

The introduction of “macroprudential” policy requiring banks to build up separate “countercyclical” buffers of capital if credit markets become frothy was a core crisis-era innovation.

The buffers can be released if loans begin turning sour and maintain resilience of the financial system to shocks – a departure from the traditional “microprudential” focus on the stability of individual banks.

China

China Rapid Finance 2018 Q1 – Results – Earnings Call Slides (Seeking Alpha) Rated: AAA

Source: Seeking Alpha

Chinese P2P giant Lufax dodges valuation bullet (Nasdaq) Rated: A

Lufax is wisely trying to grow up in private. The Chinese financial technology giant, which focuses on peer-to-peer lending and wealth management, plans to raise more than $1 billion at a $40 billion valuation ahead of a delayed Hong Kong flotation, says Reuters. That makes sense. Listing now could upset Beijing, and might only be achievable at a discounted price. Abundant venture capital allows the Ping An-backed startup to keep growing without a distracting market debut.

That creates a headache for Lufax, which has been eyeing a listing for years. There’s nothing stopping the Shanghai startup from going public now, but launching a big, showy initial public offering before regulators have finished the job would probably annoy Beijing.

European Union

Alior Bank, solarisBank, Raisin and Mastercard to unveil European digital bank (Fintech Futures) Rated: AAA

Poland’s Alior Bank has teamed with solarisBank, Raisin and Mastercard to unleash a pan-European digital bank.

The new offering, which is planned to be launched in the fourth quarter of 2018, will be built on the “strengths of all partners”.

Alior Bank will deliver multicurrency accounts with international transfers and deposits.

solarisBank will add the banking infrastructure with its technological, compliance and regulatory framework.

Raisin through its network of partner banks, is adding various savings and investment possibilities to the offering.

N26 launches a revised metal card (Tech Crunch) Rated: A

Fintech startup N26 is updating its N26 Metal product and launching it tomorrow. You might remember that the company first announced its premium card at TechCrunch Disrupt Berlin in December 2017. Shortly after the conference, the card was available in early access for existing N26 Black customers.

But the company had to go back to the drawing board and update the card design. N26 Metal customers had some complaints about the design of the card in particular.

International

Fintechs are staring down the future of banking (Financial Post) Rated: A

For instance, U.S.-based Lending Club, which has been around since 2007 and which is public, has arranged US$35 billion in consumer loans for its two million borrowers. The average loan — and it originates about US$2.4 billion a quarter — is about US$14,000.

Those themes were on full display this week in Toronto at an event organized by the KiWi Private Credit Fund, which raises capital from investors and purchases unsecured consumer loans and secured small business loans originated by established U.S.-based lending marketplaces.

“But they are not good at pricing a 9 per cent or 12 per cent risk,” he added, all of which allows entities such as his, to meet that need. It has US$27 million in assets; an average loan of almost US$14,000 and targets a return in the six- to eight-per-cent range.

Australia/New Zealand

Harmoney is to begin lending money through its own online platform (Interest) Rated: AAA

Peer to peer lending facilitator Harmoney Corp is making a number of tweaks to its operation, which will include the ability to lend its own money through its own platform.

The company has also renamed its ‘platform fee’ – recently the subject of Commerce Commission court action – as an ‘establishment fee’ and dropped the fee by $50 to $450. The company has also tweaked some of its interest rates higher (see below tables).

Harmoney will now be operating two different markets within its platform; the existing P2P facility and a new ‘wholesale market’ operated through a new subsidiary Harmoney Nominee.

Australian regulator sues Westpac for staffer’s poor financial advice (Reuters) Rated: A

An Australian regulator filed a lawsuit against No. 2 lender Westpac Banking Corp (WBC.AX) over a financial planner it alleges gave poor advice for years, upping its scrutiny of a sector already under fire amid an embarrassing public inquiry.

Australia’s A$5 billion ($3.7 billion) financial planning sector has provided some of the most damning evidence at an inquiry into finance sector misconduct, ordered by the government after a string of banking scandals including fraud.

P2P lender cuts rates (Good Returns) Rated: A

Peer to peer lender Lending Crowd has cut its borrower interest rates for all new business and personal loan applications including vehicle purchases and debt consolidations.

A1 grade personal borrowers will have a market leading rate of 6.89% pa and SME businesses will have rates available from 7.98%. Interest rates across all loan grades will range from a low of 6.89%
to a high of 18.96% (previously 7.90% to 19.75%).

Parents giving $ 10k towards kid’s first car (Finder) Rated: A

Survey shows 60% of parents are giving kids $10,594 to buy their first car.

According to research conducted by RateSetter, parents are stumping up $10k to get their child their first set of wheels.

RateSetter found that among parents who bought their child a car, 15% chose a new model, 71% opted for a used one and 14% donated their own vehicle. The majority of families could afford a car under $10,000, while 26% spent between $10,000 and $20,000. A lucky 12% of kids were gifted over $20,000 towards their ride. Parents in Victoria spend the most on their child, up to $13,386. In NSW, the average outlay was $10,404.

India

P2P lending companies change tack in bid to become NBFCs (Business Standard) Rated: AAA

Peer-to-peer (P2P) lending companies are changing their business model as they migrate to becoming non-banking finance companies (NBFCs).

RBI had created a special category called NBFC-P2P, in view of the proliferation of P2P entities. While mandating Rs 20 million as minimum net worth, RBI had also imposed a Rs 1-mn cap for individual lending on such platforms.

So far, a couple of these entities have got an NBFC licence from RBI. Faircent says it got the licence about 20 days earlier.

Amazon launches lending platform for sellers (The Economic Times) Rated: AAA

Amazon India has launched a platform for lenders and sellers wherein sellers can choose from competitive rates and loan offers. It will also open its APIs to lenders to plug in and lend to the sellers as part of the new programme, called the seller lending network.

India will be the first geography for Amazon where it has launched such a seller platform.

Fiscal 2015 World Bank Lending Report highlights India as one of the biggest Loan Beneficiary (Digital Journal) Rated: AAA

Fintechs offer loans to individuals with low credit scores as well. For instance, in the case of Qbera, individuals with a minimum credit score of 600 can qualify for personal finance. This is not quite so in the case of private banks – individuals need to have a minimum credit score of 750 to be eligible.

Aye Finance Secures $ 21.5M in Series C Funding (Finsmes) Rated: A

Aye Finance, a Gurgaon, India-based provider of financial services to micro and small businesses, secured $21.5m in Series C funding.

Backers included CapitalG, SAIF Partners and LFT.

The company intends to use the funds to accelerate business growth.

P2P lending: Can India replicate the UK experience to achieve Sabka Saath, Sabka Vikas? (Economic Times) Rated: A

India is still struggling with a huge credit gap that is holding back the economy. Getting a bank loan is an extremely cumbersome and long-drawn process for salaried individuals and small businesses, alike. According to a study conducted jointly by ASSOCHAM and EY, around 19% of India’s population remains unserved by the traditional banking sector.

Several million MSMEs that lack a tangible financial record are thus not eligible for credit from legacy financial institutions who still use traditional credit and financial data to evaluate eligibility. For the Indian economy to achieve the next level of growth, the current gap of nearly $200 billion in credit supply to MSMEs and significant under-banked population of India needs to be addressed immediately.

Asia

FSC reins in P2P firms (Korea Joongang Daily) Rated: AAA

In Korea, P2P firms, which directly connect borrowers with investors through online platforms, are not under the direct supervision or management of financial authorities. The Financial Services Commission (FSC) only indirectly supervises them by requiring registration of P2P firms’ lending subsidiaries, which most P2P firms use to carry out the process of lending money to borrowers.

But this safeguard also has many loopholes. TheHighOneFunding, for example, had uploaded the name of a different person as CEO when it registered its lending subsidiary with government regulators.

With more investors attracted to the idea of making easy money through high interest rates on P2P lending, the cumulative amount of loans on such platforms has dramatically increased, from 37.3 billion won in late 2015 to 3.50 trillion won as of May.

MENA

Where’s the money, honey? (Gulf News) Rated: AAA

According to the Khalifa Fund for Enterprise Development, nearly 50 to 70 per cent of loan applications made by SMEs in the UAE are declined by traditional banks, while loans to SMEs account for around four to five per cent of the outstanding bank credit in the UAE.

Enter peer-to-peer lending.

Over the years, such platforms have become big business: In 2016, the size of the peer-to-peer lending market in the US, UK, the European Union, Australia and New Zealand was estimated to be more than $72 billion, according to AltFi. In China, loan originations in 2015 were estimated at $101 billion.

Authors:

George Popescu

Allen Taylor

Tuesday May 22 2018 Daily News Digest

News Comments Today’s main news: Kabbage to launch payment services. Funding Circle SME Income Fund limited force signal moves past key line. Zopa boosts TruFin results. DEPO launches to help lenders accept digital assets as collateral. Qudian stock drops 16.5%. Today’s main analysis: Deep dive into MFT 2018-2 vs. AVNT 2018-A (A MUST-READ). Today’s thought-provoking articles: Credit score improvement […]

News Comments

Today’s main news: Kabbage to launch payment services. Funding Circle SME Income Fund limited force signal moves past key line. Zopa boosts TruFin results. DEPO launches to help lenders accept digital assets as collateral. Qudian stock drops 16.5%.
Today’s main analysis: Deep dive into MFT 2018-2 vs. AVNT 2018-A (A MUST-READ).
Today’s thought-provoking articles: Credit score improvement on My LendingTree. GreenSky IPO offers litmust test for online lenders. Is decentralized lending too good to be true?

United States

Kabbage to launch payment services. AT: “Expansion is a good thing, and Kabbage has been making some great strides lately. Of course, there are a few ways to expand. Expanding services is just one of them, but a very important one.”
MFT 2018-2 vs. AVNT 2018-A. AT: “A very good, deep look at Marlette’s MFT 2018-2 securitization and Avant’s AVNT 2018-A. A great comparison. A must-read.”
Avant continues to benefit from tighter underwriting.
My LendingTree users improve credit scores. AT: “LendingTree provides proof of the value of its services better than anyone in the industry.”
GreenSky’s IPO is online lending litmus test. AT: “A very good look at GreenSky’s value versus LendingClub’s and Prosper’s. We can debate why the two latter have had struggles since their IPOs, but the industry is maturing now and GreenSky’s IPO could signal a new wave of online lending IPOs. If it does well, a floodgate could open. If not, the doors may shut for a long time.”
How to responsibly invest in Bitcoin. AT: “If you want to invest responsibly, don’t take a loan.”
Is Mulvaney targeting fintechs or nonbanks?
Banking overhaul could be heading to Congress.
Hedge funds, PE firms are main street banks’ new lending competitors.
How small banks can make tech the solution.
Vota turns credit card transactions into recommendations and spots fraud.
Optimal Blue offers pipeline & lock management APIs.
Mastercard unveils initiative aimed at digital banking.

United Kingdom

European Union

DEPO helps lenders accept digital assets as collateral. AT: “This is a great idea. If agnostic toward type of lender, this service, if it catches on, could bring about new competition in online lending.”
Interview with Matthias Setzer of PayU. AT: “Lend Academy podcast.”‘
Instantor wants to change your views on data.
Bricknode, Lendytech unite under Untie Group banner.

International

Decentralized lending: Is it too good to be true? AT: “A sober look at a new buzzword. Lenders should be cautious about jumping on the decentralized bandwagon and throwing about a word that might be misleading or confusing. If your lending business is truly decentralized, fine, but is that really a distinction that can drive value?”
Automation, ‘platformization’ could take hold in banking.
New lending models in fintech.

Other

News Summary

United States

Online lender Kabbage to launch payment services by year-end (Reuters) Rated: AAA

Kabbage Inc, a U.S. online lender for small businesses, plans to launch payment processing services by year-end, President Kathryn Petralia said on Monday, helping it to diversify and compete more directly with industry leaders PayPal Holdings Inc and Square Inc.

The Atlanta-based startup will offer tools to enable clients, mostly brick-and-mortar businesses, to accept card payments in-store and online, Petralia said in an interview.

Deal Deep Dive MFT 2018-2 vs AVNT 2018-A (PeerIQ), Rated: AAA

This week we compare 2 very different MPL personal loan securitizations – Marlette’s MFT 2018-2 Prime deal and Avant’s AVNT 2018-A Near Prime deal.

Collateral Comparison

AVNT 2018-A has lower average loan size by $6,435, shorter weighted average loan terms by 9 months and higher WAC by 16.28%. This is a reflection of the quality of borrowers that Avant and Marlette target. Marlette’s prime borrowers have higher weighted average FICO scores by 59 points than Avant’s near prime borrowers. The geographic distribution is quite similar between the two deals.

Source: PeerIQ, KBRA

Bond Characteristics and Pricing

The significantly higher WAC on AVNT 2018-A leads to a 14.8% pickup in excess spread. KBRA’s base case loss estimate is 7.4% higher on AVNT 2018-A, which leads to a 7.4% higher loss-adjusted excess spread on AVNT 2018-A.

Source: PeerIQ, KBRA

Capital Structure

AVNT 2018-A has 3.3% lower O/C which is compensated by 14.8% higher excess spread. The A tranches have similar CE in both deals but Marlette’s A is rated one notch higher.

Source: PeerIQ

Avant continues to benefit from tighter underwriting criteria (Asset Securitization Report) Rated: A

The introduction of tighter underwriting criteria continues to pay off for the online consumer lender Avant.

The company, which was founded in 2012 and is based in Chicago, was able to lower the credit enhancement, again, on its latest securitization, the $221.9 million Avant Loans Funding Trust 2018-A.

Kroll Bond Rating Agency assigned an A- to the $149 million senior tranche of notes to be issued, which benefit from 38.42% credit enhancement. That’s down from 41.8% on the comparable tranche of its prior transaction, completed last year.

LendingTree Study Finds More than Half of My LendingTree Users Improved Credit Scores in Majority of 50 Metros Analyzed (PR Newswire) Rated: AAA

LendingTree today released its study on the top places with rising credit scores. With credit scores being a crucial component of personal financial stability and opportunity, LendingTree analysts decided to look at anonymized My LendingTree users who logged into their accounts in both the first quarter of 2017 and the first quarter of 2018 to determine the top metros for rising credit scores among the 50 largest in the United States.

Below are some of the key takeaways from the study.

Jacksonville, Indianapolis, Denver and Tampa saw the highest rate of rising credit scores among the 50 biggest metros from Q1 2017 to Q1 2018.
Virginia Beach, Va., Los Angeles and Birmingham, Ala., had the lowest rate of rising credit scores, with 47 percent of Virginia Beach users raised their credit scores.
San Jose (Silicon Valley) saw the most dramatic rises in credit scores, with the highest rates of people who raised their score by more than 75 points and 100 points.
In the majority of the 50 metros analyzed, more than 50 percent of users improved their credit scores between Q1 2017 and Q1 2018.
About one in three increased their scores by over 20 points, and 3.5 percent were able to improve their scores by 100 points or more.

Source: Lending Tree

New Fintech IPO Offers Litmus Test for Online Lenders (Wall Street Journal) Rated: AAA

It wasn’t long ago that online lenders were ascendant. More than $3 billion in capital from investors as diverse as Japanese conglomerate SoftBank Group Corp. and celebrity chef David Chang gushed into lending startups in 2015, according to Dow Jones VentureSource. Analysts at Morgan Stanley predicted that year that the nascent industry would account for 10% of all unsecured consumer and small-business loans by 2020.

Investors soured on the sector. Shares of LendingClub, which once had a market value of about $10 billion, are down 77% from their IPO price. Prosper’s valuation was slashed by more than two-thirds in a private fundraising round last year.

Source: The Wall Street Journal

GreenSky said in its IPO filings that it has facilitated more than $12 billion in loans to consumers for home-improvement projects and elective medical procedures.

Part of GreenSky’s advantage comes from its relatively low customer-acquisition costs. LendingClub’s biggest expense is sales and marketing, which last year rose to $229.9 million, equivalent to 40% of revenue.

Source: The Wall Street Journal

How to responsibly invest in bitcoin (Bankrate) Rated: A

Recently, Bank of America, Chase, and Citigroup joined Capital One and Discover in banning cardholders from using them to buy cryptocurrencies. Credit cards were one of the most popular payment methods because of their relatively low fees and instant transaction rates, and investors are having to look at other options to make their investments.

Source: Bankrate

You can borrow money from a family member or friend, or you can use a peer-to-peer lending platform like SoFi to leverage funds for Bitcoin investments. However, be cautious when borrowing money for an investment. Interest rates can eliminate any gains you get from the investment, and the risk of losing money in such a volatile market is high.

Is Mulvaney targeting fintech or nonbanks? (Respa News) Rated: A

The acting director also responded to a question about qualified mortgages which has left the industry scratching its head since. Was Mulvaney separating fintech marketplace lending from traditional mortgage lending, or was he drawing a line between depository mortgage and non-depository mortgages?

Banking overhaul heading for likely passage in Congress (Yahoo! Finance) Rated: A

Legislation that would ease banking regulations — and modify rules governing credit reports and some consumer loans — is headed for likely passage in Congress any day now.

The bill cleared the Senate in March with some bipartisan support and is expected to be voted on by House lawmakers this week, perhaps as early as Tuesday.

The measure rolls back some of the regulations imposed by the Dodd-Frank Act of 2010. That legislation came on the heels of the financial meltdown that rocked the U.S. economy a decade ago, when risky and unaffordable mortgages contributed to millions of homeowners losing their houses to foreclosure.

Main Street Banks’ New Lending Rivals: Hedge Funds and Private Equity (Wall Street Journal) Rated: A

Main Street banks are feeling squeezed by competition from new rivals: nonbanks like hedge funds and private-equity firms that are elbowing into business loans.

Growth in business lending has picked up recently—it was up 3.3% year over year as of May 9, according to Federal Reserve data released Friday, after falling below 1% earlier this year. But the growth rate is still far below where it’s been in recent years, when loans to businesses grew at a double-digit clip for much of 2014, 2015 and 2016.

Making technology the solution, not the problem, at small banks (American Banker) Rated: A

The board members of R Bank in Round Rock, Texas — who include the Hall of Fame fireballer Nolan Ryan, a co-founder of the bank — hold accounts there, and they, like most other patrons, knew its old technology made for clunky customer service.

So, says president and CEO Steve Stapp, he channeled those irksome experiences into board support for an investment in a systems overhaul at the $455 million-asset bank.

For community banks in highly competitive markets, service with a personal touch can be a differentiator to win and keep customers. But when legacy technology hampers the customer experience, all the cups of coffee in the world won’t help.

Vota turns your credit card transactions into recommendations, helps you spot fraud (Tech Crunch) Rated: A

Blippy, which was hyped up to a $46.2 million valuation back in 2010 before the world realized that almost nobody wanted a dedicated network for sharing and viewing each others’ purchases. Well, guess what? Someone’s trying a Blippy-like thing again — this time, in the form of a new app called Vota, which automatically records your credit card purchases and the places you visit so you can share them with friends or family, or view them privately for your own reference.

As a byproduct of this data collection, you may spot credit card fraud or other errant charges, too, or just get a handle on your spending.

Optimal Blue First-to-Market with Pipeline & Lock Management APIs (Business Wire) Rated: B

Optimal Blue is proud to recognize enterprise SaaS digital mortgage solution leader, Capsilon, as its first strategic partner to complete certification with the highly anticipated Pipeline & Lock Management APIs. By debuting these innovative system-to-system API interfaces in the mortgage industry, Optimal Blue has enabled Capsilon’s digital mortgage platform to fully support the creation, management, registration, and locking of first-lien mortgages instantaneously with Optimal Blue. As a result of this advanced integration, a completed application and pre-approval are done in half the time of the traditional back-and-forth processes, empowering loan officers to be more competitive in today’s purchase market and win more business from real estate agents.

Mastercard Unveils Fintech Initiative Aimed at Digital Banking (Banker & Tadesman) Rated: B

The company on Monday announced the creation of Accelerate, a new initiative to drive growth at scale for the fast-evolving fintech industry, reflecting the company’s ongoing commitment to this sector.

Designed to operate alongside its successful Start Path program, Accelerate will broaden Mastercard’s engagement with the payment fintech community including the next generation of digital banks.

United Kingdom

Funding Circle Sme Income Fund Limited Force Signal Moves Past Key Line (Concordia Review) Rated: AAA

Checking on current RSI levels on shares of Funding Circle Sme Income Fund Limited (FCIF.L), the 14-day RSI is currently standing at 58.31, the 7-day is at 65.97, and the 3-day is resting at 83.22.

Funding Circle Sme Income Fund Limited (FCIF.L) currently has a 14-day Commodity Channel Index (CCI) of 148.41.

Shares of Funding Circle Sme Income Fund Limited (FCIF.L) have a 200-day moving average of 103.52. The 50-day is 104.93, and the 7-day is sitting at 104.82.

Zopa stake boosts TruFin annual results (AltFi News) Rated: AAA

TruFin, the AIM listed fintech lender and payments provider, has released its first set of annual results following on from its public listing back in February. The numbers show a 7.67 per cent uptick in its valuation of its stake in p2p lender Zopa in 2017.

TruFin, which says it used an external company to aid the valuation of Zopa, re-valued its holding upwards by £2.6m to £36.5m over the course of the year. The firm, which was spun out of hedge fund Arrowgrass’ fintech holdings, holds a c.15 per cent stake in Zopa bought by Arrowgrass in 2014 for £15m. TruFin was set up by Henry Kenner, one of the founders of Arrowgrass, who is also its CEO and chairman. The hedge fund itself was launched by a group of Deutsche Bank traders in the wake of the financial crisis, including Kenner.

UK watchdog says automated financial advice falls short (Rueters) Rated: A

Advice doled out online or via smartphone apps, referred to in the industry as “robo advice”, aims to cut costs for customers looking to save or invest. It also seeks to foster innovation and increase competition in financial services.

But the Financial Conduct Authority (FCA) said two reviews of the industry uncovered problems among early entrants.

Exclusive: Former ADS Securities exec Jamieson Blake joins specialty lender Basset and Gold (Leaprate) Rated: B

Following our exclusive report from earlier this month that Jamieson Blake, Head of Client Experience at the FCA regulated London based arm of ADS Securities, had resigned from the company, LeapRate has now learned that Mr. Blake has landed – at specialty lending and retail investment firm Basset and Gold, as Head of Relationship Management.

China

Why Qudian Inc Stock Dropped 16.5% Today (Motley Fool) Rated: AAA

Shares of Qudian (NYSE:QD) closed down 16.5% on Monday after the Chinese online lender announced earnings that fell short of expectations.

Qudian reported “diluted adjusted net income per share” of $0.16 but GAAP diluted net income per share of only $0.15 per share. Whichever yardstick you use, though, these numbers appear to be lower than the $0.17-per-share estimate quoted on Yahoo! Finance. Revenue, on the other hand, came in at $273.7 million, significantly above consensus expectations for $214.6 million.

European Union

European Company Helps Turning Cryptocurrency into Collateral (the Merkle) Rated: AAA

Following a similar model as traditional depository services, DEPO gives lenders the freedom to accept digital assets as loan collateral. The platform also allows borrowers to keep ownership of their digital asset during the entire loan period. The platform also protects future financial gain of the asset for borrowers with its decentralized design.

By employing the DEPO platform, lenders will be able to accept cryptocurrency as collateral for loans. To be protected, lenders can request additional collateral, or a partial sale of the asset should the market become excessively volatile at any time during the loan period.

Matthias Setzer of PayU (Lend Academy) Rated: A

In this podcast you will learn:

The history of Naspers, the parent company of PayU.
What PayU does and the markets where it operates.
Why Matthias decided to leave PayPal after 12 years and move to PayU.
How PayU approaches going into a new international market.
The Naspers investment in Chinese giant Tencent and the PayU footprint in China.
Why the number one country PayU is focused on today is India.
Why they invested €110 million in Kreditech and how they are leveraging that partnership.
The point of sale lending product they have launched in India with Kreditech.
The biggest growth drivers for PayU over the next 12-18 months.

New Insight will change the way you think about data (Instantor Email) Rated: A

Today Instantor, the Swedish fintech company making financial decisions easy, announces Insight. A new product that will transform the way financial organisations assess risk for loan applicants. By using robust machine learning, Insight analyses more than 70 predictive features and insightful patterns in historical banking, and can be used to make better risk and opportunity decisions. Instead of having a risk team spending months testing risk models, Insight ́s intelligent features will build the most optimal risk model using the clients own data and can be up and running within a week.

Bricknode and Lendytech unite under Untie Group banner (Finextra) Rated: B

Untie Group used to be several companies, the largest of which were Bricknode and Lendytech. They had a common founder in Stefan Willebrand and used, at least to a degree, the same self developed software. Also a number of people have gone from one firm to the other over the years.

International

Decentralized Lending Promises Easy And Global Access To Credit, But Is It Too Good To Be True? (Forbes) Rated: AAA

Since the rise of cryptocurrencies, the term “decentralized” seems to be everywhere. Decentralization has been proposed in many industries as a way to heighten transparency and make transactions simpler. One field in particular which has shown great potential for the application of decentralization is money lending. As many might rightly ask, don’t we need banks who are willing to take the financial risk and approve loans? As it turns out, maybe we don’t.

For lenders, the use of smart contracts allows for much easier assessments of the counter-party’s trustworthiness. Something that would take traditional audits weeks, not to mention the costs of such a traditional audit. Validating transactions and follow-up can become fully automated. Collateral is automatically returned at the end of the loan period or liquidated if the loan is defaulted on, removing many of the time-consuming actions that come with it.

Automation, ‘platformisation’ tipped to take hold in banking (AltFi News) Rated: A

The report, entitled Whose customer are you? The reality of digital banking, shows that 73 per cent of bankers believe retail banking will be at least 80 per cent automated in the next two years. A further 78 per cent see ‘platformisation’ steering the market in the future.

71 per cent of respondents are focusing their digital investment budget on cyber security, up from 34 per cent last year. Yet a mere 17 per cent are thinking about the risks of third-party integrations under Open Banking.

Fin-tech changes the loan process: Meet new lending models (Bankless Times) Rated: A

The new FinTech lending model opens new opportunities to people who were not able to borrow from traditional banks and other financial institutions because of the poor credit history and other factors. Such loans are now available to the new groups of people who need an instant funding, for instance, small business owners, students etc. In particular, entrepreneurs got a chance to get a loan without collateral, which a while ago was a real obstacle for many business owners.

Millennials Choose FinTech

Millenials are the first generation to accept the real advantages of new technologies and ready to use them for their own convenience. When it comes to lending process, millennials no longer wish to visit bank branches personally, stand in lines, deal with unnecessary paperwork and wait for months to get the approval.

End of the Line…

Today we are already witnessing a drastic change in the lending model that existed for centuries. Consumers want to have a more flexible way to lend money but most importantly, they want this process to be quick. The FinTech industry already gave us this opportunity and hopefully, the following changes will be for the better.

Asia

Kieran Arasaratnam to Join Credify Founding Team as CFO (Digital Journal) Rated: B

Credify Inc., a pioneer in decentralised reputation systems, is pleased to announce that Kieran Arasaratnam is joining the founding team as Chief Financial Officer.

Authors:

George Popescu

Allen Taylor

Solving Cryptocurrency Volatility With Hedge Lending

There are currently two major issues with crypto payments – currency volatility and network transmission time. The recipient wants to receive the exact amount owed them. But, because cryptocurrencies are volatile and experience rapid price changes multiple times every day, that’s a difficult task to handle for crypto payment providers. Price swings can be more than 20% a day, so many merchants don’t accept crypto assets payments. Also, the merchant wants the payment instantaneously and is not willing to wait for it under any circumstance.

To solve these issues, Ben Way, CEO of Digits, conceptualized a new instrument he calls a hedge lending network. This is a service that provides instant loans thereby enabling its users to pay with fiat currency using their cryptocurrency. Its framework runs on a machine learning algorithm and is the first time the concept of hedging and lending has been combined together in a financial instrument.

How Hedge Lending Works

In the process, the user swipes his Digits registered card for making a transaction. Let’s say $100 is turned into a smart contract-backed loan, which is paid for by the hedge lending network. The merchant receives the money instantaneously. The $100 becomes a loan for the customer for a period of 366 days. If the consumer does not pay back the loan, the crypto is taken out of her wallet after the 12 months, gets liquidated, and the lender is paid back.

The customer is able to save almost 33 percent in capital gains if she is able to wait out the one-year period for holding a crypto asset. She can pay the loan back within 12 months and get her currency back. If she had spent $100 while her crypto asset doubled in price, she can pay the original $100 and take her cryptocurrency back. It’s similar to an escrow account in that it can either be liquidated or paid back. At the end of 366 days, the transaction is liquidated and the lender gets the money or the borrower pays it off, taking the difference.

The Hedge Lending Network uses the lender’s invested fiat currency in exchange for the Digits user’s cryptocurrency-backed smart contract. In doing this, Digits can overcome the payment issues faced when customers pay in cryptocurrency. The main objective is to find the lowest interest rates and reduce the cost of the network to the minimum possible level. Apart from this, the lending network accounts for volatility, as wel.

If a cryptocurrency price goes up during the transmission time, Digits takes the gain and puts it in the buffer to account for the decreases in crypto prices during transmission. Being currency agnostic, the firm supports every cryptocurrency the interacting exchange supports. Currently, Digits works with Coinbase with relationship expected soon for other crypto exchanges. The company has its own wallet system and does not need to prepay for transactions. This is important in its journey to scale up and support the payments ecosystem.

The Benefits of Paying Through Digits

Way estimates that, by 2025, five percent of the population will be using a crypto wallet. Digits turns any credit or debit card in the world into a means to pay with cryptocurrency assets. The solution is extremely elegant as it settles on the MasterCard and Visa Network and allows any existing card to be converted into a crypto card. The user just needs to type in his credit card details and connect it to Coinbase for making the crypto payments. The Digits technology interrupts the payment, executes the necessary conversions and then settles the transaction on the existing network only. This allows the merchant and MasterCard/Visa to not deal with cryptocurrencies, a major hurdle in the growth of crypto payments thus far.

The Founders

Way and Co-Founder Laura Wagner founded Digits in September 2017 in the San Francisco Bay Area. Way had been a tech prodigy from a very young age. When he was six, he received a laptop that helped him enter the world of technology. At 15, he was earning good money online consulting with people to solve their computer issues. He later founded Pulsar, an e-commerce search engine that went on to raise $33 million.

That company eventually failed during the dotcom bust of 2000-2001. He lost everything he had, but he was able to start over and launched multiple companies and projects over the years since.

During the Clinton years, Way was a senior consultant to the White House on matters of technology. He is currently the CEO of Rainmakers, one of the first incubators in Europe and has helped launch around 200 companies.

Priot to starting Digits, Way was associated with a traditional payments company where he learned a lot about the payments industry and its inherent complexity. Being there, he realized how difficult it was to use cryptocurrency in the real world and came up with an idea to build a crypto payments company to make paying with cryptocurrency as easy as paying with a credit or debit card. This led to the launch of Digits.

For the last six months, he and his team have been building the platform and the technology. Currently, they are in the Pre-ICO stage on their way to raising $50 million.

Future goals

Digits is currently in the alpha phase and Way expects a product release in the next six months. He believes there is little competition in this space right now. There are a few crypto lenders and hedgers, but no one has been able to combine the two in a way Digits has accomplished. He wants his competitors to use his technology stack to build new products for their clients and believes this will allow for the entire space to grow.

Conclusion

Cryptocurrencies were expected to change the way our payment systems work. But almost nine years after the creation of Bitcoin, the ability to pay via crypto assets is restricted in the real world. Ben Way has come up with an innovative solution that will end the difference between a debit/credit card payment and a crypto card payment without interfering in the present debit/credit card system.

Digits is looking to capture a segment that has some major competition. But the company’s ability to transmit payments instantaneously without having the merchant or payment processors touch cryptocurrences and simultaneously create a potential 33 percent capital gain tax savings for the user is a win-win for all involved.

Authors:

Written by Heena Dhir with Allen Taylor.

Allen Taylor

Monday April 30 2018, Daily News Digest

News Comments Today’s main news: GreenSky files for IPO. LendingTree hits $181M consolidated revenues. KBRA assigns preliminary ratings to Morgan Stanley resecuritization. Zopa says savers are abandoning cash ISA. KBRA assigns first European ratings. Today’s main analysis: FTC vs. LendingClub, dueling unicorns. Today’s thought-provoking articles: JD Supra on LendingClub’s FTC issues. Aussie borrowers should embrace for rate hike. Brazil’s amended payment […]

News Comments

Today’s main news: GreenSky files for IPO. LendingTree hits $181M consolidated revenues. KBRA assigns preliminary ratings to Morgan Stanley resecuritization. Zopa says savers are abandoning cash ISA. KBRA assigns first European ratings.
Today’s main analysis: FTC vs. LendingClub, dueling unicorns.
Today’s thought-provoking articles: JD Supra on LendingClub’s FTC issues. Aussie borrowers should embrace for rate hike. Brazil’s amended payment method regulation. FTC vs. LendingClub, dueling unicorns.

United States

GreenSky files for IPO. AT: “This is exciting because of GreenSky’s extreme specialization.”
JD Supra on FTCs lawsuit against LendingClub. AT: “Shed’s a little more light on the situation from a legal perspective.”
LendingTree’s Q1 consolidated revenues reach $181 million. AT: “Congratulations to the industry’s leading marketplace. This is huge news, not just for LendingTree but all of the MPL industry. I see them continuing to grow.”
KBRA assigns preliminary ratings to Morgan Stanley Resecuritization Pass-Through 2018-SC1.
Use your IRA to diversify into real estate.
Navient reports greater earnings, few charge offs on student loans.
Interview with Yolande Piazza of Citi Fintech.
Mastercard serves the New Middle Class with Elevate.
Millennials more bullish on finances than boomers.
Possible Finance launches with small, short-term loans for low-income borrowers.
LendingPoint is fastest-growing company in Atlanta.

United Kingdom

China

International

Other

News Summary

United States

Fintech Firm GreenSky Files for IPO (Wall Street Journal) Rated: AAA

Financial-technology firm GreenSky Inc., a provider of point-of-sale financing and payments technology, disclosed plans to go public.

The Atlanta company, which operates a lending platform that enables retailers, health-care providers and home contractors to offer loans to their customers, filed preliminary documents Friday for an initial public offering with the Securities and Exchange Commission.

FTC Sues Lending Club For Deceptive Advertising (JD Supra) Rated: AAA

According to the FTC, this deception is made worse by the fact that Lending Club never adequately discloses the up-front fee to consumers during the entire online application process. The fee is only mentioned once—inside an explanatory “pop-up bubble” that only appears if the applicant happens to click or tap on a relatively small and inconspicuous icon. Because applicants are not required to click or tap on the icon in order to move forward with their loan application, many applicants never saw the disclosure at all.

LendingTree’s 1Q consolidated revenue grows to record $ 181m (Mortgage Professional American) Rated: AAA

Online loan marketplace operator LendingTree saw its consolidated revenue rise to a record $181m during the first this year – up 37% from the same period in 2017, according to a financial statement released Thursday.

January to March revenue from mortgage products stood at $73.5m, up 17% from the first three months of 2017. In particular, purchase and refinance revenues went up 13% and 18%, respectively. Citing the Mortgage Bankers Association, LendingTree said originations industry-wide were projected down 4% in the comparable period.

KBRA Assigns Preliminary Ratings to Morgan Stanley Resecuritization Pass-Through 2018-SC1 (Business Wire) Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to one class of notes issued by Morgan Stanley Resecuritization Pass-Through Trust 2018-SC1 (“MSRP 2018-SC1”). This transaction represents the securitization of the consumer loan asset-backed trust certificates issued by SoFi Consumer Loan Program 2015-1 Trust (“SCLP 2015-1”) and supported by a portfolio of prime unsecured personal loans (“Underlying Loans”) that were originated by SoFi Lending Corp (“SoFi”).

Preliminary Ratings Assigned: Morgan Stanley Resecuritization Pass-Through 2018-SC1


Class	Preliminary Rating	Initial Class Principal
B	BBB (sf)	$36,700,000

Diversify Into Real Estate With Your IRA Or 401(k) (Forbes) Rated: A

The IRS does allow

Navient Reports Greater Earnings and Fewer Student Loan Charge-Offs (Lend EDU) Rated: A

On April 24, Navient stated from its earnings report in the first quarter that it had $500 million of originations in private education refinance loans, a 43 percent fall in private education loan charge-offs and a 32 percent jump in business processing fee revenue year over year, according to a press

Business processing earnings: Earnings were $10 million in the first quarter, compared to $3 million in 2017’s first quarter.

Consumer lending earnings: Earnings were $50 million in the first quarter, up from $38 million in 2017’s first quarter. This jump came from a $7 million increase in net interest income, an $18 million decline in loan losses provision and a $9 million fall in income tax expense.

Federal Education Loans earnings: Earnings were $141 million, up from $129 million in 2017’s first quarter.

Unitus Ventures Marks The First Close Of Its $ 45.2 Mn Fund II With $ 15 Mn (Inc42) Rated: A

Unitus Ventures (formerly known as Unitus Seed Fund), an impact venture fund investing in early-stage startups, has announced to have raised $15 Mn (INR 100 Cr) towards the first close of its $45.2 Mn (INR 300 Cr) Unitus Ventures Fund II.

The fund will be utilised for onward investing of $753K – $2.2 Mn (INR 5 Cr -INR 15 Cr) each to 25 to 30 startups specialising in education, healthcare and inclusive fintech.

Yolande Piazza of Citi Fintech (Lend Academy) Rated: A

In this podcast you will learn:

The origins of Citi Fintech and the goal of their group within Citi.
How they have created a new and innovative culture within Citi Fintech.
Why Citi Fintech released a global open banking API.
Citi’s Canvas platform that is their internal sandbox product.
How they create these products hand in hand with their customers.
Why this is about more than just creating mobile offerings.
What Citi’s newly announced national digital bank means for the overall bank.
How Citi will help non-bank customers as well as their own customers.

Mastercard: Serving The Financial Needs Of The ‘New Middle Class’ (PYMNTS) Rated: A

Whether an applicant has recently immigrated and lacks the background data to be approved, or is recovering from a drastic life event such as a divorce or death of a spouse, demonstrating their creditworthiness is often impossible by traditional means – i.e. the FICO score – leaving as many as 160 million Americans up the creek with no paddle.

Haymond said Mastercard has already put its philosophy into practice by partnering with CreditStacks, a FinTech that focuses on providing credit to new Americans, as well as launching its Inclusive Futures Project in December 2017 to address the needs of gig and on-demand workers.

Mastercard Meets Elevate

Some of the features of the new product will include purchase and fraud alerts, credit score monitoring, a full-service mobile app and on/off functionality for the credit card. Cards will be awarded based on the analysis of data from alternative sources, Haymond said, which can fill in the blanks to evaluate a customer’s creditworthiness when traditional data points are not present or don’t meet requirements.

Millennials now more bullish about finances than baby boomers — study (Spears Magazine) Rated: A

Almost nine in ten (88 per cent) HNW millennials feel more confident about their finances than a year ago- but less than half of baby boomers (47 per cent) shared the same sentiment.

A new study from SunTrust Bank also found that millennials are more confident than their generation X counterparts, of whom 66 per cent are more confident than last year.

Some 16 per cent of those surveyed attributed their increased optimism to ‘having a great investment firm’, while 13 per cent cited increases in income and assets.

Possible Finance launches with small, short-term loans designed for low-income borrowers (Geek Wire) Rated: B

Tony Huang was inspired to create Possible Finance because “it’s so damn expensive to be poor.”

Possible Finance customers can apply for small loans and receive approval quickly using a mobile app. Customers can build credit when they make payments, unlike traditional payday loans, which typically do not report to credit agencies unless a borrower misses payments.

LendingPoint is the fastest-growing company in metro Atlanta (Atlanta Business Chronicle) Rated: B

Being a successful financial technology (fintech) lender requires focusing more on the lender portion of your business than the fintech portion. That’s the way Tom Burnside, CEO and founder of LendingPoint, runs his company, the number-one overall fastest-growing private company in the metro area.

United Kingdom

Zopa executive: “Savers are abandoning the cash ISA en masse” (Peer2Peer Finance) Rated: AAA

SAVERS are “abandoning the cash ISA en masse”, as the personal savings allowance (PSA) makes the tax-free wrappers less relevant for consumers, a Zopa executive has said.

New data from UK Finance showed that investment in cash ISAs fell from £773m in March 2017 to just £332m in March 2018 – a decrease of 42 per cent.

Immigration rules ‘could choke fintech’, says lobby group Innovate Finance (The Times) Rated: A

The prospect of tighter immigration rules after Brexit risks choking off a boom in Britain’s burgeoning fintech industry, according to a new study by lobby group Innovate Finance.

The report says the financial technology sector is on course to top 100,000 employees by 2030, with 30,000 jobs set to be created.

The result would be a shortfall of 3,200 highly skilled workers by 2030, at a cost to the fintech sector of £361m, the report said.

Investment trusts back “substantial opportunity” in alternative lending (Peer2Peer Finance) Rated: A

Victory Park Capital Specialty Lending (VPC) and P2P Global Investments (P2PGI) released their annual reports on Friday morning, insisting there were still opportunities for online lending and consumer credit as banks continue to scale back.

VPC reported a NAV return of 3.07 per cent for 2017, up from 0.95 per cent in 2016 but below its eight per cent target.

Similarly, P2PGI posted NAV total returns of 3.03 per cent for 2017, down from 4.1 per cent in 2016 and below its target of six to eight per cent.

Is there still life left in P2P investment trusts? (Peer2Peer Finance) Rated: A

But four years on from the launch of P2PGI, the investment trust has admitted in its 2017 annual report that historic performance was ”more volatile than we would like.”

But P2PGI still sits at a discount to NAV of 17.5 per cent and VPC is at 12.5 per cent.

Putting Your Bitcoin Investments to Work (Coinspeaker) Rated: A

One pioneer in the field to consider is Nebeus, a crypto bank that brings together cryptocurrency opportunities and a standard bank service. Its Nebeus trading platform supports peer-to-peer (P2P) lending and a multi-cryptocurrency wallet. The platform enables customers to buy, sell, store, remit, lend and borrow cryptocurrency funds.

Nebeus offers two cards that allow holders to spend their cryptocurrency at their convenience online, offline, or to get cash at ATMs, and the convenience and protection this card offers is hard to beat.

The Nebeus Exo Card lets users top up their card with all major cryptocurrencies and spend that money with over 30 million merchants online. Users can make $1,500 ATM withdrawals per day, worldwide. And they get 3% cashback In NBTK tokens monthly. There is no monthly fee for the card for NBTK holders.

China

China: WeiyangX Fintech Review (Crowdfund Insider) Rated: AAA

On April 23, China’s leading financial inclusion platform FINUP filed a listing application for the Hong Kong Exchanges and Clearing Limited (HKEX).

Ant Financial Invests in Bangladesh-based Fintech Startup bKash

On April 26, Bangladesh-based mobile financial service provider bKash and Ant Financial jointly announced a strategic partnership to promote the development of financial inclusion for the unbanked and underbanked communities in Bangladesh.

NIFA Establishes e-Contract Standards for Online Lending

On April 23, the National Internet Finance Association of China released a draft of standards on “Safety Regulations for Internet Finance Contracts”.

With $ 1.9 Billion Investment, Former Baidu Unit Challenges Fintech Rivals (Wall Street Journal) Rated: A

Baidu Inc.’s former financial-services unit has attracted a $1.9 billion investment from firms including U.S. private-equity giants TPG and the Carlyle Group, giving it fresh ammunition to compete in China’s increasingly crowded financial-services space.

Chinese VC Firm Sky9 Capital Reaches Final Closing Of $ 200M For New Fund (China Money Network) Rated: B

Sky9 Capital, a venture capital firm founded by a former partner at Lightspeed Venture Partners, announced today that it has completed the final closing of a new fund with total commitments of US$200 million.

Sky9 Capital Fund III, L.P. will invest mainly in China-based businesses with a focus on early-stage companies in the Internet, enterprise, and deep technology sectors.

European Union

KBRA Issues First European Ratings (Business Wire) Rated: AAA

Kroll Bond Rating Agency Europe Limited (KBRA) is pleased to announce its first published European Structured Finance ratings. KBRA issued its inaugural published European ratings on Small Business Origination Loan Trust 2018-1 DAC (“SBOLT 2018-1”), a £206.6 million ABS transaction collateralized by unsecured loans made to small and medium-sized enterprises (“SMEs”) incorporated in the United Kingdom (“UK”). This transaction represents the second ABS securitisation collateralised by unsecured loans to SMEs originated through the online lending platform operated by Funding Circle Limited (“Funding Circle”). The full rating report can be accessed here.

This is KBRA’s first publicly rated European ABS securitisation after being registered as a Credit Rating Agency by ESMA in November 2017.

International

The FTC vs LendingClub, Banking through the Post Office, Dueling Unicorns (PeerIQ), Rated: AAA

On Thursday, Amazon reported $3.27 EPS earnings well above the $1.26 estimates. The stock jumped 7% to record highs in reaction to the beat. The news comes just days after Amazon invested $22mm into Capital Float, India’s self-proclaimed largest online lender. We recently discussed Amazon’s path to the banking sector via its reported partnership with JP Morgan.

The lines between tech and banking continue to blur. Square announced the acquisition of Weebly for $365 Mn.

Dueling Unicorns

Source: PeerIQ, Company Websites, Crunchbase

FTC vs LendingClub

On Wednesday, the FTC charged LendingClub with deceiving borrowers.

In response to the lawsuit, LendingClub posted a detailed rebuttal, refuting the FTC’s claim. As seen in the image below from LendingClub’s blog post, the company believes they provide borrowers multiple opportunities to understand the Origination Fees mentioned in the FTC’s lawsuit. LendingClub goes on to refute each claim made by the FTC individually.

Source: LendingClub

In a post on Lend Academy, Peter Renton questions the cause of this lawsuit, and points to the fact that only two of the five FTC Commissioner seats were occupied at the time of the complaint, and one of the two left on Friday. Renton’s understanding is that LendingClub and the FTC were cooperating and this lawsuit “came out of left field.”

Are You Ready To Give Fintech A Try? (Forbes) Rated: A

In just three years, Germany’s

Blockchain Startup ShareRing is Facilitating the Adoption of Cryptocurrency (Coinspeaker) Rated: A

ShareRing will achieve this by employing a dual-coin mechanism through its own ShareLedger blockchain that will operate with two distinct tokens. The first – ShareToken (SHR) – will be the utility token of ShareRing. SHR will drive the consensus algorithm and act as a tradable coin on cryptocurrency exchanges.

The second currency, SharePay (SHRP) will be pegged to fiat and can be purchased directly from the ShareRing app using a credit card. A user can then use their SHRP to buy sharing services within the ShareRing application. ShareRing foresees a wide range of partners for the platform, sharing not just apartments and cars, but time, labor, as well as peer-to-peer lending and group tours.

FintruX Network (FTX) Will Be Listed In 3 Exchanges in their first week of token unlock (satPRNews) Rated: B

Qryptos exchange was the first exchange to list FintruX (FTX) On April 22, Bancor network quickly followed suit by listing Fintrux on April 24.

Potential investors, who missed their ICO, will now be able to buy the tokens on Qryptos, Bancor Network and HitBTC as well.

Australia

Borrowers should ‘brace’ themselves for rate hikes (The Adviser) Rated: AAA

After online lender ME claimed that it was “forced” to hike interest rates on its owner-occupier and investor loans as a result of increased funding costs, comparison site finder.com.au asked a panel of economists whether they believed other banks would follow.

According to the finder.com.au survey of 17 economists, 78 per cent said that they expected more lenders would raise their rates out of cycle as a result of rising US interest rates.

India

Fintech Startup Rubique Raises Fresh Round Of Funding (Inc42) Rated: AAA

Kalaari Capital-backed online lending marketplace Rubique has raised fresh funding led by Japan’s Recruit Group and Russian venture capital management company Emery Capital.

Blacksoil and existing investor Kalaari Capital also participated in the funding round. Apart from this round, the startup is also in the final stages of closing another tranche’ of funding, to be led by a couple of marquee investors

The startup plans to use the funds to hire more data scientists, enhance technology and reach a monthly revenue of $1.8 Mn (INR 12 Cr) by September.

Crowd Genie Opens India Office to Expand Asia-Pacific Asset Exchange (BC Focus) Rated: A

Crowd Genie Financial Services Pte. Ltd. is incorporated in Singapore and was granted a “Dealing in Securities” license by Monetary Authority of Singapore (MAS) in March 2017. This makes Crowd Genie one of the handful licensed platforms in Singapore.It is a peer-to-peer lending online platform that lets Singapore-based SMEs obtain financing from investors.

Crowd Genie is contemplating to establish a blockchain based Asia-Pacific asset exchange. It recently started an office in Bangalore, India and named Kunwar Singh as its Chief Technology Officer. The company completed its CGCOIN token sale in March this year. It intends to work on the regulatory elements to drive India centric assets onto its exchange.

A primer on crowdfunding (The Hindu BusinessLine) Rated: A

P2P lending is when individuals lend to small businesses/individuals for either a social or a commercial initiative. P2P lending can also be for non-income-generating activities. The consideration here is the interest on the amount lent. The return varies with the risk associated with the business and the individuals running the business — higher the risk, higher the return. Some of the prominent P2P platforms include Milaap, Kiva, Faircent and Cashkumar.

P2P platforms insist on KYC fulfilment for both lenders and borrowers. Diligence exercise is done on borrowers to assess credit-worthiness, genuineness and repayment capability.

Crowdfunding for non-financial consideration is of two types — social lending/donation crowdfunding and reward crowdfunding. Here the return or consideration may or may not be commensurate with the money raised.

Latin American

Brazil: Amended payment method regulation (IFLR.com) Rated: A

On March 26 2018, the Brazilian Central Bank enacted amendments to the existing regulation on payment methods, proposing more flexible rules on payment arrangements, payment institutions and on interchange fees charged to issuers of debit cards. The Central Bank expects these changes to foster competition among market players and as a result provide reduced debit card costs for end users.

This new regulation follows an international trend already observed in several developed and developing countries. In the US and Mexico, for instance, maximum limits for interchange fees charged in debit cards transactions led to average cost reductions on such fees of 40% and 50%, respectively.

Authors:

George Popescu

Allen Taylor

Wednesday April 18 2018, Daily News Digest

News Comments Today’s main news: Elevate, Mastercard collaborate on credit card for the New Middle Class. Funding Circle opens IFISA to new investors. Ant Financial’s $150B valuation. Funding Societies raises $25M. Today’s main analysis: Marketplace lending securitization tracker Q1 2018 (A MUST-READ). Why PPDAI is a buy. Today’s thought-provoking articles: Interview with Kabbage’s CEO. Cities with highest share of cash-out […]

News Comments

Today’s main news: Elevate, Mastercard collaborate on credit card for the New Middle Class. Funding Circle opens IFISA to new investors. Ant Financial’s $150B valuation. Funding Societies raises $25M.
Today’s main analysis: Marketplace lending securitization tracker Q1 2018 (A MUST-READ). Why PPDAI is a buy.
Today’s thought-provoking articles: Interview with Kabbage’s CEO. Cities with highest share of cash-out refis. Mid-sized P2P platforms in UK taking larger share of the market. Yirendai, Hexindai on making it in China.

United States

Elevate creates credit card for ‘New Middle Class’ with Mastercard. AT: “Here’s another way Elevate seeks to distinguish itself in the marketplace. Good partnership.”
MPL securitization tracker. AT: “I’ve been saying securitizations have increased. PeerIQ has the data to support the claim.”
Interview with Kabbage’s Frohwein.
How JPMorgan chooses startup partners, companies to invest in, and buy.
Why banks need to prioritize digital platforms.
CrowdStreet now has 99K investors. AT: “But how many of them are active?”
LendUp, EARN launch cross-sector partnership.
Cities with highest share of cash-out refi borrowers.
What you should know about Peerform loans.
New Resource Bank partners with P2Binvestor.
Family offices startup investing pitfalls.
Best Oregon mortgage lenders.

United Kingdom

China

European Union

Other

News Summary

United States

Elevate to Collaborate with Mastercard on Credit Card Product for the ‘New Middle Class’ (News Channel 10) Rated: AAA

Elevate Credit, Inc. (“Elevate”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced an agreement to collaborate with Mastercard on the development of a new credit product to expand financial opportunities for the approximately 160 million Americans with low or no credit scores.

Elevate is committed to advancing growth and economic opportunity for these households that it has dubbed the “New Middle Class.”

Marketplace Lending Securitization Tracker Q1 2018 (PeerIQ), Rated: AAA

Seven marketplace lending securitizations priced this quarter totaling $4.3 Bn, the 2nd highest level of quarterly issuance, representing 34% growth YoY. To date, cumulative issuance equals $33.4 Bn across 114 deals.

We observed an unprecedented 21 months of non-stop issuance. Markets remain in a “risk-on” mode and MPL investor appetite continues to grow.

Spreads tightened this quarter, amidst rising rates and increased
volatility, and we saw deals price at record tights. Average spreads at
issuance are tighter in the consumer and student spaces across credit tranches. New issue spreads in the Consumer MPL space on As were tighter by 27 bps and those on Cs were tighter by 107 bps on average. New issue spreads in the Student MPL space were also tighter across the stack, with the Cs seeing a nearly 100bp tightening on average.

SoFi issued the largest consumer and student deals ever seen in the MPL space. SoFi continues to increase deal sizes every quarter with a billion-dollar student deal in 1Q18.

View the full report here.

Inside a Kabbagehead (Banking Exchange) Rated: AAA

Frohwein noted that there are multiple ways that companies can fail when trying to expand their offerings.

1. Trying too long a stretch.

By way of example, Frohwein pointed out that Prosper Marketplace, which offers three- or five-year personal and business loans, tried an expansion in 2016 called Prosper Daily.

2. Cheaping out on brand promotion.

Another error is failing to spend money on the company’s brand. Interestingly, given that the fintech fraternity is a crowd attuned to social media, Frohwein urged listeners to invest real money in their brands. (@KabbageInc, the corporate Twitter handle, has 23,400 followers, while @KabbageRob, Frohwein’s own account, has fewer than 2,000 followers.)

3. Developing customer knowledge.

Frohwein said that all those data connections referred to earlier give Kabbage a strong idea of what its customers look like. Few online lenders have that depth of customer knowledge, he said.

How JPMorgan’s CIO decides which startups to partner with, invest in, to buy (Business Insider) Rated: A

Here’s Beer:

“In some cases, we saw in the fintech ecosystem that one of their challenges is the size, scale and complexity of a company like JPMorgan Chase. If you’re trying to build out something in the wholesale payment ecosystem, you’re talking about 200 regulators, $5 trillion dollars we process a day, over 120 currencies and countries. There are multiple layers of complexities considering anti-money laundering rules, fraud requirements and new sanctions. How do you understand that complexity if I’m a startup in the payment space in wholesale?”

These companies could later wind up with an investment from JPMorgan if all goes well.

Here’s why banks need to prioritize digital platforms (Business Insider) Rated: A

With bank earnings season upon us we have seen a continued growth among mobile users at some of the biggest banks; JPMorgan Chase saw active mobile customers jump 13 percent and Wells Fargo saw total active digital users jump 3 percent; mobile banking has become a priority for all banks as the focus has shifted from just offering mobile to increasing engagement on mobile.

99,000 Investors and $ 5.8B in Commercial Properties Now on CrowdStreet (PR Newswire) Rated: A

With a steady focus and at an accelerated pace, CrowdStreet is moving the fundraising component of the $15-trillion commercial and multifamily real estate business online, helping real estate developers and operators raise capital and acquire new investors online, and helping high-net-worth investors build wealth through online real estate investing.

With more than 99,000 investors now on its platform, CrowdStreet is one of the largest platforms for online real estate investing.

LendUp and Nonprofit EARN Launch Cross-Sector Partnership to Combat America’s Savings Crisis (Lendup) Rated: A

LendUp, a fast-growing financial services firm for the emerging middle class, and EARN, a national nonprofit empowering low-income Americans to take charge of their financial lives through savings, today announced a partnership to offer LendUp customers, who represent the nearly half of Americans with subprime credit scores, the opportunity to begin saving with EARN’s SaverLife program.

LendingTree Ranks Cities With the Highest Share of Cash-Out Refinance Borrowers (Lending Tree) Rated: AAA

LendingTree analyzed mortgage requests and offers for refinance borrowers between March 1, 2017 and March 1, 2018, based on the location of the property to be mortgaged. The city rankings are generated from the percentage of total refinance mortgage funded that included a cash-out portion of the loan.

Cities with the highest share of cash-out borrowers

#1 Albany, N.Y.

Share of refinance mortgages funded with cash-out portion: 73% Average loan amount: $166,504

#2 Portland, Ore.

Share of refinance mortgages funded with cash-out portion: 72% Average loan amount: $266,152

#3 Cape Coral, Fla.

Share of refinance mortgages funded with cash-out portion: 72% Average loan amount: $162,975

Source: Lending Tree

What You Need to Know About Peerform Peer Lending Loans (Student Loan Hero) Rated: A

With Peerform, an affiliate company of Versara Lending, you can apply for personal loans via an online platform that connects you with individuals or businesses willing to loan you the money.

You can then use the cash to make home improvements, start a business, buy a new car, or consolidate your credit card debt.

The peer lending company offers unsecured, fixed-rate loans to people with a range of credit scores. Read on to learn the pros and cons of borrowing from Peerform.

This fintech partnership could serve as template for small banks (American Banker) Rated: A

New Resource Bank in San Francisco is working with a fintech firm to reach underserved small-business clients.

The $349 million-asset company has been offering asset-based loans to companies with at least $1 million in annual revenue through a partnership with P2Binvestor in Denver, known as P2Bi, since late 2017.

Family Offices: Beware of These Startup Investing Pitfalls (Wealth Mangement) Rated: A

According to PitchBook Data, family offices did $100.6 billion in deals in 2016, compared with $25.1 billion in 2011. These family offices are seeking opportunities that offer better returns than the public market and, therefore, investing in startup companies through longer-term private equity deals.

What Family Offices Get Wrong When They Try to Invest in Startups Alone

In emerging markets, family offices can face a number of challenges when they try to invest in startups.

Most family offices don’t possess specialized knowledge of startups, because the startup ecosystems in emerging markets are very different from the traditional business climate that family offices are used to. Because of limited experience and exposure, they may not always have a comprehensive list of questions or resources at their disposal that would aid them in the decision-making process or to evaluate a deal.

Best Oregon Mortgage Lenders of 2018 (Nerd Wallet) Rated: B

Flagstar Bank: Best for low down payments
Bank of America: Best for low down payments
CitiMortgage: Best for first-time home buyers
Guild Mortgage: Best for first-time home buyers
New American Funding: Best for low credit scores
J.G. Wentworth: Best for low credit scores
Rocket Mortgage: Best for online experience
PennyMac: Best for online experience
U.S. Bank: Best for home equity lines of credit
Chase Mortgage: Best for home equity lines of credit

United Kingdom

Funding Circle opens IFISA to new investors (Peer2Peer Finance) Rated: AAA

FUNDING Circle has opened its Innovative Finance ISA (IFISA) to new investors.

The peer-to-peer business lending platform opened its IFISA to existing users last November but has now said that the tax wrapper, offering projected returns of 7.2 per cent, is open to the wider public.

Mid-sized P2P platforms taking bigger market share (Peer2Peer Finance) Rated: AAA

The peer-to-peer investor’s 2018 Direct Lending Report found direct lenders – which include P2P platforms – facilitated more than £4.5bn of lending in 2017, with the ‘big four’ – Zopa, Funding Circle, RateSetter and LendInvest – making up two thirds.

But loanbook growth at the biggest lenders was up just six per cent last year, while mid-sized lenders saw their lending grow 50 per cent to £1.6bn, according to the report.

The report also looked at the performance of P2P and alternative finance-focused investment trusts, finding that if you had invested the same amount in the main funds – P2P Global Investment, Ranger Direct Lending, VPC Specialty Lending, SQN Secured Income Fund and Honeycomb – last year, you would be down 1.69 per cent.

P2P Lender ArchOver Bridges Finance Gap with New Research & Development Advance (Crowdfud Insider) Rated: A

ArchOver, the UK P2P business lending platform, aims to bridge the funding gap to enable businesses to continue to grow while waiting for their R&D tax claim to be repaid. ArchOver’s Research & Development Advance (RDA) service is reportedly the first provided by a P2P lender funding advances upward of £100,000.

According to ArchOver, only 1.67 percent of national income is currently being spent on R&D compared to an average of over 2 percent across the EU. Government initiatives have been put in place to encourage further investment in innovation in the UK. Under the current system, UK businesses can claim cash repayments of up to 33 percent of their R&D expenditure, but it can take up to six months to receive payment from HM Revenue & Customs (HMRC). ArchOver aims to help qualifying companies to bridge this gap, and connect them with the money they need to invest in the products and services of the future.

Update: Landbay is Set to Close Latest Seedrs Funding Round After Securing More Than £1.6 Million (Crowdfund Insider) Rated: A

UK-based peer-to-peer lender Landbay is set to close its latest equity crowdfunding campaign on Seedrs later this evening with more than £1.6 million from nearly 285 investors. The funding round was launched last month and quickly secured its initial £1.25 million funding target.

All funds from the latest funding round will be used for lender’s growth, which are:

Technology – 50%.
Marketing & Brand Development – 25%.
General Operating Expenses – 25%.

More awareness of Open Banking benefits needed (London School of Business and Finance) Rated: A

The study surveyed 2,000 UK consumers and identified some of the barriers that Open Banking will need to address in order for the initiative to be adopted on a wide scale.

Implications

Security was found to be one of the main issues for UK consumers, with 69% citing this as a top reason for being against the idea of Open Banking, whilst more than 45% cited security issues such as data breaches and identity theft as the main implications of the initiative.

Seedrs: £500 Million in Crowdfunding by 2021 (Crowdfund Insider) Rated: A

Seedrs has raised more than £330 million for smaller firms so far but according to CEO Jeff Kelisky they expect growth to ramp up rapidly by 2021. While 2017 was their best year ever, Seedrs is just getting started.

He expects that before 2020 deals will get larger. In 2017, twenty four crowdfunding offerings were over £1 million. Some of these deals are starting to approach the € 5 million hurdle. In the UK, the European directive on doing a prospectus at € 5 million has become a regulatory speed bump of sorts for crowdfunding platforms. But raising that limit to € 10 million, or perhaps € 20 million, is currently under discussion.

Two tribes: fintech versus traditional banking (CLNews) Rated: A

Quietly though, another part of Britain’s finance sector is leading the world and it’s starting to disrupt the traditional financial companies in the UK.

Fintech describes the marriage of finance and technology within one company. The first big growth sector in fintech was the peer to peer marketplace originally launched by Zopa in the UK. Peer to peer finance allows those who have savings who want a better return than they’d get from their bank in interest the opportunity to lend money to those who need quick access to money.

China

Ant Financial’s $ 150bn valuation belies glaring risks for investors (Financial Times) Rated: AAA

Ant Financial’s $150bn valuation belies glaring risks for investors. Alibaba founder Jack Ma and his trusty advisers have pulled off a coup in gaining a $150bn valuation for Ant Financial ahead of a mooted listing next year. It is easy to see how the pitch to investors went.

Chinese P2P Players Yirendai And Hexindai On Making It In China’s Lending Industry (Forbes) Rated: AAA

Yihan Fang: The P2P lending industry is in a different stage now, it went from being very wild to heavy regulation, and after that it will be a more rational industry. Yirendai is in compliance with regulations, implementing minor modifications along the way. Compliance was always the highest priority, and from day one we had a very good business model and didn’t change it along the way. We have high quality customers. We have a good business platform and have used a bank as custodian since 2015, even before the regulations came out. Yirendai also strives for transparency. Regulations are good, because the industry has been quite chaotic since other companies don’t do the same things as we did.

Johnson Zhang: Hexindai has had no negative impact of regulation. The new regulations are focused on petty loans. We don’t touch the petty loans market so we have no impact. In this market, all of the borrowers lack the capacity to repay loans, they just borrow more money to repay existing loans. Unlike these other firms, we offer loans in the range of 20,000 to 200,000 RMB to middle class consumers with a stable income. These are borrowers who are upgrading their social class for a better life. The second part of the regulations restricts financial institutions like banks from providing funds to fintech companies, but we do not rely on any financial institutions. All of our fund sourcing is from individuals. Our company is part of the Beijing Internet Finance Association, which alerts us to upcoming regulations. The China Banking Regulatory Commission governs the P2P industry. Government registration for P2P companies is mandatory this year. Those that fail the process will be shut down. The number of competitors will become smaller.

China Looks to Implement Credit Scoring System Without Giving Top Players too Much Power (Financial Times) Rated: A

China has been looking to create a credit scoring system seen in many developed economies like the U.S. and the U.K.; initially asking 8 top companies to be involved, though they found it hard to form as companies were unwilling to share proprietary data with competitors; the PBoC is now tasked with having a industry wide system that does not favor giants like Alibaba and Tencent.

PPDAI Group: China’s ‘Lending Club’ Is In A Buy Range Now (Seeking Alpha) Rated: AAA

Net loss was RMB 507.1 million (US$77.90 million) for the fourth quarter of 2017, compared with a profit of RMB 266.0 million in the same period of 2016. More specifically, the loss was due to:
- Net interest income/(expense) and loan provision losses for the fourth quarter of 2017 was an expense of RMB 13.2 million (US$2.0 million), compared to an income of RMB 3.6 million in the same period of 2016. This was primarily due to a one-time provision of RMB 107.7 million (US$16.3 million) for expected discretionary payments to investors in investment programs protected by the investor reserve funds caused by the increase in delinquency rates.
- Other income recorded a loss of RMB 694.8 million (US$106.8 million)for the fourth quarter of 2017, compared with income of RMB 124.7 million in the same period of 2016. The loss was caused mainly by an expense of RMB 271.9 million (US$41.8 million) related to the quality assurance fund and an expense of RMB 460.4 million (US$70.8 million) from a fair value change of financial guarantee derivatives due to increased credit risks across the industry which led to upward adjustments to the company’s expected default rate for loans protected by the quality assurance fund and underlying loans in investment programs protected by the investor reserve funds.

Source: Seeking Alpha

Indeed, when we look at the delinquency rate by balance at each quarter, there was a significant jump in every delinquency bucket at 2017 Q4:

As of	15-29 days	30-59 days	60-89 days	90-119 days	120-149 days	150-179 days
March 31, 2015	0.79%	1.75%	1.10%	1.01%	0.87%	0.67%
June 30, 2015	0.88%	1.06%	0.67%	0.54%	0.89%	0.67%
September 30, 2015	0.67%	0.89%	0.61%	0.54%	0.44%	0.35%
December 31, 2015	0.80%	0.93%	0.51%	0.49%	0.39%	0.32%
March 31, 2016	0.62%	0.93%	0.72%	0.61%	0.48%	0.32%
June 30, 2016	0.82%	1.01%	0.63%	0.43%	0.47%	0.44%
September 30, 2016	0.83%	1.11%	0.80%	0.63%	0.49%	0.39%
December 31, 2016	0.63%	0.91%	0.75%	0.79%	0.69%	0.57%
March 31, 2017	0.57%	0.95%	0.79%	0.59%	0.54%	0.51%
June 30, 2017	0.86%	1.11%	0.79%	0.51%	0.55%	0.52%
September 30, 2017	0.89%	1.40%	1.15%	1.02%	0.79%	0.60%
December 31, 2017	2.27%	2.21%	1.72%	1.63%	1.36%	1.20%

Source: PPDF’s Q4 ER release

European Union

Homelend ICO (HMD Token): Blockchain Mortgage Crowdfunding? (Bitcoin Exchange Guide) Rated: A

Homelend is a mortgage crowdfunding platform built on blockchain technology.

What is Homelend?

Yes, just like we have P2P lending platforms for smaller loans and offers, we now have lending platforms for larger loans – like home mortgages.

The goal of Homelend is to disrupt the $31 trillion global real estate lending market. As of April 2018, Homelend is still preparing to launch. They’ve published a whitepaper online and appear to be preparing for a token sale in the near future.

Spotcap Opens Fintech Fellowship Applications (Crowdfund Insider) Rated: B

Spotcap, an SME focused online lender based in Berlin, announced on Tuesday it has opened applications for its Fintech Fellowship. According to the lending platform, this program offers a £8,000 award to a postgraduate student studying a fintech related course at a UK university. Applications will be open for four months and close on August 1st.

International

HOLD ICO: Cryptocurrency Lending & Investing For Instant Cash? (Bitcoin Exchange Guide) Rated: A

HOLD provides members with unique P2P lending and borrowing capabilities. The platform allows users to leverage their existing cryptocurrency holdings for instant cash advances from other willing users. Through their mobile app and prepaid card, they enable online and offline purchases with over 45 million retailers worldwide and over 3 million ATMs.

Bitcoin, Ethereum, and Litecoin can be used as collateral for cash advances at a competitive rate of 8%, not requiring a good credit history and without geographic restrictions.

HOLD cardholders earn HOLD tokens every time they use their card. On almost all purchases, the HOLD platform will provide a 1% cashback in HOLD tokens, directly into the user’s wallet. The platform will progressively match provided liquidity with cash advances, producing lucrative and low-risk returns of up to 7.5% p.a. for lenders, representing a lucrative money-making opportunity.

Australia

Mortgage trust sector has nearly doubled over the past year (Australian Financial Review) Rated: AAA

The size of the mortgage trust sector has nearly doubled over the past year but the quality of underlying loans are healthy with low arrears, research group SQM Research says.

Source: SQM Research

Australian millennials have taken to robo financial advice (Business Insider) Rated: B

In Australia, robo-advice has gained significant recognition among the Australian online share investor population, with 22% saying they are familiar with these services.

Only in the US, where the bulk of innovation in robo-advice is taking place, is familiarity with robo-advice significantly higher (39%).

India

Mumbai-based P2P Lending Platform PaisaDukan Raises $ 650K Through Angel Funding Route (Indian Web2) Rated: A

PaisaDukan.com a P2P Lending marketplace solely owned by Mumbai based FinTech start-up BigWin Infotech, today announced a secured seed funding of USD 650K through Angel funding rout. The fund will be used for marketplace platform and mobile app development.

Asia

Homegrown P2P lending platform Funding Societies raised US$ 25m (Singapore Business Review) Rated: AAA

Peer-to-peer (P2P) lending platform Funding Societies has raised US$25m in its oversubscribed Series B funding round, which was led by Softbank Ventures Korea, along with Sequoia India, Alpha JWC Ventures (Indonesia), and Golden Gate Ventures. Qualgro and LINE Ventures also participated.

Its Series B funding round was led by Softbank Ventures Korea and Sequoia India.

Ex-law firm boss fined $ 10,000 for failing to report suspicious deal (The Strait Times) Rated: A

The former director of a Singapore law firm decided to find out more about a “high net worth client” who was buying a house in Sentosa Cove – and discovered she was linked to one of China’s biggest Ponzi schemes involving $10.8 billion.

Kang Bee Leng, 56, failed to notify the authorities that a sum of almost $5.5 million involved in the purchase could have been benefits of criminal activities.

Kang, who was a managing director of Sterling Law Corporation during the offence but has since left the firm, was fined $10,000 on Tuesday (April 17) after pleading guilty to the offence last month.

MENA

Why unbanked Egypt is ripe for a FinTech revolution (ZDNet) Rated: A

World Bank data reveals that the Middle East has the lowest level of bank-account penetration in the world, averaging 14 percent of adults, in line with the in-country figure for Egypt.

Authors:

George Popescu

Allen Taylor

Tuesday April 17 2018, Daily News Digest

News Comments Today’s main news: dv01 to expand into mortgages. Zopa prepares for next-gen bank launch. JD Finance raises over $2B. Moody’s assigns ratings to Prospa. Namaste Credit raises $3.8M. Today’s main analysis: Venture capital reaches record high. Today’s thought-provoking articles: Interview with Prosper’s CFO. Fintech lenders give mortgage borrowers an edge. Hexindai’s IPO prospectus. Where top European banks are investing. What Aussie […]

News Comments

Today’s main news: dv01 to expand into mortgages. Zopa prepares for next-gen bank launch. JD Finance raises over $2B. Moody’s assigns ratings to Prospa. Namaste Credit raises $3.8M.
Today’s main analysis: Venture capital reaches record high.
Today’s thought-provoking articles: Interview with Prosper’s CFO. Fintech lenders give mortgage borrowers an edge. Hexindai’s IPO prospectus. Where top European banks are investing. What Aussie SME lenders have learned from U.S. lenders.

United States

dv01 expands into mortgages. AT: “Acting as loan data agent for $275 million securitization. I’ll say it again: This will be the year of increased securitizations.”
Interview with Prosper’s CFO. AT: “Usama Ashraf has a lot to say about Prosper’s past and future, the personal loan market, investing with Prosper, and the blockchain. A great read.”
How fintech lenders give mortgage borrowers an edge.
Mastercard looks to blockchain to fight fake identities.
How U.S. banks are preparing for GDPR.
Cross River selected as two-time winner of LendIt award.
Stash partners with Green Dot to be a challenger bank. AT: “I thought Stash was appealing before. This makes them even more appealing, but will they compete?”
How local banks are staying ahead.
Plaid rolls out Assets, Day 1 Certainty.

United Kingdom

Zopa prepares for next-gen bank launch. AT: “Zopa’s bank launch will be a big splash in a fairly decent-sized pool. Challenger banks are more popular in the UK than the U.S. Zopa has already started restructuring to make its banking introduction.”
RateSetter review.
Finastra uses Microsoft Azure to take mortgage lending solutions to the cloud.
Nuggets to lead tech mission to China.

China

European Union

International

Australia

India

Other

News Summary

United States

dv01 Announces Expansion Into Mortgages; Signs As Loan Data Agent For CSMC 2018-RPL2 (Crowdfund Insider) Rated: AAA

dv01, the data management, reporting, and analytics platform that offers institutional investors transparency and insight into lending markets, announced on Friday it participated in its first mortgage securitization and acted as loan data agent for CSMC 2018-RPL2, a securitization of $275 million re-performing loans serviced by Select Portfolio Servicing (SPS). The company revealed it introduced the role of Loan Data Agent in 2016 and provides Loan Data Agent services for an aggregate securitized collateral balance in excess of $25 billion of online lending loans.

CFO Usama Ashraf Talks Borrowing and Investing with Prosper (LEndEDU) Rated: AAA

Recently, I had the privilege to pick the brain of the Chief Financial Officer (CFO) of an industry leading company in the fintech space. Usama Ashraf is the CFO of Prosper, the first peer-to-peer platform in the US that connects people who want to borrow with individuals and institutions that are looking to invest in consumer credit.

Q: What are some unique challenges that come with the job of managing the finances of Prosper?

A: If you look at our business today, we have a 10+ year track record. We launched in 2006, and we’ve done over $12 billion in cumulative loan originations. A key differentiator in this space is the ability to generate cash flow, and last year, we were cash flow positive for three consecutive quarters starting in Q2.

Q: How has the health of the personal loan market in the recent past impact Prosper’s growth?

A: 2017 really allowed us to stabilize the business. We had stable funding. We had growth of over 30% on the platform, and as mentioned, we generated cash for three consecutive quarters. So, the business is now on a healthy footing, and we’ve returned to strong growth.

Q: Are you optimistic about the overall market in the next few years?

A: The total consumer credit market today is over $10 trillion. When you look at our originations last year, we did about $3 billion. The consumer credit space is a massive market, and it’s also a key element of growth in GDP in the US. 70 percent of GDP comes from consumer spending, so consumer credit and spending is a massive part of the US economy. Since the US economy is mostly expected to grow over the next several years, we are optimistic about the opportunities that growth presents for us.

How fintech lenders give mortgage borrowers an edge (Market Watch) Rated: AAA

Fintech lenders reduced the time it takes to process a loan by roughly 10 days as compared with the average processing time for mortgages. For refinances, they’re nearly 15 days faster than more traditional lenders.
In instances where a lender is seeing greater demand for loans, tech-based lenders are better at handling the larger inflow of applications. Double the application volume raised the loan processing time only by 7.5 days for fintech lenders, versus 13.5 days for traditional ones. Moreover, the researchers found that tech-based lenders lower their denial rates when there’s a higher volume of applications.
In parts of the country where fintech lenders have a greater presence, existing borrowers are more likely to refinance. But the efficiencies created through their platforms make it more likely that borrowers will see an optimal result from a refinancing, including getting the market interest rate.
The default rate on Federal Housing Administration loans originated by fintech lenders is roughly 25% lower than traditional ones.

Cross River Selected As Two-Time Winner In LendIt Fintech Industry Awards (PR Newswire) Rated: B

Cross River has been selected as the nation’s Most Innovative Bank for the second year in a row at the LendIt Fintech Industry Awards, the world’s leading annual event in financial services innovation, held in San Francisco at LendIt Fintech USA. Other nominees included BankMobile, CBW Bank, Marcus by Goldman Sachs and HSBC.

Mastercard Eyes Blockchain for Fighting Fake Identities (Coindesk) Rated: A

In an application released by the U.S. Patent and Trademark Office (USPTO) last Thursday, Mastercard describes a system in which a semi-private or private blockchain would be used to receive and store identity data, the pieces of which could include a “name, a street address, tax identification number” and more.

The company states in the filing, which was originally submitted in September 2017, that the tech could help it block the use of fake identity data within its systems.

How US banks are preparing for the GDPR (Tearsheet) Rated: A

On May 25, EU companies will no longer be able to collect and use personal data without the individual’s consent, under the General Data Protection Regulation. U.S.-headquartered banks and fintech companies with global operations are anxiously preparing to comply with the new rules, anticipating a time when U.S. customers will demand the same protections from their home institutions.

Stash Teams with Green Dot to Become a Challenger Bank (Finovate) Rated: A

Mobile financial services company Stash first revealed its plans to launch banking services in October of last year, positioning itself as a challenger bank with mobile-centric investment and retirement capabilities. And, as with all U.S.-based challenger banks, Stash will house the funds at a traditional bank. Today, the New York-based company announced it has selected Green Dot and its subsidiary bank, Green Dot Bank, Member FDIC, to keep user’s funds safe.

Through the partnership with Green Dot, Stash will deliver debit cards with no overdraft fees and provide access to a network of free ATMs across the U.S. The app will also share insight into clients’ financial health, with actionable advice on spending, saving, investing, and retirement via Stash Coach.

‘In this market, it’s disrupt or die’: The innovations local banks are using to stay ahead (Orlando Business Journal) Rated: A

Many Central Florida bank customers nowadays want more than just the ability to move money around. David Stahl, senior vice president, SunTrust: We acquired an online lender called LightStream two years ago and that has been a huge opportunity for us. Personally, I used it. There is a need out there for consumers.

Plaid Assets and Day 1 Certainty: a win-win solution for digital mortgage (Plaid) Rated: B

Today, we’re thrilled to announce that our Assets product is out of beta and Plaid is officially approved to supply asset verification reports to Fannie Mae as part of their Day 1 Certainty initiative. This means that lenders can embed Plaid directly into their application experience and provide borrowers with a fast, seamless experience, reduce the time it takes a loan to close, and have peace of mind offered by Fannie Mae’s protection against repurchase for key loan components. It’s a win-win solution.

Using Plaid, borrowers can now share with lenders the data they need, directly from the source, including:

Bank account, transaction, and bank account owner information from multiple accounts and institutions in a single, standardized JSON report delivered via API
An auditable PDF version of the same information, also via API
The ability to permission secondary investors like Fannie Mae to securely retrieve the same data directly from Plaid, enabling programs like Day 1 Certainty

United Kingdom

Bank and P2P boards take shape as Zopa prepares for next gen bank launch (Global Banking and Finance Review) Rated: AAA

Zopa, the pioneering financial services company, has today announced a governance restructure in advance of launching its next generation bank.

The re-structure will establish separate boards for the Zopa P2P business, proposed bank (subject to banking licence approval) and Group in order to facilitate the increasing scale of the business, ensure good corporate governance and protect the interests of its customers.

The changes come with the appointment of two new board chairs as well as two new independent non-executive directors to the proposed bank. Christine Farnish will be chair of the P2P board and Peter Herbert will be chair of the proposed bank.

Ratesetter review: peer-to-peer lender’s best rates, risks and more (Love Money) Rated: AAA

RateSetter was founded in 2010 by Rhydian Lewis (pictured) and has been used by more than 62,633 lenders, to lend more than £2.4 billion.

RateSetter will lend to either individuals or businesses. You start by deciding how much to lend: the average amount invested is £14,299, but you can start with £10.

You can borrow between £1,000 and £25,000 – depending on your circumstances.

Finastra brings mortgage solutions to the cloud with Microsoft Azure (Finastra) Rated: A

Finastra is bringing its mortgage lending solutions to the cloud via Microsoft Azure. As part of the strategic alliance between the two companies to use Microsoft’s enterprise-ready, trusted cloud platform as a base for a selection of Finastra’s payments and retail banking technology, Finastra’s Fusion MortgagebotLOS product is now available via the Azure cloud. As of today, US clients that access this service will realize streamlined access to their data, improved operational control and increased productivity.

Government chooses fintech start-up to lead UK tech mission to China (Internet of Business) Rated: B

Fintech start-up Nuggets has been chosen by the UK government and the Mayor of London to embark on two trade missions to China this year.

The company – which has developed a blockchain-based, e-commerce payments and ID platform – will help represent the Department for International Trade, the Greater London Authority, and the City of London Corporation on the trips.

China

China: WeiyangX Fintech Review (Crowdfund Insider) Rated: AAA

According to a person with direct knowledge of the matter, JD Finance is nearing the closing of a new round of financing of over $2 billion (¥12.6 billion).

After this investment, the market valuation of JD Finance is expected to exceed $20 billion (¥126 billion).

CHINA SECURITIES led this financing, which was followed by Oriza Holdings and other institutional investors.

Hexindai: Don’t Miss Out On A Good Target Because Of Industry-Wide Concerns (Seeking Alpha) Rated: AAA

Hexindai Inc. had their IPO on NASDAQ on November 03, 2017, raising US$50 Million. HX is a fast-growing consumer lending marketplace facilitating loans to meet the increasing consumption demand of the emerging middle class in China.

This “online and offline” model led to significant business growth for HX since its inception. The total amount of loans facilitated through the online marketplace increased by 54.4% from Q2 2016 to Q2 2017. Also, the company has experienced a business shift from collateral loans (auto loans etc.) to credit loans, which drives the boost in the the company’s customer base growth:

Source: HX’s IPO prospectus

European Union

Where top European banks are investing in fintech – CB Insights (Fintech Futures) Rated: AAA

Research company CB Insights analysed the private market fintech investment activity of the top European banks and their venture arms, by assets under management (AUM), from 2012 to Q2 2018 (as of 11 April 2018).

According to the graphic below, created by CB Insights, European banks are placing strategic bets across wealth management, lending, payments and regulatory technology and also blockchain.

Source: Fintech Futures

New Company Opens Door to Malta’s Crypto Market (Nasdaq) Rated: B

Decentralised Ventures is a partnership between Malta-based Initial Coin Offering (ICO) specialist TokenKey and token research and Blockchain consultancy Strategic Coin.

Decentralised Ventures offers a complete list of end-to-end services for any organization involved in or looking to enter the token, crypto or peer-to-peer lending markets.

International

Venture capital investment in FinTech reaches record $ 27.4 billion high (Consultancy) Rated: AAA

Confidence in FinTech has accelerated venture capital financing in the industry to a record level of $27.4 billion in 2017 – a growth of 18% from 2016. According to a recent report from consulting firm Accenture, the growth in FinTech investment has been driven by a surge in deal value in the US, UK and India.

In the US, the value of venture capital investment deals jumped 31% to $11.3 billion in 2017. Meanwhile, in the UK, deal values almost quadrupled to $3.4 billion, while India saw a near quintupling of investment to $2.4 billion in 2017. The volume of global FinTech deals also rose greatly, from about 1,800 in 2016 to almost 2,700 in 2017.

Source: Consultancy

BotBird – Your cryptocurrency investment partner for modern trading! (AMBCrypto) Rated: A

BotBird is introducing Social Peer-to-Peer Lending Market where the community members can make use of their digital assets as collateral to get cash. This involves no risk and is equally benefited to both the borrowers and lenders. The main goal of BotBird is to connect the lenders and borrowers across the world through the P2P lending marketplace.

Lenders can earn up to 50 percent monthly interest while trading.

Trends: More innovative mobile money services on the horizon (The Edge Markets) Rated: A

According to McKinsey & Co’s global banking report released last month, digital finance has the potential to reach more than 1.6 billion new retail customers in emerging economies and increase the volume of loans extended to individuals and businesses by US$2.1 trillion (RM8.1 trillion).

According to statistics provided by Bank Negara Malaysia, the national transaction value per capita for e-payments amounts to nearly RM613.6 million last year, up 11.4% from RM550.6 million in 2016. There was no data for the total number of mobile payments made in 2016, but the central bank stated last year that it came to about RM500,000.

4 Blockchain Startups to Keep an Eye On (Coin Announcer) Rated: B

2. Alchemy
Founded by 21-year-old entrepreneur, Justin Jung, the P2P lending platform is looking to take existing P2P concepts and completely disrupt them by creating a CDO (collateralized debt obligations) market that will allow tranched investments within the platform.

Australia

Online small business lender assigned Moody’s ratings (Australian Broker) Rated: AAA

Leading global ratings agency Moody’s has assigned ratings to Prospa’s Australian small business loan asset backed securities (ABS) trust.

This is the first rated ABS issuance backed by unsecured small business loans in the Australasian market. It is also one of the few that have been issued globally and rated by one of the big three credit rating agencies.

A total of $83.25million in debt securities were rated as follows: $64.8m Class A Notes assigned A3; $14.6m Class B Notes assigned Ba2 and $3.7m Class C Notes assigned B3.

How Australia’s fintech SME lenders have learnt from the US (Finder) Rated: AAA

Speaking at the AltFi Australasia Summit 2018, CEO of OnDeck US Noah Breslow discussed how it first launched in the US over a decade ago in 2007. And while it only launched its Australian lending business in 2015, the Australian small business lending market has traversed the same course as the US market in a markedly shorter time.

Source: OnDeck

While the actual alternative small business lending market remains largely unregulated, other initiatives put in place, such as the pursuit of open banking and comprehensive credit reporting (CCR), will have a marked impact on the sector.

In the US, 70% of SMEs perceived there to be more small business lending options than five years ago, but that number is only 30% in Australia.

Online small business lending growing fast (Australian Broker) Rated: A

The online small business lending market in Australia is growing at a faster rate than the US market did at a similar stage of development, the CEO of OnDeck Global has said.

Speaking at the AltFi Australasian Summit in Sydney, CEO Noah Breslow said it could reach more than $2billion in annual originations by 2020.

He said that despite over 6,000 banks offering small business lending options in the US, online lending to small businesses has flourished.

Australians getting short-changed for financial advice, inquiry hears (Rueters) Rated: A

Australia’s four biggest retail banks and wealth manager AMP (AMP.AX) have paid hundreds of millions of dollars in compensation to customers for poor advice over the past decade, a major inquiry into the financial sector heard on Monday.

Financial advice came under scrutiny at the start of a fortnight of hearings by the Royal Commission into corporate wrongdoing and abuse of power by Australia’s financial sector, which could lead to greater regulation and criminal charges.

India

Namaste Credit raises ₹25 crore (Business Line) Rated: AAA

Namaste Credit, a digital marketplace and technology platform for SME loans, has raised about ₹25 crore ($3.8 million) in a Series A round from Nexus Venture Partners. It will use the money to expand to new markets, improve its technology and data analytics platform and scale the business. The company plans to increase its channel partner programme across India and expand its technology licensing partnerships with leading lenders globally.

Finzy gets ₹8.5-crore funding

Finzy, a peer-to-peer lending platform, has raised about ₹8.5 crore ($1.3 million) in a pre-Series A funding round from industry investors. It hopes to close a second round of fund raising in two months. The company will use the money to speed up growth by investing in technology, making the process leaner and faster, and in building the team. It will also use a large part of the money to expand across Tier-I cities.

(VCCircle) Rated: A

Indian peer-to-peer (P2P) lending startups are considering a private blockchain to facilitate sharing of information as a risk-mitigation strategy, and to identify fraudulent loan applications.

5 Benefits of Online Peer-to-peer Lending That You Didn’t Know (Entrepreneur) Rated: B

Easier and Faster
Lower Eligibility Criteria
Lower Interest charges
No hidden fees and charges
No penalty for repaying your loan before stipulated time

Africa

Meet FINT, the FinTech Company that wants to change micro-lending in Nigeria (Nairametrics) Rated: AAA

The guys behind FINT

FINT.ng is run by a team of 4; Chiwete John-Njokanma is the company’s Chief Executive Officer, Nnamdi Okeke is the Chief Technology Officer, Eskor Toyo is the Chief Operating Officer while Reva Attah is Chief Strategy Officer.

Who is it for?

The only restriction so far is that everyone who uses the platform must have a bank account that is linked to a BVN. Users can borrow anything between N60,000 and N2 million at rates as low as 8% for 3 – 12 months, which in Nigeria is remarkable because in the current environment, a loan from a formal financial institution with 20% interest would be a good deal.

Personal Loan Products – Are they useful for repaying credit or a bad debt? (The South Africa) Rated: A

If you’re one of these people you might be interested in Wonga’s new personal loans. The personal loan offers a repayment plan lasting up to 6 months, affording customers more flexibility through small monthly repayment instalments.

Asia

Robo-advisor seen as a step forward for investors (The Malaysian Reserve) Rated: A

The issuance of robo-advisory licences by the Securities Commission Malaysia (SC) would allow regulators to provide high quality and cheaper investment advice for customers.

Main Street Capital Sdn Bhd CEO Julian Ng said through a robo-advisory licence, regulators are able to reach out to wider ranges of investors where previously only wealthy clients could afford the investment advice.

Authors:

George Popescu

Allen Taylor

News Comments

News Summary

United States

SoFi announces partnerships to expand insurance offering (Insurance Business Mag), Rated: A

LendIt Fintech USA 2019 Slide Presentations Now Live (LendIt Fintech), Rated: AAA

Are Crypto-Tracking Stocks Viable Alternatives to a Bitcoin ETF? (Finance Magnates), Rated: AAA

Nearly 1 in 4 Millennial Homebuyers Want to Buy a Home Before They’re Married (LendingTree), Rated: AAA

GROUNDFLOOR Doubles Year Over Year Revenue (PR Newswire), Rated: A

Real estate startup Reali acquires online lender Lenda, expands into mortgages (Housingwire), Rated: A

Avant to pay $ 3.85M to settle allegations of deceiving borrowers (American Banker), Rated: A

A Max Levchin-Backed Startup Raises $ 19 Million To Tackle Online Returns (Forbes), Rated: A

Small businesses turning far more often to online lenders (American Banker), Rated: A

Mastercard Redefines Choice at Checkout with Acquisition of Vyze (Business Wire), Rated: A

Earnest Launches Private Student Loans (PR Newswire), Rated: A

News Comments

News Summary

United States

Fintech Startup SoFi to Roll Out Crypto Trading Via Partnership With Coinbase (CoinTelegraph), Rated: AAA

Millennial online lender SoFi to offer zero-fee ETFs, an unexpected rival for index fund giants Vanguard, iShares (CNBC), Rated: A

FTC orders SoFi to stop misleading consumers (MPA Mag), Rated: B

Digital lender founded by ex-SoFi CEO raises $ 65M to fuel expansion (American Banker), Rated: A

Walmart teams with Affirm to offer point-of-sale loans (American Banker), Rated: AAA

Affirm’s latest partnership brings its alternative financing to Walmart’s US stores and website (TechCrunch), Rated: A

Loan app Affirm CEO breaks down new Walmart partnership (CNBC), Rated: A

ABS Vegas – 2019 Securitization Update; Square Charter Status (PeerIQ), Rated: AAA

The Housing Market’s 10 Year Challenge — Comparing The Housing Market of 2009 to Today (LendingTree), Rated: AAA

Gen Xers Carry the Biggest Auto Loan Burden; Study Finds (One World Herald), Rated: A

Personal Loan Interest Rates for February 2019 (Nerdwallet), Rated: AAA

Elevate Credit (ELVT) Posts Earnings Results, Meets Expectations (Fairfield Current), Rated: A

Hunt Real Estate Capital buys RealtyMogul’s proprietary loan underwriting program (Housing Wire), Rated: A

Elevate’s Joan Kuehl Named Dallas ORBIE CIO of the Year (The Progress), Rated: B

A Recession Coming? Small Business Lending Platform Kabbage Says It’s Prepared (Forbes), Rated: A

Here’s more on the AJC Top Workplaces midsize companies (AJC.com), Rated: B

Diversifying a Self-Directed IRA Made Simple with New Offering from CrowdStreet (The Progress), Rated: A

Liquid P2P and Interest Radar Announce Strategic Partnership (Liquid P2P), Rated: A

Direct Lending Investments Suspends Investor Withdrawals (Lend Academy), Rated: A

Fintech deal will provide access to midsize businesses in U.S. (American Banker), Rated: A

Venmo debuted a limited-edition rainbow-colored card (Business Insider), Rated: A

Why digital identities will be so important in the next few years, according to Mastercard’s vice chairman (CNBC), Rated: A

Credit Karma’s Dana Marineau: ‘We want users to think of us as more than just free credit scores’ (Tearsheet), Rated: A

Why this small bank created a separate, digital-first brand (American Banker), Rated: AAA

The Future Is Plastic: Fintech Unicorn Brex Launches New Credit Card For E-Commerce Merchants (Forbes), Rated: A

YieldStreet raises $ 62M to democratise alternative investments in shipping, real estate and more (TechCrunch), Rated: A

Guaranteed Rate Leads Mortgage Executive Magazine’s List of Top Loan Originators in America (GlobeNewswire), Rated: A

Americans Focus On Debt Management But Lose Focus On Retirement Savings (Forbes), Rated: A

U.S. banking regulator fights NY lawsuit over fintech charters (Reuters), Rated: A

Blockchain and data protection: the main concerns (JDSupra), Rated: A

LoanStreet positions for growth with new hires (LoanStreet Email), Rated: B

White Oak Business Capital Hires Carol Bader Apicella to Expand Northeast and Mid-Atlantic Markets (GlobeNewswire), Rated: B

United Kingdom

Funding Circle fund adds firepower for buyback strategy (AltFi), Rated: AAA

Orca Innovative Finance ISA Launches, Enables Diversified P2P Investment (Crowdfund Insider), Rated: AAA

Experian, ClearScore scrap merger plans (Reuters), Rated: A

NatWest launches account aggregation as Open Banking takes hold (AltFi), Rated: A

Will Open Banking boom in 2019? (AltFi), Rated: A

Aave Launches Platform to Pay Bills Using Crypto (Finance Magnates), Rated: A

Investing in crowdfunded development projects – what you need to know (Property Investor Today), Rated: A

Failed Lender Reaching ‘From Beyond The Grave,’ MPs Warn (Law360), Rated: A

International

Some Bankers Are Doing Even Worse Than in 2009 (The Washington Post), Rated: AAA

Marketplace Lending – A Growing and Dynamic Global Market (DBRS Email), Rated: AAA

Bank on it: How Enova’s software expands credit access worldwide (Built in Chicago), Rated: A

Blossom Capital scores $ 85m from Robinhood and Funding Circle backers (AltFi), Rated: A

Eight Simple Ways to Earn Bitcoin Online Legally (The Crypto Updates), Rated: B

European Union

Grid Finance suspends taking investments below € 100,000 (Irish Times), Rated: AAA

China

Dragon Victory International: Exposure To The Chinese Crowdfunding Market At A Regulatory-Driven Discount (Seeking Alpha), Rated: AAA

China Fintech Today: The P2P Boom Is Truly Over (SupChina), Rated: A

A Crypto Project That Raised $ 20 Million Is Caught Faking Its Founding Team (CoinDesk), Rated: A

Tencent-backed brokerage firm downsizes US IPO amid weak market demand (Technode), Rated: A

Australia

How should accountants talk to clients about fintechs? (In the Black), Rated: A

India

LenDenClub crosses 1,00,000 borrowers and lenders milestone (News Barons), Rated: AAA

Why Do Fintech Startups and Investors See a Huge Potential in Lending? (Entrepreneur), Rated: AAA

Banning of UDS to benefit P2P Lending Industry (Inventiva), Rated: A

Asia

Singapore fintech investments rose two-fold to US$ 365m in 2018 (SBR.com.sg), Rated: AAA

Validus Capital raises $ 15m for SME financing (Fintech Futures), Rated: A