Monday March 19 2018, Daily News Digest

Monday March 19 2018, Daily News Digest

News Comments Today’s main news: Robinhood valuation tops $5B. MarketInvoice reaches 2B GBP milestone. Lendy reaches 20K investors. Senmiao Technology prices IPO at low end. Merchant Advance Capital closes $30M debt facility. Today’s main analysis: CLUB 2018-NP1 Deep Dive. Today’s thought-provoking articles: Helena, Montana wants to be tech talent destination. More SMEs plan to apply for finance. The third age of credit. Australian […]

Monday March 19 2018, Daily News Digest

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United States

Valuation for Robinhood, Maker of App That Offers Free Stock Trades, Tops $ 5 Billion (Wall Street Journal), Rated: AAA

Robinhood Markets Inc. is set to be valued at about $5.6 billion in a new funding round, according to people familiar with the matter, a fourfold increase in just one year that reflects the stock-trading app’s soaring popularity among millennials.

The Silicon Valley startup is in the final stages of securing around $350 million from a group of investors led by Russian firm DST Global, according to the people familiar with the fundraising.

Helena, Montana wants to be a new destination for engineers after landing a SoFi office (VentureBeat), Rated: AAA

With a population of slightly more than 31,000, Helena is one of the country’s smallest state capitals. It’s not surprising, given that the entire state of Montana is home to only 1 million people. In addition to being tiny, Helena is also incredibly remote. The closest large metropolitan areas are Salt Lake City and Seattle, which are both nearly 500 miles away.

Those qualities shouldn’t make Helena a candidate to house a large engineering team for one of Silicon Valley’s most valuable unicorns. However, SoFi, the online personal finance company focusing on student loans, mortgages, and personal loans, has multiple locations in the city that together house roughly 140 employees — many of them programmers and engineers, as I learned on a trip last month to Helena.

Amazon’s footprint grows, CLUB 2018-NP1 Deep Dive (Peer IQ), Rated: AAA

Amazon continued its foray into the lending sector this week by offering a a robo advisor. Amazon is partnering with banks where they lack a clear regulatory swim lane.

CLUB 2018-NP1

Source: Peer IQ

This is the largest near-prime deal that has been issued so far. The deal has 8,237 loans more than the CLUB 2017-NP2 deal and the average loan balance is $422 lower. The weighted average FICO on LC’s near-prime deals is 639, lower than that on AVNT 2017-B.

Source: Peer IQ

Kushners’ Cadre Startup Benefited From Misleading Rent Filings (Bloomberg), Rated: A

Cadre owned about 60 percent of three rent-regulated buildings in Queens sold by Kushner Cos. in April 2017. The $59 million price tag was an 80 percent premium over what they paid in January 2015, property records in New York show. It was the first known deal that Cadre, then a fledgling company, took from purchase to sale, and the high rate of return in a short time was touted as a proof-of-concept for its web-based investing platform.

Kushner Cos., Cadre’s operating partner at the properties, told the city the buildings had no rent-regulated tenants when applying for construction permits to update the buildings in 2015 but tax records filed later showed almost 100 such residents, according to a report by the Associated Press. The number of tenants fell precipitously prior to the buildings’ sale, the wire service reported.

 

U.S. Appeals Court Voids Obama-Era ‘Fiduciary Rule’(Financial Advisor), Rated A

A federal appeals court on Thursday voided the U.S. Department of Labor’s “fiduciary rule,” an Obama administration measure adopted in 2016 meant to curb conflicts of interest among providers of financial advice to Americans planning for retirement.

Study Finds Link Between Payday Loans, Poor Health (LendEDU), Rated: A

A new study has disclosed that almost 40 percent of people seeking short-term, high-interest loans from lenders such as payday loan companies are likely to report their health as either fair or poor.

Short-term loans have grown from a $10 billion industry in 1998 to $48 billion in 2011, reported The Guardian. Interest is extremely high on these loans—up to 600 percent per year—and the funds, typically utilized by low-income borrowers, are used for necessities including car repairs, food, and rent, according to the study.

Short-term loans have grown from a $10 billion industry in 1998 to $48 billion in 2011, reported The Guardian.

How Citizens Bank is reaching millennials (Tearsheet), Rated: A

Citizens Bank is selling millennials a comfortable, enjoyable life of travel, adventure and everything short of avocado toast in an effort to grow its student loan refinancing business.

At the end of 2017, Citizens’ student loan book was valued at $8.1 billion, according to the company. It’s a space which startups have forged a path, with CommonBond funding $1.5 billion loans since it was founded in 2012, and the value of SoFi’s student loan originations at $14 billion. Still, banks have unique advantages when it comes to the student loan refinance market, like a strong resource base to invest in marketing, and a book of business based on deposit products that lowers their costs.

Goldman Sachs launches in-house incubator (Tearsheet), Rated: A

Goldman Sachs has launched an in-house incubator to allow its employees to bring innovative ideas and solutions to life, and to Goldman.

GS Accelerate is accepting applications for “ideas that can deliver best-in-class solutions for our clients, take Goldman Sachs into new business areas, manage risk and tackle inefficiencies in our operations,” according to an executive memo sent to staff Thursday and shared with Tearsheet. Goldman declined to comment further.

Developing The Application of Anti-fraud Technology to Enhance Financial Risk Management (Lendit), Rated: A

With the maturity of the underlying technologies such as artificial intelligence and blockchain, the manual driven anti-fraud method will be closely integrated with artificial intelligence driven anti-fraud method by incorporating the online and offline scenarios, constantly and quickly generating a surge in innovative strategies from the previous unidirectional and inefficient strategy.

The current application of anti-fraud technology is a rule engine driven approach, that is, it can detect the problems when the frauds are triggered but cannot predict and warn in the early stage. By accumulating and studying the data of fraudulent activities and developing the new cyber technology, the application of anti-fraud technology is expected to be turn from passive investigation into active pre-warning to build up the first firewall of anti-fraud. Adding intervention techniques out of the rule engine, such as neural network technology, will help to improve the pre-warning mechanism.

Bank Fintech Partnership More Than Just a Good Idea (Lendit), Rated: A

Bank customers demand highly functioning and seamless digital experiences.  They expect easy loan application processes that minimize data entry and turn around decision and funding in session-time.  They expect configurable communications, inbound and outbound, via the channel of their choosing and on the cadence of their choosing.  They expect to conduct every possible interaction, including account opening, without being require to walk into a branch.  They crave AI-driven advice and AI-fueled interaction channels.  With mobile payment processes, remote deposit capture, 24/7 access and service, and high degrees of security all to boot.

While it is possible to develop these capabilities in house, the best solutions already exist, developed by fintech providers who are ready to partner with the bank.

Blake Cohen of SALT Lending (Lending Academy), Rated: A

In this podcast you will learn:

  • How Blake first got involved with blockchain and bitcoin.
  • The conversation that led to the founding of SALT Lending.
  • The outcome of his conversations with banks around accepting bitcoin as collateral.
  • How they discovered there would be demand for their proposed lending service.
  • Why they decided to sell discounted memberships instead of doing an ICO.
  • Why anybody who is holding cryptocurrency instantly understands their value proposition.
  • How much membership tokens, known as SALT tokens, cost.
  • The total amount of loan demand they have received to date.
  • How the process works when taking out a loan.
  • The loan products they are offering today.
  • How their margin calls work.
  • Why they do no credit checks on their borrowers.
  • How loans are getting funded today and their plans for the future here.
  • How the volatility in the price of cryptocurrencies has impacted their business.
  • The vision for the future of SALT lending.

Best Online Checking Accounts (Benzinga), Rated: A

Online checking accounts are different from regular checking accounts at your bank/credit union and the number one reason they’re different is that they’re from banks that forgo a traditional branch structure. Ally Bank is a great example of this type of online-only option.

Best for no monthly fees: Capital One 360 Online Checking Account
Best for hIgh APY: Consumers Credit Union Free Rewards Checking
Best for no deposit minimum: Ally Interest Checking
Best business online checking account: EverBank Business Checking

Lendio announces South Charlotte franchise (Bankless Times), Rated: B

Small business loan marketplace Lendio this week opened a franchise in Charlotte, North Carolina. Through the Lendio franchise program, Chris Cronk will help local businesses in the community apply for loans, review their options and secure funding.

OnDeck Names Diamond Janitorial Services as Small Business Of the Month (PR Newwire), Rated: B

OnDeck (NYSE: ONDK), the leader in online lending to small business, today announced that Diamond Janitorial Services has been selected as the OnDeck Small Business of the Month for March, 2018.

 

Government Lifts Prohibition on Payday Lending Chain’s Partnership With National Banks (WSJ), Rated: B

The Office of the Comptroller of the Currency has lifted a prohibition on partnerships between payday loan chain ACE Cash Express Inc. and national banks, as the agency’s Trump-appointed head, Joseph Otting, is encouraging financial institutions to offer more small-dollar consumer loans.

The OCC rescinded a 2002 consent order that restricted ACE’s ability to offer payday loans funded by nationally chartered banks.

Private equity firms buying real estate data and software provider EDR for $ 205 million (Housingwire), Rated: B

Two prominent private equity firms are buying EDR, a provider of real estate data and software-as-a-service, for $205 million, the companies announced earlier this week.

The buyers for EDR, which provides property due-diligence and risk management technology and information, are Silver Lake and Battery Ventures.

United Kingdom

MarketInvoice reaches £2b milestone (Finextra), Rated: AAA

Business finance company MarketInvoice has today reached the landmark milestone of having advanced £2b worth of invoice finance and business loans to UK companies.

The first £1b was achieved after 5 years of trading and the second £1b took just 14 months to reach. During this brief time, two new products were launched (confidential invoice discounting and business loans). These helped MarketInvoice provide funding worth £714.2m to business in 2017 up from £410.4m in 2016 (up 74%).

Lendy Announces 20,000 Investor Milestone & Repays Five Loans in February 2018 (Crowdfund Insider), Rated: AAA

Lendy announced this week it has attracted its 20,000th investor to its peer-to-peer lending platform. This news comes just days after the online lender announced it repaid five loans in February 2018.

According to P2P Finance News, the lender reported that about 7,000 new investors have joined its platform during the past year, with growth in the under 40 age group. Lendy also revealed that investors have secured more than £37 million in interest since its platform’s launch in 2012, with over  £373 million in total has been lent through the platform.

More SMEs planning to apply for finance, research shows (London School of Business & Finance), Rated: AAA

A study from market research agency BDRC has shown that the number of SMEs planning to apply for finance increased in 2017, rising from 10% in the first quarter to 14% in the last three months of the year.  

The company’s SME Finance Monitor surveyed 132,000 businesses and also found that more SMEs are becoming aware of peer-to-peer (P2P) lending, with more than 30% being aware of this type of finance in the final quarter of 2017.

The research showed an increase in awareness of P2P lending combined with crowdfunding, with 46% being aware of these types of finance, up from 36% at the start of last year.

Nearly half (48%) of larger businesses with 50-249 employees were found to be aware of P2P lending, compared to 32% of solo operations and 31% of smaller businesses with fewer than ten employees.

Get ready for UK fintech’s Big IPO Year (AltFiNews), Rated: A

Funding Circle, one of the most notable UK ‘unicorns’ (a tech firm with a valuation north of £1bn), is the latest firm to make headlines for a soon-expected IPO. It also recently enlisted Goldman Sachs and Morgan Stanley to help with the process, according to media reports. Many other notable digital lending platforms such as Zopa and LendInvest as well as banking challengers such as Monzo have also dropped hints that they aspire to move into public spheres eventually, if not soon.

Peer-to-peer lender offers rare secured retail bond paying 5.4pc (The Telegraph), Rated: A

peer-to-peer lender is launching a secured retail bond paying 5.375pc in interest annually, until it matures in 2023. The company, LendInvest, is a service that allows individuals to loan their money to finance property projects.

IF Isas: a bold way to build your capital (Money Week), Rated: A

This time last year, for example, none of the big three peer-to-peer (P2P) lending platforms – Zopa, RateSetter, and Funding Circle – had IF Isas available. But the situation has improved, and now more than 30 platforms offer them.

More than 75% of those surveyed by specialist researcher AltFi Data shortly before Christmas said they weren’t aware of the products.

If you want to lend to consumers, you could try RateSetter, which offers up to 4.9% a year over five years. A far riskier option is FundingSecure. This platform offers 12% or more on sub-prime asset-backed lending – P2P pawnbroking, effectively.

On the lending to business side, Funding Circle offers 7.2%, but is currently only open to existing customers. Assetz Capital offers from 3.75% to 15% over various terms. Crowdstacker offers up to 7%. The UK Bond Network allows you to invest from £5,000 in individual corporate bonds from listed and unlisted businesses, returning an average of 11.1%. And if you prefer to invest in renewable-energy projects, Abundance Investments offers up to 15%.

China

Micro-cap Chinese fintech Senmiao Technology prices $ 12 million IPO at $ 4 low end (Nasdaq), Rated: AAA

Senmiao Technology, an early-stage Chinese marketplace for peer-to-peer lending, raised $12 million by offering 3.0 million shares at $4.00, the low end of the range of $4.00 to $4.50.

At $4.00, the company commands an IPO market cap of $102 million and an enterprise value of $90 million. During fiscal 2017, it booked $0.2 million in revenue and a net loss of $0.7 million.

China: WeiyangX Fintech Review (Crowdfund Insider), Rated: A

Ant Financial Buys Shares in Telenor Microfinance Bank

On March 13, Pakistan’s Telenor Group announced a strategic partnership with China’s Ant Financial Services Group. According to the agreement, Ant Financial will acquire 45% of Telenor Microcredit Bank, at the value of US $184.5 million. According to the agreement, Ant Financial will acquire 45% of Telenor Microcredit Bank, at the value of US $184.5 million.  

JD Finance Starts a New 13 Billion-Yuan Fundraising

On March 13, JD Financial announced that the group has initiated a new 13 billion yuan fundraising round. The new funding raised will be mainly utilized for financial licenses acquisition, technology research and marketing. It is said that CICC and COFCO shall lead this investment with a share of 10-billion-yuan. The leading investors will sign the agreements with JD Finance by the end of March and close their investment by the end of April.

Statistics shows that the valuation of JD Finance has reached 120-billion-yuan before this planned investment and is expected to reach between 165 and 190-billion-yuan after that.

 

 

Weekly Review (Investors Business Daily), Rated: A

China-based online lender Qudian (QD) reported $229.2 million in revenue and diluted EPS of 26 cents. ADT posted a surprise adjusted loss of 6 cents a share on 6% sales growth to $1.11 billion. On a GAAP basis, the home security company earned 99 cents a share.

European Union

Real estate crowdfunding in Finland: the drivers of campaign success and the industry development (Theseus.fi), Rated: B

The objectives of the study were to examine the phenomenon of real estate crowdfunding in Finland, to explain the success or failure of RECF campaigns, to understand the drivers behind industry development and to assess its future potential. The data was collected from the two main sources: interviews with the experts and the information from the websites of the crowdfunding platforms.

International

The Third Age of credit (TechCrunch), Rated: AAA

Today, buoyed by a plethora of technologies and a golden age for abundant data, creditis undergoing its most radical change yet. But it is being pulled in many directions by competing forces, each with their own vision for the future.

The last year has witnessed a Cambrian explosion in credit innovation, unveiling hundreds of possibilities for the future of credit. Unlike the last two ages, credit of the future will be personal, predictive, self-correcting and universal.

What does a new world of credit look like?

Thousands of startups are all finding new ways to apply this same concept of statistical modeling. WeLab in Hong Kong and Kreditech in Germany, for example, use up to 20,000 points of alternative data to process loans (WeLab has provided $28 billion in credit in four years). mPesa and Branch in Kenya provide developing-world credit using mobile data, Lendabledoes so using psychographic data and Koradoes this on blockchain. Young peer-to-peer lending startups like Funding CircleLending Club and Lufax have originated more than $100 billion in loans using algorithmic underwriting.

Victory Park Capital partners IFC on fintech fund for emerging markets (Finextra), Rated: A

Victory Park Capital (“VPC”), a leading investment firm focused on providing flexible debt and opportunistic equity solutions worldwide, announced today that it has launched a new fund together with the International Finance Corporation (“IFC”), a member of the World Bank Group.

The new fund will invest in financial technology companies in emerging markets. The partnership aims to improve access to debt capital for financial technology companies that lend to small businesses and consumers in emerging markets.

Accountants Look to Artificial Intelligence As Clients Get More Demanding (Sanvada), Rated: A

Accountancy firms to be particular are busy investing in AI and automation initiatives to help staffs with mundane tasks. The need is so open in some situations that businesses fail to deliver their mandate to customers.

In the research, close to 50 percent of the accountants said they would like to automate number crunching, diary management and the most time consuming of all: data entry. On the same note, three quarter showed great attraction to AI, to have it assist time-consuming responsibilities and automate involving tasks with recurring patterns.

Accounting firms have been in the front line of using cloud computing and Sage report stated that 67 percent of respondents now link their success to the use of cloud tech.

Finastra named provider of best payments solution by Global Finance (Vested for Finastra Email), Rated: B

Finastra has been named ‘best payment solutions provider’ by Global Finance, as part of the publication’s Best Treasury & Cash Management Banks and Providers for 2018, announced in the March issue of the magazine.

Finastra received the award based on its best-of-breed payments and financial messaging solutions that enable financial institutions and their business customers to manage cash, process payments, exchange information and transfer funds cost-effectively, securely and reliably within and across national boundaries.

Australia

SMEs shun banks, turn to fintechs (Financial Standard), Rated: AAA

The proportion of SMEs planning to use banks dropped from 38% to 24% between 2014 and 2018, the Scottish Pacific SME Growth Index shows. It is recalculated every six months.

About half (47.6%) of the 1253 small-to-medium business leaders who had not used non-banking lending options in the last 12 months said they are interested in using alternative financing in the future.

Of the SMEs that used alternative working capital options in 2017, the most popular was debtor finance (77%), followed by merchant cash advances (23%), peer-to-peer lending (10%), crowdfunding (9%) and other online lending (5%).

9 in 10 SMEs say cash flow problems prevented revenue growth (Finder), Rated: A

A new report released this week has revealed the changing state of cash flow, finance and growth for Australian small- to medium-sized enterprises (SMEs). The SME Growth Index, released by working capital provider Scottish Pacific, found that one in five (21.1%) SMEs were unable to take on new work because of cash flow restrictions, and 9 in 10 (92.7%) SMEs said that cash flow restrictions actually prevented them from generating more revenue.

Small business revenue is heavily influenced by the business’ cash flow. Of the 1,253 small business respondents to the Index, only 7.3% said that improved cash flow would not have led to more revenue. The restrictions on revenue due to cash flow has cost the Australian economy $229.8 billion.

FinTech Australia Points to Report that Highlights Growth in Fintech Lenders as Traditional Finance Declines (Crowdfind Insider), Rated: A

FinTech Australia, is highlighting a report this week that points to the decline in traditional fince options (IE Banks) and the ongoing rise in SMEs using Fintech platforms to address their capital needs.

The report is courtesy of the Scottish Pacific SME Growth Index, released every six months, which is based on interviews with 1,253 SMEs across Australia with annual revenues of up to $5 million.

For SMEs with plans to invest in expansion over the next 6 months, 24% say they will fund growth by borrowing from their main relationship bank – continuing a downward trend, and well short of the high of 38% who nominated this option to fund growth in the first round of the Index in September 2014. More than one in five SMEs (22%) plan to use alternatives to their main bank to fund upcoming growth, with 91% relying on their own funds. Of the SMEs that used alternative working capital options in 2017, their funding choices were: debtor finance (used by 77%), merchant cash advances (23%), P2P lending (10%), crowdfunding (9%) and other online lending (5%).

Gen Y advisers shy away from the big banks (Financial Review), Rated: B

Data from consumer information company Adviser Ratings provided exclusively to The Australian Financial Review reveals in the last two years, the non-aligned sector – or what was previously termed the independent space – has seen it attract 70 per cent of all news advisers, compared with 40 per cent previously.

There has also been a 32 per cent increase in the number of Australian Financial Services Licenses (AFSLs) granted by the Australian Securities and Investments Commission. This equates to 400 new licenses in two years. Total adviser numbers have grown 10 per cent, up to 24,777 from 22,612 over that period.

India

Is RBI sleeping over Faircent’s P2P ad that promises huge returns? (MoneyLife), Rated: AAA

An overhyped, front page advertisements in a leading economic daily by Faircent.com, which claims it is India’s largest peer-to-peer (P2P) lending website, is luring people promising returns that are safer than the risky ’Sensex’ — almost like a Ponzi scheme. Shockingly, the company’s business and its puffery does not seem to attract the attention or supervision of any regulator. Not even the Reserve Bank of India (RBI), whose governor recently lamented that his organisation does not have adequate powers over banks — especially public sector banks. So what about finance companies that are regulated by it? The Faircent.com advertisement would give you a clue. The last line of the advertisement, in its fine print carries a disclaimer saying, the “Reserve Bank of India (RBI) should not be held responsible for these claims or promises”.

Movers And Shakers Of The Week [12–17 March 2018] (Inc 42), Rated: B

Online financial services marketplace BankBazaar has appointed Aparna Maheshas the Chief Marketing Officer.

P2P lending company Faircent has roped in Vikas Prasad and Mayank Bishnoi on board its leadership team.  Vikas has joined Faircent as Head – Planning, Processes, and Control, while Mayank has taken over as Head – Customer Experience.

Asia

Genie: the broadest Asian business loans exchange platform (Global Coin Report), Rated: A

The Genie ICO recently hit its soft cap of $5 million, with another $20 million in the pipeline. They had achieved about $2.5million through crowd sale; with the $3million underwritten amount, the current token purchase crosses the soft cap of $5million.

 

The ICO, which started a few weeks ago, finalized on March, 1st. Tokens were for sale at a rate of 0.0025 ETH, with a fundraising goal of 5,000,000 USD that was already met.

INTERVIEW-Indonesian banks will see “more than 12 pct” loan growth in 2018- regulator (Reuters), Rated: A

Indonesian banks will see “more than 12 percent” loan growth in 2018 thanks to a recovering global economy and a pickup in commodity prices, the country’s financial regulator said.

Loan growth in Indonesia has fallen below 10 percent since the start of 2016, compared with more than 20 percent during the commodity boom years before that.

Canada

Merchant Advance Capital Closes $ 30 Million Debt Facility (deBanked), Rated: AAA

Canadian Merchant Advance Capital closed a $30 million debt facility from Comvest Credit Partners today.

“This is giving us significant runway,” Merchant Advance Capital CEO David Gens told deBanked. “For the next 12 months in particular, we’ve got great visibility as far as where our incremental capital is going to come from. This will allow us to focus less on fundraising and more on just building the business.”

Founded in 2010, Merchant Advance Capital offers several small business financing products including fixed term loans and business lines of credit.

Royal Bank of Canada Explores Blockchain to Automate Credit Scores (CoinDesk), Rated: A

The Royal Bank of Canada may be interested in putting credit scores on a blockchain.

In a patent application released Thursday, the bank outlines a platform built on a blockchain that would automatically generate credit ratings using a borrower’s historical and predictive data. The application as described proposes a system that would utilize more data sources than existing credit rating systems, improving the loan process while creating an immutable record.

If a loan application is submitted, the system would automatically determine what sort of loan and creditor would be appropriate before generating a unique smart contract that contains the terms of the loan.

Authors:

George Popescu
Allen Taylor

Monday August 28 2017, Daily News Digest

artificial intelligence

News Comments Today’s main news: Blend lands $100M investment. Funding Circle achieves ISA manager status. Hive raises over $8M. Innovate UK invests 700K GBP in Paybase. China Life, Baidu launch $1B internet fund. Klarna’s profits increase 138 percent. Today’s main analysis: Bank of America Merrill Lynch to implement AI. Today’s thought-provoking articles: Congresswoman asks FDIC to hold public hearing on […]

artificial intelligence

News Comments

United StatesFlipkart, Amazon pose new competition for fintech lenders.

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United States

LendingClub Hit with Lawsuit (Crowdfund Insider), Rated: AAA

LendingClub (NYSE:LC) has been hit with a lawsuit that names former CEO Renaud Laplanche alongside current and former board members and former CFO Carrie Dolan. The complaint, filed in the Court of Chancery in Delaware, states;

“Throughout the period December 11, 2014 and continuing through May 9, 2016 (the “Relevant Period”), the Individual Defendants breached their fiduciary duties to LendingClub by failing to institute adequate internal controls regarding financial disclosures, related party transactions, and data integrity and security, all while causing LendingClub to represent in the Registration Statement and a series of subsequent filings that such controls were sufficient.”

The suit has been filed by two shareholders; Kelvin Farley and Jay Fink.

Waters Calls on FDIC to Hold Public Hearing on SoFi’s Application for Bank Charter (House.gov), Rated: AAA

Today, Congresswoman Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services, sent a letter to Federal Deposit Insurance Corporation (FDIC) Chairman Martin Gruenberg, calling for the FDIC to hold at least one public hearing on Social Financial, Inc.’s (SoFi) application to establish an Industrial Loan Company (ILC).

In the letter, Ranking Member Waters states that changes in the financial services industry and financial regulation necessitate a public hearing to examine the policy and legal implications of granting federal deposit insurance to ILCs generally, as well as to obtain greater input on the unique risks posed by granting it to a financial technology (fintech) company like SoFi.

I am writing to request that the Federal Deposit Insurance Corporation (“FDIC”) hold at least one public hearing on Social Finance, Incorporated’s (“SoFi”) application to establish an industrial loan company (“ILC”) to provide FDIC-insured Negotiable Order of Withdrawal (“NOW”) accounts and credit card products. As you know, because de novo ILC formations have been affected by regulatory and statutory moratoria for several years, the FDIC has not approved a deposit insurance application for a new ILC charter for some time. Since the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), changes in the financial regulatory regime and financial services industry justify a public hearing to examine the policy and legal implications of granting Federal deposit insurance to ILCs generally, as well as to obtain greater input on the unique risks posed by granting it to a financial technology (“fintech”) company like SoFi, a number of which I will discuss in more detail below.

Appropriate regulatory oversight of any ILC is an essential prerequisite to approving any application for deposit insurance backed by taxpayers. The FDIC has previously acknowledged the importance of strong oversight of any insured bank and its parent company when discussing oversight of ILCs.[1] In reaction to a number of concerns previously raised on the regulation of ILCs, the FDIC even went so far as imposing several moratoria on its ability to approve ILC applications for deposit insurance in 2006 and 2007 to, in the words of former FDIC Chairman Sheila Bair in testimony before the House Financial Services Committee, “allow the FDIC to carefully weigh the safety and soundness concerns that have been raised regarding commercially-owned ILCs. At the same time… the moratorium provides an opportunity for Congress to consider the important public policy issues regarding the ownership of ILCs by commercial companies.”[2]

While some experts have touted the possibility that fintech firms can help promote financial inclusion, others have underscored the challenges posed for our current regulatory regime to oversee these types of companies and have underscored the need for policymakers to carefully evaluate the consequences of allowing them access to deposit insurance and the Federal Reserve discount window.[11] Thus, Federal regulators have taken a varying degree of actions focused on fintech companies and services. For example, while the Office of the Comptroller of the Currency (“OCC”), under its “Responsible Innovation” initiative, has proposed a Special Purpose National Bank Charter for fintech companies (“fintech charter”)[12] questions have been raised about whether the benefits to consumers for this new charter will be widely and fairly shared, and whether there is adequate legal authority, let alone a clearly defined and modern regulatory framework, for such a fintech charter.[13] Indeed, a lawsuit has been filed by state banking regulators challenging the OCC’s authority.[14] As should be the case with the OCC and its proposal to use its authority to federally charter fintech companies, the FDIC should thoroughly consider the implications of offering access to the deposit insurance fund for ILCs that will result in expanding the type of institutions to it, like fintech firms. Fintech firms, whose operations cross state and international boundaries, and may exist entirely online, were undoubtedly beyond original congressional intent in permitting ILCs to access deposit insurance and it is appropriate for stakeholders to weigh in on whether it is appropriate for these firms to have this access without proper oversight of their parent companies.

The chartering of a fintech company as an ILC also raises a number of consumer protection concerns that the FDIC should consider. For example, the California Reinvestment Coalition (“CRC”) has opposed SoFi’s application on the basis of concerns with the institution’s Community Reinvestment Act (“CRA”) plan, as well as its intended approach to financial inclusion, fair lending, and consumer protection.[17] CRC notes that SoFi’s business model targets “students from elite universities that have strong earnings and wealth potential,” and offers products and services “designed to exclude working class households.” CRC also notes that SoFi’s CRA plan is grossly inadequate, considering that: (1) SoFi’s assessment area will be limited to areas in Utah, but the company will accept deposits and operate nationally; (2) SoFi’s current core products are not designed to serve the “convenience and needs” of low- and moderate-income (“LMI”) communities in which the bank would operate,[18] but rather are focused on serving SoFi’s members; and (3) SoFi’s CRA plan does not encompass measurable commitments to lending, investments, and services for LMI communities.

The full letter is here.

Bank of America Merrill Lynch has become the latest bank to implement AI (Business Insider), Rated: AAA

Bank of America Merrill Lynch (BAML) has 

Bo Brustkern and Emmanuel Marot (Lend Academy), Rated: A

On this episode of the Lend Academy Podcast I brought together both CEOs to talk about this merger; what it means for their respective customers as well as the industry as a whole.

In this podcast you will learn:

  • The original idea that led to the founding of both companies.
  • The strengths of both companies and why they are a complementary fit.
  • Why they decided to come together and merge companies now.
  • The scale and profitability of the combined company.
  • The unique aspects of the LendingRobot Series investment offering.
  • The platforms that the LendingRobot Series invests on.
  • The different funds that make up the Lending Robot Series.
  • The choices for non-accredited investors on the combined platform.
  • Their value proposition today for investors.
  • Who the target customer is today for the combined company.
  • How the two brands will operate going forward.
  • What the combined company will look like in 12 months time.
  • Where marketplace lending is going in the future.

LendKey, Earnest Alter Student Loan Refinancing Rates (LendEDU), Rated: A

Two student loan refinancing companies, LendKey and Earnest, have changed their student loan refinancing interest rates in recent weeks, according to LendEDU.

Effective August 10th, LendKey’s variable interest rate range for their student loan refinance product was altered slightly. LendKey, a leading lending partner of both banks and credit unions, now offers a variable rate range between 2.67 and 6.31 percent for student loan refinancing.

This new variable rates for LendKey mark an increase on both the low and high ends of the range. Previously, the online lending partner offered a variable interest rate range between 2.52 and 6.16 percent since June.

Online Mortgage Lender Blend Lands $ 100 Million Investment Led by Greylock (Crowdfund Insider), Rated: A

Blend has landed a significant funding round to the tune of $100 million. The funding was led by Greylock Partners with participation by Emergence Capital. Existing investors joined in the round as well.

Wells Fargo, U.S. Bancorp Turn to Startup to Speed Up Mortgage Applications (WSJ), Rated: A

Wells Fargo & Co. and U.S. Bancorp have signed deals with mortgage-software startup Blend Labs Inc. to move more of their loan applications online.

Ethereum-Based Invoice Finance Platform Hive Raises Over US$ 8 Million (Coin Journal), Rated: A

The Hive Project, which intends to build the world’s first cryptocurrency-based invoice financing platform, has raised 2,087 BTC, or over US$8.9 million, from 2,234 investors through its initial coin offering (ICO).

Using invoice finance, the business “sells” its outstanding invoices at a small discount to a financier. The business immediately receives up to 85% of the value of the invoice instead of having to wait the usual 30 to 90 days to get paid by customers.

Hive uses the Ethereum blockchain and smart contracts to assign a unique fingerprint to every invoice issued. These invoices are then tokenized and published on a blockchain, and made available as a shared source of liquidity for factoring and invoice financing.

Debate on Regulatory Reform (PeerIQ), Rated: A

JP Morgan CEO Jamie Dimon in his annual letter would agree that the banking system is safer and stronger today. Nevertheless, Mr. Dimon believes that economic growth and lending is below potential. For instance, JPM estimates $1 Tn in loans could have been generated in recent years generating an additional 50 bps in annual GDP growth thru regulatory reform.

The specific regulatory reform areas Mr. Dimon identified include:

  • Simplification of the annual stress-testing process
  • Release or enable banks to deploy excess capital towards small business loans, lower middle market, and near-prime mortgages
  • Rationalization of supplementary leverage ratios and operational risk capital
  • National servicing standards for the mortgage servicing market
  • Federal Housing Administration (FHA) reform
  • Complete securitization standards to encourage private capital and reduce exposure to taxpayers

Role for 3rd party risk infrastructure to strengthen markets

Large banks are increasingly playing the role of financial intermediaries that connect non-banks to the capital markets. Banks are providing liquidity facilities (“lending to the lenders”) and capital-light securitization programs. Although Yellen is right that lending continues to grow, critically, the nexus of credit formation–including for a majority of personal loans, auto loans, student re-fi loans, and even mortgages–now takes place between a consumer and a non-bank.

Under this new landscape, the soft underbelly of the credit markets has shifted from bank wholesale funding to non-bank wholesale funding. And when investor confidence seizes, the transmission mechanism connecting policy to the real economy can break down. Spreads widen, funding costs increase, and markets freeze exactly when policymakers seek to ease financial conditions.

Q&A with Head of Alternative Lending at Fintech Marqeta (Crowdfund Insider), Rated: A

Recently, Crowdfund Insider published an article about Marqeta signing a partnership with Visa on payments and loans. The marriage is designed boost innovations in commercial and consumer payments and online lending. Visa also made a strategic investment in Marqeta at that time to the tune of $25 million. Total investments in Marqeta now stand at over $70 million.

Isn’t this just all about borrowers getting a better interest rate [and investors earning more]?

Candace: Lenders are looking to increase renewals (repeat borrowers are easier to sell than new borrowers), beat out the stackers (top of wallet, top of mind) and decrease risk (new data on spending reduces risk for future loans). On the heels of 2016, these have become as important as the interest rate for the lender.

For the borrower, speed to funds has become increasingly important, and distributing loan funds to a  card allows a way to immediately spend the funds without waiting for the funds to be deposited into the borrower’s bank account.

If Credit Cards drop their rates then they can become competitive. For Visa to partner with Marqeta – isn’t it just how the debt is carried? For the consumer / business, they are indifferent?

Candace: The rates apply to the underlying loan per the agreement between the lender and the borrower, not to a prepaid card that is used to assist with making purchases. The prepaid card bears no interest charge. The terms for the loan (from which the loan proceeds are distributed to the card) continues as agreed upon between the lender and the borrower. That debt does not change.

How Riskalyze Won The Hearts Of Financial Advisors And Upgraded The Advice Industry (Benzinga), Rated: A

Ahead of Riskalyze CEO Aaron Klein’s speaking engagement at the Benzinga Fintech Summit in San Francisco, Benzinga caught up with him to learn more about how the company is upgrading financial advice.

BZ: How did you go about identifying this need for financial advisors? What kind of research did you do?

What’s interesting is that we invented a new space. There was no risk-alignment platform that helped advisors do that. There were questionnaire products that answered half the question, there were a few portfolio analysis tools that would answer the other half, but we invented the concept of the risk number. We can help advisors pinpoint the client’s risk number and then we score portfolios using that number.

Klein: I’ll talk about the two different sides of the coin. A lot of the innovation was figuring out those sides of the coin and bridging the two together. On the one hand, we took some concepts that had really never made it out of academia and into everyday use. They’re centered around the economic framework called prospect theory, which won the Nobel Prize for economics in 2002. We took prospect theory and built a bunch of proprietary technology on top of it to understand how to move up and down a client’s personal financial spectrum to understand when they prefer risk and when they prefer certainty.

Once we do that, we built a mathematical formula behind the scenes that lets advisors turn that into the client’s risk number. That’s how the client-side works.

On the flip side, we need to match that up with a portfolio. So, the inputs for that piece of the technology are largely market data. We effectively take daily pricing data for nearly a quarter-million securities — every U.S. stock, ETF, mutual fund, variable-annuity sub accounts, SMA third-party money managers, proprietary non-traded strategies, all kinds of different products. We take all the data for those, we have new data streaming into our systems every night on those securities.

 

This Week In Retail: Funding, Finance And Tech (PYMNTS), Rated: A

This week in retail, we’ve seen news coming in from multiple sides, including that of Apple’s projected increase in smartwatch salesU.K. online lender Prodigy’s funding news for expansion into the U,S.,  Walmart’s two new partnership announcements, and the news that the CFPB is ordering American Express to pay out money to those hurt by unfair practices.

American Express is in the hot seat this week as the Consumer Financial Protection Bureau (CFPB) ordered the credit card company to pay out a very large amount to consumers in Puerto Rico and the U.S. Virgin Islands. It’s being confirmed that over a 10-year period, American Express  provided inferior card offerings to people in those territories than what was being offered in the U.S.

Here are the numbers:

  • $240 million | Amount Prodigy Finance raised in its venture capital equity funding round
  • $96 million | Amount CFPB ordered American Express to pay out to affected Puerto Rico and the U.S. Virgin Islands consumers
  • $200 | Starting point for potential Walmart installment loans

5 Trends That are Changing the Millennial Economy (Huffington Post), Rated: A

According to statistics from the U.S. census bureau, Millennials make up about 83 million of the nation’s current population. The unique experiences of the Millennials will shape the way we buy and sell, forcing companies and businesses to adjust their business strategy for decades to come.

For example, a growing number of Millennials are choosing to live with their parents. They have been reluctant to buy items such as cars, music, and luxury goods. Luxuries that used to be important for previous generations are not as important for Millennials. They are reshaping the real estate market and are responsible for the growth of the sharing economy.

A recent survey of Interns conducted by Goldman Sachs in 2013, found out that 30% of millennials do not intend to purchase a car in the future. 25% said they will only buy one if there is a need for it, otherwise they are indifferent. Another 25% said buying a car is important but not a big priority. 15% said purchasing a car is extremely important. And the last 5% do not feel strongly about it.

recent report shows that student loans have increased by 84% over ten years with an average student having a loan balance of $29,000.

How to choose and switch to a better bank for you (WPXI), Rated: B

Online banks are now offering much higher rates on savings accounts — significantly higher than the current rates at traditional, bigger banks. So with that in mind, why not just move your savings to take advantage of the bigger return?

To give you some context, online bank ally recently increased the rates on its savings accounts to 1.15% — while the rate on a regular savings account at Bank of America currently sits at only 0.01%.

United Kingdom

Funding Circle receives ISA manager status (P2P Finance News), Rated: AAA

FUNDING Circle has received ISA manager status from the HMRC, Peer2Peer Finance News can reveal.

Approval was granted in July, less than two months after the platform won full FCA authorisation.

However, the platform has no immediate plans to launch its IFISA product, telling customers earlier this week that it intended to roll out the tax-free investment wrapper “before the end of the tax year.”

How Funding Circle is helping small businesses face the challenges of Brexit (Prospect Magazine), Rated: A

Fast forward to today, we’ve originated over £3.2 billion worth of loans through the platform. In the UK, that lending has helped create about 60 thousand jobs, and the £2.5 billion of loans has created about £5 billion of GDP or gross economic value added, according to an independent survey by the Centre for Economics Business Research.

In fact, we think we make up about 2 per cent of the total money that’s going to gross-lending small businesses. And if you actually look at the money going into the economy, we make up about a third of net new lending— which is the preferred Bank of England measure. We did about 300 million versus 600 million in the entire banking system in the first half of this year.

Say a small business decides to come to you: what is it they’re getting that they don’t get with a bank?

We turn around loan applications specifically within 24 hours. We are better in that we give better service; everyone can find an account manager.

We’re cheaper, in that our prices are very, very competitive, and often we’re often providing cheaper loans than businesses would be able to get at the bank. We also don’t have the overheads that banks have.

We all know that Brexit is going to shake up the financial sector. What can Funding Circle do to help businesses rise to the challenge?

Net lending by banks fell by 220 million in Q4 last year. Ours actually rose to 167 million.

On top of that, we’ve also had large insurance companies like Aegon, which is a big Dutch insurer, commit to fund £160 million in year one, but actually committed over a four-year period to purchase our loans. The fact a large foreign insurer would want to do that shows that actually, despite Brexit, there’s a vote of confidence in the UK economy, particularly in small business.

FinTech startup Paybase gets £700,000 from Innovate UK (UK Tech), Rated: AAA

London-based FinTech startup Paybase has received a grant of almost £700,000 from innovation agency Innovate UK.

Expected to launch later this year, Paybase has developed an ‘end-to-end solution for payments, compliance and risk’, which can be accessed through a unified API.

Why P2P is still the crowd despite passive lending (AltFi), Rated: A

There’s been much collective gnashing of teeth over the last few months at the evolution of peer to peer lending, as practised by ZopaRatesetter and most latterly Funding Circle. The big bone of contention has been a shift amongst all three – with FC falling into line just a matter of days ago – to a passive lending model. This means that lenders on said platforms now lend passively to a full slice of borrowers rather than picking their borrowers individually. To the critics this implies that the traditional peer to peer (P2P) model is slowly dying out. If you’re not lending to your peers, don’t you just sound like any other finance business such as a bank?

I’m not convinced by this criticism. Collectively a crowd – many peers – are still lending to another crowd, but just in a format that looks closer to a passive, collective fund basis rather than one on one. There is no bank balance sheet lurking around and the ‘crowd’ still sets the rate at which it’s happy to lend. Credit scoring has always been a feature of all the platforms, whether they be ‘pure’ P2P or passive P2P. Someone, somewhere at the centre of the online marketplace needs to set the lending criteria and make decisions about who to lend to.

What about peer to peer? (Library of Things), Rated: A

In this week’s bonus episode co-founder Emma looks at the sharing economy, peer to peer lending, and explains why Library of Things have chosen to operate from a physical space.

Listen to the podcast here.

How Risky Is Borrowing Money Online Through Peer-to-peer Lending (FX Daily Report), Rated: B

It is almost true that borrowing money from traditional financial institutions is a thing of the past.

It has been observed that P2P online lending platforms are not the source of the problem or the risk. However, it seems to be the ease with which loans are available that causes the problems.

Online P2P lenders also offer student loans. It is very important to realize that student loans these days are available everywhere. But what is ultimately the truth is that the loans are burdensome. Any student that avails of such a P2Ponline student loan emerges as a graduate burdened with a heavy debt.

If an individual wants to apply for a P2P online loan, it is best to start with checking credit reports. It is a good idea to fix any errors that may be found on these reports. Otherwise, the interest rates may be hiked up. It is also a good idea to do some research prior to applying for the loan. It is worthwhile to find out as to which lender offers a lower rate of interest even if they fall outside the ring of online P2P lenders. Never decide on which loan to pick up by looking at the monthly amount to be paid. The total amount that you are going to repay and the time period of the repayment are the more important factors to be considered. This gives the total cost of the loan.

China

Big banks strike partnerships with technology companies as part of fintech wave (South China Morning Post), Rated: AAA

Bank of Communications, the nation’s fifth biggest lender, joined with Suning Holdings and its financial affiliate Suning Finance as strategic partners last week, the latest of the big five banks to ally with internet firms.

So far, all big-five banks, accounting for more than one-third of China’s banking assets, have allied with technology giants.

Industrial and Commercial Bank of China allied with e-commerce major JD.com for cooperation in sectors including fintech, retail financing, corporate credit and asset management. Agricultural Bank of China agreed to work together with dominant search engine operator Baidu. Bank of China and Tencent Holdings jointly set up a fintech lab, focusing on cloud computing, big data, block chain and artificial intelligence.

Earlier this month, mid-sized Industrial Bank and JD.com’s financial affiliate JD Finance launched a debit card in Beijing and most cities in affluent Zhejiang province.

China Life and Baidu to launch $ 1 billion internet fund (Reuters), Rated: AAA

China Life Insurance Group Co and Baidu Inc will form a 7 billion yuan ($1 billion) private equity fund, targeting internet and other technology investments, China Life’s listed arm said on Thursday.

The Baidu Fund Partnership will be capitalized by China Life through a special partnership, which will contribute up to 5.6 billion yuan, China Life Insurance Co Ltd said in a Hong Kong Stock Exchange statement.

Baidu, the Chinese language internet search provider, will contribute as much as 1.4 billion yuan.

Ant Financial’s “TechFin” vs JD Finance’s “FinTech” (ASEAN Today), Rated: A

Alibaba’s Ant Financial Services Group and JD Finance are at loggerheads in the Chinese, and increasingly, global e-commerce scene. In 2015, JD Finance recommended the use of “FinTech.” In December 2016, Ma Yun coined the ”TechFin” as a rebuttal, and as a show of thought leadership.

Ant Financial’s unveiling of “TechFin” shows the firm’s focus on building technology rather than financial products.

Critics believe there is not much difference between TechFin and FinTech. Critics believe Ant Financial coined TechFin to gain a foothold from the conceptual standpoint; a counteroffensive to JD Finance’s aggressive marketing of FinTech. This is inevitable considering “FinTech” as a term already achieved credibility within the finance and other related industries.

Ant Financial and JD Finance are more complementary than competitive

Onlookers see Ant Financial and JD Finance as longstanding rivals. JD.com’s recent sale of JD Finance for US$2.1 billion in cash was seen part of a deal to spin off its burgeoning finance arm and raise its game against Ant Financial.

Ant Financial focuses on the traditional model of the Internet while JD Finance focuses on product innovation, for a start. Each business model has its advantages.

Ant Financial also seeks to leverage on Ant Check Later (花呗), a virtual credit card, to open up a whole new road map for credit distribution in Internet finance. In contrast, JD Finance aims to boost user’s consumption through its products. Its Jingxiaodai (京小贷) appeals to merchants who need fuss-free and almost instant access to credit.

European Union

Klarna just posted some impressive half-year figures — profits soar by 138 percent (Business Insider), Rated: AAA

The Swedish e-invoicing giant posted 2,05 billion Swedish crowns ($254,2m) in revenue for the first two quarters of 2017. Meanwhile, operating profits jumped to 228 million ($28m) from last year’s 96 million ($11,9m), reports tech site Di Digital.

Yesterday, Breakit reported that the company is teaming up with Stripeto boost growth in the U.S.

Credit Suisse Eyes 2018 Launch for Blockchain Loans Platform (Coindesk), Rated: AAA

A group of banks led by Credit Suisse is eyeing the launch of a commercial platform for blockchain-based syndicated loans, according to reports.

The group involved finished the second phase of their testing in March.

Using smart contracts to reduce those turnaround times could increase the market’s appeal to potential lenders and investors, according to Aidoo.

Worldcore Payment Institution Announces ICO (Coin Idol), Rated: A

Worldcore announces an Initial Coin Offering (ICO), as part of their wider expansion plans.

The company envisions to become a worldwide reference for the financial tomorrow, by integrating its successful payment solution into the blockchain sector of economy.

Worldcore ICO starts on October 14 of 2017. In total, a maximum supply of one billion WRC tokens at $0.10 USD each, will be available for purchase.

Corlytics named by Allen & Overy in its regtech programme (Finextra), Rated: B

Magic Circle law firm, Allen & Overy, has named Corlytics as one of the eight companies selected to move into its Fuse programme. Fuse is a newly launched innovation space where its lawyers and technology firms team up to develop legal, regulatory and deal-related improvements.

International

Ten Fintech Conferences to Attend This Fall (Lend Academy), Rated: AAA

FinovateFall

When: Sept 11-14, 2017
Where: New York City Hilton Midtown
Link:  /> Discount code: F17FALLLAT

LendIt Europe 2017

When: Oct 9-10, 2017
Where: London
Link:  /> Discount code: LENDACADEMYVIP

American Banker’s Digital Lending & Investing

When: November 2-3, 2017
Where: New York, NY
Link: 

AltFi Global Summit

When: November 7, 2017
Where: Amsterdam
Link: 

Marketplace Lending & Alternative Financing Summit 2017

When: December 3-5, 2017
Where: Dana Point, CA
Link: 

This event is put on by the Opal Group and is the only west coast event this fall. This is its second year and while I did not attend last year I heard it was a good event with a focus on the investor side of marketplace lending.

Digital Banking – Old Wine in New Bottle? (Fintech Weekly), Rated: A

There was a time when digital banking was perceived as synonymous with online banking and mobile banking. Financial services industry, along with other sectors, is experiencing an explosion of digitization thanks to smartphones, tablets and access to affordable high-speed internet. The number of smart phone users is expected to equal the number of bank accounts in near future as all mobile users link their bank accounts to their smart phone and get onboard with mobile-based digital wallets and savings platform.

Given this, it is imperative to take a fresh look at whether digital banking means the same as it did a decade ago – both for banks as well as customers – especially since there does not seem to be a consensus on the definition of ‘digital banking’.

Customers today do not have the patience to navigate through multiple screens. They do not want to fill the same KYC details over and over for each product. Presenting paperwork at the branch to support an online application is a big no-no. They expect to resume the application they started on Smart phone on their home computer and may want to talk to the customer care executive on phone while doing that. They do not want to be bothered with cold calls and random sales pitches; they prefer to see only personalized and contextual cross-sell offers with direct purchase links. In short, digital customer today wants one-touch, one-click, personalized and integrated user experience across channels.

On the flip side, while customers enjoy the convenience of digital banking for routine tasks, they also want to continue using the branch when they need some face time with a seamless switch between digital and personal interaction. They do not want to forego the privilege of walking into the local branch despite being able to do all their banking via the web or smartphone.

Australia/New Zealand

Fintech startup shares $ 7m of investment (NZ Adviser), Rated: AAA

Since its launch in June, fintech startup Ilumony has reported more than $7 million in financial investments. Of the $7 million, it has charged no fees for advice on $1 million worth of customer KiwiSaver money.

India

Fintech lenders have new competition: Flipkart and Amazon (The-Ken), Rated: AAA

Though Flipkart launched in 2007, it was only in 2013 that e-commerce really took off in India. That was the year Amazon entered India through a marketplace model, and Flipkart too launched its own marketplace model.

From selling smartphones, books, and apparel to customers, the two of them now started offering warehouses, packaging, and logistics to sellers.

No Flipkart or Amazon for EzCred; this startup wants to pursue offline shoppers (India Times), Rated: A

When ecommerce companies like Flipkart and Amazon wanted to expand to the nooks and corners of the country, they borrowed the idea and recently started offering “No cost EMI” option on selected products. Taking a step further, you now have many fintech companies that have lined up on ecommerce platforms to offer loans to consumers.

Launched in January 2017, EzCred is an alternate lending startup which offers loans to consumers who walk into shop at offline stores.

“Offline is a much larger play than online. A majority of transactions are still done offline,” says Maheshwari.

The startup now has plans to roll out an app for customers to enable them to apply for loans directly. The platform has a credit assessment system which enables the startup to assess the borrowers’ repayment capabilities. This involves various data sources like the borrowers’ CIBIL score, bank statements, information provided by customers, which are then matched with the credit policy of EzCred.

India’s draft data protection law to hinge on user consent; will be ready only next year (Factor Daily), Rated: A

A draft data protection law, which is at the core of the Indian government’s stance that Aadhaar does not violate citizen privacy, will have user consent as its mainstay with a few exceptions.

The draft legislation is expected to be ready in about a year.

This was revealed in interviews with a member of the committee set up by the government to come up with the draft framework — B N Srikrishna, a former Supreme Court judge who is heading it, and a second person with knowledge of the committee’s thinking.

P2P lenders may be allowed to operate offline (The Hindu BusinessLine), Rated: A

In a bid to impart vibrancy to the fledgling peer-to-peer (P2P) lending space and also further the cause of financial inclusion, the Reserve Bank of India is believed to be looking at allowing players in the sector to have an offline presence besides an online one.

On-the-ground presence may help the platforms reach out to those who are currently not being served by banks/non-banking finance companies and also help break the vice-like grip of money lenders on local lending, especially in rural areas and small towns.

Asia

Why e-commerce firms could replace banks as the region’s leading lenders (Southeast Asia Globe), Rated: A

Peer to peer lending (P2P lending) first entered the wider public’s consciousness when it rose from the ashes of the global financial crisis in 2007. By cutting out traditional intermediaries, such as banks, the lending platforms, were able to offer borrowers lower interest rates and lenders higher returns. They were populist alternatives to the casino capitalism that had brought Wall Street to its knees.

According to a 2015 report by Deloitte, in Indonesia, Malaysia, the Philippines, Singapore and Thailand there exists “a clear disparity between what SMEs want and expect from banks and what the banks can deliver”. In Indonesia, the report found as few as 6% of SMEs were able to access bank loans.

Recent statistics from the Asian Development Bank show that the situation is similar in Myanmar, which the bank says suffers from a $2 billion shortage in available credit, a shortfall that Brad Jones, CEO of Wave Money, attributes to the country’s excessively cautious banking regulations.

According to data from Singapore-based venture capital fund Dymon Asia Ventures, less than 0.1% of loans in the region currently originate from P2P lending sources, compared with 10% in China and 2-3% in the UK and US. There is, therefore, sufficient growth potential for the Southeast Asian P2P lending market.

Peer-to-peer lending bears risk of bad debt (The Jakarta Post), Rated: A

Despite the rising trend of peer-to-peer (P2P) lending in Indonesia, an economist believes that online-based businesses have increased risk of bad debt if the lenders ignore the importance of supervision.

The credit application mechanism in P2P lending is risky. There is no integrated costumer blacklist data-base like in the banking industry, said Samuel Aset Manajemen economist Lana Soelistianingsih said in Jakarta on Friday.

Moreover, she said P2P lending offered annual interest rates of up to 18.5 percent to investors, adding that such aggressive offers could increase the risk of business failure.

Canada

FLINKS PARTNERS WITH MERCHANT ADVANCE CAPITAL (Betakit), Rated: B

Flinks, a financial API for banks and credit unions, announced a partnership with Merchant Advance Capital, an online lender for small and medium-sized businesses.

Merchant Advance Capital partnered with Flinks to reduce loan approval time for its customers. Flinks will allow Merchant Advance Capital to connect its app directly with customers’ banks, allowing the company to validate account ownership, account balances, and transaction histories.

Authors:

George Popescu
Allen Taylor