Established in Russia in 2014, Scorista was born out of the need for a reliable risk-scoring model for Russian lenders. Leveraging the skills of famed Russian programmers, Scorista has created the go-to risk management solution for lenders operating in the sub-prime short-term lending segment. How Scorista Began Maria Veikhman, a business management, IT, and risk […]
Established in Russia in 2014, Scorista was born out of the need for a reliable risk-scoring model for Russian lenders. Leveraging the skills of famed Russian programmers, Scorista has created the go-to risk management solution for lenders operating in the sub-prime short-term lending segment.
How Scorista Began
Maria Veikhman, a business management, IT, and risk management specialist is the founder and CEO of Scorista. It took off when a few lenders in Russia realized the dearth of reliable risk managers in the market and asked Veikhman to create a risk-scoring model for their lending businesses. Scorista was born as a disruptive innovation to automate the area of credit assessment and provide clients with an instant credit decision. They believe they can help lenders achieve the desired KPIs in a very short span of time with a guarantee of results.
What gave impetus to the company was the dearth of risk management solutions for short-term lenders and payday lenders. They only have access to the FICO score, which is not a very bankable option for payday lenders.
More On Scorista
Scorista offers a broad variety of products ranging from credit assessment to underwriting plans, verification plans, individual scoring, and variable kits, which facilitate scoring and dossiers that legally provide access to complete information about the borrowers. Its prime spot is borrowers looking for less than $5k for less than 12 months. According to Veikhman, Scorista has a 93% forecast accuracy rate. This is much higher than anything available for the segment currently.
This performance has led to profitable growth with offices in China and clients in Russia, China, Kazakhstan, Spain, and Latvia. It has just launched its services in the United States. More than 142 lenders are currently using the Scorista platform, and it is processing over 500,000 applications every month. According to its website, Scorista has helped its partners earn an additional $145 million.
The company has raised an undisclosed amount of funding from Life.SREDA.
Scorista’s Business Model
Scorista’s business model is transactional-based. In Russia, Scorista charges an estimated $1K for every credit decision depending on the volume of applications. Credit lenders are provided with credit decisions instantly so that they can further approve or deny a loan. When the borrower files a loan application with the lender, the lender communicates the borrower file through an API or web interface. Its system receives the application, evaluates the same with its scoring algorithm, and provides a credit decision for approval or denial of the loan. In cases where the scoring algorithm depicts that the borrower can’t repay the loan, Scorista works out different models to predict the amount that the borrower can pay. So if a borrower is rejected for a $2,000 loan for a 3-month period, Scorista will additionally provide that he is a good bet for $1,000 for a 1-month period.
Scorista has developed artificial intelligence and machine learning-powered proprietary algorithms for its scoring systems. It keeps fine tuning its algorithms to ensure optimum performance. It is focusing only on its specialization of short-term micro-borrowers to ensure highest efficiency rates in the segment.
The money-back guarantee is Scorista’s USP. Scorista is ready to refund the fees to its clients if they are not satisfied with its services. Others in the industry are generic players looking to cover the entire market rather than specializing in any one segment. In the name of alternative data, many peers focus exclusively on the social media footprint. However, research shows that decision-making based on social networking is not very reliable as the quality and quantity of information available on borrowers is circumspect. Moreover, about 40% of borrowers do not have extractable social media information available.
Scorista has also introduced Mindscore, a psychometric scoring method that uses a social networking profile and psychometrics to score borrowers. It helps in predicting repayment ability, and the default rate of the applicant.
According to Veikhman, using alternative data in the credit model is dependent on the country. Credit bureaus across Russia have a lot of data on borrowers, and, as such, alternative data is not able to add a lot of weight. But there are no reliable credit bureaus in China so a lot of e-commerce data from Alipay, Wechat, and other social media is put to use. The company is also using mobile data in some cases and incorporates details like the workplace of the borrower to make a credit decision.
The Russian and Chinese branches of Scorista have launched a white label product for mobile applications for lenders. It facilitates fast issuance requiring the borrower to download the application and then submit information to the lender. Scorista performs the function of scoring and the lender can directly issue money through the application, credit card, debit card, or bank account.
Scorista mainly integrates with short-term lenders and specializes in facilitating short-term loans. Although banks have a broad line of products, Scorista can work with banks that deal in short-term loans apart from full-term loans.
The sub-prime segment that Scorista specializes in is growing across the world. The global economy is not getting better, and many economists agree that it is in the last legs of the growth phase. The last recession was in 2008-09, so considering a cycle of 10 years, we are looking at a recession sooner rather than later. Also exacerbating the trend is the fact that the number of people drawing a lower than average income is increasing in every nation across the world.
Borrowers with low credit scores can improve their credit ratings by following a regular, structured repayment schedule. This will enable them to have access to better loans and banking products with lower rates of interest. Scorista,, with its credit models, helps borrowers gain that access to credit at the right time for the right amount.
Scorista’s Future Goals
Scorista is looking to expand across global markets. It is looking for partners in multiple countries to expand its offering. It is also looking to onboard well-connected financial investors who can help introduce them to their lending networks.
Scorista wants to establish itself as the FICO score for the sub-prime borrower segment. Its key differentiator is its specialization in only short-term microlending and its money back guarantee. The company has been able to build a solid business and is on the precipice of breaking into the big leagues.
News Comments Today’s main news: iFunding insolvent, SEC issues subpoena. DreamFunded now offers Reg CF investment opportunities. MarketInvoice integrates with Veritas. Raisin passes 4B Euro mark. Today’s main analysis: China Rapid Finance reports unaudited Q2 results. European real estate investment up post-Brexit. Today’s thought-provoking articles: Community banks refuse to step down on ILC battle. How Swift makes renminbi payment frictionless. Small lenders […]
Community banks not stepping down on ILC fight. AT: “Banks feel emboldened after defeating Wal-Mart’s attempt to get a special bank charter in 2006. However, SoFi is not Wal-Mart. It will be interesting to see if the banks succeed this time.”
Top 5 emerging fintech hubs in the U.S. AT: “The rise of technology means that industries do not have to concentrate in one geographical location any more. If fintech technology decentralizes the processes of financial services, why can’t it also decentralize where those services are performed?”
Small lenders offer biggest savings on $1M property loans. AT: “There could be any number of reasons for this. One is that large lenders have massive overhead expenses and therefore are forced to charge higher interest rates and fees. Smaller lenders can use technology and agile business practices to cut costs.”
In recent days, information has cropped up that investors have been left holding the remains of the company that included properties with an estimated value of $20 million. One individual estimated the number of impacted investors at 400 individuals. These Investors are now looking at options to salvage what they can from the crowdfunding platform.
Crowdfund Insider has been told the SEC did issue a subpoena at some point regarding the operational questions regarding iFunding. Specific details have not been made available but one individual suggested it had to do with the platform operating as a Broker Dealer without having the appropriate license.
DreamFunded Real Estate has launched its first real estate investment opportunity under Reg CF. DreamFunded is a FINRA approved crowdfunding platform that may offer securities the newest crowdfunding exemption. This iteration of crowdfunding allows any investor access to these opportunities – not just wealthier, accredited types. DreamFunded is one of only two real estate crowdfunding platforms using Reg CF.
Commentators who say we should do away with that historic separation should be aware that the community banking industry will once again fight tooth and nail against such a move. We fiercely and successfully opposed Walmart’s 2006 bid. More than a decade later, the core principle remains the same.
Allowing nonbank corporate conglomerates to own banks not only violates the U.S. policy of maintaining the separation of banking and commerce. It also jeopardizes the impartial allocation of credit, creates egregious conflicts of interest, and results in a dangerous concentration of commercial and economic power. It also extends the federal safety net to commercial interests, which is counter to the principles upon which the Federal Deposit Insurance Corp. was created.
The Independent Community Bankers of America’s main objection to the SoFi application for federal deposit insurance is that the ILC charter would allow the fintech company to avoid the legal prohibitions and restrictions under the Bank Holding Company Act (BHCA).
iPayment, Inc., a trusted provider of payment and processing solutions for small and medium-sized businesses (SMBs), introduces iPayment Capital, a new business unit focused exclusively on merchant cash advance services.
iPayment Capital will formally launch this fall with a focus on iPayment’s more than 137,000 SMB customers. Adding merchant cash advance as a direct offering, the Company will significantly streamline the process for its customers, offering a simplified application, expedited reviews and approvals, and a seamless re-payment process.
The Company recently hired Mr. Tomo Matsuo as Senior Vice President to lead this important initiative. Mr. Matsuo spent over six years with Bizfi, a premier fintech company combining aggregation, funding and a participation marketplace on a single platform for small businesses, where he held several senior level positions including Chief Operating Officer.
Morgan Stanley financial advisor Michael Siva is among seven people charged with making about $5 million trading on illegal leaks made by a former Bank of America employee, Bloomberg writes.
Daniel Rivas, a former employee atBank of America’s capital-markets technology group, allegedly passed dozens of tips about unannounced deals to two friends, including his girlfriend’s father, James Moodhe, an assistant controller at a brokerage that prosecutors didn’t identify, according to the news service.
Moodhe allegedly passed the tips on to Morgan Stanley’s Siva, whose trades on the leaked deals allegedly made his clients more than $880,000 and $8,000 for himself, Bloomberg writes.
“In 10 years, we’ll be in the midst of the largest wealth transfer in history, as more than $30 trillion is passed to millennials.”
Lowell Putnam, co-founder and CEO, Quovo
“Clients are going to want more technology that they can touch. I think there’s going to be more of a collaborative piece to planning.”
Rose Price, financial planner, VLP Financial Advisors
“The emerging influence and affluence of women — specific to income, education, entrepreneurship and wealth — will further demand comprehensive planning and financial independence.”
Sameer Somal, chief financial officer, Blue Ocean Global Wealth
“As the Gen X and millennial generations become more empowered to take charge of their financial future, they will demand advice in an ‘instant’ … whether through an app, online digitally or virtually with an adviser.”
Julia Carlson, CEO and wealth adviser, Financial Freedom Wealth Management Group
“There will be commoditization of financial planning advice in the same way we’ve seen in investment management in the past, that’s going to offer the opportunity for further specialization.”
Nicholas Crow, president, Motley Fool Wealth Management
In fact, investment crowdfunding (excluding community fundraising tools like Kickstarter) could top $300 billion annually by 2025, according to CFX Markets.
A typical crowdfunded real-estate project raises anywhere from $50,000 to $3 million from individual investors; the total project size can range up to $30 million or higher. For a $10,000 investment, return expectations range from $700 to $1,200 for a one-year debt investment to $5,000 to $15,000 for a longer-term (over three to five years) equity investment.
• Lower barrier to entry: For as little as $5,000, individuals can invest in large, commercial real-estate projects and enjoy the benefits of real estate: strong returns, a low degree of correlation with public markets and historically lower volatility.
• High yield potential: As equity investors, individuals can share in uncapped gains.
• Risk remains: These investments do carry risk, and some investors may not know how to evaluate risk factors, such as local economy volatility, or potential for higher-than-expected construction costs.
• Lack of liquidity: Many of these investments entail a hold period of up to five years. No prominent secondary markets have emerged yet.
• It’s early: While many platforms tout positive aggregate return figures, it’s inevitable that some projects won’t go well.
Syndicated debt crowdfunding
• Less risky than an equity investment: Debt investors are entitled to repayment before equity investors earn a return, so these investments carry less risk.
• Extra diligence: The loans upon which these investments are based were originated by professional real-estate lenders, who often have a physical presence and expertise in the markets where they issue loans.
• Short hold period: Relatively short terms (typically under two years) allow investor to reinvest sooner, and reduces liquidity risk.
• Less upside than an equity stake: Though debt investments are generally more secure, they carry less upside, as the investor’s yield is limited to the interest rate of the loan.
• A middleman: The experienced real estate lender is an additional layer of diligence, but it’s also another party between the investor and the original loan. This typically means a net annual percentage return of 0.5% to 1% lower than platform-issued debt offerings (see below).
Platform-issued (‘pre-filled’) debt crowdfunding
• Less risky: Debt investors are the first to be repaid, and the investment is secured by the underlying property.
• Short hold period: The individual typically recoups their money in six months to two years.
• One less middleman: With the platform acting as the lender, one less party takes a fee.
• Less upside than equity, for the same reason that syndicated debt does.
• Less diligence: Unlike syndication, the only loan underwriting is done by the platform (acting as lender). Some platforms practice conservative underwriting, but the companies themselves may have limited operating histories and minimal experience in all the markets where they issue loans.
KeyBank (NYSE: KEY) announced today its strategic partnership with and equity investment in Billtrust, a pioneer of payment cycle management solutions. This collaboration, along with the launch of KeyTotal AR™, marks the most recent in a series of partnerships with emerging fintech providers, affirming Key’s commitment to bringing innovative solutions to market. Terms of the investment were not disclosed.
The KeyTotal AR™ platform allows KeyBank’s corporate clients to improve operational efficiency during the invoice-to-cash process using electronic invoicing and payments in a flexible, cloud-based solution. Powered by Billtrust’s Quantum Payment Cycle Management solution, the platform accelerates cash flow by automating invoice delivery and payment and cash application. Merging this innovation with KeyBank’s broad range of accounts receivable (AR) capabilities has created one of the highest-level product suites available in the market today.
Atlanta has enjoyed a position as a hub for financial services, if not necessarily fintech, for quite a while. The city, which is presently playing host to a number of fintech startups, incumbents, and technology accelerators (including the Techstars Atlanta Program) is the place to be for payments companies, to the point where some have nicknamed areas of the hub things like “Transaction Alley.”
For the older guard of digital payments, companies NCR and WorldPay are both currently headquartered here, and of course, it’s the birthplace of the Atlanta Automated ClearingHouse, or ACH.
Startups like First Performance Global are innovating the authorization side of payments, using data analytics, social media, and automation to make sure its businesses stay competitive.
The city is home to older fintech residents like banking technology provider Kasasa, mobile trendsetter Malauzai, and digital banking solutions provider Q2 Holdings.
Now, Austin is headquarters to newer entrants like Draft,which is using the venture funding it received from Plug and Play and Envestnet Yodlee in order to build insights based on data analytics to help financial advisors avoid poor portfolio performances and to further build trust with clients. Companies like Self Lender are focusing attention on the under-banked, using digital savings plans to help users build up the credit they are missing from lack of access to more traditional financial products. Other startups like Able are focusing on the increasingly competitive small business lending market, aiming to fund SMBs at all stages with help from friends and family.
Take for example the startup Waleteros,a banking app geared specifically to serve the underbanked U.S. Hispanic customer.
Then there’s ClassWallet, an app geared specifically to help schools. This virtual wallet streamlines the process of payments and reimbursements for teachers and schools alike.
Catering to Miami’s entrepreneur demography is a startup like InvestReady, formerly known as Accredify. This company uses API integration to allow crowdfunding portals to verify investors, thus simplifying the tedious compliance and verification process. The company, which was founded in 2014, has to date raised $120K in funding.
D3 Technology in Omaha has become a stalwart in the mobile banking scene, helping institutions replace their aging, first-generation mobile apps with data-driven solutions and modern UX’s. Lincoln’s Hip Pocket is a financial wellness tool that allows users to save money with a swipe.
Some companies like Wealthminder are using digitized financial planning tools and investment recommendations fueled by data analytics to help its users to achieve longer term financial goals, such as funding college, buying a home, or retirement.
Startups like FS Card are busy re-designing credit, offering new options for small dollar loan customers to move towards more traditional (more affordable) credit products. Others, like StreetShares are enabling “social finance” for small businesses, allowing like-minded investors to fund small businesses through auctions (businesses pitch themselves through a simple mobile application, and investors compete to fund; the lowest bids are consolidated into one single loan with a low interest rate).
Using aggregators also allow retailers to instantly offer multiple payment methods to the customers leading to a higher conversion rate. That’s why we see digital payment processing companies like Wirecard AG (WRCDF) expanding at a quick rate. The company registered a transaction volume growthof ~34% during the first quarter of 2017.
GH Capital Inc (GHHC), a gateway provider for online banking electronics payments, can also benefitfrom this trend. The company already entered in several partnerships with multiple payment processors. It recently partnered with Allied Wallet and has taken a 23% equity stake in VMoney.
GH Capital is involved in the provision of IPO services for small corporations.
BFS Capital Inc., a small business financing company, announced that it has appointed Michael Marrache as Chief Executive Officer to succeed outgoing CEO and co-founder Marc Glazer. Named President in September 2016, Marrache previously served for more than three years as the company’s Chief Operating Officer. He also will join the company’s Board of Directors. Marc Glazer will continue to serve as Chairman of the BFS Capital Board.
Today, Washington Capital Partners (WCP), a hard money lender operating in the Washington D.C., Virginia, and Maryland areas, announced their new Flip-to-Rent Hybrid Loan product. This 3-year hard money loan allows fix and flip investors to immediately roll their property into a long-term rental loan.
MarketInvoice continues on its mission to extend its services to a broader range of businesses. The invoice finance platform, which recently launched a new longer term funding line (MarketInvoice Pro), has forged a strategic alliance with credit management specialists Veritas Commercial Services.
Veritas is a leading credit management firm with a digital sales ledger platform called VeritasVirtual. Its customers use this platform to monitor the status of outstanding payments. The MarketInvoice platform has now been seamlessly integrated into VeritasVirtual, offering small business users access to MarketInvoice Pro – a funding line which is secured against their outstanding invoices.
China Rapid Finance Limited (“China Rapid Finance” or the “Company”) (NYSE: XRF) today reported its unaudited financial results for the second quarter ended June 30, 2017. The Company will hold a conference call on August 17, 2017 at 8:00 am Eastern Time (8:00 pm Beijing Time) to discuss the financial results for the second quarter of 2017. Dial-in details are provided at the end of this release.
Second Quarter 2017 Financial Highlights
Total gross billings on transaction and service fees grew by 59% year over year to $24.5 million, or 46% over the previous quarter.
Gross billings from consumption loans exceeded gross billings from lifestyle loans, marking an important milestone. Gross billings from consumption loans increased by 642% year over year to $13.2 million, or 97% over the previous quarter. Gross billings from consumption loans represented 54% of total gross billings as compared with 12% in the prior year period, and 40% in the previous quarter. Gross billings from lifestyle loans were $11.3 million as compared with $13.7 million in the prior year period, or $10 million in the previous quarter. Gross billings from lifestyle loans were 46% of total gross billings, as compared with 88% in the prior year period, and 60% in the previous quarter.
Net revenue increased by 9% year over year to $15.2 million (after netting off customer acquisition incentives of $8.1 million) from $13.9 million (after netting off customer acquisition incentives of $0.6 million) in the prior year period, and 45% over the previous quarter from $10.5 million (after netting off customer acquisition incentives of $5.3 million) in the previous quarter.
Second Quarter 2017 Operating Highlights
Number of new borrowers added in the second quarter of 2017 was 760 thousand, increasing 39% over the previous quarter. As of June 30, 2017, the Company had 2.7 million unique borrowers.
Total number of loans facilitated grew by 354% year over year to 5.1 million, or on average 55 thousand loans facilitated per day. Total number of loans facilitated since inception reached 20 million.
Total loan volume facilitated increased by 244% year over year to $720.7 million. Consumption loans facilitated increased by 431% year over year to $637.5 million, with lifestyle loans facilitated totaling $83.2 million, as compared with $89.7 million in the prior year period.
Average cumulative loan volume per borrower of the Q4 2015 cohort increased to approximately $1,550 in their 18th month on our marketplace from approximately $1,300 in the 15th month. Average cumulative loan volume per borrower of the Q1 2016 cohort increased to approximately $1,340 in their 15th month on our marketplace from approximately $1,099 in the 12th month.
Repeat borrowers on the Company’s marketplace accounted for 72% of the total borrowers as of June 30, 2017.
Recently, the Finance Office of Ningbo City Government approved a subsidiary of Fox Financial Technology Group Limited (“Fox Fintech Group” or “the Company”), an affiliate of Sohu.com Limited (NASDAQ: SOHU), to obtain the city’s first internet micro-credit license.This is a milestone that shows Ningbo City Government’s positive stance towards leading internet companies to set up fintech-related businesses in the city.
Headquartered in Germany, Pan-European savings marketplace Raisin reports that in less than 4 years its customers have invested more than €4 billion in the platform’s savings products. As a result, Raisin is the leading marketplace for investments in Europe and one of the fastest growing Fintechs in the world.
Founded in 2013 as the first marketplace for investments in Europe, Raisin is now about twice the size of its next largest competitor.
The immediate impact of 2016’s Brexit vote on private equity real estate investing in the second half of the year carried over into 2017, with reciprocal effects in mainland Europe. The first half of 2017 saw 201 deals closed, down from 315 and 302 in the first six months of 2016 and 2015, respectively. Continental Europe saw about 500 deals close between January and June 2017, as compared to about 400 halfway through 2016 and about 300 at 2015’s midpoint.
Swifts’s gpi enables banks to make cross-border renminbi payments to Chinese companies. By collaborating with China’s Cross-border Interbank Payment System they aim to make renminbi payments as fast as possible, Michael Moon, head of payments markets for Asia-Pacific at Swift, tells The Asset.
A recent Swift report shows that the renminbi only ranked sixth as a share of total global payments by volume.
Malaysia and Germany are the two countries which have had the highest growth in renminbi utilization for the past three years. For the first six months of 2017, Malaysia and Germany have seen a 551% and 436% growth respectively, compared to the same period in 2014.
Supercomputer Organized by Network Mining (SONM) has made an announcement regarding digital economist Paolo Tasca having joined the company’s board of advisors.
Tasca is the founder of the Centre for Blockchain Technologies at the University College London (UCL) and currently holds the role of Executive Director there. Prior to this position, Tasca acted as Lead Economist for digital currencies and peer-to-peer lending at Deutsche Bundesbank, which is located in Frankfurt, Germany.
Small lenders are offering the lowest rates on $1 million mortgages, with some products potentially lowering repayments by $500 a month, or $200,000 over a 30-year term.
The loan sizes have crept up as the median price of a property in Sydney hit $1.15m and about $850,000 in Melbourne.
Loans.com.au, an online lender, and Mortgage House Advantage offer the lowest variable, principal and interest rate for an owner-occupier of 3.64 per cent, or monthly repayments of about $4569. That compares to an average rate of 4.27 per cent, a difference of 53 basis points, $362 a month or $130,000 over a 30-year term.
Australian Unity has a top rate for interest-only, owner occupiers of 3.79 per cent, or $3158 in monthly repayments. There is a $600 application fee. The average basic variable rate in the category is 4.73 per cent, a difference of 94 basis points, $551 a month or more than $198,000 over a 30-year loan.
Loans.com.au offers owner occupier, interest-only loans at 3.89 per cent, or $4711 in monthly repayments. That compares to an average rate of 4.53 per cent, a difference of 64 basis points, or $374 a month, or more than $134,000 over 30 years.
KNAB Finance Advisors Pvt. Ltd, a fin-tech firm that provides unsecured working capital loans to small and medium-sized enterprises (SMEs), has raised a little over Rs 2.5 crore in two funding rounds, a top company executive told VCCircle.
Non-banking financial company (NBFC) InCred, and over a dozen individual investors including Mindtree executive chairman Krishnakumar Natarajan and Sharjah Islamic Bank’s senior vice president Ravi Bhardwaj invested in the company.
The startup extends loans with an average ticket size of Rs 6 lakh, and it has disbursed Rs 10 crore worth of loans so far. It also offers short-term loans, allowing customers to close them within a month.
P2P Lending: According to a recent study, 80% of the Indonesian population does not have a formal bank account, with 203 million Indonesians earning less than $4.50 a day.
Merchant payments: These companies include Moka, backed by investors including Convergence Ventures, East Ventures, Fenox VC, and Wavemaker Partners; Pawoon, backed by Ideabox and Kejora Ventures; and Cashlez, backed by Mandiri Capital and Gan Kapital, which offers a wireless card reader to facilitate card payments for small and medium-sized businesses.
E-commerce installment lending: In November 2016, East Ventures invested in Cicil, a financing platform targeted at college students to provide installment loans for items such as smartphones and laptops. Akulaku, which has a presence in five countries including Indonesia, provides an installment shopping mall and has racked up more than 5,000,000 downloads in the Google Play store. Kredivo, which is owned by Singapore-based startup FinAccel, also offers credit for online shopping in Indonesia without credit card on 30-day or 3-, 6-, and 12-month installments.
Historically, crowdfunding may be traced back to 1885, when renowned publisher Joseph Pulitzer launched a fundraising campaign in his newspaper, The New York World, to seek funds from the public for the construction of a pedestal for the Statue of Liberty — a gift of friendship from the French government to the United States.
The fast-growing phase of the Internet in 1990s marked another success story for crowdfunding. British rock band Marillion in 1997 succeeded in its call via the Internet to collect US$60,000 from the fans to fund its concert tour. Since then, Internet-mediated crowdfunding platforms started to flourish in many countries, particularly in the United States, the United Kingdom, and recently, in other parts of the globe.
As at 2014, the value of the crowdfunding industry worldwide reached US$16.2 billion (RM69.7 billion). The figure was predicted to increase to US$34.44b in 2015.
The Securities Commission of Malaysia (SC) issued the Guidelines on Regulation of Markets under Section 34 of the Capital Markets and Services Act 2007 on Feb 10, 2015, to regulate the equity crowdfunding (ECF) platforms. Since then, the SC has approved six ECF platforms, namely FundedByMe, Ata Plus, Crowdo, Eureeca, Equity.pitchIN and Crowdplus.Asia to start their operation.
Beijing-based Rongsheng Xinlian Information Technology, operator of online and mobile automobile-focused P2P lending platform Baijindai.com, recently secured a strategic investment of USD 10 mln from Xingda (Singapore) Group Holding.
Baijindai is an automobile-focused financing platform, which allows users to apply for loans to buy a car, and for investors to fund users’ loans.
HSBC announced that it was working with IBM to create a cognitive intelligence solution aimed at extracting key data from trade documents before entering the bank’s formal system. The bank typically processes over US$500 billion worth of trade documentation for customers and must manually review an estimated 100 million pages of documents annually.
In Singapore, financial technology firm Silent Eight has alternatively proposed using AI solutions to support bank analysts and investigators with their fight against AML violations and terrorism financing.
The eight startups taking part in the programme were gaming startups LudoHuband Gamers Entertainment Meet (GEM), food startup InspireMe Trading, development and design startup Orbitrix Programming Solutions, flowers company Unforgettable Moments, real estate crowdfunding startup LCB Moguls, agri-tech startup eMsika, and interior design company Kreate Interiors.
News Comments Today’s main news: U.S. credit-card debt hits new record. LendingClub raises its outlook. OnDeck shares rise 17%. Zopa’s disappearing capital from IFISA. Ping An to invest in AI. Blackstone assumes majority stake in Banco Popular’s real estate portfolio. Securities and Exchange Board of India to study impact of fintech on financial markets. Today’s main analysis: SoFi bank charter could […]
Credit card debt hits new high. AT: “Making sure I understand, if millennials — the largest living generation — aren’t carrying credit cards (I’ll assume that some do), then most of this debt is from older Americans. Boomers must really love their credit cards.”
The tide could be turning for LendingClub. AT: “It looks as though it is, but keep in mind that markets fluctuate. There will be a fall again. The question is, by how much? A dip, perhaps. Bit the stock price will fall, and it may rise again. I like seeing LendingClub makes its climb back.”
The 10 biggest fintech companies in America. AT: “The figures come from CB Insights and Pitchbook. But I can’t help but wonder, aren’t they tracking PayPal? Is PayPal not considered a fintech company? I know it’s got a longer history than the word “fintech,” but it seems to me to fit the definition.”
Investors remark on disappearing capital from Zopa IFISA. AT: “Technology fails. It’s one of the downsides to fintech. Nevertheless, too many of these types of failures and platforms will lose trust and credibility. It doesn’t appear to be a hacker. Rather, it looks like an internal IT glitch. Probably easily solved with a little investigation.”
U.S. consumer credit-card debt just passed an ominous milestone, beating a record set just before the global financial system almost collapsed in 2008.
Outstanding card loans reached $1.02 trillion in June, data from the Federal Reserve show, as lenders including Citigroup Inc. and JPMorgan Chase & Co. compete to sign up cardholders who may carry balances — a relatively lucrative business in a prolonged period of low interest rates.
By the numbers, the performance was also in line with what investors wanted to see — revenue was up 35 percent to $139.6 million during Q2, a solid beat on the analysts’ consensus estimate of $136.4 million. Originations returned to growth in the second quarter, up 10 percent to $2.15 billion. Meanwhile, operating expenses fell by 12.5 percent to $165.1 million in the quarter.
Revenue for the year — on the strength of that big performance — got an upward revision to the range of $585 million to $600 million, a reasonable pick-up on the previous forecast of $575 million to $595 million.
Following a beat-and-raise quarter from LendingClub Corp LC, analysts surmised the company may have reached an inflection point.
Credit Suisse analysts Stephen Ju and Christopher Ford noted this is the first quarter in about a year in which the company reported year-over-year growth in loan originations. The analysts expect ongoing acceleration throughout the next four quarters, as the company continues to recover.
Canaccord Genuity expects originations to grow sequentially in the third quarter or fourth quarter, aiding revenue growth acceleration in the second half of 2017 and notable sequential margin expansion.
The firm maintains its 2017 earnings per share estimate at 3 cents but nudged up its 2018 earnings per share estimate from 19 cents to 20 cents.
Shares of OnDeck Capital Inc (ONDK.N) rose as much as 17 percent on Monday after the online lender said it had made progress on a plan to cut costs and improve the credit profile of its borrowers, and expects to reach double-digit loan growth again by next year.
Social Finance Inc., or SoFi, on June 6 applied for a bank charter with the Federal Deposit Insurance Corp.
S&P Global Market Intelligence research shows SoFi originated 1,160 mortgages in 2016, with only two of those mortgages, or 0.2%, made in distressed or underserved tracts, a CRA measure. Across the U.S., 2.0% of all mortgages were in underserved areas that year.
Of the $8 billion in total loans that SoFi said it originated in 2016, about $810 million were property loans, according to S&P Global Market Intelligence data. None of the mortgages issued by the parent company were in SoFi Bank’s proposed CRA assessment area of Salt Lake City and nearby areas.
Fewer than 1.00% of SoFi’s consumer loans are made to borrowers in Utah, according to reports for the company’s asset-backed securities issued in 2015, 2016 and 2017. The securitization documents cover $4.6 billion in principal loan balances.
SoFi’s CRA strategy will revolve around financial literacy, education and scholarships, according to its application. SoFi stated it will measure the success of its CRA plan in terms of employee hours devoted to community service, the number of scholarships awarded and the percent of its investment pool that goes into Utah Housing Bonds.
Betterment’s three new features went live in late July. The features are:
Financial Advice Via App: Through Betterment’s mobile app, clients can now message a licensed financial expert. Experts can answer questions like how to set goals, which tax features to use, and how much risk to take in investing.
Socially Responsible Investing (SRI) Portfolio Options: These options give customers a way to invest in a globally diversified portfolio of companies considered socially responsible.
Combining Plus and Premium Plans: Betterment is now combining its Plus and Premium plans, which allow customers to now make unlimited phone calls to certified financial professionals. The new, combined plan charges a .4% annual fee.
The first feature, the ability to get financial advice through an app, attempts to address a big issue with robo advisors. Many investors want a human touch. They want to talk to an advisor from time to time. This will no doubt be true during the next bear market. Betterment’s new feature attempts to address this need.
The new pricing plan will benefit investors who were already using the higher-level Betterment plans. Those who were Plus customers can now get more personalized advice for the same fee and those who were Premium customers are paying less for the same service–always a good thing.
The Premium plan now gives customers access to more holistic investing advice. This advice can run the full scope of your investments, from your 401(k) to real estate to individual stocks to your Betterment portfolio.
The fintech lender’s consumer lending activities penetrated into areas that could benefit from additional credit supply, such as areas that have lost a disproportionate number of bank branches and highly concentrated banking markets.
Consumers presenting the same credit risk could obtain credit at lower rates through the fintech lender than through traditional credit cards offered by banks.
The lender’s use of alternative credit data allowed consumers with few or inaccurate credit records (based on FICO scores) to access credit at lower prices, thereby resulting in enhanced financial inclusion.
You may no longer need to worry about carrying your ATM card with you everywhere as long as your bank’s ATM and smartphone are equipped with near field communication technology (NFC). NFC, a method of wireless data transfer that detects and enables technology to communicate, is reportedly being rolled out at banks across the country. Financial institutions believe that cardless or “Smart ATM’s” are the wave of the future and they are enabled as long as ATM’s and customers have a smartphone or mobile device equipped with NFC.
It’s been estimated that 2.2 billion smartphones will be equipped with NFC by 2020.
The emergence of robo-advice and robo-investing platforms in recent years has led many traditional advisory firms to place a greater emphasis on their digital footprints. A growing number, in fact, are moving to offer digital versions of their “human” services. The 2017 InvestmentNews Adviser Technology Study, for example, showed that 7% of independent advisory firms offered a robo-advice option at the end of 2016, compared with just 3% two years earlier. At the same time, 19% of the firms that do not offer a robo-advice option intend to introduce one in 2017—nearly double the number that indicated that intention in 2015.
Only about 4% of the mass affluent and high-net-worth individuals in our survey reported that they use an automated investing or robo-advice tool.
For context, some 49% of individuals in our study currently use a financial adviser; the balance are self-directed investors.
Better Mortgage is now available in 13 different states as it has received a license to lend to house hunters in Florida. The Sunshine state is an important addition to the online lenders services as Florida is a popular vacation home state.
Better Mortgage says it is continuing to expand its footprint in the US. The lender is now available and improving access to homeownership in 13 markets including; Arizona, California, Colorado, Connecticut, Washington, DC, Florida, Georgia, Illinois, New Jersey, North Carolina, Oregon, Pennsylvania and Washington. Better Mortgage says that it is seeing particularly strong uptake in Seattle, Washington, San Francisco, California, and Washington, D.C.
While each offers a unique focus and value proposition to investors, platforms have now consolidated into several main categories of business model:
eREITs: Fundrise and RealtyMogul, two of the original players the real estate crowdfunding space, have pivoted to offering semi-blind funds that aggregate properties throughout the country.
Commercial equity investing: probably the closest to the original ideal of real estate crowdfunding, these platforms offer CRE equity opportunities to accredited investors, allowing them to participate in high-upside, larger commercial projects. While the return potential is often great, these tend to be the longer term and riskier than other RECF investments.
Debt investing: Some platformstake some or all of an existing real estate loan, secured by a deed on the underlying property, and syndicate it out to a network of individual investors at a fixed rate of return.
Some platforms (like EquityMultiple, see below) perform their own diligence on investments, which should give you some comfort as an investor. Even so, you’ll want to understand some key components of any deal you consider, and be sure it aligns with your investing objectives before pulling the trigger. Here are some of the main things to consider:
Risk Factors – Examples of risk factors are tight construction timelines, a precarious labor market in the area, an unsubstantial track record or aggressive leverage on the part of the Sponsor who originated the deal.
Payout Structure – Be sure to understand where your investments fits in the capital stack, and what order you will be repaid principal and profits relative to the Sponsor and other LP investors.
Cash Flow and Liquidity – Simply looking at how many dollars you’re expected to receive over the lifetime of a deal (the simple return) or even a time-weighted return (IRR – internal rate of return), won’t give a complete picture of the timing and magnitude of returns.
Small Change, a real estate crowdfunding portal, recently completed the sale of its first-ever offering open to all investors — and raised $95,000. Thirty-nine investors put in an average of $2,435. The minimum investment was $500. The money will help OJT (Office of Jonathan Tate), a New Orleans-based developer, finance the construction of two affordable single-family homes, on vacant lots.
The homes will be in New Orleans’ Milan neighborhood, which is two-thirds black and one-third white, and has a median income around $33,000.
So it has to move beyond the perception that it is a singular service provider, says Voya Financial Advisors’s Tom Halloran, president of its broker-dealer. One way the firm is doing that is by tying together its institutional businesses with retail, mixing technological innovation with old fashioned salesmanship, even considering the deployment of a robo advice platform.
In fact, it’s up to you to track your performance and ensure that your compensation reflects it, said Joanne Bradford, chief marketing officer of online lender SoFi, on a recent episode of the “So Money” podcast.
A new report on savings and investment suggests that savers are missing out on billions of pounds by spurning investment opportunities, including peer-to-peer lending. The report is supported by RateSetter, one of the UK’s largest P2P operators, and was produced by the Social Market Foundation think tank.
The report found that savers are holding more than £200bn in cash above and beyond what is referred to as the “rainy day” level. “Rainy day” funds – which are held in cash in case of emergency – are defined by the report as three months’ worth of income. The Social Market Foundation says that this idle pot of £200bn could have generated returns of £94bn over the past five years, had it been invested in the FTSE 100, or £40bn, if invested via P2P lending.
The £240m Ranger Direct Lending fund was announced its latest dividend of 24.26 pence per ordinary share for the 3-month period to 30 June 2017, its lowest in more than a year.
Its latest numbers show returns were again comparable to the last few months. This was due to a combination of expenses such as legal fees and higher than expected cash levels. In 2017, excluding the estimated dividend mentioned above, a total of 55.44 pence per share has been paid in dividends to ordinary shareholders. In 2016, a total of 89.61 pence per share was paid in dividends to ordinary shareholders.
Investment firm Octopus seems to have its tentacles in all the pies, as it has today become the latest business to offer an Innovative Finance Isa.
Octopus is also aiming to dismiss the risks associated with peer-to-peer lending by contributing five per cent of every loan from its own pocket. Any losses suffered will come out of this sum first, meaning investors can get their initial investment back plus any interest due to them before Octopus earns anything.
Investors will be able to put as little as £10 in the tax-free product, and up to their annual Isa allowance which currently stands at £20,000.
ThinCats, an alternative lending industry leader, announced on Tuesday it has received full authorization by the Financial Conduct Authority (FCA). According to the online lender, the approval highlights its commitment to protecting consumers and also developing the alternative finance industry as a vital source of capital for businesses and income for investors.
Chinese financial giant Ping An Insurance (Group) Co will spend more than 7.77 billion yuan ($1.16 billion) on technology research and development this year, and artificial intelligence will be the focus of that R&D, according to a senior executive of the company.
Established in 2008, Ping An Technology has about 4,000 technology workers and has paid attention to R&D in cognition, robot advisory and cloud businesses. Their applications are mainly used in finance and healthcare industries; up to now, there have been more than 200 application scenarios.
On the evening of August 7, the public bankers issued a friend said that the balance of micro-loan loans over 100 billion. According to the public bank in 2016 annual report, the balance of micro-loan loans 7 months increase of nearly 300%.
In addition, July 16, the public bank retail credit director Fang Zhenyu Lundi summit speech revealed that the balance of microfinance loans 76 billion yuan, which means that the balance of 72 days of microfluice increased by 24 billion yuan. At the same time, he also revealed that the daily loan loans to 150,000 pen, up to 20 to 300,000 pen, the daily repayment of the number of 200,000 pen, a single loan approval time is 0.3 seconds, almost real-time approval. In the allocation of talent, the public bank IT department staff accounted for 57%, background managers accounted for 6%, business and support staff accounted for 37%.
Last year, the conference had a massive showing of over 1,300 attendees. This year, the conference nearly doubled to 2,400 attendees. There was hardly any place to stand when Soul Htite of DianRong and Renaud Laplache of Upgrade took the main stage to talk about Fintech entrepreneurship.
Gopher Asset Management had investment associates in just about every session at the conference looking for the next investment opportunity. Gopher is a subsidiary of Noah Holding Limited (NOAH:NYSE), one of the biggest wealth management companies in China with a current market cap of USD $1.7 billion.
Galaxy Internet, another Chinese venture capital firm is actively seeking investment opportunities in the area of finance, ecommerce, payments and big data.
Borrowell is owning the Canadian market in a big way. They just raised a $12 million round. Borrowell is helping Canadian’s to build credit starting with affordable loans. In a short amount of time, Borrowell has amassed over 300,000 borrowers and is looking to expand into other markets.
Jack Quigley, Founder and CEO of CrowdFundUp. He’s probably the hardest working man in Fintech. He’s constantly making deals and connecting dots. He’s 100% committed to China and recently moved to Shanghai and I think he’s not leaving until he brings home the trophy. I visited his office in Shanghai, overlooking a bustling city. CrowdFundUp will be China’s gateway into commercial real estate in Australia.
Banco Popular S.A. (‘Popular’) has today approved the sale of a majority stake in its real estate portfolio to Blackstone Real Estate Partners Europe V (‘Blackstone’). The agreement has been reached following a competitive process in which three international companies with long track records in the management of real estate assets presented offers. Blackstone was selected as the successful bidder after submitting the best offer in terms of both its value and management plan.
The agreement was confirmed after the European Union Directorate General for Competition today approved the acquisition of Popular by Banco Santander S.A. (‘Santander’) with no restrictions.
The transaction will involve the creation of a company to which Banco Popular will transfer assets with an aggregate gross book value of approximately €30 billion, as well as 100% of the share capital of Banco Popular’s real estate management company, Aliseda.
The valuation attributed to the Spanish assets of the business (e.g. properties, loans and tax assets, not including Aliseda) is approximately €10 billion. This is consistent with the valuation and provisions made by Santander during the acquisition of Popular and does not, therefore, result in any material capital gain or loss for Santander or Popular. The final valuation is subject to change depending on the assets remaining within the business at closure and following the integration of Aliseda.
Blackstone will own a majority 51% stake in the new company while also assuming management responsibilities, while Banco Popular will own the remaining 49% stake. As a result, the aforementioned assets will no longer be consolidated on Banco Popular’s balance sheet.
Lithuania is the latest country joining the Fintech revolution by recognizing the importance of fostering a regulatory environment that is conducive to change and challenges established norms. The Bank of Lithuania is out with a statement regarding the launch of a sponsored Fintech Sandbox.
The following measures are will apply:
Relatively easy and low-cost authorization process: following submission of all necessary documents, it takes only 3 months for the Bank of Lithuania to take a decision on the issuance of an electronic money or payment institution license. In other EU countries, the process may take 12 months and more.
Access to the Bank of Lithuania payment infrastructure for non-banking sector companies planning to provide payment services, thus avoiding a middleman.
Newcomer program. The Bank of Lithuania applies a one-stop shop principle for meetings and consultations with potential financial market participants.
Specialized banking license. In order to establish a bank in Lithuania that would provide usual banking services, the lowest initial capital requirement in the entire euro area – EUR 1 million – is applied. This is five times less than the requirement applied to banks that provide the full range of services, including investment ones.
ID Finance Co-Founders Boris Batine and Alexander Dunaev were far from newcomers to the world of finance when they started up their business in 2012. Long before founding a data science, credit scoring and digital finance company, the Russian-born and U.K.-educated entrepreneurs met while working abroad at Renaissance Capital and Deutsche Bank.
And so, in 2012, with only a few hundred thousand of their own dollars to get up and running, ID Finance launched in one of those underserved markets — their home market of Russia.
By 2015, the firm was profitable, and in 2016, it officially relocated it headquarters to Barcelona, Spain, one of three nations outside Russia ID Finance has expanded its efforts into — Belarus and Brazil being the other two.
These days, the firm originates 50,000 new loans a month — loans that it mostly finances off its own balance sheet, as opposed to selling them off on a marketplace. As of February of this year, the firm raised $50 million in debt from a consortium of banks to fund further expansion in South America.
A New $200 Million Fund
As ID Finance has expanded around the world — and partnered with various FIs — its founders realized that there are a host of small businesses that are simply being underdeveloped because they are almost invisible to investors.
Working with Elbrus Capital Fund Manager Yury Popov and asset management company Da Vinci Capital, the FinTech Credit Fund is being jointly offered as a $200 million debt finance fund aimed at FinTech companies focused on alt lending innovation. The funding from the credit fund, according to Batine, is aimed at helping up-and-coming FinTech lenders fund their own loans — and finance their loan portfolios.
“The alternative lending market is worth a potential $2 trillion, and we see a huge opportunity to back the billion dollar companies of tomorrow focused on digital lending,” Dunaev said.
Humaniq was launched in 2016 with a vision to build a world where the unbanked and underbanked around the world also have access to the banking and financial transactions. An estimated 2 billion people can be brought under the umbrella of financial inclusion with Humaniq’s services.
Tell us more about Humaniq and the problem you solve?
Humaniq is on a mission to bring new mobile digital services and financial inclusion solutions to the 3.5 billion unbanked / under banked globally who have no access to the digital economy.
How does Humaniq work, especially with respect to privacy and security?
Humaniq offers a biometric blockchain app that can be used in any simple smartphone device.
The Humaniq LITE app is part of a broader humanitarian capitalism venture. Humaniq has a digital currency tied to it, known as HMQ.
Who’s your target audience and how exactly do you help?
We are working with emergent economies – where people live on USD$2.50 a day. Many of them do not have documentation and have had little or no education.
Our first big pilot will be in Ghana with local and international organisations, targeting 18 to 40-year-old low-income smartphone users and merchants in suburban areas including the capital city of Accra.
How did you acquire your first customer and how long did that take?
We did various test in India and Africa with previous test versions of our app. We are also working with Brazilian organizations.
With regards to funding, how did you fund your business? How hard was it and how much time did it take to acquire those funds?
Our business model has thrived on the P2P innovation and blockchain driven crypto economics. We built our model on the back of a crypto, Ethereum driven smart contract Initial Coin Offering(ICO).
The New Zealand government is looking to remove the distinction between class and personal advice, as well as allow the provision of digital advice as it seeks to overhaul the country’s regulatory regime for financial advisers.
Unlike the FA Act, the new Bill enables the provision of more types of advice by being technology-neutral, lifting the existing restrictions around advice needing to be provided by a human adviser.
In turn, this allows for the provision of robo-advice and works to future-proof the legislation for technological developments. It also serves to increase the New Zealand population’s access to quality financial advice.
Thus, regulators are faced with the challenges as well as opportunities to evolve their functioning more effectively through the adoption of new technology solutions. It is in this context that the CFRT committee will help the SEBI deal with relevant risks and challenges.
The Committee would examine, deliberate and advise the SEBI on an ongoing basis on the following issues:
Recent and medium term trends (within next 5 years) in fintech developments in securities market worldwide.
Opportunities and challenges from new fintech solutions and its impact on Indian Securities Market.
Fintech solutions for further widening and deepening of Indian securities market.
Approach and framework for the regulatory sandbox in Indian market conditions to facilitate the adoption of fintech and promote financial innovations.
Preparing the Indian securities market and regulatory framework to adapt to new fintech solutions while promoting market integrity, market development, consumer protection and managing change, business models and market disruptions.
Assessing technological solutions for SEBI regulatory functions viz. information management and data mining, risk management including cyber security, intermediary supervision, consumer protection, etc., through the application of new technological solutions like applying distributed ledger technology, Big Data, data analytics, Artificial Intelligence, machine learning etc.
Technology capacity building by Indian securities market in general and SEBI in particular.
The Committee on Financial and Regulatory Technologies will, among other things, deliberate on financial technology solutions for “further widening and deepening of the Indian securities market” through traditional and alternative platforms, including peer to peer lending and equity crowd-funding.
While questioning the manner in which these entities help start-ups raise funds, the regulator has said that any violation would be “construed as organising an unrecognised stock exchange” and that SEBI would be “constrained to initiate action.”
Under the current legal framework, issue of shares to more than 200 persons constitutes a public issue and needs SEBI approval.
Rubique, the one-stop online marketplace providing technology-enabled end-to-end solutions to financing needs of individuals & SMEs has announced the appointment of two directors- Suresh Sethi, EX-CEO & Managing Director of Vodafone M-Pesa and Alexia Yannopoulos Director at Apis Partners LLP.
The Centre for Finance, Technology and Entrepreneurship (CFTE) has revealed that it is setting up an international hub in Singapore designed to aid finance professionals gain the necessary skills in FinTech.
Working closely with the Monetary Authority of Singapore (MAS), CFTE has been formalizing plans to expand its education platform to the Association of Southeast Asian Nations (ASEAN), according to a report from FinTech Finance.
CFTE is to deliver courses that cover a range of areas in the finance industry. These include artificial intelligence, application programming interfaces (APIs), coding, blockchain, and RegTech. They will either be delivered online or via in-class training.
It is especially likely to absorb the investor cluster who, under the government’s new restrictive measures on real estate transactions, are swiftly turning away from banks and seeking for an alternative source of investment income, according to industry watchers.
In late May, the association enforced a set of guidelines, setting a 10 million won ceiling on the investment per business unit, responding to the government’s gesture to protect investors from potential dangers of the new investment platform.
INDONESIAN peer-to-peer (P2P) lending marketplace PT Amartha Mikro Fintek (Amartha) encourages and targets “millenials” to invest in micro-businesses and SMEs through the Amartha Short Movie Festival.
The Amartha Short Movie Festival is a competition divided into two categories which are short documentaries with the theme empowering micro-businesses and short fiction movies with online peer-to-peer lending as the theme. Applications are open from August 8 to October 9, 2017.
Global Domination Capital is set to be the regions’ first fintech startup company, offering equity crowdfunding and peer-to-peer lending solutions to the OECS countries and the CARICOM member states. This includes Barbados, Jamaica, The Bahamas, Trinidad and Tobago and The Turks and Caicos Islands.
Global Domination Capital is expected go live and accept both new investors and borrowers to the platform by late September.
OnDeck posts surprise quarterly adjusted profit. AT: “I like these kinds of surprises. If OnDeck turns itself around, and it looks like it’s going to, it could be an even bigger story than the LendingClub turn around. Maybe pundits will quit talking about a buyout.”
OnDeck to focus on better borrowers, expanded partnerships. AT: “This is smart business. Borrowers are the lifeblood of the business. If OnDeck can reduce risk by creating better risk assessment tools, make smart loans, and develop good partnerships that benefit both partners, we could see a different company in 2-3 years.”
The online lender will continue this focus on higher quality borrowers going into the remainder of 2017, and will also be expanding several of its loan features, including prepaid benefits for term loans and a “more tailored” underwriting experience for businesses, said Breslow.
JPMorgan Chase (NYSE: JPM) and OnDeck (NYSE: ONDK) today announced a contract extension to continue their collaboration on the bank’s digital small business lending product, Chase Business Quick Capital, for up to four years.
Shares of On Deck Capital(NYSE:ONDK) were up more than 21% as of 3:15 p.m. EDT, after the company announced a smaller net loss during the second quarter and a promising expansion in its partnership with JPMorgan Chase(NYSE:JPM). Shares of LendingClub(NYSE:LC), its primary rival in the world of online lending, rose 7%, as investors see On Deck’s recent performance as a good omen for the industry as a whole.
A focus on higher-quality borrowers seems to have relaxed investors’ worries about the company’s loan quality, a perennial concern given that the average On Deck loan carries an APR in excess of 40% per year.
Lending Club’s second quarter earnings marked an important milestone for the company – a return to growth. Originations have been hovering around $1.9 billion since Q2 of last year. This quarter Lending Club announced originations of $2.15 billion for the quarter, up 10% from the prior quarter of $1.96 billion. While this is still down from their previous highs, it shows that the company is back on a growth trajectory.
Last quarter the company announced banks were funding 40% of loans, but that reached higher in the second quarter to 44%.
LendingClub Corp <LC.N> and OnDeck Capital Inc <ONDK.N> surprised investors on Monday with strong growth forecasts that sent the online lenders’ stocks soaring, but analysts said the sector’s health was still a concern.
OnDeck shares closed 18.5 percent higher at $5, and LendingClub ended up 4.8 percent $5.46. The stocks rose in after-hours trading but remain far below their initial public offering prices of $20 and $15, respectively.
Executives of both companies were upbeat about the progress in their turnaround plans after they reported second-quarter results.
Earnest Corp is looking to sell itself for $200 million, Bloomberg News reported on Friday, far less than the $300 million it has raised from investors.
The online lending industry regained its footing in the second quarter, more than a year after it was knocked off-balance by severe disruptions in the loan marketplace. But investors’ sky-high hopes for the sector may have been lowered permanently.
Investors also were relieved that On Deck reiterated it would turn profitable later this year. Shares rose a sharp 18.5% Monday, but they fetch only about a fourth of their December 2014 IPO price, a sign of just how much the hype around these lenders has deflated.
Crucially, On Deck has moved on from funding loans through an online marketplace, the aspect of its business model that was truly disruptive. It now funds the vast majority through its own balance sheet, making On Deck more like an ordinary bank.
Both companies have to worry about rising competition. Innovative payment companies like Square and PayPal are extending more microloans to their merchant customers. Meanwhile, giants of finance like Goldman Sachs are extending more unsecured personal loans, which is LendingClub’s sweet spot.
U.S. financial technology provider Fiserv made an improved offer for Monitise worth about 75 million pounds ($98 million) on Monday, hoping to secure backing from the British financial services technology group’s investors.
Fiserv’s earlier offer, which valued the group at about 70 million pounds, drew criticism from Monitise’s investors led by Cavendish Asset Management, for being too low, given that the British group was worth over 1 billion pounds three year ago.
Fiserv’s final offer of 3.1 pence in cash per share represents a premium of 34.8 percent over Monitise’s closing price on June 12, the last before the initial offer was made.
Banco Santander, Monitise’s top shareholder with a 4.67 percent stake, had submitted a letter of intent to back the deal, as had Visa Inc, a large customer and investor with a 2.41 percent stake.
LendingRobot Series finished the second quarter with a healthy YTD aggregated return of 2.7%. Each Series’ return and portfolio health is in line with projections. Since April 1st, LendingRobot Series has added over 2,800 loans to its portfolio, more than doubling the number of loans held in each series.
Legislative Update 161 (Experian Email), Rated: A
Highlights this issue:
On July 10, the CFPB published a final rule prohibiting the use of mandatory predispute arbitration clauses that prevent class action lawsuits in consumer contracts for a wide array of financial products. The final rule was published in the Federal Register on July 19, and will become effective 60 days after that date, or September 18. All consumer contracts with arbitration clauses will need to comply with the rule within 180 days of the effective date, which will be March 19, 2018.
The House of Representatives is working to pass 12 appropriations bills by September 30 to fund federal agencies for the Fiscal Year 2018. The House Appropriations Committee passed the spending bill for financial regulatory agencies on July 13. The measure included several provisions important to Experian and our clients.
On July 19, Representatives Patrick McHenry (R-N.C.) and Gregory Meeks (DNY) introduced the Protecting Consumers Access to Credit Act. The bill would codify the legal precedent under federal banking laws that preempts a loan’s interest as valid when made.
Legislators in California continue to debate legislation that would enact a broadband privacy law in the state, similar to the rule issued by the FCC and then overturned by Congress. A.B. 375 would prohibit an internet service provider from using, disclosing, selling or permitting access to customer personal information.
In recent years, Kabbage and others have stepped up to introduce a purchasing card product to their borrowers, and with their early success, many lenders are now following suit for the following four reasons:
Staying on top of the customer’s mind
Speaking the language of large corporate partner targets
Underwriting use of funds
New Financial Technology Upgrades Bank’s Credit Review Process (PayNet Email), Rated: A
Enables Banks To Review All Credits and Focus on the Highest Risks
The real challenge is convincing bank management that they do not have to apply the same credit review process to the entire portfolio. Adopting different processes based upon exposure size and measured risk (APD for example) should be the goal of every bank. In other words, focus credit review efforts to those accounts that represent the greatest risk to the bank – and that is what you are hoping to do with your credit review process.
Conducting credit reviews are a “waste of time” in most cases because nothing has changed. What form that documentation takes is where PayNet can be most helpful to the prospect.
PayNet is introducing PayNet Credit Review Express,a risk management tool which streamlines the credit review process making credit review easier and less costly.
Credit Review Expressassesses the credit risk of each C&I borrower each month. Banks can assign their definition of risk from delinquency to probability of default to assign high, medium or low risk to each borrower. Currently, PayNet sees less than 2% of C&I borrowers as high risk credits. Other features include automated action steps (such as Watch, Restructure, Work-out) and a customized dashboard to monitor and track activity.
The Federal Deposit Insurance Corp. defended its authority to approve prospective new banks in response to suggestions by acting Comptroller of the Currency Keith Noreika that his agency should be able to approve applications on its own.
So it’s important for borrowers, especially recent grads, to think about the best places to live — the cities in which they’re not only likely to find a well-paying job, but also where rents and other living expenses aren’t so exorbitant so as to add to their pile of debt.
5 cities where student loans borrowers struggle the most with debt:
1. San Jose, California
2. Fort Worth, Texas
3. Boston, Massachusetts
4. Los Angeles, California
5. Denver, Colorado
5 cities where student loans borrowers struggle the least with debt:
1. Dallas, TX
2. Jacksonville, FL
3. Houston, TX
4. Columbus, OH
5. Austin, TX
The key indicator for affordability was how much of a borrower’s monthly income would go towards their student loan payments and monthly housing costs.
Marketplace lending has grown by nearly 150 percent on a compound annual basis for the last half-decade. Strong growth and real longevity mean that most advisors have to consider the role that marketplace lending plays in their clients’ portfolios.
Refinancing high-rate credit card debt or other hard-money-type loans among high-quality borrowers via a marketplace lender is sensible and provides good value to all parties.
As part of a fixed income allocation, what are the risks in marketplace loans? There is the credit risk of the borrower first and foremost—here the asset can be seen as clearly pro-cyclical; in other words, as the economy improves, the asset strengthens. Correspondingly, as the economy weakens, the credit of the borrower will weaken. Additionally, there has recently been some weakness in consumer credit, primarily in auto loans and credit card defaults, though these have been largely limited to the subprime aspects of these loan categories.
Six of the leading equity crowdfunding platforms that form the OFF3R Index raised nearly £130M in 2017 for UK private companies. This is £2M above the previous half yearly record that was reached back in the second half of 2015. March 2017, where Over £40 million was raised, buoyed the latest data and the period as a whole was characterised by some very large fundraises from Q1 2017.
The data also revealed that peer to peer lendinglevels continue to rise in the UK. The peer to peer lending statistics showed that over £1.8 billion was lent in the first half of 2017 by the nine platforms that make up the OFF3R Index. This is an increase of over £350 million from the previous half year period at the end of 2016.
The data also revealed that Assetz Capital had a record breaking month in June 2017. The total amount lent of over £30 million by the platform was higher than any previous period since the OFF3R Index began.
Old Mutual, a sigificant shareholder in the £351m VPC Speciality Lending fund, has further reduced its holding in the closed ended portfolio following previous reductions in exposure earlier in the year.
Its holding in the fund fell below 6 per cent back in March 2017, now it has sold more shares with its stake now less than 4.99 per cent, according to regulatory filings.
A VENTURE capital (VC) firm that backed Zopa in its early days has been named among judges for the second annual PitchIt Europe competition.
Rob Moffat, partner at Balderton Capital, an early Zopa backer, will be one of the VC judges alongside Seedcamp’s Reshma Sohoni, Blenheim Chalcot’s Dan Cobley and managing director of CommerzVentures Patrick Meisberger.
Tencent is developing a credit scoring system as it ramps up its battle with rival Alibaba for a share of China’s $5.5tn mobile payments market.
Ant Financial, Alibaba’s payments affiliate, launched its Sesame Credit two years ago, parlaying its data on consumers into a measure of their trustworthiness, providing comfort for small businesses and consumers alike.
Credit scoring is popular in China, especially among younger subscribers who lack a credit history but might be eligible for a high rating that would let them rent hotel rooms, bikes or phone chargers without leaving a deposit. The services are particularly valuable given the lack of access to credit cards in the country.
Tencent is testing a credit scoring service among a small group of its subscribers, upping the stakes as the two tech titans engage in an aggressive promotion this week encouraging Chinese to forgo cash in favour of payments made with a swipe of the phone.
Recently, Internet Society of China (ISA) and the information center of Industry and Information Technology Ministry Jointly issued the list of “China’s Top 100 Internet Companies in 2017”. For this time, Tencent overtook Alibaba to become the No.1. Tencent, Alibaba and Baidu were still the top three for five consecutive years, while Letv was out of the list.
The top 10 of the list were:
The list of “China’s top 100 Internet Companies” has been published every year since 2013 and has been published five times so far.The evaluation index combines seven core indicators of enterprise scale, profitability, innovation, growth, influence and social responsibility.
In a report released last weekend, the People’s Bank of China said some financial products offered through internet channels by fintech companies are “systemically important” and hence will be included in its macro-prudential assessment or MPA.
The aim is to prevent cyclical risks and cross-market risk transmission, it said.
Analysts said this is the first time that the PBOC said it will include fintech businesses in its MPA.
On 7th August, a Webank staff said in WeChat Moments that the loan balance of Weli Dai reached a milestone of over 100 billion RMB (equivalent to $14.91 bn). In a speech at the LendIt on July 16, Fang Zhengyu, the director of retail credit section in Webank, revealed that the loan balance of Weli Dai was $1.13 bn. And it has increased by $3.58 bn within just 22 days. What an amazing growth!
Weli Dai is focused on providing a cash loans product, with the loans amount from ￥500 to ￥300,000, and is operated in pure online pattern. With its white list invitation system, Weli Dai identifies the target customers effectively. The loan period is flexible from one day to twenty months, which makes users borrow and repay money at any time. Many factors contributed to the performance of Webank today, the most important is that Webank developed its business in the huge customer base of QQ and WeChat. Besides, Webank has built partnerships with nearly 40 banks for jointly making loans.
TNG FinTech Group Inc, a Hong Kong-based digital wallet operator founded in 2013, is poised to close a funding round and is targeting a valuation of about US$500mil, according to a person familiar with the matter.
It has attracted almost US$60mil in the series A round from investors including a Beijing-based private equity fund, said the person, who asked not to be named discussing private deliberations.
TNG, which offers global money transfers, foreign-exchange transactions and bill payments, expects to be profitable this year and is targeting a listing in either New York or Hong Kong by 2019, the person said.
Our next guest on the Lend Academy Podcast is Jin (Jeffrey) Chen, the CEO of ZhongAn Insurance. I sat down with him when I was in Shanghai recently for Lang Di Fintech (LendIt’s Chinese event) and we conducted this interview with the assistance of his translator.
The People’s Bank of China said in a report that it is considering expanding its risk-assessment system beyond banks to include major online financial businesses. Last month, it reached agreement with 45 nonbank financial firms– including payment systems affiliated with internet giants Alibaba Group Holding Ltd. and Tencent Holdings Ltd.–on joining a new payment-clearing platform called Wanglian, according to listed-company documents.
This effectively gives the PBOC a clearer view of payments, enhancing regulation, said Tencent, which owns the TenPay payment system.
Finnish p2p lending service Fellow Finance has opened a new invoice finance service for companies, which allows businesses to convert their trade receivables into cash immediately. In the new invoice finance service, a company gets funding against its invoice receivables directly from investors.
In adjacent Estonia p2p lending marketplace Investly, which specializes on invoice financing for Estonian and UK SMEs, is growing. The last figures we reported for them show 78% month on month and 319% y-o-y growth.
Rob Moffat is a Partner at Balderton Capital, a London-based venture capital firm that has invested in fintech businesses including GoCardless, Revolut, Crowdcube, Nutmeg, Seedcamp, ComplyAdvantage, Wonga, Zopa and more. Prior to joining Balderton, Rob worked at Bain & Company and Google. Rob holds degrees from Cambridge and INSEAD.
As has been noted in the financial and trade press, the Financial Choice Act, which was passed last month by the U.S. House of Representatives, now awaits a vote in the U.S. Senate.
In other regulatory news, one executive in Britain is calling for tighter financial regulations in the United Kingdom. Douglas Flint, departing chairman of Britain’s largest bank, HSBC, said in a statement that, amid issues such as Brexit and a revamp of the European financial order, a lack of homogeneity in regulation means there should be cooperation between overseers to find — and stop — “bad actors.” Flint advocated that “greater cooperation between the public and private sectors, together with a refresh of bank secrecy laws and regulation designed for a different age, would significantly increase the effectiveness of our joint efforts.”
As it turns out, putting that spec on the shelf helped to inform the development of the EMVCo QR code standard, which was released yesterday into a payments ecosystem that looks at them as anything but uninteresting.
China is a prime example as, over the course of the last five years, the QR code-based mobile payment has almost entirely displaced cash in the country — and leapfrogged credit and debit cards — to become Chinese consumers’ preferred alternative for payment. There are $5.5 trillion worth of mobile payments made in China per year, the vast, vast majority of which are handled via QR code.
But perhaps most striking is India and its government’s November 2016 decision to move toward a cashless society. That led the country to the accompanying adoption of a QR code-focused payments scheme based on Visa’s mVisa standard.
Getting To Scale
Visa is currently developing mVisa as a worldwide solution. The key to scale, Shrauger told Webster, is making it useful and accessible for their two client groups — merchants and their customers.
zipMoney (ASX:ZML) has announced a $40 million strategic investment from Westpac Banking (ASX:WBC). The investment was paired with an agreement for the two companies to explore the integration of Zip’s products and services into Westpac’s network across Australia. The investment will be by subscription of ordinary equity of 49,382,716 shares at a price of $0.81 per share. This represents a 14.1% premium over the close of $0.71 on August 4th.
Most Indians save first and think of spending later. However, when it comes time for them to plan their expenses, they end up relying on mental estimates of their financial position. As a result, most people are never confident of 1) how much to save and 2) whether they can reach their financial aspirations with their current investment plan. This is especially true for young professionals who want to save for a secure future but also want a more fulfilling life experience. What is required is financial advice that delivers the answers to these questions in a clear and quantified way.
A solution to these issues has come from the field of artificial intelligence. Cognitive technologies is a branch of artificial intelligence that deals with the application of computers towards tasks traditionally performed by people. The aim of this process is to design a software solution that has comprehensive and detailed instructions, that enables it to do the same work that a person can. The benefits of this approach are that the same work can be done at a much faster pace, at a higher accuracy and at a lower cost.
Japan’s SoftBank Group Corp on Monday reported a 50.1 percent rise in first-quarter operating profit, after the company included Vision Fund, the world’s largest private equity fund, as a new reportable segment and booked a valuation gain.
The internet and telecoms giant said profit for the quarter through June increased to 479.2 billion yen ($4.33 billion).
GLOBAL investment in financial technology (fintech) firms more than doubled in the second quarter of the year, compared with the first quarter, to US$8.4bil (S$11.4bil) across 293 deals, KPMG said in a recent report.
Investment in fintech in Singapore more than tripled to US$61.5mil (S$83.3mil), although there were only four deals, compared with seven the quarter before.
On Monday, Indonesia-based peer-to-peer lending platform UangTeman announced it successfully secured $12 million during its Series A funding round, which was led by K2 Venture Capital, with participation from STI Financial Group and Draper Associates.
United Arab Emirates (UAE) regulators are setting out to establish a framework to guide the small business (SMB) crowdfunding market, news reports on Sunday (Aug. 6) said.
Equity crowdfunding is expected to provide $93 billion to small- and medium-sized enterprises by 2020, reports added. In the UAE, SMBs stand to gain significantly from that trend, as these businesses make up an estimated 85 percent of all UAE companies. In Dubai, that number is even higher, at nearly 95 percent of all businesses, reports added.
Meanwhile, research from the Khalifa Fund for Enterprise Development found that as many as 70 percent of small business loan applications in the UAE are rejected by traditional banks, despite efforts from the national government and the Central Bank of the UAE to promote SMB financing.
Take Flutterwave, a payments company which builds infrastructure to ease processing payments across Africa, it’s just raised $10 million in its Series A round. Significantly, the round was led by leading Silicon Valley venture capital funds Greycroft and Green Visor Capital, with participation from Y Combinator and Glynn Capital.
Fintech startups are the “most attractive,” for tech investors looking towards Africa, according to a recent report by Disrupt Africa. Nearly 20% of fintech startups tracked raised money in the last two years and in 2016, there was a 84% increase in the number of fintech startups secured investment compared to the previous year. In total, since 2015, fintech startups in Africa had raised $93 million in investment as of June 2017. Flutterwave’s raise takes that total past the $100 million mark.
In more advanced economies, fintech startups are focused on disrupting the traditional banking industry by changing how people access financial services. But in most parts of sub Saharan Africa, that’s not the case. In fact, fintech startups are typically creating products and services to plug many of the gaps which currently exist.
Indeed, as of 2014, only 34% of adults in sub Saharan Africa had bank accounts.Given the sheer size of the market which remains under-served, fintech startups are presented with a huge opportunity. And for investors, all that represents a major upside.