News Comments Today’s main news: SoFi has raised $500M. Morningstar accelerates acquisition of DBRS. PayPal hits $10B in small business loans milestone. Lendy goes into administration. Klarna launches installment loan app for all retailers. New York overtakes London as financial hub of the world. Today’s main analysis: LendingClub’s advance shareholder meeting presentation (A MUST-READ). Today’s […]
Morningstar accelerates acquisition of DBRS. This is an interesting acquisition. Consolidation in the credit ratings business means fewer ways to analyze a potential investment. It will strengthen Morningstar’s reputation and analysis technology, but investors will lose in the long run since analysis information will come from fewer quarters.
Online lending startup Social Finance, better known as SoFi, took another tack this morning, quietly announcing in a press release that it has closed half a billion dollars in a single funding round led by Qatar Investment Authority, a Doha, Qatar-based private equity and sovereign wealth fund.
The company said it will use the capital to invest in growth and add some muscle to its $2.3 billion balance sheet. The company’s valuation will stay about the same as with the last funding round two years ago, which was led by Silver Lake.
Social Finance Inc., a financial technology startup, is close to signing a deal that would put its name on a new NFL stadium under construction in Inglewood, California, according to two people familiar with the matter.
The deal for the stadium, which would be home to the Los Angeles Rams and Chargers, hasn’t been signed so figures could change. But currently the agreement would have SoFi pay $20 million a year for 20 years, these people added.
Morningstar, Inc. today announced it has entered into a definitive agreement to acquire DBRS, the world’s fourth-largest credit ratings agency, for a purchase price of $669 million. The combination of DBRS with Morningstar Credit Ratings’ U.S. business will expand global asset class coverage and provide an enhanced platform for providing investors with leading fixed-income analysis and research.
The small business lending market is booming and it’s not the traditional banks that are benefiting. Fintechs are leading the way. Case in point: PayPal. It hit a milestone, announcing it has provided more than $10 billion in loans to more than 225,000 small businesses around the globe.
The $10 billion mark comes a little more than five years after PayPal made its first loan. Today it has issued more than 650,000 loans through financing programs in the U.S., UK, Australia, Germany, and Mexico.
First, a quick summary of headlines. The Fed agreed to keep interest rates on hold for longer according to the minutes of the April meeting. The decision is expected to help inflation pick up towards the Fed’s 2% target. The Fed’s latest ‘dot plot’, shown below, indicates Fed governors on the margin expect lower rates in the 2019 to 2021 timeframe suggesting lower growth expectations.
“…what we see is right now the fundamentals of the economy in the U.S. on a global basis and the fundamentals of consumers and unemployment being low as you mentioned, means that credit is in good shape and we just don’t see that changing a lot.”
Small business clients are increasingly looking to alternative lenders for financing. There are numerous draws for SMB clients: a fast and easy application process, quick funding, and a higher chance of being approved for a loan.
According to the Federal Reserve’s Small Business Credit Survey, the main reason clients applied for funding from an online lender was the speed of decision / funding (63 percent) followed by a better chance of being funded (61 percent).
The number of small business owners who turn to alternative lenders for funding has increased steadily since 2016.
RedWeek.com, the largest online community for timeshare rentals and resales, announced a new partnership with Affirm that will give travelers the flexibility to pay for their vacation rentals in simple, monthly installments.
Travelers can check eligibility for a loan online before booking their next trip and, after entering five simple pieces of information, receive a real-time decision without impacting their credit scores.
Once upon a time, if you wanted to borrow money for your business you had to make a trip down to your local bank branch or credit union to see if you could qualify for funding. However, a new generation of business lenders has since emerged to offer business owners an alternative way to secure capital.
2. Invoice Financing
Is your business structured in a way so that it gets paid after delivering services or goods to customers? If so, invoice financing is an alternative lending option that might work for you.
Microloans are issued through non-profit organizations aptly named microlenders. Although the maximum loan size is generally $50,000, the average microloan issued to a small business or startup is a much smaller $6,000.
CoreLogic today launched the new CoreLogic Teletrack platform, offering lenders and credit issuers superior access and greater insight into alternative credit data through one of the industry’s largest alternative credit databases. The new platform and solution combine upgraded services, data, products and an analytics engine to help users discover new market segments, make smarter risk decisions and grow their business throughout the credit lifecycle.
Intuitsaid Tuesday it had agreed to buy analytics company Origami Logic, effectively doubling down on the use of customer data to enhance its marketing.
The company can cross-sell its own products as well as products and services from third parties — like a Capital One Platinum Credit Card or a loan from Lending Club — based on what it knows about you.
US online banking platform Azlo and online small business lender announced the launch of Mission Street Capital, a new program that provides small businesses banking with Azlo access to loans through Kabbage up to $250,000.
Not many know this discount bulk retail giant also provides a loan marketplace to shop for the best mortgage rate. While open to all, Costco members can access discounts on lending services. Loan options include home equity, fixed and adjustable rate, FHA, VA, USDA, and jumbo. Note, this lender’s services are strictly digital so you will not be able to meet up with someone face-to-face.
Though P2P lendings are not low investment choices; with Fast invest, it is possible. You can start investing here with just 1 pound to accelerate cash flow. The website allows investors to deposit amounts and based on that suggests loans. After you choose the loan pack as an investor, the site assigns borrowers. Once the borrower takes the loan from you, the site starts increasing your invested amount with the applied interest rate of up to 14% till the payback period. It also comes with buyback guarantee if the borrower fails to return your loan in the payback period.
Real estate crowdfunding sites provide you the opportunity to invest in third-party properties. Fundrise is the best crowdfunding platform to go for that lets you start investing with only $500. With a year’s saving, you can start investing in this crowdfunding site and gain 8.7 to 12.4% annual returns based on your deposited amount.
BFS Capital today announced the appointment of Fred Kauber as Chief Technology Officer and Chief Product Officer. As a member of the management team reporting to CEO Mark Ruddock, Kauber will be responsible for leading a customer-focused product and technology organization whose mission is to help BFS re-imagine financial services for small businesses.
Damian Webb, Phillip Sykes and Mark Wilson of RSM Restructuring Advisory have been appointed as joint administrators of three companies within the Lendy Group: Lendy Limited, Saving Stream Security Holdings Limited and Lendy Provision Reserve Limited.
BondMason, an online savings and investments platform that sources investments from across the peer-to-peer (P2P) market for its clients, has reportedly announced it is officially shutting down its P2P lending business.
Peter Briffett, CEO of U.K. FinTech Wagestream, told PYMNTS in a recent interview that the cash flow constraints of having to wait for a single day to receive wages every month can be dangerous to the financial wellness of professionals. A single, expensive incident can force these professionals into debt via bank overdrafts or credit cards — or worse, Briffett said, into the payday loan cycle.
The company recently announced a $51 million funding round for its solution — led by Balderton Capital and Northzone, which provided equity, and Shawbrook, which provided debt.
And that is where microfinance is moving – to an era where individuals and businesses can get financial services from other individuals and business entities. Technology is providing tools for matching borrowers and lenders. And even more important – the tools for creating contracts that execute accordingly.
Announced Tuesday, the Klarna app presents the retailer’s site with a footer containing a Pay with Klarna button. When selecting that option, the shopper can pay for purchases in four equal installments with no interest or fees. The app is open to any merchant, not just those already affiliated with Klarna, the company says. These could include retailers without an alternative-payment option or that use a competitor’s program.
Stabelo’s model is to pool capital from institutional investors in exchange for fixed-income securities and uses the money raised to lend mortgages directly to homebuyers. The firm offers mortgages in conjunction with Avanza Bank, which is the biggest online lender in Sweden, and owns just under 20% of Stabelo.
A survey by consultancy and advisory firm Duff & Phelps, involving 180 executives in asset management, private equity, hedge funds, banking and brokerage, found that confidence in the UK capital has plummetted in the last year.
Just 36 percent ranked London as the foremost global financial hub— a year-on-year drop of 17 percent. With New York rising 10 percent, ranked by more than half (52 percent) as the world’s new financial powerhouse, the two cities have “switched places”.
Major crypto exchange Binance has partnered with decentralized crypto lending platform Cred to bring its services to the Binance ecosystem, according to a press release publishedon May 29.
As part of the agreement, Cred will migrate some of its ERC-20 LBA tokens to Binance’s mainnet, Binance Chain, and become the official lending and borrowing platform for the decentralized financial ecosystem.
Cryptocurrency asset management company BlockFi announced that its interest-bearing accounts now support the gemini dollar (GUSD) in a post published on May 29.
Per the announcement, GUSD deposits will see a yearly yield of 6.2%, paid in the stablecoinin question. BlockFi notes that it also offers GUSD as a U.S. dollar funding option and as collateral from institutional cryptocurrency borrowers.
Brazil has more fintech start-ups than any other Latin American country, and most of them are consolidated in the country’s financial centre, São Paulo.
One country poised to see an explosion of opportunities after Brexit is Lithuania. In February of this year, the country saw around 100 British financial companies apply for a licence in the country.
Estonia has one of the highest rates of start-ups per capita in Europe. According to Startup Genome, 29 percent of all jobs created by these start-ups are within the country’s fintech industry.
Home to the European Central Bank and more than 200 banks – most of which are foreign – Frankfurt plays an important role in the EU’s financial system.
Bengaluru (previously Bangalore) is anticipated to become one of the next big tech hubs. One of Asia’s fastest growing start-up ecosystems, the city is home to 438 fintech start-ups and has been dubbed the ‘Silicon Valley of India’.
Apolitical, a peer-to-peer lending platform for governments, unveiled its list of the world’s 100 most influential individuals on gender equality on Wednesday. It recognized politicians, activists and academics, among others, who were shaping gender policy in 2019.
According to Adrienne Church, General Manager at small business lender Prospa, venturing into an unfamiliar type of lending may be worrying – but it is also necessary as the lending market expands, and the property market remains as unpredictable as it inevitably always is.
Agritech startup TaniGroup, which operates agriculture e-commerce TaniHub and peer-to-peer lending provider TaniFund, today announced it raised a US$10 million Series A round of financing led by Openspace Ventures with participation from Intudo Ventures, Golden Gate Ventures, and The DFS Lab.
In February of this year, the Indonesian Financial Services Authority (Otoritas Jasa Keuangan or “OJK”) issued an updated checklist for peer-to-peer lending (“P2P lending”) platform providers (“Checklist”) registering with the OJK or applying to the body for a business license or change of ownership. The new Checklist introduces several changes to the previous checklist issued in October 2018. We highlight the key material changes and new requirements introduced by the Checklist.
Qatar Investment Authority has led an investment of more than $500 million in SoFi, a mobile-first personal finance firm. The investment values the company at $4.3 billion on a pre-money basis, according to a release from the fund.
We all know that Kenya revolutionized mobile payments for the developing world and brands like M-Pesa continue to lead the market, but what about mobile lending? According to Creditinfo Kenya, 93 percent of all mobile loans originate from regulated financial institutions, and there are around five million borrowers and each has an average of 5.89 loans.
Home Capital is a specialty finance company that primarily deals in mortgages. The company typically deals with borrowers who don’t meet normal bank requirements. It offers traditional mortgages and consumer lending as well as securitizing insured mortgages and offering home equity lines of credit.
News Comments Today’s main news: Circle seeks a banking license. Revolut has 2M users. Ping An looks beyond insurance. TransferWise partners with first big bank. Today’s main analysis: How microfinance is navigating the fintech revolution in Africa. Today’s thought-provoking articles: Where retail credit, charge cards are used the most. The case for a VRP strategy. A different type of Know Your […]
Circle wants a banking license. This is big news for the crypto space, but there are clear implications for marketplace lending, as well. Circle wants to lend cryptocurrencies. This banking license will help, and if this happens, I think we’ll see a wave of crypto lenders moving in on the MPL space. It’s already started, but this could ramp it up.
Which places use the most retail credit, charge cards? This is interesting. McAllen, Texas isn’t that big a community. When this study says they have the highest number of people with retail cards, they mean per capita. 72% of the people in this small town have retail cards. Only 17% have credit card debt on those cards. These people are prime prospects for instant credit services like Klarna and Affirm.
The venture, partly backed by Goldman Sachs Group Inc., plans to seek a federal banking license to provide more services to customers. It also intends to pursue registration as a brokerage and trading venue with the Securities and Exchange Commission, so it can help investors buy and sell tokens deemed to be securities.
LendingTree today released its monthly Mortgage Offers Report which analyzes data from actual loan terms offered to borrowers on LendingTree.com by lenders on LendingTree’s network. The purpose of the report is to empower consumers by providing additional information on how their credit profile affects their loan prospects.
May’s best rate offers for borrowers with the best credit profiles had an average APR of 4.35% for conforming 30-year fixed purchase loans, up from 4.26% in April.
Refinance loan offers for borrowers with the best profiles were up 12 bps to 4.35%.
For the average borrower, purchase APRs for conforming 30-yr fixed loans offered on LendingTree’s platform were up 10 bps to 5.02%. The loan note rate of 4.91% was also up 10 bps.
CompareCards by LendingTree today released the findings of its study on the places that use the most retail credit and charge cards. The study found that some metro areas are home to heavy users of retail cards while other locations have a population who use retail cards more sparingly.
Nationally, 61.3 percent of credit card owners have at least one retail card. Of those who have at least one retail card, 30.4 percent carry a balance on a retail card, representing 11.4 percent of outstanding balances. The average balance on a retail card in the U.S. is $2,699.
Highlights from the report:
Residents of McAllen, Texas are by far the highest users of retail credit and charge cards. The metro earned a final score of 87.2 and ranked first in these categories:
The number of people who have retail cards (72%)
The number of retail card owners who carry a balance on their retail cards (45%)
And the percentage of credit card debt carried on a retail card (17%)
People in Charleston, S.C. have this retail card claim to fame: They carry the highest balances on their retail cards among all 100 metros, with an average balance of $4,026and a median balance of $1,746. Meanwhile, Albany, N.Y. had the lowest average balance ($2,420).
Honolulu has the lowest retail card usage, with a final score of 9.4. Although it didn’t rank last in any individual category, it ranked extremely low in all.
AQR Capital Management, the Greenwich, CT-based global investment firm, has posted a new discussion of thevolatility risk premium and of the advantages of strategies based thereon.
In principle the premium would disappear if markets efficiently estimated the probability of significant losses. But it remains, because investors are risk averse and tend to overestimate the probability of substantial losses.
QR models an investor who was hypothetically long the S&P 500 from 1996 to 2016, while hedging his position with a continuously rolled one-month 5% out-of-the-money put. The hedged strategy will in fact lessen portfolio volatility as measured against simply being long in the S&P without the hedge. Vol falls from 16.1% in the latter case to 14.7% in the former.
But, as noted, this risk aversion comes at a hefty cost. Average portfolio returns decline from 5.1% to just 1.8%.
Austin-based crypto-finance startup Unchained Capital has raised nearly $3 million in seed funding. Unchained’s first product is a crypto asset-backed loan, which is like borrowing against one’s home—except the company lends against digital assets such as bitcoin and ethereum.
The round includes $2.4 million in new capital and $595,000 of SAFE notes converting.
The plaintiff filed a class-action lawsuit that wasn’t against the online payday lending companies themselves, but against four nonlender financial institutions — Generations Federal Credit Union, BMO Harris Bank, Four Oaks Bank & Trust Co. and Bay Cities Bank — that processed the debit transactions and were paid fees.
MejeTuyo thinks the payday loan industry is ripe for disruption and he wants to do it using blockchain technology. Specifically, Tuyo wants to deliver more equitable access to loans through Owo, a startup venture set to debut this fall. The company’s name means “money” in the West African language of Yoruba.
Tuyo, a native of Nigeria, is looking to, at first, address the challenges of African Americans, a population that relies more on payday loans than other groups. Anotherstudy from the Pew Charitable Trusts from 2012 found that 12 percent of African-Americans had taken out payday loans, compared with 4 percent of whites and 6 percent of Hispanics.
The company plans to launch an app called Pazima, which will allow consumers to request loans that will be automatically repaid when they receive their paychecks.
Renovate America, a leading provider of home improvement financing, has been recognized as “Esoteric ABS Issuer of the Year” in the 2018 U.S. Securitization Awards announced by GlobalCapitalmagazine. The award recognizes Renovate America’s position as a leader in the esoteric ABS market, which includes not only PACE, but also equipment leasing, containers, marketplace lending, whole business, solar, and cell tower deals, to name a handful.
Sallie Krawcheck spent years as a Wall Street exec, commonly called “the most powerful woman on Wall Street.”
But when she got her first investment banking job in her early 20s, she hated it, and even went back to business school to transition into her dream jobs in media.
It wasn’t until she asked herself what she loved about media that she could find in banking that she found a place in equity research, which launched her into a series of executive roles on Wall Street.
White Oak Business Capital, Inc. (“WOBC” or White Oak), an affiliate of White Oak Global Advisors, LLC, today announced the appointment of David Mitchell to the role of Senior Vice President and Senior Business Development Officer, responsible for expanding business in the Southeast and Mid-Atlantic markets.
London fintech start-up Revolut has announced that it has grown to 2m users following its launch in 2013.
Revolut said that it has now signed up 2m customers in Europe ahead of plans to launch in the US this year. Customers have also made over 100m transactions, the company said, with a monthly transaction volume of $2bn (£1.4bn).
The fintech industry is coming of age. Global investments in the sector have grown from $20 billion in 2014 to $39 billion in 2017, according to Fintech Global. Fintechs like Transferwise, Nutmeg, Revolut, Starling Bank and Funding Circle in the UK have grown rapidly over the last five years. A large reason for this success is attributable to the way fintechs are able to develop deep relationships with their customers who rally around them in an almost tribe-like manner. Successful firms manage to convert isolated customers into communities and finally highly engaged ‘tribes’.
Fintechs that have successfully demonstrated that they can generate a sense of community within their customer base share the following six characteristics.
Transparency-or at least the perception of it – is a great way to build trust and attract younger customers. Transferwise publishes its rate card in full on its website for instance.
Reachability-In general, fintechs are much more in tune with what their customers want to be developed next. Revolut got this formula right from the start – this has helped them to grow to a $1.7 billion company in just 33 months.
A sense of purpose-A large part of fintechs’ success in tribe-building is their ability to generate the sense of a greater purpose. Fintechs are typically focussed on achieving a specific goal which on its own, is mundane and something on the lines of – ‘help you transfer money cheaply’. However, this mundane goal is transformed into a grandiose vision when put into the intended context— ‘transfer money cheaply and beat the big banks at their game’. An origin story is the final touch required to transform this vision into a sense of purpose for the community – ‘transfer money cheaply, beat big banks and be a part of something meaningful’.
In light of this, bridging loans are increasingly popular as a short-term solution for investors and a way for high-net-worth individuals to see a return on capital.
Although the recent rise of bridging loans is associated with specialist lenders, particularly in the commercial space offering non-FCA regulated loans, the product originated as an option for property buyers to bridge a gap between exchanging contracts and completion of a sale where you needed to purchase a property in the interim but did not have the capital.
Global 2000 list — look beyond the stodgy insurance business and into the realm of high technology, whose tentacles reach into every aspect of commerce in China and eventually show up in the mobile handsets of Chinese consumers.
In a presentation entitled ‘Banking on the CX factor’, Klarna CEO Sebastian Siemiatkowski spoke to a packed crowd under The Big Top at Money 20/20 EU, Amsterdam, today, taking the opportunity to open fire on the banks.
The audience heard insight from Klarna on customer experience, including the fact that, according to the Happiness Index, consumers are more stressed and unhappy than ever before.
The three partners together own more than 50 percent in a new company called Auto1 Fintech, that will offer refinancing loans and insurance products to car dealerships buying SoftBank Group Corp.-backed Auto1’s vehicles, co-Chief Executive Officer Hakan Koc said Wednesday in an interview.
UK-based cross-border money transfer company TransferWise has announced a partnership with France’s second-largest bank, BPCE Groupe, that will take effect at the beginning of 2019. Under the partnership, TransferWise will provide international money transfer services for BPCE Groupe’s customers, enabling them to send money in different currencies with TransferWise’s low standard fees.
StartUp Nation Ventures (“SUNV”) in partnership with the Israel Innovation Authority (“IIA”) is proud to announce the initial Call for Proposals through the Israel-Florida Innovation Alliance (“Innovation Alliance”).
The Innovation Alliance was created to support Israeli innovation companies in the discovery and selection of Florida as their destination to establish U.S. headquarters—a gateway for expansion into the U.S., and Latin America markets.
The joint collaboration between SUNV and the IIA establishes a scalable platform to support Israeli companies that have proven the feasibility of their technologies and have a minimal viable product or working prototypes for the U.S and Latin America markets in the following areas:
Tech Innovation related to smart contracts, supply chain, asset verification, certification, identity, health and financial transactions, digital and mobile payments; capital markets & investing, banking & corporate finance, financial platforms, crowdfunding & peer-to-peer lending, and personal financial management.
Lending has experienced one of the biggest changes in the traditional banking marketplace with financial technology startups, or simply, fintechs, introducing disruptive products to consumers. Peer-to-peer lending platforms have been at the forefront in this space, but recent developments suggest more could be about to unfold over the coming years.
Startup lending companies have managed to gain a substantial chunk of the market over the last few years. According to credit analysts, this growth has been driven by personal loans. In a report published by TransUnion late last year, it was established that fintechs continue to disrupt the personal loans market at an alarming rate. In the report titled Fact versus Fiction, the TransUnion study found that fintechs have grown from a mere 1% of personal loan originations in 2010 to one-third of the entire personal loan market in 2017.
The 32% market share for fintechs in the personal loans market was more than the 29% for banks, 24% for credit unions, and 15% for traditional finance. This clearly shows that fintechs are on the path to dominate the entire lending market if the momentum can be maintained.
Robo-advisors give retail investors access to automated investment strategies, creating portfolios and coming up with an asset allocation that’s based on client data points, including time horizon and risk tolerance.
As convenient as it may be, this technology doesn’t make human financial advisors obsolete, said Joe Duran, founder and CEO of United Capital.
That’s because robo-advisors fail to account for the complexity of financial planning, he says.
Having now tracked alternative finance for five years, and from this relatively short perspective, the Centre has noted an emerging industry that has progressed quickly. Where once there were only handful of early adopters and innovators in a given country, they now see an “altfin” landscape that is growing rapidly, with an exponential number of new platforms driving competition and introducing new products.
In many regions (the EU, UK, USA) the Centre is also seeing their first cases of consolidation, but with continued diversification of products and services to customers.
We are also looking to provide insight for microfinance stakeholders into how MFIs can leverage Fintech solutions to remain competitive in the rapidly changing financial landscape in Africa. While it is still too early to present a definitive response to the opportunities and challenges of Fintech, we are
convinced that MFIs will need to adapt to succeed in this increasingly dynamic microfinancing environment in Africa.
Fintech is considered more as an enabler than as a disruptor.
The MFIs surveyed perceived Fintech more as an opportunity than as a threat to their business (see graph 3: 88% consider it as a (very) great opportunity, while only 35% see a moderate to high threat).
Few MFIs foresee increasing competition in the future from Fintech-based (B2C) companies. This is explained by the fact that most digital lenders enter relatively easy markets with a target audience that is tech savvy, literate and more urban and where data and technical infrastructure are already available. But to access more informal and rural client segments effectively, these Fintech players face a number of challenges, such as client acquisition, initial high write-offs and limited profitability.
You can support Indonesian micro businesses and help them grow and thrive by investing in their loans. A leading, Indonesia-based peer-to-peer lending platform lets you do just that in just a few simple steps. Mekar (PT Mekar Investama Sampoerna) connects you, the investors (also called ‘funders’ in Mekar) from all over the world, with micro businesses in many provinces in Indonesia that are in need of funding.
About 99% of the micro businesses that are seeking loans in Mekar are run by women. Loans in Mekar range from around Rp 2 million (US$ 140) to Rp 8 million. For the last couple of years 99.5% of these borrowers have repaid on time.
News Comments Today’s main news: Prosper loan originations up 27% year-over-year, over $2B co-sponsored securitizations closed. Funding Circle launches new borrower referral incentive. Renren investors seek to block asset sales. PayMate acquires Z2P Technologies. Today’s main analysis: Singapore’s biggest bank vs. China’s tech giants. Today’s thought-provoking articles: 80% of startup money goes to three states. The Sharestates story: $1B […]
Prosper loan originations and co-sponsored securitizations. AT: “A look at Prosper’s earnings results. Reports like these prove that alternative lending is still on the rise. It may not be growing as fast as it once was, but every industry has a slow down when it moves from growth to maturity. Slower growth is still growth.”
Sharestates: From startup to $1 billion in three years. AT: “Sharestates has made incredible moves in a sector that already had a lot going on when they stepped in. I think the key to their success is their leadership and the fact that they came to the table with real estate investing experience. Disclosure: I write for the company, but you can make up your own mind.”
Prosper today reported financial results for the first quarter of 2018. Loan originations increased 27% year-over-year to $744 million, driven by strong demand for the company’s personal loan product and stable funding.
Financial highlights include:
Total Net Revenue, which includes the non-cash impact related to warrants to purchase preferred stock, was flat year-over-year at $30.5 million in Q1 2018 compared to $30.8 million in Q1 2017.
Core Revenue(1), which excludes the non-cash impact related to warrants to purchase preferred stock, increased $11.6 million or 34% year-over-year to $45.7 million in Q1 2018 compared to $34.2 million in Q1 2017.
Net Loss decreased by $12.6 million to ($11.4) million in Q1 2018 compared to a Net Loss of ($24.0) million in Q1 2017.
Adjusted EBITDA(1) increased $13.6 million to $4.5 million in Q1 2018 compared to ($9.0) million in Q1 2017, the fourth consecutive quarter of positive Adjusted EBITDA(1) generated by Prosper.
Baird: And the microfinance industry is — $30 billion a year around the world is lent in $500 chunks to small businesses, near a 100% repayment rate.
Microfinance is a tool. All investing is a tool. Every microfinance bank, every bank is neither good nor bad, they’re amoral. It’s just what are people trying to do with it. I’ve seen microfinance banks that act in extractive ways and their primary goal is extract as much profit out of poor communities as possible. I’ve seen payday lenders do the same thing. I’ve also seen microfinance banks that are very good and say, “Our core goal is building wealth for the community and we’ve structured our business in a way that works for us.”
One percent of start-up investment goes to African-Americans. Two percent of start-up investment goes to women. There are a lot of people who are overlooked. So roughly 80% of start-up investment goes to three states: New York, Massachusetts, California. If you’re in Ohio or Florida or Nairobi or Mumbai, it’s really hard to get your idea into the system.
Now, just over a year later, they have announced they recently crossed the $1 billion mark in originations. The company did so in just over 3 years, having officially launched in February 2015, just before LendIt USA that year. They are the second company in the real estate crowdfunding space to do so and are on our list as one of the ten options available for accredited investors in the marketplace lending space.
Originations in the lending space is only one metric. Any lending company’s survival depends on the quality of the loans they are making. According to the Sharestates’ website, investors have earned an average 10.54 percent annualized return. They also report 0% loss of principal for their investors. As of last year when we checked in the company was profitable which sets them up for continued success going forward. We’ve seen very few companies in the marketplace lending space broadly achieve this goal.
BuildDirect, the first technology platform for the home improvement industry, today announced its partnership with Affirm Inc., a financial technology company that provides transparent payment alternatives to traditional credit. Now, U.S.-based BuildDirect customers have easy access to flexible and transparent financing options to pay for home improvement and renovation materials over time. At the point of sale, shoppers will see exactly how much they’ll pay in fixed monthly installments over the term they choose.
Digital banking has been a big positive for the financial services industry, though it has opened companies to greater cyber risk; cyber criminals now have a lot more entry points when it comes to getting access to funds illicitly; banks have increased their spending on defense but it isn’t enough as they also need to construct better, more secure systems; the CEO of Standard Chartered writes in the FT that banks can better utilize the data they collect, design tech better and work more closely with governments to catch bad actors.
The advancement of blockchain technology, this is poised to change. Through the technology, anyone anywhere in the world can raise financing from peers without having to rely on the traditional credit scores and the often heavily bureaucratic conventional mortgage processes.
Blockchain solutions such as Homelend are making it possible for borrowers to directly reach lenders without depending on any intermediary and with no paperwork. The whole process is safeguarded by smart contracts to ensure that all parties in the deal adhere to their part of the bargain. According to Aneeza Haleem , a senior account manager at Cognizant Technology Solutions, blockchain-powered peer-to-peer mortgage financing significantly reduces the costs involved in the mortgage process.
The irony of the explosive growth of mobile P2P is this: As consumers get more comfortable with paying one another through mobile devices, they’re thinking of P2P less as a service that one should find within a bank’s app.
This is a problem for Early Warning’s Zelle, the bank-run P2P network whose main selling point is its integration with banks. It’s a sharp contrast to rivals such as Venmo, which styled itself on a social media app; and Facebook and Apple, which took their own messaging platforms and blended P2P payments into the interface.
Capital One has acquired San Francisco-based digital identity start-up Confyrm as it seeks to capture the market for consumer identity services.
Financial details were not disclosed, but as part of the deal Andrew Nash, founder and CEO of Confyrm, has become managing vice-president of Capital One’s consumer identity services. No word on what happens to the rest of the staff.
Confyrm was founded five years ago and offers help against online fraud.
Bank of America spends $3 billion developing and buying technology every year, and about three times that on keeping its existing IT infrastructure going, says David Reilly, global banking and markets technology chief information officer.
As you might expect, some of that goes to artificial intelligence technology. The bank does not disclose how much.
An old-school fraud analytics program might see a customer using a card in a place they have never used a card before and block the transaction.
Banks, fintech firms and data aggregators are asking regulators to provide more clarity on how to handle consumer data and who is responsible for leaks when it is shared between firms — a request that’s seemingly a reversal from the deregulatory approach the industry often takes.
The potential liability stemming from consumer data has become a critical concern for the financial industry as more data aggregators and fintech firms rapidly enter the space, seeking access to customers’ bank account information in order to offer loans and other products.
Now, there are a couple different ways Congress could build banking into the U.S. Postal Service. The first approach would just cover the basics.
That means offering low-dollar checking accounts and debit cards to low-income earners. That would at least offer basic financial services to all Americans, regardless of wealth. And it probably wouldn’t be too tough politically because the big banks typically aren’t interested in these customers.
But Gillibrand’s proposal would go further, allowing the postal service to also make loans of up to $1,000 with a super low interest rate around 2 percent, even to the poorest Americans. Because many of those loans would be at risk of not being paid back, some experts say the interest rate will have to be higher, maybe 25 percent. But that would still be a lot lower than rates from payday lenders, which often have people pay back three or four times what they borrowed.
Citizens Financial Group announced on Monday (May 14) plans to launch Citizens Access, a nationwide direct-to-consumer online bank.
In a press release, Citizens Financial said the digital platform will offer FDIC-insured deposits products aimed at serving people who want to save and want the flexibility of an online banking service. The company said it will provide digital deposit services at attractive rates and lower costs to help consumers save more for the future. The platform will be launched in the third quarter and will be available throughout the U.S.
Refinancing your student loans from pharmacy school can potentially save you a significant amount of money while providing the convenience of making one payment a month. Keep in mind refinancing may not be for everyone. Individuals with a poor credit history, low salary from a pharmacy residency or fellowship, or those who want to keep the provisions in federal loans may want to closely consider their options before jumping right into refinancing their loans.
However, a HMRC representative has told Peer2Peer Finance News that the tax office will deal with cryptocurrency related tax bills “on a case-by-case basis”.
The 2017-18 tax year saw huge volatility across the cryptocurrency sector, with Bitcoin reaching a high of £13,840 in mid-December before ending the tax year at approximately £4,750 per coin. This has led to confusion among retail investors regarding their tax liability, particularly if they sold out of the market at a high, then reinvested the profits only to see any gains wiped out.
Antony Jenkins, former CEO of Barclays and now head of 10x Future Technologies, writes in the FT that technology is key to the battle with banks; having technology that is more nimble and focused on the customer will help to better position challengers; UK challengers banks have found it hard to compete against the big names, even with recent consolidation; understanding what the customer needs most and allowing them to access services anytime and anywhere is what firms should focus on.
Capitama’s current registered investors have a total annual investment capacity of £7.6bn. Of this total capacity, investors have expressed an annual investment capacity of £5bn into private equity opportunities, with £2.3bn total annual investment in Debt and Income opportunities. The interest of the registered investors in Philanthropic and Social Impact opportunities currently stands at £300m per year. This is an additional theme on Capitama given the rise in interest in these organisations from wealthy individuals and organisations.
69% of Capitama investors are interested in fintech investment opportunities and 67% want to see software and technology deals. Of the nine different investment types available on Capitama, Growth funding is the most popular, with 83% of Capitama registered Investors interested in this area, followed by Early stage investments (72%), Buy-outs (63%), and Real Estate (47%).
A group of Renren Inc. investors are trying to block the private sale of company-owned assets to a consortium that includes its own top executive and major shareholder SoftBank Group Corp.
Renren announced the complex deal in April, which it said was necessary to address concerns that the SEC might deem it an investment company — forcing its delisting if it failed to obtain relevant licenses.
The letter accused management of trying to transfer the assets at values equal to or lower than their book value, neglecting their duty to smaller shareholders and misrepresenting certain financial statements. For example, it says the shares in SoFi — one of America’s biggest student loan refinancers — are being sold at a valuation of $269 million when they could be worth double that amount.
Steven Eisman, famous for successfully shorting the US subprime market before the onset of the 2008 financial crisis, has said the online lending business model used in the United States is unsustainable, and that losses from Canadian mortgages could widen.
The one pocket of financial market anomaly in the US was online lending, where, he said, the underwriting of peer-to-peer credit was unproven, as selling a loan to investors such as hedge funds and other financial institutions was an unsustainable business model.
“The problem [with P2P lending] is that selling a loan [online] is not the same as selling a book. You buy a book on Amazon and that’s the end of the transaction. When you make a loan, that’s the beginning of a relationship. The question is how you manage that relationship,” said Eisman.
More than a dozen technology companies from China are rushing to go public abroad, in an enticing opportunity for investors but one that has generated poor returns recently.
Shares of most Asian tech companies that have listed in New York and Hong Kong since the start of 2017 have notched lackluster performances, with the bulk trading below their initial public offering prices after strong early gains.
Go & Grow is designed for the passive investors as hands off p2p lending. One of the main advantages is that Bondora says it is tax optimised.
The Bondora Go & Grow product features a target interest rate of 6.75% which will accrue daily. It runs completly on autoinvest. The investor just needs to join it and pay money into the Go & Grow account (or transfer it from the normal Bondora account). The Go & Grow account promises daily liquidity. There is a 1 EUR withdrawal fee making small withdrawals expensive but for portfolios of 1000 EUR or more and usual investment horizons this fee is negligible.
Latvian Fintech Mintos is reporting a profit in its brief three year old history. According to the company, the global online marketplace for loans has seen their revenue increase more than four-fold in 2017 to € 2.1 million generating a net profit for the year of € 197,000. Mintos says it has experienced significant growth, making it the “peer-to-peer lending market leader for continental Europe” with a 38% market share.
In aggregate, Mintos has topped € 660 million in investments by investors and the company expects the amount of loans funded to reach EUR 1 billion before the end of this year. As of May 2018, Mintos claims more than 58,000 investors using the platform and this number is expected to surpass 100,000 at some point in 2017. Currently, investors may expect an average 12.1% rate of return.
Ridehailing giants Uber and Didi Chuxing, based in San Francisco and Beijing, respectively, lead the list of most valuable private companies around the globe. And moving down the rankings, the pattern set at the top continues. A total of five of the companies are in the ridehailing industry, and 26 of the 30 are based in either the US or China.
Libra Credit is offering a decentralized lending Ethereum-based ecosystem that helps users get open access to credit anywhere and anytime.
As long as a user has digital assets, they will be able to borrow money from Libra Credit by using those digital assets as collateral. Additionally, these users will be able to build an international credit history – a concept that Libra Credit and its partners plan to push to be recognized globally.
Libra Credit plans to charge a fixed 8% annual interest rate charged by Libra Credit, which is party enabled by its partnerships with traditional finance institutions. The rate is competitive with that of other peer-to-peer lending platforms such as Lending Club and Salt, but isn’t tied to the availability of a peer match.
Australia’s four biggest banks — Commonwealth Bank of Australia, Westpac Banking Corp., National Australia Bank Ltd. and Australia & New Zealand Banking Group Ltd. — have been plagued by a string of scandals. The accusations run the gamut from giving misleading financial advice to trying to manipulate a benchmark interest rate. Simmering public resentment — stoked by a sense banks were gouging fees to fuel record profits and executive pay — boiled over last year when Commonwealth Bank was sued for systemically breaching anti-money laundering rules.
The government has announced tough new penalties for corporate wrongdoing and beefed up the regulator’s powers; analysts have trimmed earnings forecasts and speculate future legislation could force the biggest banks to sell off advice businesses. All this comes at a time when bank profits are under pressure from a slowing housing market, rising costs and increased competition. Most of the banks are trying to simplify their operations and sell non-core operations.
Global financial institution Citi is expanding its existing partnership with the Asian Development Bank (ADB) to share risk in trade finance transactions, reports in The Financial said Friday (May 11).
The ADB’s Trade Finance Program reached a deal worth $100 million with Citi that sees the financial institutions (FIs) sharing risk on trade finance transactions in an effort to bolster support for trade and access to finance across Asia.
The country has its first robot financial adviser after KiwiWealth was given an exemption by the Financial Markets Authority from the current law which requires humans to give financial and investment advice.
But Mr Bishop said it would still have human advisors offer detailed advice and have control of the robot.
PayMate, an early pioneer in India’s payments industry and a leading player in electronic Business-to-Business (B2B) payments space, announced today the acquisition of Z2P (Zaitech Technology Pvt. Ltd.), a digital lending platform which provides hassle-free and real-time credit using social and banking data along with proprietary analytics and AI.
The acquisition is expected to be completed by May 2018 and it follows the announcement in February of this year by PayMate of its B2B partnership agreement with Visa.
As a result of the acquisition, PayMate acquires an innovative and proven lending solution in Z2P, which when combined with PayMate’s proprietary B2B payments platform will revolutionize the way businesses manage their payment operations, cashflow, and access to growth capital. PayMate plans to partner with banks and NBFCs to improve the flow of credit to SMEs.
Last week, Power Financial CEO Jeff Orr told reporters he plans to invest more money in fintech startups as the company looks to find technologies that can be incorporated into its business model and avoid disruptions that have hurt other sectors.
Widely known on the Street for its empire of financial advisers and investment products, Power Financial has spent $320-million in the fintech sector – with more than half the funds being allocated toward online robo-adviser Wealthsimple.
Almost 55% of customers say they would consider branchless digital-only bank
Gupta credits his early recognition of the threat to his early days in Citigroup’s transaction banking division, unusual for a bank CEO, who tend to hail from the retail or investment banking arms of their institutions. That background taught him both the nuts and bolts of banking and the importance of technology, Gupta said. He also dabbled briefly but unsuccessfully in the startup world, when he quit Citigroup in 2001 to found an Internet portal in India, around the time the dotcom bubble was bursting.
Bloomberg, citing four people with direct knowledge of the matter, reported that Morgan Stanley purchased $14 million in local subordinated bonds from online consumer lender Geru Tecnologia e Servicos. The Geru bonds, which the company issued in December of 2017, have a four-year maturity and pay about 11.2 percent each year, noted the report.
The company is also reportedly in talks with international investors about raising $50 million via an equity round that QMS Capital is handling. QMS has a 10 percent stake in Geru. General Atlantic could also be an investor in the round of fundraising, noted the report.
News Comments Today’s main news: Former SoFi CEO Mike Cagney raises $50M for blockchain-based Figure. RateSetter IFISA attracts ‘high tens of millions’ of GBP. Brazilian online lender Agibank files for IPO in São Paulo. Today’s main analysis: The cities with the highest rates of mortgage denials. Today’s thought-provoking articles: Hedge funds are down in Q1. MPL’s new ways look […]
Can the USPS be a short-term lender to the underbanked? AT: “This is actually a pretty good read, and sheds some historical light on the U.S. postal service’s banking operations. Did you know Americans once held over $3 billion in savings deposits with the USPS? But can they be a lender?”
Mike Cagney, who built SoFi into America’s biggest student loan refinancer before quitting amid allegations of sexual harassment at the fintech firm, is preparing for his second act: a startup offering home-equity loans.
Cagney has raised $50 million for San Francisco-based Figure, which plans to use the blockchain to help expedite loan approvals in minutes rather than days, according to people familiar with the matter. Two global banks have agreed to finance loans and several firms have agreed to purchase them, say the people, who requested anonymity to discuss a private matter.
The Eurekahedge April 2018 report says that hedge funds were down in the first quarter of the year (-0.13%). This is the industry’s worst performance since Q1 2016.
The steepest performance-based losses by regional mandate were those of the North American funds, they lost $1.2 billion. Meanwhile, asset inflows remained net positive but were lower (17% lower) than were the net asset inflows for the first quarter 2017.
The highest performance gains by regional mandate were those of the Asia ex-Japan funds. (+0.5%). But those hedge funds were down in March, largely on rumblings of a US/China trade war.
Total assets under management for the global hedge fund industry are now at $2.48 trillion.
Last week, the Federal Trade Commission accused LendingClub, the largest of the peer-to-peer lenders, of misleading consumers with hidden fees and continuing to charge borrowers even after they had paid off their loans. Shares of the online lender fell to nearly $2.50, its all-time low.
In the first quarter, peer-to-peer lenders sold $4.3 billion in asset-backed securities, according to industry tracker PeerIQ. That was slightly down from $4.4 billion in issuance in the last three months of 2017, which was a quarterly high for the industry. PeerIQ estimates that peer-to-peer ABS securitization will hit $18 billion this year, up from $14 billion in 2017.
LendingTree delved into data from more than 10 million mortgage applications using the most recent available Home Mortgage Disclosure Act data set to find out the main reasons would-be borrowers were rejected.
Nearly one in 10 borrowers get denied for mortgages. On a national level, 8% of loan applications were denied.
Credit history and debt are the biggest barriers. The leading reasons for denial were credit history (which includes credit score) and debt-to-income ratio, which were each responsible for 26% of denied loans. These were followed by collateral at 17% and incomplete applications at 14%. All other reasons for denial were cited in less than 10% of denied mortgage applications.
Debt is a huge barrier to borrowers living in California. We found three California cities (Los Angeles, San Francisco, San Jose) had the highest share of borrowers who were denied because of their debt-to-income ratio.
Credit history is holding borrowers back in Louisville, Ky., Memphis, Tenn. and Philadelphia. Among failed applications in these three metros, we found the highest rates of denied borrowers due to their credit history.
The top reason for a mortgage denial in Houston was debt-to-income ratio, which is the share of monthly debt obligations in relation to monthly gross income. Most lenders want this number to be 43 percent or lower, per the report.
Other Texas cities ranked quite lower than Houston on the list. San Antonio was No. 18 with an 8.05 percent rate, Dallas was No. 21 with a 7.58 percent rate, and Austin was No. 27 with a 7.05 percent.
Banking apps are now among the most widely and frequently used apps, along with weather and social media, according to Citi’s second annual mobile banking study, released Thursday.
If that’s true — the study examines the behavior of some 2,000 U.S. adult consumers — that would mean people are checking their bank accounts more frequently than they use music, news and dating apps. Although, 20 percent of millennials actually use their mobile banking app while on a date, Alice Milligan, the chief digital client experience officer for Citi’s U.S. consumer bank, pointed out in a presentation of the results.
In this age of electronic communications, we often take the post office for granted, but it remains a powerful institution. As the US Postal Service (USPS) website indicates, 47 percent of the world’s mail volume is handled by the USPS; the website adds that if it were a private sector company, “the Postal Service would rank 37th in the 2017 Fortune500. In the 2017 Global Fortune 500 list, we ranked 99th.” The business employs over 500,000 career employees, has annual revenues of $69.6 billion, and operates 30,825 “retail offices” nationwide.
It is this last aspect—the ubiquity of post offices across the nation—that has spurred legislation (Senate Bill 2755), introduced last week by US Senator Kirsten Gillibrand (D-NY), that would require every post office to provide basic banking services. Interestingly, the idea of post offices offering banking services is not new. From 1911 to 1967, post offices offered savings and deposit services for Americans (although not loan products). At one time, Americans held more than $3 billion in deposits through postal banking ($30 billion in inflation-adjusted 2018 dollars). Other countries, including Japan, Germany, China, and South Korea, continue to offer banking services through their postal networks.
Daniel Maran of the Huffington Postexplains that, “Under Gillibrand’s proposal, Americans could cash paychecks and deposit money in accounts free of charge at each post office location. Deposits would be capped at the larger of two amounts―$20,000, or the median balance in all American bank accounts. The postal banks would be able to distribute loans to borrowers of up to $1,000 at an interest rate slightly higher than the yield on one-month Treasury bonds, currently about 2 percent.” By contrast, a Pew Charitable Trusts report found that average payday loan of $375 typically costs a borrower $520 in interest and fees.
Financial Engines announced on Monday that it will be acquired by private equity firm Hellman & Friedman and combined with Edelman Financial Services.
According to the announcement, Hellman & Friedman will make the acquisition in an all-cash transaction that values Sunnyvale, Calif.-based Financial Engines at $3.02 billion. Financial Engines shareholders will receive $45 per share in cash upon closing.
The best taxable robo-advisor performers in the first quarter for total portfolios were SoFi, which posted a loss of 0.14 percent; Schwab, which returned a negative 0.33 percent; and TIAA’s socially responsible portfolios, which posted a 0.45 percent loss.
The top-performing taxable robo-advisors for total portfolios over the two-year duration of Backend Benchmarking’s study are Schwab, offering 10.98 percent annualized two-year returns; SigFig, which returned an average of 10.71 percent annually over two years; and Betterment, which returned 10.24 percent.
MetaBank, a provider of payment, community banking and financing solutions, today announced an agreement with CURO, a facilitator of short-term credit to underbanked consumers. Together, the organizations will launch a new line of credit product the parties believe will be more flexible and transparent than others in the market, and well-suited for US-based underbanked consumers. CURO and Meta expect to unveil the new, joint brand and a timeline for the pilot launch later this year.
Through the credit option expected to be launched by CURO and Meta, underbanked consumers would be able to access credit with a flexible timeline for repayment. These consumers would also be able to control their cost of borrowing through transparent fees that would apply only when credit is drawn. Estimates indicate 67 million adults are considered un- or underbanked. Many of these adults typically have poor credit ratings and, as such, have difficulty securing credit or loans — this product is expected to provide a responsible credit option for many of those consumers.
LendingTree, Inc. (NASDAQ:TREE), operator of LendingTree.com, the nation’s leading online loan marketplace, today announced that it will participate in the SunTrust Robinson Humphrey Internet & Digital Media Conference at The Palace Hotel in San Francisco, California.
Trent Ziegler, Vice President of Investor Relations and Treasurer at LendingTree, is scheduled to present on Tuesday, May 8, at 9:10am PT and will participate in one-on-one meetings throughout the course of the day. The presentation will be webcast live and archived at
If you’re looking for a way to grow income over time, and don’t mind the risk and reward nature of investment, peer to peer (P2P) can be a great way to earn some passive income on the side. Operating much like a bank loan — but without the bank – P2P lending connects people with money (even if it’s only a few hundred dollars) with people who need it.
Cleo, the London-based fintech that offers an AI-powered chatbot as a replacement for your banking apps, continues to put together an impressive list of backers. The startup’s early investors already include Entrepreneur First, Moonfruit founder Wendy Tan White, Skype founder Niklas Zennström, Wonga founder Errol Damelin, and LocalGlobe, the seed VC firm founded by father and son duo Robin and Saul Klein, amongst others. Now TechCrunch can reveal that TransferWise founder Taavet Hinrikus has become a Cleo investor and advisor.
According to the research firm eMarketer, 76% of Chinese smartphone users made a mobile point-of-sale purchase in 2017, compared with 25% of American users. In total, 61.8% of all such transactions globally are Chinese.
In the first 10 months of last year, China processed a whopping $12.8 trillion in mobile payments, according to the state-run news agency, Xinhua — 38% higher than for all of 2016.
Though it’s not exactly an apples-to-apples comparison, the U.S. market in 2017 had just $49.3 billion in mobile point-of-sale transactions, according to Shelleen Shum, eMarketer’s forecasting director.
Start with an oligopoly
More than 90% of Chinese mobile payments run through Alipay and WeChat Pay, rival platforms backed by China’s two largest internet conglomerates — Alibaba, essentially the Amazon of China, and Tencent Holdings, owner of WeChat, the nation’s must-have messaging and social-media app with more than 1 billion users.
During an 18-month period, Ezubo swindled up to 900,000 investors out of 50 billion yuan (US$7.7 billion).
In one of the country’s highest-profile court cases, the founders of what was once China’s largest peer-to-peer lending platform, Ding Ning and his younger brother Ding Dian, were jailed for life last September.
Another 24 executives were sentenced to prison terms, ranging from three to 15 years, after disbelieving depositors mounted unprecedented protests in fintech’s biggest scandal.
“[Just] 500 P2P companies, out of the total 4,856, are likely to maintain their operations this year,” it added.
Fincera Inc. (”Fincera” or the ”Company”) (OTCQB: YUANF), a leading provider of web-based financing and ecommerce services for small and medium-sized businesses and individuals in China, today reported financial results for the year ended December 31, 2017.
Full-year 2017 Financial Highlights
Income for the year ended December 31, 2017, increased 16.9% to RMB1.0 billion (US$156.7 million) from RMB875.9 million in the prior year.
Net loss improved to RMB8.4 million (US$1.3 million), from net loss of RMB12.3 million in the prior year.
Net cash provided by operating activities increased 148.4% to RMB2.1 billion (US$326.6 million) for the year ended December 31, 2017, from RMB859.2 million in the prior year. This increase resulted in a 63.6% improvement in the Company’s overall cash position to RMB1.3 billion (US$191.5 million) at the end of 2017, compared to RMB764.8 million at the end of 2016.
Loan transaction volume across all loan types for 2017 totaled approximately RMB26.8 billion (US$4.1 billion), compared to approximately RMB24.4 billion in 2016.
In January, the International Data Corporation (IDC) reported worldwide spending on blockchain solutions would increase to $2.1 billion in 2018 from $945 million in 2017 and will grow more than 80 percent year over year to reach $9.7 billion by 2021. Most of that spend will be concentrated in the U.S., with supporting use cases mostly related to financial services and cross-border settlement, for a grand total of $242 million in 2018.
LendingClub was hit with a lawsuit by the Federal Trade Commission (FTC) last week over claims of “deceptive” practices.
Following that news, LendingClub’s stock price took a nosedive. Yesterday, it was trading at an all-time low of $2.70.
Launched in October of 2016, Marcus is Goldman’s $2 billion annual hedge on threats to its core commercial banking and trading businesses. Goldman Sachs reported on its Q1 earnings call that Marcus, since it launched, has originated $3 billion of new loans and taken in $9 billion of new retail deposits.
A new crypto lender, Nexo, will launch Monday in a market where existing participants have already withstood trial by fire.
Such lenders extend credit to those who want to own digital currency, such as bitcoin and ether, and hold onto it long-term while investing it in real estate and elsewhere. But crypto lenders have been severely tested of late as digital currency prices dropped about 70% between December and February.
The team behind Switzerland-based Nexo runs a consumer lending operation called Credissimo that has made more than a million loans to consumers of up to $2,000 in Europe.
Denver-based Salt Lending, which started crypto lending earlier this year, has made just under $40 million in loans and has had no losses, according to co-founder Blake Cohen.
Unchained Capital, which publicly launched in November, is originating “single-digit million dollars of loans per month,” according to CEO Joe Kelly. The typical loan size is $120,000; the average interest rate is 12%.
IdentityMind Global today announced that Ripio Credit Network (RCN), a global peer-to-peer credit network based on co-signed smart contracts that connect lenders and borrowers located anywhere in the world, has partnered with IdentityMind to provide KYC and AML compliance support.
The company’s research shows the average customer of one of the big four banks can save more than $2,500 a year by switching to an online deal. This has increased from a year ago, when the potential annual savings were $2,250.
Despite these savings and the fact most other services have migrated online, only 27% of consumers said they would take out a home loan with an online lender.
INDONESIAN fintech startup EmasDigi enables the investing in as well as buying and selling of gold through mobile applications with easy processes that require little time.
The idea began with EmasDigi chief executive officer and founder Claudia Kolonas selling vouchers which gave people easier access to the gold trading market.
EmasDigi is affiliated with PT PG Berjangka, which is registered and supervised by the Trade Ministry’s Futures Exchange Supervisory Board (Bappebti). This affirms EmasDigi’s commitment to consumer protection and ensures compliance with legal provisions in Indonesia.
Bangladesh is widely known as the origin of microfinance. The pioneer two NGOs, Grameen Bank and BRAC, have taken this poverty reduction tool to different places in the world, especially in Asia and Africa. This has been acclaimed by the United Nations and other international organisations. Certainly the objectives of microfinance have undoubtedly already been achieved.
Microfinance was inaugurated in the 1980s for a specific, target group of people (given their poverty level). It doesn’t have the generalised character required to reach all people.
Brazilian online lender Banco Agibank SA on Monday filed for regulatory clearance to launch an initial public offering (IPO), according to a securities filing.
Agibank follows Banco Inter SA’s (BIDI11.SA) strategy of raising capital to fund its expansion and IT investments. On Monday, Inter made its debut in São Paulo stock exchange, in the first IPO by a Brazilian retail bank in nearly a decade. In late afternoon, Inter’s units were stable at 74 reais.
The bank and its owner, Marciano Testa, will sell an undisclosed amount of preferred shares in the IPO.
Fintech Select Ltd. (“Fintech Select” or the “Company”) (TSX-V:FTEC) is pleased to announce that its financial statements for the year ending December 31 2017 have resulted in a net profit of $435k. 2017 Financial Statements and Management Discussion & Analysis (“MD&A”) will be filed on SEDAR shortly.
Reduced the Company’s liability by $7.6M including our unfavourable high-interest loan
Made a net profit of $435k for the year due to the reduced liability
Reduced interest rate of 24% per annum plus management fee to 12% on April 1, 2017, and further to 6% plus management fee on May 16 2017.
Raised $3.4M through two private placements in April and June of the year, and had access to un-restricted cash of $915k by December 31 2017
Increased its customer care service revenue
Established an advisory board with high skill sets in business and Cryptocurrency space
Filed a patent-pending for Cryptocurrency POS platform.
Developed and launched the Company’s first phase of the Cryptocurrency POS solution, which simplifies buying cryptocurrecny to the mass of consumers
Acquired software for P2P Micro Lending and initiated the project to work on required changes and enhancements to meet the regulatory required standards
News Comments Today’s main news: Goldman buys Clarity Services. Zopa to receive 400M GBP valuation. Lending Works surpasses 100M GBP in online lending. ETHLend expands into fiat lending. Today’s main analysis: PeerIQ’s valuation report. Today’s thought-provoking articles: Why you’re not making much on your bank account. The impact of Brexit. Adjusting to new digital demands. UK venture funding takes a breather. […]
Why you’re not making much on your bank account. AT: “This is also one of the large drivers of the rise of P2P lending. If savers aren’t getting returns from the banks while banks charge high interest rates, savers can turn to lending and undercut bank prices. This is good for investors, borrowers, and everyone–except banks.”
Goldman Sachs Group Inc. bought personal-finance app Clarity Money, acquiring a mobile storefront for its growing consumer bank.
The deal closed on Friday for Clarity Money, whose backers include Soros Capital and Citigroup Inc.’s venture-capital arm. Adam Dell—brother of Michael Dell, the personal-computer pioneer—founded Clarity Money and will join Goldman as a partner, a title rarely given to outsiders.
Wells Fargo’s earnings also beat analyst expectations, but the bank cautioned that these results could change due to the ongoing CFPB investigations. Consumer loans decreased $9.5 Bn QoQ – more than LendingClub or SoFi originate in a year – driven by a $3.8 Bn decline in auto loans, $1.9 Bn seasonal decline in credit card balances, and a $1.8 Bn decline in the junior lien mortgage portfolio.
After a decade of being near zero, short-term interest rates have risen sharply in recent months. Typically, these rates — three-month T-bills, Libor, commercial paper — move together because they reflect the same basic economic reality.
Slow but solid growth in the United States since the Great Recession has finally altered the balance between borrowers and lenders. Higher rates mean those with cash to spare now have the upper hand and can demand a higher price to part with it.
That’s how it’s supposed to work. But as any saver can tell you, some short-term rates have barely budged.
One of the dominant themes at the recent Oracle Industry Connect conference was that banking customers are not in a state of transition to digital anymore — they are all digital now.
But whether an institution is drawing up plans on how to respond to big tech firms entering the banking market, or engaged in an effort to overhaul legacy systems, Suber said, the guiding emotion shouldn’t be fear. Instead, he said, bankers should embrace a “golden age of fintech.”
Key’s goal is to use digital to enable self-service when appropriate, while gearing the branch towards serving customers with issues best suited for a one-on-one request.
Regions Bank announced on Thursday it has invested in and formed a partnership with fintech mortgage and consumer digital lending technology platform provider, Lender Price. According to the bank, the duo will focus on streamlining Regions’ digital process and simplify interaction between banks, borrowers, and bank.
Online loan marketplace LendingTree is considering moving its headquarters from SouthPark in Charlotte to the Cone Mill site in Pineville.
The company released a statement Thursday concerning the possible move.
In the statement the company said that given its considerable growth since the 2016 purchase of two buildings in SouthPark, their headcount projections have expanded significantly, so they are evaluating alternatives, including Pineville.
The beleaguered bank warned on Friday that it may revise its first quarter earnings results because of the fine. The bank says that the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency have offered to resolve their investigations for that amount.
An internal review by Wells Fargo found that about 20,000 of those customers may have defaulted on their car loans and had their vehicles repossessed in part because of those unnecessary insurance costs.
DiversyFund, a crowdfunding platform that is revolutionizing real estate investing, has launched its Commercial and Multifamily Real Estate Growth Fund. Investors in this fund will own shares of a variety of real estate investments, with 80% of the fund dedicated to commercial and multifamily properties.
Projected returns are between 15% and 20% per year. The minimum investment is $5,000.
On April 12, 2018, Mick Mulvaney, the Acting Director of the Consumer Financial Protection Bureau (Bureau) testified before the Senate Committee on Banking, Housing, and Urban Affairs regarding the Bureau’s Semi-Annual Report to Congress. The Senate Hearing comes the day after Democrats in the House Financial Services Committee questioned Mulvaney about his leadership at the Bureau. A copy of his written testimony is here.
Increased Congressional Oversight. Throughout the hearing, Mulvaney stressed his recommendations for greater oversight to hold the Bureau accountable.
Payday Lending. Mulvaney noted, however, that he has the discretion to reach a different conclusion about the payday lending rules than his predecessor, Richard Cordray.
Data Security. While data security was an issue that spanned both sides of the aisle, Republican senators focused on the Bureau’s handling of consumer data while their Democratic colleagues focused on Mulvaney’s position on the Equifax data breach.
As to the Bureau’s handling of data, Mulvaney explained that he has instituted a data freeze and commissioned a report about the Bureau’s data collection and protection. While the data freeze does not apply to enforcement actions, the Bureau plans “to limit data that we take possession of. . . . instead of having them send it to us electronically, we are going to look at it.” Mulvaney acknowledged that “everything that we keep is subject to being lost.” When Sen. David Perdue (R-GA) asked what data had been lost, Mulvaney declined to publicly comment.
SoftBank’s massive Vision Fund said in 2017 that its minimum check size is $100 million. But in the financial-technology market, the number appears to be twice as big.
Executives at a half-dozen fintech companies said the Vision Fund has told them it’s looking to do deals where it can put at least $200 million to work over one or multiple investment rounds. These people asked not to be named because their talks with SoftBank are confidential.
Dream Forward deploys AI chatbots in its automated 401(k) platform, and is now beta testing a mobile-only version that can answer client questions via text message without requiring customers to log into their accounts.
Laserfiche develops automated workflows for advisers and later this year plans to go one step further with “robotic processes” that will automate even more of advisers’ manual, repetitive front- and back-office tasks.
UK-based peer-to-peer lender Zopa is in advanced negotiations with potential investors to seek around GBP 50.00 million in funding, helping advance the company to one of the largest financial technology (fintech) businesses in the country, Sky News reported.
Citing sources close to the matter, the broadcaster observed the simple loans and smart investment firm could be valued at GBP 400.00 million as a result of the deal, expected to be led by existing shareholders Wadhawan Global Capital.
UK-based peer-to-peer lender Lending Works announced this week it surpassed £100 million in online lending. According to Lending Works, the milestone comes just a little over a year after the platform surpassed £50 million. The lender also reported that 20,000 customers (over 16,000 borrowers and nearly 4,000 lenders) have used its platform.
Following a blockbuster year of over 8 billion USD invested within the UK bolstered significantly by multiple mega-rounds, – 2018 still managed to achieve a healthy start, with one $100 million round pushing the nation’s tally over 1 billion USD. The UK played host to seven of the top 10 European deals in the last quarter of 2017, but managed to scrape just one of the 10 in the first quarter of 2018. Four of the ten biggest European deals done in the first three months of 2018 were located in Germany.
No tech subsector has reached stratospheric valuations as consistently as financial technology, or fintech. The heady combination of huge markets, a radical platform shift to mobile, and newly vulnerable incumbent dinosaurs (be they banks, wealth managers, or insurers) has attracted over $30bn of annual investment. After a decade of evolution, 2018 looks set to be the first year we’ll see a herd of fintech firms go public. At least ten have filed or talked about an impending listing this year, including TransferWise, Credit Karma, Adyen and Funding Circle.
The Alternative Investment Management Association, the London-based organization representing the interests of the world’s alternative investment industry, has issued a new whitepaper about the impact of the exit of the United Kingdom from the European Union.
The United Kingdom has the largest alternative assets industry in Europe, so AIMA is unsurprisingly interested in the consequences of such an exit.
Scottish fintech business The ID Co is on a recruitment drive ahead of an expected ‘tsunami’ with the advent of so-called open banking.
The Edinburgh-based company helps banks make lending decisions by analysing live financial data including online bank statements, cashflow and credit agency records – and was one of the first agitators for open banking.
Savers subscribed to 8.5 million Cash ISAs in the tax year ending 5 April 2017, down from 10.1 million the previous year, while the total amount saved tumbled by a third to £39.2 billion.
LendingCrowd’s original IFISA product, the Growth ISA, is designed for those who want a quick and simple way of creating a diversified portfolio of secured business loans.
By automatically reinvesting their interest and capital repayments, the Growth ISA has actually delivered an average return for investors of 8.5% – more than three times the rate of inflation – as shown in the chart below.
According to the recent survey, Mainland China’s small businesses are the top users of fintech application and in digital payment technologies. More than 84 percent of the survey’s respondents say that at least 10 percent of their overall revenue came via these platforms. Businesses also use fintech to access funds from crowd-sourced funding and peer-to-peer lending.
The Association for Financial Markets (AFME) in Europe wants regulators to curb the development of aggressive bank regulation, according to Reuters reports on Thursday (April 12).
The bank lobby has released a study aimed at reducing regulators’ heavy hand in the financial services market that the group said has made it more difficult for banks in Europe to support the broader economy in the wake of the financial crisis.
The AFME released a report along with PwC which surveyed 13 international banks, accounting for a combined 70 percent of capital market activity around the world, reports said. Analysis found the annual cost of regulation costs $37 billion for 13 banks combined, amounting to 39 percent of total capital markets expenses in 2016.
ETHLend, a crypto-to-crypto lending platform, has started a process to obtain a license on lending activities in over thirty countries in the European Economic Area (EEA). ETHlend’s initiative will also include other countries as well with its helping expand its current business model (crypto-to-crypto lending) to provide financing in FIAT currencies such as EUR, USD, and GBP against cryptocurrency holdings.
In payments and commerce, it’s an eternity. Too long, according to ZestFinance, a company that believes credit needs a machine learning upgrade. Trulioo thinks verification needs to step up so financial institutions can actually “know their customer.” Global cross-border payments between businesses need a major boost to support the trillion dollars worth of transactions they’ve have to support in five years.
RedCapital from Chile is a crowdfunding P2P lending startup. It offers a platform through which investors get attractive returns at low risk. Furthermore, the SMEs acquire loans at favorable rates. The startup has a risk predictor that allows its investors to realize zero default.
Unsecured personal lender and ASX-aspirant Latitude Financial is targeting up to $5 billion of new loans over the next few years as its chief executive Sean Morrissey insists it can grow responsibly amid heightened scrutiny on lending standards.
During a “non-deal roadshow” over the past month, Latitude has met with around 100 fund managers ahead of what is expected to be the biggest ASX initial public offering since Medibank Private in 2014. Latitude’s three shareholders, KKR & Co, Varde Partners and Deutsche Bank, have not yet made a decision on timing for the float, which could value the equity in the group at around $5 billion.
Maintain outperform with an unchanged target price (TP) of RM1.53: N2N announced plans to acquire a 28% interest in Australian-based OurMoneyMarket Holdings Pty Ltd (OMM) through a subscription of new shares for a cash consideration of A$2.8 million (RM8.43 million).
Online lender from micro businesses Aye Finance said that it has received Rs 30 crore debt funding from from Swiss-based impact investor, BlueOrchard Finance Ltd. The funds would help the MSME lender to further diversify its lending portfolio, reaching out to the long trail of MSMEs in India.
Cash Suvidha, a start-up fintech company that extends business loans to small and medium enterprises (SMEs) and start-ups, is looking to foray into microfinance business.
According to Rajesh Gupta, founder, Cash Suvidha, the company is exploring the possibility of either acquiring an existing microfinance institution (MFI) or setting up a separate vertical for its MFI business in the next two-to-three years.
“Rural lending is one area which excites me the most,” Gupta told BusinessLine.
After rounding off 2017 at a remarkable high bolstered by megadeals, Asia continued to see large deals in Q1 2018. These include two US$1 billion+ megadeals which were struck outside China, with Singapore-based Grab’s Series G financing and Go-Jek in Indonesia’s Series E round.
“Singapore saw a record US$2.68 billion of VC investment in Q1 2018, despite a relatively muted level of activity. It is testament to the maturing of Singapore’s ecosystem that a business such as Grab could be built here to tackle the regional market. In addition, the top deals in Singapore also span across diverse sectors, from logistics, internet retail to biotechnology,” said Chia Tek Yew, head of Financial Services Advisory, KPMG in Singapore.
Speaking at the AltFi Australasia Summit in Sydney today, OnDeck chief executive Noah Breslow said he can see the Australian alternative finance industry working with $2 billion in new loan volumes by 2020. He expects the industry to oversee about $700 million in new loans this year.
“Compared to five years ago, 70% of small business owners perceive there are more small business lending options today than there were in 2013. It shows how mainstream this type of financing is becoming,” Breslow said.
Equifax group managing director Asia Pacific, Mike Cutter, said 54% of online lending enquiries come from Australians 35-years-old and under. And Queensland is leading the charge, he said.
Singapore is ready for open banking, but regulators don’t want to force it on the financial services market, according to reports in Bloomberg.
Bloomberg highlighted how Singapore’s approach differs from open banking initiatives in Europe and Japan, where regulators have imposed requirements for banks and other financial institutions to support the movement of data between their systems and those of third-party financial service providers. Such was the aim of PSD2 in Europe and Open Banking in the U.K.
The Financial Services Authority (OJK) has adopted a more relaxed view toward the financial technology (fintech) industry, believing that rigid policies may only make them obsolete in the face of fast-growing businesses in the digital sector.The financial regulator already has a policy, called OJK Regulation (POJK) No. 77/2016, which governs peer-to-peer (P2P) lending fintech companies.
After missing loan growth targets in 2017, several Malaysian banks have kept expectations more conservative this year, even as Bank Negara Malaysia (BNM) data indicated a moderation in the total outstanding financing growth of 4.1% in 2017 compared with 5.6% in 2016.
OJK deputy commissioner Sukarela Batunanggar said as of April, there were 44 P2P lending businesses that had been granted operational permits by the authority. This figure, he said, was a considerable increase from just 30 P2P lending businesses in January, indicating robust growth in the industry.
News Comments Today’s main news: SoFi CEO’s top 3 things to focus on. KBRA assigns prelim ratings to Prosper Marketplace Issuance Trust, Series 2018-1. Funding Circle fund dividend in line with target. Assetz Capital secures new funding. Experian acquires ClearScore. Today’s main analysis: Credit analysis and valuation methods for MPL. (A MUST-READ) Today’s thought-provoking articles: Top 5 trends of institutional […]
“First, we have to have the best selection — and not just selection of each product, but variations of those products,” Noto said. “Second, we have to provide unmatched convenience. Anytime, anywhere, on any device, you should be able to access all of your financial information, do any activity that you want across the broad spectrum of products that we’ll launch over time.”
Noto’s third initiative for the company — which helps its “members,” or customers, refinance student and mortgage loans, take out personal loans and even get career advice — had to do with speed.
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by Prosper Marketplace Lending Issuance Trust 2018-1 (“PMIT 2018-1”). This is a $647.5 million consumer loan ABS transaction.
Preliminary Ratings Assigned: Prosper Marketplace Issuance Trust, Series 2018-1
As Marketplace lenders continue to lend at a fast pace, there has been a significant increase in the past several years in non-bank consumer, student and small business lending.
1. What are the most prevalent methods of valuing loan portfolios today?
Discounted cashflow (DCF) methodology at the loan or cohort level is the most prevalent valuation methodology used today to value marketplace loan portfolios and related assets, including tranches in securitizations and servicing rights, regardless of the lending vertical.
2. Are valuation methods standardized? If not, why not? How does this lack of a valuation standard affect investors?
Marketplace lending is a fragmented space, and it is also diverse, with innovative forms of underwriting and funding methods being deployed.
3. How do loan valuation methods differ across lending verticals?
Marketplace lending verticals cover a wide spectrum of product, ranging from $500 installment loans, to $100,000 merchant cash advances (MCAs) made to small businesses, to sub-650 FICO unsecured consumer loans to credit impaired borrowers, to student loans extended to borrowers in medical school with high future earning potential. Thus, any methodology that falls short of incorporating all impactful data to project full cashflows does not do justice to the portfolio. In essence, the assumptions used in the DCF are based on loan characteristics that have the biggest impact on prepayment, default, and recovery behavior. These loan characteristics depend on the asset class but often include underwritten payment schedule (e.g. 36 months amortizing term, 60 months amortizing term, daily pay MCA, etc.) credit metrics (e.g. FICO bands, platform ratings, repeat borrower flags), loan size (e.g. <$5K, $20-$30K, etc.), note rate, and more. These assumptions then feed into the DCF model to project principal and interest cashflows generated from the loan portfolio, incorporating prepayments and defaults, net of recoveries.
7. What about the secondary market? How are deals priced relative to what valuation methods tell us they should be priced? How do valuation analysts obtain information about private sales of loans? In the securitization market is there a valuation standard? How are these deals priced relative to the valuation of the underlying loans?
While many new platforms have started originating in the past few years, several lenders have been originating loans since early 2010s, albeit initially at lower volumes. Data on these loans has been normalized and made available for analysis by firms such as PeerIQ and dv01. More established lenders have returned to securitization markets as issuers with sizeable deals.
The types of institutional investors allocating to the marketplace lending asset class has changed dramatically, from mostly family offices and fund of funds about five years ago to institutional investors such as pensions, endowments and sovereign wealth funds today.
It is a big shift from what the typical fund used to look like just a few years ago, which:
only purchased loans from origination platforms
invested only in consumer loans
invested in loans only from the largest platforms such as Prosper and Lending Club
used a credit model to purchase only select loans from the platforms (active buying versus passively buying)
offered only one fund to allocators
The expansion of institutional investors has ushered in higher investment standards for this asset class which now require a very high level of portfolio management expertise, risk management oversight and robust operational infrastructure before making an allocation.
As a result, these allocators and investors have generally shifted investment activity towards the top five trends:
investing through a combination of loans, securitizations and warehouse lines of credit
investing in multiple sub-asset classes
using both well established and newer origination platforms
investing both actively and passively from platform
Over the last several weeks, two notable cases in federal court challenging certain aspects of the business model of marketplace lending companies headed down separate paths. First, in an action brought against Kabbage, Inc. and Celtic Bank Corporation in the United States District Court for the District of Massachusetts,1 the parties agreed to, and the Court approved, a stipulation staying the proceedings pending an arbitrator’s review of whether the claims in that action are covered by the arbitration provisions in the governing loan agreements. Second, in an action against marketplace lender Avant in the United States District Court for the District of Colorado,2 the Court accepted a magistrate judge’s recommendation to remand the case to state court over Avant’s objection.
According to Fundbox, it takes the average small business 21 days to get paid, 81% of small- business invoices are 30 days past due, and the value of small businesses’ unpaid invoices is $825 billion — which is equivalent to 5% of U.S. GDP.
Fundbox’s underwriting software pulls data from accounting systems, invoicing systems, payments (e.g. screen scraping from PayPal), public records, web interactions, social networks and tax returns. It uses artificial intelligence to assess the creditworthiness of the company and can render a credit decision in minutes based on the business’s incoming and outgoing invoices. Borrowers pay by the week for whatever credit they use.
Using the new Fundbox Pay product, a small business that has provided a product or service (a lawyer, say, or a construction company) puts in a request for payment and gets paid immediately by Fundbox. The seller pays a 2.9% transaction fee, in return for immediate cash flow and not having to worry about the buyer defaulting.
Even Financial, the technology platform powering financial services online, has expanded its strategic partnership with Credit.com, a go-to source for expert information about credit scoring, credit reporting, credit cards and personal finance. Even Financial will now power Credit.com’s personal loans marketplace, as well as its related content tools.
With this expanded partnership, Credit.com will provide its users access with a native, personalized and optimized loan matching experience, powered by Even Financial’s proprietary technology. Even’s technology utilizes machine learning, big data and an extensive network of touchpoints and financial products to provide a personalized experience.
The firm aims to become a one-stop shop that focuses on lending service for micro, small-to-medium sized enterprises (“SMEs”) in China. The company is specifically engaged with micro financing services and financial advisory services, operating through the subsidiary Arki E-Commerce, and VIE, Arki Network.
Digital Assets Data, a NYC-based fintech startup, raised a seed funding round of undisclosed amount.
Vestigo Ventures, an early-stage venture capital firm focused on fintech, made the investment. In conjunction with the funding, Mark Casady, general partner of Vestigo Ventures, will serve on Digital Assets Data’s Advisory Board.
The £311m Funding Circle SME Income fund has revealed its latest dividend of 1.625p per share, in line with its forecast rate.
Its eighth pay-out and seventh at the same level – it’s first was 1p, the latest dividend will be paid on 30 April 2018 to shareholders on the register as at the close of business on 23 March 2018 (the record date) and the corresponding ex-dividend date will be 22 March 2018.
ASSETZ Capital has secured a new line of institutional funding that it says will widen its scope and scale of lending.
The peer-to-peer lender said the unnamed institutional investor was part of a $100bn (£71.5bn) global multi-asset manager and would provide funding dedicated to the residential property bridging, refurbishment and conversion markets.
In an update to its first release, Monzo has added a new category to its marketplace beta: investments.
AltFi can now reveal that users on the beta are able to access digital wealth investment accounts from Scalable Capital, Wealthify, Wealthsimple and WiseAlpha, peer-to-peer lending accounts with Zopa, and property-backed investments with Bricklane.com and Octopus Choice.
Challenger banks like OakNorth, Masthaven, Aldermore and Axis Bank are coming out ahead of the game by offering savings rates more than 1 per cent higher than the average offered by high street incumbents.
New research conducted by fellow challenger Gatehouse Bank revealed today that the average one year fixed-term deposit account offered by UK challengers pays 1.82 per cent on average in interest returns, compared to 0.63 per cent by high street competitors.
Likewise, the average 2 year fixed-term deposit account at a challenger bank pays 1.29 per cent more than the high street, coming in at 2.05 per cent on average compared to only 0.76 per cent from incumbents.
Experienced bankers are moving into the alternative finance sector, creating an ideal environment for SMEs seeking finance, according to alternative finance provider ThinCats.
The shift towards digital banking was highlighted in a 2016 study from the Federation of Small Businesses, with 1,500 towns being without bank branches as banks aim to direct their customers towards digital banking.
Whilst more than 90 per cent of small businesses use internet banking, face-to-face services are still valuable to businesses when it comes to making decisions regarding the future of their company and obtaining finance.
The latest SME Finance Monitor, from insight agency BDRC, shows 32 per cent of the 130,000 firms interviewed were aware of P2P lending in the fourth quarter of 2017 .
When combined with crowdfunding, awareness of these forms of finance was 46 per cent. This was up from 36 per cent at the start of 2017.
Larger SMEs tend to be more aware of P2P, the research shows, with 48 per cent of firms with 50 to 249 employees familiar with the sector, compared with just 32 per cent of one-man bands and 31 per cent of those with fewer than 10 members of staff.
P2P lending platform Lendy has grown its investor base to 20,000 in the past year, according to a statement by the firm, representing a more than 50 per cent increase.
The secured property lender has seen strong demand in particular from investors under 40 years of age. It had 13,000 investors in total a year ago, it says. Investors aged below 40 now represent 50 per cent of the property platform’s investor base.
Investors, Lendy adds, have now received more than £37m in interest from Lendy loans since inception in 2012, up from £16m at the end of 2016.
In a speech to the Credit Summit on Thursday, Jonathan Davidson, executive director of supervision – retail and authorisations at the FCA, said there are worrying numbers of households who are too deeply in debt.
He said one in five mortgages today are interest-only mortgages, many of which were made at the height of the credit boom to borrowers with little equity in their homes and not a lot of disposable income. These mortgages will not mature until about 2032.
He said the £14.8m fine paid by rent-to-own firm BrightHouse last year shows how seriously the regulator takes the issue.
On a more positive note, Davidson reassured the industry that consumer debt in the UK has not reached levels that are likely to be harmful to lenders.
He also said there has been progress by the sector in addressing conduct issues and that “by and large you do a good job for us, your customers”.
Backed to the tune of €650m ($800m) Mingo has clearly impressed more than a few crypto-noobs. Its versatility and learning curve should ensure it stays ahead of the crowd heading past St. Pat’s into the 2018 summer.
The company already has dozens of success stories to tell since its 2014 foundation – including itself, which has raised $1.5m to date.
“We’re addressing two markets across two countries with Flender: business lending and consumer lending in the UK and Ireland – an established market currently worth £2.5bn ($3.46bn) per annum,” co-founder and sales director Oli Cavanagh recently told Silicon Republic.
For PayPal CEO Dan Schulman, the main driver of his company’s gains to date has been “the digitization of cash.”
With 227 million subscribers, 65 percent of whom reside outside of North America, PayPal has seized on this “explosion” of digital payments around the world, Schulman said.
In its latest quarter, PayPal added 8.6 million net new active users, a record since Schulman joined the payment processing giant as president and CEO in 2014.
With over 50 percent of its revenues coming from outside North America,PayPal has started to leverage its international ecosystem to benefit small businesses in the United States as well, the CEO said.
“In North America, … only 5 percent of small businesses export internationally. Eighty percent of small businesses on PayPal in the U.S. export internationally,” Schulman said.
About a year after Experianreceived authorization from the U.K.’s FCA, the company has made further inroads into the nation with the acquisition of U.K.-based ClearScore. The deal is anticipated to close for $385 million (£275 million).
Founded in 2014, ClearScore has onboarded 6 million members in the U.K. through its free membership model. The company matches individuals to personal financial products, offers free credit reports, and provides financial education. The company is projected to generate $55 million in revenue in 2018, a 50% increase over what it earned in 2017.
Debitum is a borderless, small business financing network that seeks to revolutionize the alternative finance industry to enable more small to medium businesses to obtain loans in situations that may previously have been difficult, time consuming, or outright impossible.
According to a review by the World Bank, although SMEs’ more than 2/3rds of SMEs do not have access to credit. Over recent years alternative financing via peer-to-peer lending, crowdfunding, balance-sheet lending, invoice trading (loans backed by account receivables) and VAT financing, has served to assist financing for SMEs, however no single solution encompasses all fields of business.
As a result, the global credit gap still stands at a whopping $2 trillion, accounted by the World Bank Organization and the IFC.
The Monetary Authority of Singapore (MAS) and the Bank of Lithuania have agreed to work together to support the development of the FinTech ecosystems and encourage greater financial innovation in the two countries.
The FinTech Co-operation Agreement between the two countries was signed on the sidelines of the Money 20/20 Asia conference in Singapore today.
FMA today published guidance on fair dealing in advertising and communications for licensed crowdfunding services, peer-to-peer lenders and the companies that offer financial products on these platforms.
The fair dealing provisions of the Financial Markets Conduct Act 2013 ban:
misleading and deceptive conduct
false or misleading representations
offers of financial products in the course of unsolicited meetings.
The Securities Commission Malaysia (SC) and Bank Negara Malaysia established Brokerage Industry Digitisation Group (BRIDGe) yesterday, a joint working group between the regulators and industry to accelerate digitisation of the stockbroking industry.
News Comments Today’s main news: Cross River Bank, PeerIQ partner on loan data.Coinbase to offer crypto payments service to compete with PayPal.Better Mortgage hits $1B in mortgage loan funding.LendingClub updates Truth in Lending Statement.Zopa to launch a credit card.Funding Circle plans IPO at $2.1B valuation.Prospa ranked #1 among high-growth firms in APAC. Today’s main analysis: […]
Why banks should buy online lenders. AT: “A must-read analysis from PeerIQ. There’s more to it, however, than mere numbers. As financial technology rises, if banks do not find a way to make use of technology to remain competitive, they will become obsolete. That’s why they need a presence at the table.”
Cross River Bank in Fort Lee, N.J., has entered into a partnership with PeerIQ, a provider of consumer loan data analytics, in an effort to streamline capital sourcing between online lenders and institutional loan buyers such as small banks.
According to Mercator’s report, Business Banking Services: Keeping Up with Millennial Owners, 27% of total U.S. SMEs have used online alternative lenders (P2P lenders or marketplace lending platforms) in 2017.
Of this number, 48% of millennial owners (aged 18–34), currently have a loan from an alternative lender compared to 25% of SMEs run by owners over 35 years of age. Further, these millennial owners said they are twice as likely to use alternative lenders than their older counterparts.
The 2018 Small Business Finance Markets report, released on Tuesday, found that P2P business lending rose by 51 per cent in 2017. In contrast, bank lending to UK small- and medium-sized enterprises (SMEs) fell to £700m in 2017 from £3bn the previous year.
Despite increased demand for alternative finance, the report found that 70 per cent of smaller businesses would rather forego growth than borrow. The BBB’s analysis found that only 1.7 per cent of small firms sought new loans over the last 10 quarters – a record low since its index began in 2011.
Less than half (43 per cent) of businesses surveyed were confident they would get a loan if they applied, even though most new loan applications (72 per cent) are approved.
Better Mortgage, a digital mortgage company focused on improving access to home financing for a new generation of homeowners, announced that it has funded over $1 billion dollars in mortgage loans to date. Better launched in January 2016, making it the third fastest online lender to reach this $1B milestone — per research published by Lend Academy in July 2017.
Tech firms have already demonstrated they can open these markets. The largest money market fund in the world, Ant Financial’s four-year-old Yu’e Bao, was built on a sweep from the AliPay payments product. Intuit can utilize proprietary accounting and tax data to underwrite (and acquire) borrowers in novel ways. Amazon can underwrite small businesses using inventory turnover and reams of customer data.
“Big Tech” firms also have proprietary platforms and channels – in-home (think ‘Alexa’), apps, in-car, and mobile to name a few. However, in the US – at least for now – Big Tech firms lack a regulatory “swimlane” to compete with banks in lending and payments on a national scale. Their non-bank and commercial status confines their activities to narrow forms of lending, affinity partnerships, and lead generation. Until that impediment is dissolved, “Big Tech” firms need to partner with national banks with unsecured lending capabilities to fully unlock these markets.
Our argument is that banks without an unsecured lending capability risk losing long-term customer relevance. Banks that do not have an unsecured lending business do not have a seat at the table.
Which Banks are the logical buyers?
Banks that have the following characteristics would make a short-list of likely acquirers:
Are active in lending, but have a gap in unsecured consumer loans
Banks with asset management or structured products arms that can package loans into new products (e.g., ABS offerings, investment vehicles, etc.). Also, banks that have aspirations to develop a robo-advisor
Banks that have a demonstrated history of partnering with FinTechs
We assume underwriting and loan terms similar to those today (e.g. ~700 credit score, 15% coupon, $15k principal, 3 to 5 year term). We assume annual charge-off rates of 5%. We assume a 1.5% deposit funding charge and a leverage ratio of 15%.
We find that a bank can generate 10% NIM, 2 to 3.5% ROA, 15 to 20% marginal-ROE during good times.
As of Friday, February 23, 2018, recent updates made to the Truth in Lending disclosure statement for unsecured consumer loans will take effect. The forthcoming Truth in Lending disclosure statement is available here.
LendingClub has a market cap of about $1.6 billion, which makes it one of the biggest players in the peer-to-peer lending market.
The company’s stock price has plunged nearly 40% over the last four months and this could continue unless the upcoming earnings call changes investor sentiment. LendingClub was valued at about $9 billion in late 2014 but it has dropped to about $1.6 billion.
A bill introduced Thursday by Assemblyman Ash Kalra (D-San Jose) could dramatically reshape California’s lending industry by capping interest rates at roughly 20% for consumer loans between $2,500 and $10,000. Since rate caps were removed by the Legislature in the 1980s, there’s been no limit to the amount of interest lenders can charge on those loans.
That has led to startling growth in the market. In 2016, more than half of the loans between $2,500 and $5,000 and about 21% of larger loans charged interest rates of 100% or higher. In all, Californians in 2016 — the most recent year for which state data are available — borrowed $1.1 billion at triple-digit interest rates.
But Kalra’s bill would do much more than ban lenders’ priciest offerings. The bill would extend an existing set of rate caps that now apply to loans of less than $2,500 to all loans of up to $10,000. That would cap interest rates at roughly 19% for loans up to $10,000.
Had the caps been in effect in 2016, 98% of loans between $2,500 and $5,000 and 95% of loans up to $10,000 would have been outlawed. Only about $91 million of the $2.7 billion in loans made in those sizes in 2016 had rates below 20%.
BFS Capital Announces New 5 Million Credit Line (BFS Capital Email), Rated: A
BFS Capital, a leading small business financing platform, today announced it is has received a new $175 million revolving credit line provided by funds managed by Ares Management, L.P. BFS Capital will use the new facility to accelerate the growth of its lending business, following a record year where the company generated more than $300 million in originations, a new annual high.
Braviant Holdings Announces $ 7 Million Equity Raise (Braviant Email), Rated: A
Braviant Holdings, a leading fintech startup that uses advanced analytics and proprietary technology to make smarter lending decisions, has raised $5 million common equity from Loom Capital, LLC. Alongside the equity investment, Braviant has entered into an exclusive partnership with a subsidiary of Trend Capital, a tech-enabled digital marketing platform affiliated with Loom.
In addition, “accredited investors” need only apply. Investors must have a net worth greater than $1 million in liquid assets (meaning the equity in your home doesn’t count) or you need to earn more than $200,000 per year or make $300,000 jointly.
PeerStreet’s minimum investment is $1,000 and account fees range from 0.25% to a 1% setup fee. The investment length ranges from six to 24 months.
Buying and selling property has already become much more accessible due to technology, and this trend is only going to speed up. While historically, real estate professionals, investors, and landlords have been reluctant to pay for technology, and the data available has been spotty, the tide is turning as more wake up to the opportunities. Investment values are shooting up in many places due in a large part to technological advances, including the ability to market real estate to audiences beyond the immediate community and to close deals securely, quickly, and remotely with investors.
Lloyd Blankfein was a breezy opening act at a big industry event this week in Key Biscayne, Florida. On stage at the Ritz-Carlton the chairman and chief executive of Goldman Sachs was talking about Marcus, the bank’s new online savings and lending platform, which is targeting borrowers with scores as low as 660 on the 300-850 Fico scale. Goldman calls such people “creditworthy”; others call them subprime.
Those who find themselves pinched for cash often turn to high-cost payday lenders. But traditional banks and credit unions could serve that role for borrowers and do it at much lower rates, according to a new proposal from the Pew Charitable Trusts.
Good news for Americans struggling with income tax returns given the recent changes in the tax laws with the enactment of The PATH ACT. A visionary African-American entrepreneur, Marshawn Govan, has come up with an innovative mobile tax refund loan app that is all set to revolutionize the tax industry and make tax returns simpler for Americans.
Titled as MKG Tax Refund, the state of the art program is a patent pending mobile tax refund Collateral Driven Interest & Investment (SaaS) Software-as-a-Service (FOF) Fund-Of-Fund multi-manager investment application.
If there’s any question that digital mortgage firms are gaining attention from larger fintech players and investors, then look no further than venture capital firm Santander InnoVentures‘ investment in Roostify, a startup that digitalizes the mortgage application process.
Tikehau Capital, a Paris-based firm with $15.6 billion in assets under management, signed a lease for the top two floors at Rockpoint Group’s new development at 412 West 15th Street, sources told The Real Deal.
The 11-year lease covers nearly 10,000 square feet on the top two floors of the 18-story building, which offer sweeping views of the Hudson River.
Lawmakers highlighted that H.R. 3299 — the Protecting Consumers’ Access to Credit Act of 2017 — clarifies current law to ensure innovative marketplace lending remains in-tact while simultaneously providing safe consumer protections.
H.R. 3299 passed through the House by a vote of 245-171 and went on over to the Senate, which received it, read the measure twice and referred to the Committee on Banking, Housing and Urban Affairs.
Funding Circle, the largest peer-to-peer (P2P) lender in the UK, is planning to list on the London Stock Exchange (LSE) that will see it float at an estimated valuation of £1.5 billion ($2.1 billion), according to a report by Britain’s Sky News.
Credit Kudos, a challenger credit bureau, and Lending Works, a fast-growing peer-to-peer (P2P) lending platform, are partnering to enable customers to benefit from the UK’s Open Banking initiative, a secure way for banking customers to take control of their financial data. Credit Kudos and Lending Works’ partnership is one of the first initiatives to use Open Banking to improve customer experience in the finance industry.
Currently, approximately 60% of Lending Works’ borrowers are provided with instant and automated credit decisions, whereas the remaining 40% require some manual processes. Within the new world of Open Banking, Lending Works expects to increase that figure to up to 90% of credit decisions being fully automated.
British small businesses are diversifying their sources of funding away from big banks, as a growing number turn to specialist asset-backed lenders, peer-to-peer finance sites, private equity and venture capital investors.
Fewer small businesses are applying for loans than in the past five years and more of them fear that if they did they would be rejected, according to the latest report into small business finance by the British Business Bank, a government-backed development bank.
Out of the UK’s total of 5.7m small businesses, only 1.7 per cent applied for a loan or overdraft last year, the fifth consecutive year of decline since 2012.
There are also several privately funded lenders (with a local presence in the province through brokerages) such as Atom Bank, Relendex, Thin Cats and Dunluce Capital which have all completed a number of deals in Northern Ireland from cash flow loans to property development finance.
The Access to Finance initiative supported by Invest Northern Ireland offers a variety of support including start-up funding, loans and equity investment.
WhiteRock Capital Partners manages the £50m NI Growth Loan Fund (Access to Finance) which offers loans from £50k to £1.25m to local SMEs. With an extensive network of funding partners, we work hard to deliver the most appropriate support for local businesses.
Crowdfunding is gaining serious traction in the UK market, with the sector pushing past the £10 billion milestone in 2016. While, most people will probably still associate the idea of ‘crowdfunding’ with websites like Kickstarter or early stage equity investments, the reality is that 97% of the market is debt-based – either P2P lending or Crowd Bonds.
Both P2P lending and Crowd Bonds are also making big strides into the mainstream thanks to their inclusion in the new(ish) Innovative Finance ISA (IFISA), which allows investors to earn interest tax free on their investments.
With the birth of the Lifetime ISA (LISA) for 18-39 year olds on 6 April 2017, the Innovative Finance ISA (IFISA) is no longer the baby of the ISA family. But it is perhaps still the least well understood.
Chinese regulators and commercial banks are butting heads over new rules Beijing is rolling out to tackle off-the-books lending that’s compounding China’s debt woes.
Particularly targeted are practices banks use to move loans off their books by repackaging them as investments. Banks transfer the loans—mostly corporate and local government borrowings—to brokerages and other types of shadow lenders, which then peddle the rebundled investments to investors. Such maneuvers accounted for $3.5 trillion in off-balance lending as of last year.
Bank ING Diba acquires p2p lending marketplace Lendico. According to Finanz-Szene.de the transaction was reported to the German Federal Cartel Authority last week. The bank has confirmed the acquisition.
IdentityMind Global, the leader in Digital Identities You Can Trust, today announced that it has closed a $10M Series C round of financing. In addition to all existing investors, the round was co-led by Benhamou Global Ventures and Eastern Link Capital and included Hanna Ventures, Overstock.com, and Zanadu Capital Partners.
Digital currencies such as Bitcoin and Ethereum suffered from price falls in January but many firms are still seeing the benefits of creating their own cryptocurrency to use for P2P lending. One provider, SOFIN, is currently looking to raise up to $1m (£720,000) to create a token that can be used as a tool to bypass high exchange rates so loans can be funded internationally.
The global P2P lending ecosystem, FintruX backed by Ethereum and No-Code development has reopened the Token Sale, FTX which is used to power the FintruX network and is set-up as a mean to reward or get rewarded for participating in the marketplace. The token’s minimum per transaction at present is 0.1 ETH.
GISC LoanCoin Network is a utility token based lending and borrowing platform that allows users to leverage their blockchain assets to secure cash loans. The network is optimal for P2P and B2B credit financing on a global scale.
The TWQ (Tawarruq) is an ERC20 token that confer the right to the token holder to submit an application for a personal financing based on a Commodity Tawarruq Trading program, through the iP2PGlobal platform and have it listed in the platform for prospective lenders to view and choose to finance.
10TWQs are needed to apply for a personal financing of up to 5ETH.
Prospa, a Sydney based online lender servicing the SME market, has received a nice recognition as it took the top spot for a high growth firm in Asia Pacific. According to a recent ranking of the top 1000 firms in Asia-Pacific by the FT, Prospa ranked number one having experienced revenue growth of 1600% during the time period of 2103 to 2016.
Privately owned personal loans company Nimble Money is on the block, with its two founders believed to be seeking an exit.
Street Talk can reveal Melbourne-based Baillieu Holst has been hired to find a buyer for the business and has been marketing the short term loans provider to financial services industry players and private equity firms in recent weeks.
Interested parties have been told Nimble Money is on track to make about $15 million in earnings this year, following significant growth in its loan book over the past 12-months.
BaptistCare has approved 16 loans per week to some of Australia’s most financially vulnerable people.
The No Interest Loan Scheme (NILs), a microfinance program aimed at providing small no- and low-interest loans to financially vulnerable people, has this week announced it has surpassed $11.5 million lent in NSW. The loans are designed to help people on lower incomes purchase essential goods and services.
The loans are provided through BaptistCare with the scheme run under Good Shepherd Microfinance in partnership with NAB and the NSW Office of Fair Trading.
Mumbai-based personal finance startup Fincash.com has raised Rs 1 crore ($150,000) in a fresh funding round from a group of angel investors from the financial services sector, a company statement said.
The startup will use this money to build its team, expand its product line, acquire customers and make its services available across more cities and towns, the statement added.
Lendit, a peer-to-peer lending platform operator in South Korea, has extended a combined 101.8 billion won ($95.4 million) in nearly 7,300 consumer loans as of Monday to midrange borrowers seeking lower interest rates, according to the fintech startup Monday.
With government-backed initiatives and a finite business of copper export, Nathan Lustig, co-founder and managing partner at Magma Partners, saw huge potential in the Chilean fintech market.
Lustig points out that only 30% of Chileans have credit cards, while only 50% have bank accounts, “and that’s the more advanced population,” he said. Additionally, consumer experience is “pretty horrible for about 80% of this population,” he said.
One area within the fintech space that Magma has been particularly interested in is invoice-based lending, also known as factoring. In its portfolio is Portal Finance, a startup that provides SaaS for the factoring industry.
Portal Finance earns between 0.5% to 1% for every deal the bank accepts.
Talad Invoice, a lending platform initiated by a fintech startup, is expected to grow at an exponential rate this year, following two years of peer-to-peer lending using invoices as loans collateral, said Watewiboon Pumipue, chief executive officer of D90 Capital Co, which operates the financial platform.
Finda operates an eponymous web portal that provides information about over 7,000 financial products — ranging from personal and mortgage loans, investment instruments, credit cards to insurance products — standardized in Finda‘s own format. Users can be offered easy-to-understand and up-to-date information about products online, she said.
Finda gathers information primarily from an open API by the Financial Supervisory Service, but since the FSS’ database provides data, including interest rates, of the previous months, Finda reflects updates directly from sellers — banks, insurers, credit card firms and peer-to-peer lending platforms.
The next stage in the development of Canada’s first credit fund that invests in marketplace loans — unsecured consumer and small business loans provided by online lending companies — is set to play out over the next month.
The gang behind KiWi Private Credit Fund — formed last summer with $30 million of contributions from institutional and high-net-worth investors — is planning to meet the Canadian platforms.
The regulator has been fighting against expensive and very risky loans for several years already. Last July it tightened reserve requirements for MFO again: they must add 100% interest for payday loans with a delay of more than 90 days.
Firstly, the regulator is going to restrict the size of payday loans to 10,000 rubles, secondly, to reduce the biggest term of such loans to 15 days, thirdly, to reduce interest rates to 1,5% in 2018, to 1% in July 2019 a day. Now the largest payday loan is 45,000 rubles. The maximum term is 2 months, while extra payment on such loans is limited to a threefold size of a loan.
Payday loans account for 57,6% of all loans that MFOs granted in the second quarter of the last year.
The majority of the African population is underserved and unserved when it comes to banking services. Therefore, a new crop of fintech startups are thriving in Africa by developing innovative products to accommodate the needs of the community. Accenture estimates that over one-third of mainstream financial services revenue is at risk due to disruption in […]
The majority of the African population is underserved and unserved when it comes to banking services. Therefore, a new crop of fintech startups are thriving in Africa by developing innovative products to accommodate the needs of the community.
Accenture estimates that over one-third of mainstream financial services revenue is at risk due to disruption in the industry from fintech.
The reason for this exuberance is smartphone adoption. South Africa and Kenya are the fastest growing smartphone markets in the world. As per 2015 research statistics, 88% of Africans didn’t have a bank account, but they did have smartphones. In 2015, 183 million people in Africa had a mobile wallet. That was 3 times the number of digital wallet users in the U.S. and expanding at 3 times the annual growth rate. If this trajectory continues, every African will have a mobile wallet by 2020. Numbers here clearly suggest that fintech startups have a huge opportunity staring at them.
Potential for Home Grown Peer-to-Peer Platforms
As per the Africa and Middle East Alternative Finance Benchmarking Report, Kenya and South Africa are leading the P2P business lending market in Africa. But a noteworthy point here is that 90% of online alternative lending originated from platforms headquartered outside of Africa.
The third largest alt-lending model in Africa was P2P business lending, which experienced astronomical growth from a modest $2 million in 2014 to $14 million in 2015. In 2015, Kenya and South Africa were the market leaders, garnering $16.7 million and $15 million, respectively.
“(Source) The East Africa region has the largest market share of the African alternative finance market. In 2015, East Africa accounted for 41% of total African market share, while West Africa accounted for 24% and Southern Africa accounted for 19%.”
Since the market is still in a nascent stage, there has been no regulatory policy for the alternative finance industry. But positive efforts have been made in recent times to develop a regulatory ecosystem that will help in developing this budding industry in the region.
The Alternative Lending Leaders in Africa
Leading alternative lenders in Africa include:
Aella Credit – Started in 2015 by Akin (Akinola) J, Aella Credit’s headquarters is in Mountain View, California. The firm provides instant credit solutions that eliminates the hassle of standard loan applications and enables employees to borrow at competitive and fair rates through their employers. Company offices are located in the United States and Nigeria. They raised a paltry $150,000 as seed capital but have gone on to raise an additional $1 million. Aella Credit disbursed over $1 million in loans with a 0% default rate to about 1,100 borrowers in the course of its soft launch.
Branch – Branch was launched in 2015 by Daniel Jung, Matt Flannery, and Random Bares. They raised over $11 million in various funding rounds. Branch eliminates the challenges of getting a loan by using the data on borrowers’ phones to create a credit score. It encrypts the data, thus ensuring complete privacy. Branch is a for-profit socially-conscious company based in San Francisco and Nairobi.
KiaKia – Founded in 2016 by Chiemeziem Anyadike, Olajide Abiola, and Olajide Abiola, KiaKia is headquartered in Abuja, Federal Capital Territory, Nigeria. Utilizing machine learning, big-data, predictive analytics, digital forensics, and social collateral as part of its proprietary algorithm for credit scoring and risk assessment, the company provides real-time access to consumer and SME capital to underbanked Africans. Loans offer interest as low as ₦10K – ₦200K at 0.80%, durations ranging from 7-30 days, and no collateral. It has managed to raise $50,000 in funding.
Microcred Group – Microcred was created in 2005 by Arnaud Ventura with the support of Positive Planet and a number of institutional investors. Its headquarters are in Paris, Ile-de-France, France. A leading digital finance player for financial inclusion in Africa & China, Microcred offers financial services to emerging client segments, particularly the unbanked with a focus on micro & SMEs. The company operates in Madagascar, Senegal, Nigeria, Ivory Coast, Mali, Zimbabwe, Burkina Faso, Tunisia, and China. The group has raised over € 99 million in various rounds of funding.
Musoni – Founded in 2009, Musoni is headquartered in Amsterdam. Musoni BV is a social enterprise that establishes best-practice microfinance institutions and uses technology to lower costs, reduce risk, and improve efficiency. In 2009, Musoni set up the first cashless Microfinance Institution (MFI) in the world using mobile payments for all transactions. Since then, Musoni Kenya has disbursed close to 50,000 loans to micro entrepreneurs with a total value of $12 million. In 2011, Musoni won the award for ‘most innovative use of technology’ at the Global Microfinance Achievement Awards in Geneva.
RainFin – RainFin was launched in 2012 by Hannes Van Der Merwe and Sean Emery. Headquartered in Somerset West, South Africa, RainFin was South Africa’s first lending marketplace. It pioneered a viable alternative for quality borrowers looking for access to finance and lenders looking for returns that are higher than fixed deposits or the stock market. It offers loans ranging from 6-24 months and at an APR starting from 10.25%.
FarmDrive – Founded in 2014 by Peris Nyaboe and Rita Kimani, FarmDrive is headquartered in Nairobi, Kenya. This firm is a social enterprise that connects unbanked and underserved smallholder farmers to credit, while helping financial institutions to cost effectively increase their agricultural loan portfolios.
Apart from the above-mentioned lenders, there are a few more who are trying to make their mark in the African market, such Merchant Capital, Lydia.co, and many more.
Africa is not a homogeneous market. It is imperative for alternative lending startups to understand the different cultural nuances so they can develop products that have utility. As the region continues its socioeconomic upliftment, more people will need access to financial services. This makes Africa an exciting market for alternative lending in years to come.
News Comments Today’s main news: Lending Club closes first-of-kind MPL transaction. Zopa the first P2P lender to lend 100M GBP in one month. Marcus’s personal loan hits the mark. China issues new rules for cash loan market. Lexinfintech delays IPO. China Rapid Finance posts quarterly earnings. Today’s main analysis: Mortgage delinquency case study. International P2P lending volumes. Today’s thought-provoking articles: China […]
China issues new rule for cash loan market. AT: “The most interesting news today is coming from China, and this is one of the more interesting pieces. China wants to regulate every aspect of lending, it seems.”
LendingClub (NYSE: LC), America’s largest online marketplace connecting borrowers and investors, today announced that it has closed a first-of-its-kind transaction in marketplace lending — a whole loan transaction structured as a tradeable, pass-through security called a CLUB Certificate*. This first milestone transaction totaled $25 million with an institutional investor seeking a liquid vehicle with which to access the consumer credit asset class.
The CLUB Certificate transaction consisted of whole loans structured as a pass-through security. The instrument trades in the over-the-counter market with a CUSIP and is efficiently cleared through the Depository Trust and Clearing Company (DTCC).
The $25m transaction was purchased by an institutional investor seeking “a liquid vehicle with which to access the consumer credit asset class”, chief capital officer Patrick Dunne told GlobalCapital, though he declined to reveal pricing information or the buyer’s identity.
The inaugural CLUB certificate consists of whole loans structured as a pass-through security, and trades in the over-the-counter market with a CUSIP number, and cleared through the Depository Trust and Clearing Company (DTCC).
Unlike a securitization, the certificate only pools three year and five year loans of a particular grade that the investor is looking for.
When Goldman Sachs launched Marcus, a personal loans product, a little over a year ago, it set an aggressive goal: lend $2 billion by the end of 2017. And while competing online lenders have reported a series of losses since then, Goldman announced this month that Marcus has hit that milestone.
Marcus offers loans from $3,500 to $30,000 on an unsecured basis, meaning they don’t require collateral such as a car or house. Borrowers must make monthly fixed payments, and interest rates range from 6.99 percent to 23.99 percent. On the Marcus website, a sample loan of $15,000 at 13 percent APR is estimated to cost a borrower $19,312 at the end of a 48-month term.
While Marcus has been soaring, other online lenders have been struggling. Lending Club, Prosper, and OnDeck all reported losses over the past 18 months.
On Friday, Lending Club completed a first-of-its-kind transaction in marketplace lending by selling a whole loan pass through security. The transaction size was for $25 Mn and was sold to a single institutional investor. LendingClub held 5% to comply with risk retention rules. The transaction is notable for the following reasons:
Expands the market. The pass-through security reflects the same risk and return characteristics of a whole loan pool.
Lower Financing Costs. Additionally, as market liquidity grows, the CUSIPs may enjoy lower-cost repo financing as an alternative to higher-cost credit facilities.
Secondary Markets. The product addresses certain investors’ demand for secondary market liquidity.
Valuation. The price discovery generated from markets in CUSIPs will enable valuation agents such as PeerIQ and Duff & Phelps to calibrate pricing to observed trades in the market.
After the 2016 elections, there were high hopes that student lenders (and servicers) would benefit from a more favorable environment regulatory environment and expanded lending opportunities.
Until recently, however, there was not much to show in either respect. While the industry cheered the Department of Education’s decision in August to stop sharing servicing data with the Consumer Financial Protection Bureau, higher education did not appear to be a high priority for the Trump administration.
Our latest guest is Ethan Senturia. He was the CEO and Co-Founder of Dealstruck, an online small business lender that was founded in 2013 and shut down in late 2016. Ethan talks about his journey as the CEO of Dealstruck and what led to its demise. He does not sugar coat anything and he takes a great deal of personal responsibility for everything that happened.
His has written a book about this journey called Unwound: Real-time Reflections from a Stumbling Entrepreneur and it is being released on Amazon today.
We’ve warned readers before about new, slick credit companies like Affirm, which want to replace credit cards with on-the-spot loans integrated right into online purchase pages. For all their talk of helping consumers, these companies aren’t much more than friendly loan sharks, re-branded to offer a “premium experience,” but still dangerous and even predatory.
But as Cagle points out, Affirm’s median interest rate of 19 percent is above the median credit card rate, and retailers use the company to build, and then aggressively advertise, the model of buying expensive products on credit. For all of Affirm’s talk of responsibility and helping consumers make better choices, their third most-popular buying category is fashion.
Affirm seems to be making the problem worse. As Cagle puts it: “Affirm is not just meeting a demand, but creating one, encouraging shoppers to buy and spend more. Affirm claims an average 75 percent boost in order values across all its merchant partners.”
With a young, tech-savvy consumer base, MiaDonna, an online jewelry retailer specializing in ethically sourced lab-grown diamonds, wanted to be up-to-the-minute with its payment options as well. The retailer selected financing company Affirm, enabling shoppers to pay in three-, six- and 12-month increments.
MiaDonna, which now makes approximately 20% of its sales through Affirm, noted that shoppers using the service are both spending more and coming back. Affirm users make 17% more repeat purchases, with average order values (AOV) that are 36% higher compared to non-users.
The company’s target consumer is females aged 18 to 34 who are in a relationship and are close to getting engaged or married (within six to 12 months).
“The borrower experience at a marketplace lender is better than [the experience] at a bank, and that’s why it’s here to stay,” Don Davis, portfolio manager for Prime Meridian Capital Management, said today. during a panel discussion at the 3rd Annual Investors conference for Marketplace Lending, pointing to the ease of the online lending experience for borrowers.
The Texas-based bitcoin ATM network, Coinsource has deployed 20 new machines in the state of Georgia, marking its single largest installation to date. 18 bitcoin ATMs have been installed in the city of Atlanta, and 2 machines in the nearby college town of Athens.
A survey by the Federal Deposit Insurance Corporation (FDIC) found that 7% of households (9 million) in the US are unbanked and an additional 19.9% of households (24.5 million) are underbanked.
“Atlanta, Georgia is in the top ten of most unbanked cities in the country, and more than one in ten households have no involvement with traditional banks. Around 30% of residents are underbanked, meaning they might have to check accounts, but have to rely on other kinds of services like pawn shops, check-cashing and payday loan companies to get cash and credit,” Clark said.
To maximize exposure to potential clients, the ATMs were set up near high traffic areas, as well as close to the Georgia State University and Emory University in Atlanta, and the University of Georgia in Athens. 16 of the new machines are for buying bitcoin only, while 4 have both buy and sell functionality.
The state of Georgia now has a total of 101 bitcoin ATM kiosks, making it the third largest US market for bitcoin ATMs behind the cities of Chicago and New York.
Data is the new air, and the banks that breathe the best will win. In other words, banks that really get data analytics, and can apply machine learning to gain deep customer insights are the ones that will survive.
Data scientists are going to be needed in many areas of fintech businesses such as customer acquisition, cybersecurity, customer service – even compliance. For online lending businesses the other two critical areas are underwriting and collections.
Glassdoor releases an annual 50 Best Jobs in America report and for the second year in a row Data Scientist had the top spot.
Elevate Credit, Inc. (NYSE:ELVT), today announced that it’s CEO Ken Rees and CFO Chris Lutes will present at the following upcoming conferences:
KeyBanc Capital Markets Consumer Conference – The panel presentation will begin at 12:05 p.m. Eastern Time, on Wednesday, December 6, 2017. A webcast is not available for this conference. The presentation materials will be posted to the investor relations section (“Presentations and Events”) of the company’s website at
Consumers Union, the policy and mobilization division of Consumer Reports, today urged Congress to not repeal a rule adopted by the Consumer Financial Protection Bureau (CFPB) in October that would protect consumers who take out high-cost payday, installment and auto title loans. Under a Congressional Review Act resolution introduced today in the House of Representatives, the CFPB’s new rule could be repealed by lawmakers before it goes into effect in mid-2019.
I need an expert who can help with regulatory approvals to open a peer to peer lending platform in USA. You can be a lawyer or financial consultant who have experience in the domain and knows what’s involved. You must have experience related to lending industry.
Peer-to-peer lenders including Funding Circle and RateSetter have set dates for the launch of their innovative finance Isas, but high demand and a clampdown from providers on the highest risk borrowers will slow the process for new investors.
This week, Funding Circle became the latest to launch an IF Isa.
Yet the platform, which facilitates lending to small businesses, will not be rolling out its IF Isa to new investors immediately to make sure it can match new loans to borrowers. Instead, it is opening access to its 74,000 existing lenders in batches. Those who have used the platform for the longest and who lend most frequently will be offered first chance to apply.
RateSetter also confirmed this week that it had set a February launch date for its IF Isa after receiving authorisation from the Financial Conduct Authority (FCA) in October. The platform, which facilitates loans to businesses and consumers, says it expects to raise £500m in the first full tax year after opening, but would only offer the IF Isa to existing investors in the short term. The platform said it had made that choice to reward loyal customers.
PEER-TO-PEER lending platforms will need to wait until at least the new year for the outcome of the Financial Conduct Authority’s (FCA) post-implementation review as Brexit and other market issues have taken priority at the City watchdog, Peer2Peer Finance News has learned.
On Thursday, peer-to-peer lending platform Crowd For Angels reportedly announced the launch of its £50 million bond investment opportunity. This news comes less than a year after Crowd for Angels launched its first crowd bonds, which are described as specially created secured, high-interest products act are eligible for the platform’s IFISA.
According to P2P Finance News, the online lending portal is looking to raise the funds for a Liquid Crypto Bond, which will pay investors 3% over five years. The investors will then receive cryptocurrency tokens through an Initial Coin Offering (ICO) that may be traded on external exchanges or used for project investments on the Crowd For Angels peer-to-peer lending platform.
With less than a month to go for Christmas, a new research from online lender Sunny has found that the number of hours Brits spend planning for Christmas and buying gifts online while at work are worth £1bn, with over 15m Brits admitting to planning for Christmas during work hours.
Whether at work or at home, Sunny’s research demonstrates a clear gender divide, with women most likely to take on the task of planning for Christmas. Almost a third (31%) of men admit they don’t spend any time planning meals and a quarter (24%) say they don’t do any cooking or preparing of meals, compared to only one in seven (15%) women. Men also don’t make time for Christmas cards, with a fifth (20%) not giving any time to writing them versus fewer than one in ten (9%) women.
Men who have tried this
Women who have tried this
Shopped around online for gifts to make sure I’m getting the best deal
Started next year’s shopping in the January sales
Used coupons/vouchers to buy food and drink for the Christmas period
Participated in secret Santa rather than gifting everyone
This year the list was compiled in association with the UK PropTech Association, the trade body set up in February; in addition to property investment platform LendInvest, two UKPA figures – chairman Eddie Holmes and Estate Agent Today contributor and PropTech consultant James Dearsley – were on the judging panel.
Dan Hughes, director of data and information product management for RICS, has been named the top PropTech Influencer of the Year.
Professor Andrew Baum of Oxford University took second place, after authoring PropTech 3.0, a much-discussed document in the field of PropTech.
Third was digital strategist Antony Slumbers, while fourth was Gary Chimwa, the organiser behind Future:PropTech events.
You can see the full list of 25 here and the top 10 International Influencers here.
China on Friday issued new rules to clean up its controversial cash loan and online micro lending market, including prohibiting lending to people without an income and putting a curb on the total charges on runaway credit, according to an official notice seen by the South China Morning Post.
It ordered therefore, that with immediate effect, all organisations and individuals must obtain a licence to conduct lending business. All lending institutions must also state clearly a comprehensive charge, which includes interest rates and various fees charged for different categories of offerings for the loan.
The tightened controls attempt to curb a common practice where online lending platforms bypass the maximum legal interest rate charge of 36 per cent with additional add-on fees.
Lenders are also banned from rolling over the credit more than twice and must put a cap on the cost of each loan.
Funds from online micro loans are also banned from being used to speculate in stocks and pay for property down payment. In addition, asset management products offered by financial institutions and banks are disallowed to invest in products securitised by cash loans, campus loans – loans granted to students with no regular incomes – or property down payment loans.
Online micro lenders expanded by 23 per cent in two years to 452.4 billion yuan (US$68.4 billion) by the end of 2016.
On Friday, China’s financial regulators introduced new measures aimed at restricting the industry, which is estimated to be worth 1 trillion yuan ($151.5 billion).
The number of repeat borrowers is rising, which could signal financial stress on borrowers, analysts say. The companies, however, say the repeat lending is just a sign of the attractiveness of their platforms.
Online consumer lending in China, of which cash loans are a significant portion, dwarfs similar activity in the rest of the world combined, accounting for over 85 percent of all such activity globally last year, according to a recent report by the Cambridge Centre for Alternative Finance.
The boom in micro-lending comes as lenders seek to cash in on rising incomes in a country where credit card penetration remains at about one-third of the population, according to data from the central bank, which says about half a billion consumers don’t have a credit score.
And the online cash loan sector is projected to reach 2.3 trillion yuan by 2020, according to the research firm iResearch.
Outstanding household debt in China equalled 45.5 percent of gross domestic product at the end of the first quarter, according to the Bank of International Settlements, compared to 27.9 percent five years ago.
Chinese consumer lending firm Lexinfintech will delay the pricing of its planned Nasdaq IPO to conduct more due diligence, a source with direct knowledge of the situation said – a move that comes after Beijing issued new rules to tighten control of the micro-loan sector.
The source, who was not authorized to speak to the media and declined to be identified, did not say how long the IPO was likely to be delayed.
China is on the hunt for a homegrown alternative to the U.S.-based FICO score credit ranking system as it attempts to keep up with the rapid expansion in consumer loans being offered through mobile.
Lacking such a single system, online lenders instead use a patchwork of methods to assess consumer credit worthiness, including things like online questionnaires and analysis of consumer data such as individuals’ eCommerce purchases.
The National Internet Finance Association of China — a two-year-old agency closely aligned with China’s central bank — is tasked with the job, but has offered little in the way of specific detail about how the three-year-old search for a system is progressing — past noting in a brief report late Monday that “this would complete an important rung in procedural order.”
Every citizen in China, which now has numbers swelling to well over 1.3 billion, would be given a score that, as a matter of public record, is available for all to see. This citizen score comes from monitoring an individual’s social behavior — from their spending habits and how regularly they pay bills, to their social interactions — and it’ll become the basis of that person’s trustworthiness, which would also be publicly ranked.
The companies that are implementing SCS include China Rapid Finance, which is a partner of social network giant Tencent, and Sesame Credit, a subsidiary of Alibaba affiliate company Ant Financial Services Group (AFSG). Both Rapid Finance and Sesame Credit have access to intimidating quantities of data, the former through its WeChat messaging app (at present with 850 million active users) and the latter through its AliPay payment service.
According to local media, Tencent’s SCS comes with its QQ chat app, where an individual’s score comes in a range between 300 and 850 and is broken down into five sub-categories: social connections, consumption behavior, security, wealth, and compliance.
China Rapid Finance Ltd – (NYSE:XRF) announced its quarterly earnings results on Thursday. The company reported ($1.01) EPS for the quarter. The company had revenue of $10.46 million during the quarter.
Beijing’s municipal financial regulator has warned private equity (PE) funds not to continue investing in initial coin offerings (ICOs), a practice banned by the mainland’s central bank three months ago.
Huo Xuewen, chief of the Beijing Bureau of Financial Work, said in a report published on Sunday that some of the funds had been found taking part in ICOs – fund-railings by the issuers of digital currencies such as bitcoin – outside the regulatory framework and he pointed out it was a wrongdoing that the regulator would seek to weed them out.
He added the authorities now plan to set up a strict monitoring system to track operations and investments by PE funds.
Hexindai (NASDAQ:HX), a China based peer to peer lender, became the most recent Chinese online lender to trade on a US exchange early last month. The company will report fiscal year results this coming Tuesday before markets open. Last month, Hexidai become another Chinese online lender to list their shares on the US markets in a successful IPO that raised approximately $50 million with each ADS priced at $10/each. The market cap of Hexindai stands at over $550 million today with shares in the company having traded between $10.90 and $17 since the IPO.
We asked Zhang why his company decided to list on the NASDAQ. Zhang explained that in comparison to Hong Kong the US capital markets is wider and has more comparitive companies. Zhang noted that Yirendai and other online lenders now trade on US exchanges.NASDAQ was selected because Hexindai is more tech focused.
Zhang said a key component of their competitive advantage is their sophisticated risk management. Their application pass through rate is equal to just 25% of submitted applications and their default rates are very low.
Their second competitive advantage is their extended off line channels. For example, if a customer goes to a travel agency and wants to book a trip, the agency may say they have a financing solution and will provide the application to Hexindai and then they will determine whether or not they should provide a loan to the borrower.
“For our last fiscal year there were 200,000 borrowers and 110,000 active investors. An average loan size is 80,000 RMB. The typical use of the loans are for personal use like overseas traveling, continuing education or housing renovation. We believe loan proceeds are for self investment. Their life. For their job to become better. We help the emerging middle class.”
Market making is generally an ongoing process that includes ingesting data, generating a price, and placing an order on an exchange.
Decentralized exchange promises two major benefits:
Security and control
Unlocking the ability to transact globally, through a decentralized exchange, will affect society in profound ways. Global information transfer birthed the term “globalization”. Global asset transfer will birth some new term that we all haven’t yet thought of, and in the end the borders that blockchain break down will be greater than the borders we saw the internet break down.
Decentralized exchanges will succeed, likewise, when there is liquidity and usability, both of which do not exist yet on any solution.
The ultimate example of this is the “micro-finance” movement. The idea is that you lend money to a micro-finance institution that in turn lends the money to ordinary folk (frequently women) in the developing world for practical projects that generate returns for investors. Investors hope to get back all of their money plus a return – net returns of around 2% a year aren’t uncommon.
The only trouble is that while micro-finance does score highly in terms of “impact”, it is often not so much crowd-based as “command-and-control” in style. In other words, it’s usually a credit institution making the actual lending decisions and you invest via their pool of funds.
Now, however, we have the crowd revolution and the rise of alternative finance and peer-to-peer (P2P) lending. In the Netherlands, this has given rise to companies such as Lendahand, which provide a marketplace for investing in individual projects for a defined return, usually via some form of bond. Over here in the UK, Ethex provides a similar marketplace for investors to back individual projects with real impact.
So, why not marry micro-finance, the crowd, and renewable energy into one product? That’s the idea behind a relatively new website called Lendahand, a joint venture between the Dutch platform and Ethex. The platform is working with local providers such as SolarNow in Uganda as part of its Energise Africa initiative to provide finance for solar panels. This is done via unsecured bonds that pay out 5%-6% a year for a period of between one and three years, with interest usually paid every six months (along with some of the debt, which is amortised as it is repaid).
First, second and third place, on this year’s Fintech100, are occupied by Chinese fintech firms: Ant Financial, which owns Alipay payments platform; ZhongAn, which uses big data to automate online property insurance; Qudian, an online electronics retailer offering monthly instalment re-payments.
The fourth and fifth places are occupied by Oscar, which seeks to radically transform health insurance through technology and Avant, the fastest-growing marketplace lending platform for short-term consumer credit.
The sectorial breakup of the Fintech100 is as follows: 32 lending companies, 21 payments companies, 15 transaction and capital markets, 12 insurance companies, 7 wealth companies, 6 regtech (regulatory technology-Banks.am) & cyber security companies, 4 blockchain and digital currencies companies, and 3 data and analytics companies.
Fintech100 includes a broad range of fintech companies from 29 different countries.
One blockchain based startup, SelfKey, is creating a blockchain-driven decentralized digital identity system that gives users full control over their personal information. The platform allows individuals to create their own secure personal identity wallet that stores important identity documents. This wallet also stores KEY tokens, which can be used to purchase services on the SelfKey marketplace. These services, which range from passport applications to opening bank accounts, don’t control users’ data–users do.
Users have the key, so to speak, that releases their own data.
Australian fintech and fully licensed marketplace lender, Zagga has launched its Alternative Growth Fund aimed at wholesale investors, including self-managed super funds (SMSFs), which will target net returns of 6.5 per cent per annum.
The fund, which would have the minimum investment for wholesale investors of $50,000, was designed to add scale to the Zagga business model which uses a bespoke algorithm to match wholesale investors with borrowers, the firm said.
Peer-to-peer lender RateSetter has examined big bank profit margins and found that while they are paying record low rates on deposits their lending rates for personal loans and credit cards continue to climb.
“You can drive a bus through the spread between bank deposits and consumer lending rates,” said RateSetter CEO Dan Foggo.
“Publicity stunts such as dropping fees on ATMs are little more than a smokescreen for the poor value,” he said.
Online savings account rates have dropped from 6.55 per cent to 1.6 per cent;
Bonus saver account interest rates have fallen from 4.8 per cent to 1.85 per cent, but;
Credit card interest rates have climbed from 18.6 per cent to 19.75 per cent, and;
Unsecured personal loan rates rose from 13.8 per cent to 14.5 per cent.
But the Financial Markets Authority’s first statistical report on P2P lending, issued this week, highlights just how little actual P2P lending there has been in NZ to date.
The useful and informative FMA reportdetails that there are 20,744 investors registered with licensed P2P services. At 207,230, there are about 10 times as many borrowers registered with P2P services. The volume of investors, or savers, versus borrowers sounds unbalanced and it is. But the bulk of money being lent through P2P platforms is coming from banks and institutional, or wholesale, investors.
Far and away the biggest NZ P2P lender is Harmoney. According to the FMA report, as of June 30 the total value of Harmoney loans outstanding was just under $239 million. The five other active P2P lenders had a shade under $50 million worth of outstanding loans between them.
Mumbai-based CreditVidya, a fintech start-up, uses alternative data sources to assess fraud and risk. It has recently raised $5 million Matrix Partners and had previously raised $2 million from Kalaari Capital. The money is being used for product development and hiring manpower. A lot of the investments are going into research and development and setting up the team right, which will include data scientists from the US. The plan is to have a total of 146 employees by end of 2018, said the founders of the company.
Currently you work with over 20 banks and non-banking financial (NBFCs) who are looking to assess customers of small unsecured credit. What is the quality of these banks and NBFCs?
Rajiv Raj: We have a mix of small and big banks and NBFCs. We have big banks such as State Bank of India, ICICI Bank Ltd and Axis Bank Ltd. There are many micro services that these companies use.
Abhishek Agarwal: We are also in talks with an MNC (multinational corporation) banks. Right now, 10 relationships are with large banks and NBFCs, out of the 27, and remaining are in mid- and small-sized banks. Every bank is focused on retail loans and in that pie on unsecured lendings. Personal loans, consumer durables and two-wheeler loans are the segment where there has been a tremendous rise.
Recently, P2P regulations came out. These companies will have to start reporting to credit bureaus. Has any P2P platform approached you to use alternate data?
Agarwal: We are currently working with three P2P lenders. Here again, it is for risk assessment of first-time borrowers. People who are digital savvy and want to access this facility, are first-time borrowers and under 35 years. Cibil’s (a credit bureau in India) penetration in the 25-35 age group is poor. Hence, 75-80% of the cases will have a no Cibil score.
Raj: These are thin-file customers who don’t qualify for loans.
Why are the traditional credit bureaus not using alternative or digital data to assess customers?
Raj: One, there is a regulatory issue. Two, they have never done this before.
Agarwal: Experian (a credit bureau) in the US has been around for the last 40 years. Digital lending in the US exists for the last 12 years. Experian never used alternative data in the US. It is not in their DNA. All the traditional bureaus in India are heavily influenced by their parent companies in the US. There is no product that the bureaus have launched in India that is only for the Indian market. They haven’t done anything that is new and specific to India.
While analysing customers, what parameters do you use to evaluate credit worthiness?
Agarwal: You look at five types of fingerprints—social finger print (anything you put on social media), device fingerprint (such as SMS), browser fingerprint (anything that identifies your device), click stream fingerprint (how fast you type) and biometric fingerprint (the physical fingerprint).
With a continuation to the credit line onboarding the digital trend, the next year will see more and more people borrowing using data, believes Vikram Sud, former APAC operations and technology head of Citibank and also ex-group COO of Kotak Mahindra Group.
Algorithm-based investments will see a hike, interactive brokers too will grow in numbers, while the cost of availing them will keep dropping.
While the majority of fintech users today rely on wallets and prepaid investments for transactions, many in the industry believe that that is set to change.
Citing a 360 degree financial inclusion and a future of uniform payments globally, Himaghna Dey Sarkar, Chief Expansion Officer, ToneTag spoke about how they are enabling sound-based payments. The app listens to the frequency of tones in the existing EVC machines, and enables transactions directly to the merchant’s bank account.
Sud believes that we are moving closer to a stage where the cards business is at a risk. With more and more retail lending options like buy now and pay later, Sud said that the line of credit will become more prominent.
Imagine there being minimal record of your existence – your credit history and identification papers being almost non-existent. Unfortunately, this is not a movie plot but a reality that millions across the world have to grapple with. Both developing and under-developed economies have their fair share of people who have no formal credit footprint. These are people who have never borrowed from or interacted with formal banking channels in their lives. This lack of interaction with banking channels is one of the primary reasons that these people do not possess sufficient format documentation, a primary requirement of banks. The repercussion of this is that there is minimum information available about their credit history and when they do approach a lender for capital; more often than not they are deemed ineligible and are turned away.
Over the last few years, digital lending platforms have emerged as viable sources of credit for such borrowers.
By 2022, over 70% of India’s population is expected to own a smart phone. With a current smart phone user base of 300 million, smart phone penetration in rural India is growing at a much faster pace as compared to the urban India. This means that each one of us is generating reams of digital data giving online lenders a glimpse into our habits and preferences.
Again there is speculation in the US over whether companies like Amazon, Facebook, Apple or Wal-Mart could acquire a banking license.
If you go to buy items online, you might need finance for your purchase. The easiest solution nowadays is probably to use a credit card to make the payment. Then, depending on your card, you have more time and flexibility to make the payment. The problem is the actual annual interest rate of the card is easily 30% to 40%. You could get a loan with much lower interest rates, but it is complex to get a loan quickly when you are buying something.
Now we see a situation FinTech that integrated finance solutions are easily available for all kinds of retail services and they offer also a smooth customer experience. This is part of a much bigger development in the finance industry. Finance services are no longer their own isolated islands, but they can be components in any service.
Limiting individual investment in peer-to-peer (P2P) financing at 10 million won ($9,220) is a typical one. The ban on non face-to-face contracts on discretionary investments in the asset management field also limits the domain of fintech startups online. It is necessary to change perspectives in modifying regulations to something that will help new fintech companies.
Fintech can be classified into three areas: well-known money transfer and payment; P2P finance represented by cloud funding; and asset management represented by robo-advisors. The common technology necessary for all three is artificial intelligence (AI).
In P2P lending, supervised learning can be used in P2P for credit scoring and anticipation of expected returns. For asset management firms, reinforcement learning can be used for automated portfolio building.
National Bank of Canada capped off a better fiscal year with strong fourth-quarter profit as the Montreal-based lender enters a new phase of an aggressive plan to redefine itself.
And chief executive officer Louis Vachon said the bank is now shifting from a phase of heavy cost-cutting and job losses to one that reduces costs by using technology to automate more of its processes.
The bank is spending a total of $750-million a year on technology, about $350-million of which goes to new projects.
Profit from the core personal and commercial banking segment was $239-million in the fourth quarter, compared with $191-million a year earlier, as loans and deposits grew and deposit margins improved. The wealth-management arm also posted a 29-per-cent increase in profit to $110-million.
Provisions for credit losses – the money set aside to cover bad loans – rose to $70-million in the fourth quarter, from $59-million a year ago. But the increase effectively belonged to Credigy Ltd., a U.S. subsidiary that specializes on buying distressed loans at discounted prices.
The bank expects Credigy will continue to grow, but is tapering its appetite for unsecured consumer debt as it winds down an agreement that saw the firm buy $1.3-billion in prime loans from Lending Club, a U.S.-based online lending firm. Credigy will instead look at doing more deals for secured loans with lower spreads but also lower losses.
News Comments Today’s main news: OnDeck collaborates with Ingo Money, Visa on real-time SMB lending. Affirm’s new mobile app allows consumers to borrow money for almost any online purchase. N26 readies for launch in the UK. P2PFA reports over 700M GBP in Q3 new lending. Fincera issues $1B in Q2 lending. Kabbage automates SMB lending in France, Italy with ING partnership. […]
SoFi priced itself at twice its valuation. AT: “But why? Did SoFi really believe it was worth $8B, or was this a fishing expedition to see who may be interested down the road when the company could command that valuation?”
Why Charles Schwab held talks on SoFi. AT: “Very interesting. Schwab likely sees the technology writing on the wall. If they are to remain relevant in the 21st century, the company will either have to develop new technology on its own or partner with a company that already has the technology. So this makes me wonder, will they go looking for another company?”
OnDeck (NYSE: ONDK), the nation’s largest online lender to small business, announced today agreements with Ingo Money and Visa to enable real-time1 funding of loans to small businesses via their debit cards, powered by Visa Direct. OnDeck will be the first company in the online lending industry to offer real-time access to capital via a customer’s existing small business debit card.
The move by OnDeck comes in response to small business demand for improved cash flow and faster payment experiences. A recent survey found 70% of small business owners report they have a small business debit card, and of those without debit cards, 87% of them said they would get a new debit card to take advantage of real time transfers. The virtual card grants you a one-time card number, an expiration date, and a three-digit security code, which can then be used to make singular online purchases, while the repayment plan is managed through the app.2OnDeck plans to use Visa Direct through Ingo Money’s technology platform to disburse loan proceeds securely in real time to its line of credit customers via their existing small business debit cards. Visa Direct is Visa’s real-time push payments platform allowing companies to leverage Visa’s global scale to develop faster payments solutions for ubiquitous reach to consumers or small businesses with a debit card.
Ingo Push, the turnkey push payments service from Ingo Money, allows OnDeck customers to receive funds via a vast network of eligible debit or prepaid card accounts, including eligible Visa cards; online and mobile wallets; and a network of more than 40,000 cash-out distribution points.
SoFi reportedly mulled a potential sale earlier this year, but the talks evaporated over a hefty asking price. After receiving a non-binding offer of $6 billion from a foreign bank, the online lender pegged its target acquisition price at $8 billion to $10 billion as it negotiated with several US companies, including Charles Schwab, per the Financial Times. That price would have ranked the deal among the second most valuable VC-backed fintech companyin the US. It’s also one of eight American startups that have raised $500 million+ rounds this year.
But while SoFi could likely fetch a relatively high acquisition price, the $8 billion to $10 billion figure is far more than it appears to be worth. In February, the online lender raised a $500 million round at a valuation of $4.4 billion—and since then, its value has likely dropped amid sexual harassment allegations at the company.
Citing people familiar with the matter, the Financial Times (paywall) reported the deal talks with Schwab were prompted by a $6 billion offer from a foreign bank after SoFi raised $500 million in funding led by Silver Lake. With a more than $4 billion valuation after that, the unnamed foreign bank expressed interest in acquiring SoFi. That prompted the online lender to reach out to other potential suitors aiming to fetch $8 billion to $10 billion in a sale.
At first blush, a deal with Charles Schwab may not make sense, given it isn’t in the online lending business. But SoFi does have a wealth management unit that would give the San Francisco discount brokerage access to more customers and thus more assets under management. It’s also a low-cost provider on that front, something very much in Schwab’s wheelhouse. According to SoFi’s website, the company doesn’t charge customers for the first $10,000 invested and charges 0.25% per year. It also has a team of live advisors that give customers advice and ETF portfolios that are curated by the company. SoFi also has a large customer base, particularly of millennials, that would be attractive to Schwab. Earlier this year ex-CEO Cagney predicted SoFi would end the year with 500,000 customers.
Lending startup Affirm, founded by PayPal and Yelp co-founder Max Levchin, is out to destroy the credit card, or at the very least make a noticeable dent in its utter ubiquity. The company, which began in 2012 by offering simple and transparent loans for web purchases, is today launching a mobile app to the public that acts as a virtual credit card, so it can be used as a line of credit with no strings attached for pretty much any online purchase. The app is available now for iOS and Android.
The virtual card grants you a one-time card number, an expiration date, and a three-digit security code, which can then be used to make singular online purchases, while the repayment plan is managed through the app. To use the service, you need to provide proof of your identity, but credit is extended only for the item you want to buy, with the company determining your likelihood to pay back the loan based on your current credit and the total amount being lended.
You’ll need approval for every purchase you try to make, up to a maximum of $10,000. In total, Chou says Affirm has made more than 1 million loans for a total amount of more than $1 billion since it started roughly five years ago. It also now counts as over 1,000 merchants as partners, including mattress maker Casper, furniture site Wayfair, and Expedia.
Now, Affirm wants to extend its services to anyone and any merchant, by going directly to the consumer with a virtual card.
Although Affirm may offer as low as 10 percent APR, or in some cases zero percent for select partner merchants, you still run the risk of paying more for a purchase using the company’s virtual card than if you had a standard credit card. For those who are simply bad with money and borrowing, it has the same pitfalls as a credit card, though with a few more speed bumps and warning signs built in.
For every dollar of fraud, lending companies incur $2.82 in costs, which includes chargebacks, fees, interest, merchandise replacement and distribution, according to the LexisNexis Risk Solutions Fraud Multiplier. Large digital lenders, with over $50 million in annual revenue, are hit hardest by fraud in this space. These large digital lenders face a higher risk of successful fraud attempts than others within the lending space, but it really is a problem across the digital lending space, even with small and midsized digital lenders.
When BlackRock, the world’s largest asset manager with USD 5.7 trillion in AUM, decided to layoff talented stock pickers in favor of machines for portfolio management in March, it was a sure sign that times are changing.
The top performer in a group of the five leading robo advisors in the first eight months of 2016 generated returns that were encroaching on double-digit territory, and in some cases outperformed their more expensive mutual fund counterparts.
And it’s not just BlackRock that’s demonstrated a willingness to favor machines over stock pickers. Robo advisors as a category, which is comprised of approximately 100 firms, oversee USD 60 billion in AUM as of year-end 2016 across 15 countries, according to Deloitte. That amount is expected to balloon more than fivefold to USD 385 billion in a half decade, according to Cerulli Associates research.
A recent Capital One Investing survey says in times of extreme market volatility, millennials are the least likely generation to turn to a person for financial advisory services at 69%. In fact, millennials are the generation that place the highest value on robo-advisory services, evidenced by 65% of them saying automated financial advice “enhances their financial peace of mind,” according to the poll.
FS Card Inc., an emerging financial services leader for underserved consumers, today announced it has raised $150 million in financing to fund future growth. Through its Build Card product, FS Card will expand access to traditional credit and create an on-ramp into the financial mainstream for small-dollar loan customers. The new credit facility closing comes as FS Card wraps up a year of rapid growth with Build Card portfolio expansion of nearly 500 percent in 2017.
The funding will be used for sustained portfolio build as part of the company’s ongoing commitment to financial inclusion in a market where a new rule from the Consumer Financial Protection Bureau is likely to impact access to alternative credit products.
According to Prosperity Now and The Federal Reserve, more than half of Americans are credit invisible or subprime, while 47 percent do not have $400 to pay for an emergency expense. FS Card leverages its proprietary machine learning algorithms to actively meet the increasing demand of underserved consumers for fairly priced credit with a prime-like experience.
Fintech is a multi-billion dollar industry, with startups in the US raising around $18 billion since 2015, according to PitchBook and nearly 1,400 venture capitalist-backed deals. Two of the most valuable startups in the country — Stripe and SoFi — are in the fintech sector. And there are 11 fintech startups valued at more than $1 billion.
10. Kabbage — $1.3 billion
Kabbage is valued at $1.3 billion, according to PitchBook estimates, thanks to a $250 million investment round in August 2017.
9. Robinhood — $1.3 billion
The zero-commission, US-focused stock brokerage is valued at $1.3 billion following a $110 million funding round in April 2017.
Avant was valued at $2 billion after a $325 million funding round in September 2015.
Though its valuation makes it the fifth most valuable fintech startup in the US, it’s seen some rocky shores in the years since. In June 2016, the company reportedly laid off staff and lowered its monthly lending by half.
3. Credit Karma — $3.5 billion
Credit Karma scored a $3.5 billion valuation on a $175 million funding round in June 2015 which brought the company’s total funding to $368 million.
2. SoFi — $4.4 billion
SoFi was valued at $4.4 billion during its most recent round of funding in February 2017, which brought the company $500 million from investors. In total, the company has raised over $2 billion, including a $1 billion round led by SoftBank in 2015.
1. Stripe — $9.2 billion
Stripe was valued at $9.2 billion in its most recent $150 million funding round in November 2016. The company has raised a total of $440 million since its founding in 2010.
In response to overwhelming investor demand, Groundfloor, the only real estate crowdfunding platform that is open to non-accredited investors, today announced the launch of its Loan Origination Network for mortgage brokers and third-party originators interested in tapping additional real estate loan opportunities. The company has opened up its innovative real estate financing platform to brokers nationwide who now have the opportunity to provide customers with low cost capital for fix and flip projects.
According to a recent report from ATTOM Data Solutions, the estimated total dollar volume of financing for homes flipped in Q2 2017 was $4.4 billion, up from $3.9 billion in the previous quarter and up from $3.4 billion a year ago to the to the highest level since Q3 2017, a nearly 10-year high. Also, more than 35 percent of homes flipped in Q2 2017 were purchased by the flipper with financing, up from 33.2 percent in the previous quarter.
Key benefits for mortgage brokers and third-party originators:
Competitive rates from six percent
Unique deferred payment option
Closing in as little as seven days
Costs rolled into loan principal
Discounted fees for high volume partners
Partners assigned dedicated Business Development Manager
Mortgage industry veteran Debora Valentine joins the team as Senior Vice President, Business Development. Valentine brings more than 25 years of experience in sales to Groundfloor’s senior leadership team.
Alipay, the world’s leading third-party payment platform, today announced they are working with JPMorgan Chase, a global financial leader, toward a relationship by which Chinese consumers traveling in North America would be enabled to pay using their Alipay Mobile Wallet at Chase merchant clients.
The proposed relationship between JPMorgan Chase and Alipay would enable its acceptance at many of Chase’s merchants in North America. Through Alipay’s geolocation-based “Discover” function and push notifications within the Alipay app, Chinese travelers can locate merchants nearby, receive promotion information, and make purchase decisions. It also enables local merchants to better target and connect with Chinese consumers.
Approximately 10 million consumers are expected to originate a home equity line of credit (HELOC) between 2018 and 2022. This would more than double the 4.8 million HELOCs originated in the previous five-year period (2012-2016). The projection is part of a new TransUnion (NYSE:TRU) study that evaluated recent dynamics in the HELOC industry, and was released today during the Mortgage Bankers Association’s Annual Convention & Expo.
TransUnion projects 1.4 million new HELOC borrowers in 2017 and 1.6 million in 2018, about a 30% increase from the previous two-year period of 2015 (1.1 million) and 2016 (1.2 million).
HELOC Originations – 2017-2022 Include Projections
HELOC Originations (In Millions)
The TransUnion HELOC study found that rising home prices and the resulting increase in equity is beginning to fuel interest in HELOCs. The Case-Shiller home price index rose as high as 180 in 2005 and 185 in 2006 before dropping to 134 in 2012. By July 2017 it had risen again to 194, and is expected to rise in the next few years to well over 200.
According to the study, there were 4.9 million HELOC originations in 2005 when home equity stood at $13.3 Trillion. HELOC originations dropped to a mere 600,000 in 2011 as home equity declined to $6.3 Trillion. Home equity has once again risen to $13.3 Trillion in 2016, yet HELOC originations continued to be low at 1.2 million.
Who are the HELOC borrowers?
The study explored the primary reasons why consumers open HELOCs and estimated the percentage of HELOCs opened under each motivating reason.
Types of HELOC Borrowers
Defining this Type of HELOC Borrower
“Consolidate balances from other credit products, usually to a lower interest rate”
“Finance a large credit need (e.g., home renovation project)”
“Refinance a HELOC, often to change terms or to get a better rate”
“Concurrent with a mortgage origination, often used as part of a down payment”
“Standby, undrawn line of credit for a ‘rainy day’”
Four leading trade associations – Electronic Transactions Association, Innovative Lending Platform Association, the Marketplace Lending Association, and the Small Business Finance Association – commissioned a comprehensive survey of U.S. small business owners from Edelman Intelligence. The survey conducted by Edelman Intelligence found that a large majority (70%) of small business owners believe there are more credit options today when compared to five years ago, and 97% of those feel that the growing number of financing options is a good thing.
Key findings of the study include:
70percent of small- and medium-sized business owners say there are more lending options now, and 97 percent of those believe that the increase in options is a positive thing for their businesses.
Most small business owners reported using online small business lenders to help them expand their locations, make necessary hiring and equipment purchases, and help manage cash flow.
Of the small business owners considering taking out a loan in the next 12 months, close to 40 percent say they will consider borrowing from an online lender.
According to the study, 98 percent of small business ownerswho have used online lenders say they are likely to take out another loan with an online lender.
For many small business owners, online small business lending platforms are a popular alternativeto asking friends and family for a loan.
PeerStreet, a marketplace for investing in real estate-backed loans, is excited to announce its affiliate program at FinCon 2017. Backed by Andreessen Horowitz, PeerStreet’s platform provides investments in high-yield, short-term real estate loans. The newly launched program will allow PeerStreet to partner with the personal finance community to better serve both current and future investors.
PeerStreet aims to reach more investors through the affiliate program by working with financial writers and influencers to share thought leadership and market information about this unique space. In addition to high-conversion advertising opportunities, affiliate program partners will also have access to PeerStreet’s dedicated Affiliate Director, who can provide deep insight into PeerStreet’s service and offer tailored support.
Mastercardannounced it has tested and validated its blockchain and will be opening access to it via a set of three APIs published on the Mastercard Developers website. The APIs include the Blockchain Core API, the Smart Contracts API, and the Fast Pay Network API.
Mastercard will pilot the blockchain for use in the business-to-business space, implementing it to increase speed and transparency in payments and decrease costs for cross-border payments.
Mastercard’s blockchain operates independently of a digital currency.
Envestnet | Yodlee (NYSE: ENV), a data aggregation and data analytics platform powering dynamic, cloud-based innovation for digital financial services, today announced its integration with Fannie Mae through a pilot program to digitally validate borrowers’ assets. Fannie Mae will leverage Envestnet | Yodlee’s Risk Insight Solutions to fuel the Day 1 Certainty™ validation of assets offering, which gives lenders a faster and simplified borrower experience.
Over a four-decade career in financial services I have witnessed, experienced and participated in transformational change. The conversations around emerging technology like the ATM caused industry debate – consumers would never use a machine to make a withdrawal from their account. Credit cards not tied to a specific gasoline brand, local merchant or one of the giants of the catalogue sales world – Montgomery Wards, Sears and that upstart JC Penney – would never be accepted. Consumers would never do their banking over the telephone, and of course never accept online banking – remember the first versions using a floppy disk? And checks would always be the only way, other than cash, to pay for things (bill pay, PayPal, debit cards and other payment methods…all have dispelled that).
We should be concerned about the FinTechs. They are not a fad nor are they going away. They are very well capitalized, and they have revolutionized how to leverage big data in ways we can only dream of. They have challenged credit score lending structures by leveraging their ability to engineer data. They are mobile optimized, in fact they are mobile prevalent, and they strive for immediate decisions and funding. Where traditional lenders are still caught up in past practices making it difficult to refinance student debt, underwrite small business loans in minutes, grant signature loans at the point of purchase, or embrace new credit models, the FinTechs are quickly gaining ground in market share because they can do those things today.
And we have not evolved our cornerstone lending program, the signature loan, to compete not only at the POS for autos, but for personal improvements and major retail purchases as SOFI, Lending Club and so many other FinTechs have.
Robin Erickson, an Arizona snowbird, remembers the pitch she got from her life-insurance agent about LoanGo, a startup internet payday-loan company.
The Mount Vernon, Washington, resident said she was told that the investment would generate an 18 percent return, and she “more than likely” would get her money back in a year.
“I loaned him $30,000, and I haven’t heard from him since,” Erickson, a retired elementary-school teacher, told The Arizona Republic in a phone interview.
The Arizona Corporation Commission’s Securities Division alleges that Erickson and four other older investors were defrauded of a combined $250,000 after making investments in 2011 and 2012 with LoanGo.
Administrative Law Judge Scott M. Hesla on Oct. 10 sided with state regulators and ordered the men to pay a total of $250,000 in restitution to the five investors. The judge also ordered the men to pay penalties of up to $15,000 each for “multiple violations” of the state’s anti-fraud provisions.
The judge, in his ruling, noted that Billingsley failed to inform investors that their money would be used to repay business startup loans of $10,000 each to himself and Peterson. The judge also wrotethat investors were not told Billingsley received a $15,000 commission for obtaining their investments.
The judge noted that Billingsley was repaid his startup loan the same day one person invested $45,000 in LoanGo, and that Peterson was repaid the same day a different person invested $25,000 in the company.
It has been 20 years since the Alternative Investment Management Association published its first due diligence questionnaire, a template designed to standardize the diligence process by which investors decide if a particular management is right for them.
Now it has published a new questionnaire/template, covering a broader range of entities/strategies. Specifically, for the first time there are questions specifically covering private credit and private equity strategies. The new document also integrates what were formerly separate questionnaires specific to commodity trading advisers and fund of funds managers.
Banks have welcomed the statement of principles because they are non-binding, while fintechs are encouraged by the CFPB’s recognition of key issues in the debate.
Yet the principles could also lay the groundwork for future regulation if banks and fintechs cannot work out some outstanding issues on their own.
The most controversial aspect of data sharing is screen scraping. Banks loathe data aggregators’ practice of asking a consumer to provide their online banking login credentials, so the firm can scrape their account data. They argue it’s unsafe to hand out banking credentials and that aggregators bombard their servers with these requests, preventing actual customers from accessing their accounts.
The CFPB’s principles seem to discourage screen scraping without banning it.
Knight said the principle may encourage banks to directly provide data to third parties.
The CFPB’s principles around informed consent appeared the most stringent, suggesting that it’s not enough to just disclose what a company is doing, but disclosures must be done in language anyone can understand.
The principle may pose a challenge for banks and fintechs. How many companies send notifications about how they’re using and storing consumers’ data, in easy to understand language?
However, while Noreika again defended the OCC’s right to license non-depository companies on Thursday, he also said the agency has not decided whether it will “exercise that specific authority.” This is more ambiguous than the OCC’s previous stance, perhaps suggesting the regulator believes the measure won’t survive such strong opposition.
Noreika said there’s been progress here, as federal regulators are now more willing to engage in dialogue with each other and with fintechs.
The Robo Report, the first and only report on the performance and portfolios of robo advisors, published by BackEndBenchmarking, has been released for the third quarter 2017, the company announced.
The expanded Report now offers a first look two full years of a few robo advisors performance data, along with new sections that include interviews with WiseBanyan, Personal Capital and Betterment; the addition of Sofi, TIAA and WealthSimple; and upside/downside capture ratios for more specific quant on risk tolerance, as well as more detailed asset allocation and style analysis.
The company currently tracks Acorns, Betterment, eTrade, Fidelity Go, Future Advisor, Personal Capital, Schwab, SigFig, Tradeking, Vanguard, WiseBanyan, TD Ameritrade, Ellevest, Hedgeable and Merrill Edge, Sofi, TIAA and WealthSimple.
First Associates Loan Servicing announced today that they will be hosting an industry networking breakfast for Marketplace Lending and Investment Banking professionals the day prior to the American Banker Digital Lending + Investing Conference.
Hosted at Aureole Restaurant in Manhattan, this event will include a panel of marketplace lending superstars, including speakers from Prospect Capital, Macquarie, MoneyLion and more, who will discuss the state of the industry.
If you have interest in attending panel discussion and event, please click here to learn more.
CoinList, a provider of financial services for staging and managing initial coin offerings (ICOs), is spinning out of AngelList as a standalone company that will be led by former Sidewire CEO Andy Bromberg, it tells Axios.
Closely-watched German fintech startup N26 is recruiting a country manager to spearhead its launch into the UK.
A job listing on N26’s website says it is looking for someone to take “charge of the market entry of N26 in the UK.” The successful applicant will be “responsible for the operational setup and development of N26 in the UK market,” and should “build up the branding for N26 within the UK market in order to successfully attract and win new customers.”
THE PEER-TO-PEER Finance Association (P2PFA) has reported that new lending among its members equated to more than £700m in the third quarter of 2017, despite losing ‘big three’ platform RateSetter during the period.
The self-regulated trade body said on Monday that cumulative lending by the existing P2PFA platforms came in at more than £7.1bn by the end of September 2017.
The UK Peer to Peer Finance Association (P2PFA) has published their quarterly numbers on sector growth for the third quarter of 2017. Covering the period between July and September 2017, the P2PFA says the numbers confirm continued steady growth in levels of new lending and in the number of borrowers facilitating loans through peer-to-peer lending platforms.
Earlier this year LendInvest received the highest possible rating for the quality of our loan servicing from ARC Rating, a regulated European credit agency, for the third straight year. It’s a big achievement for any lender, but particularly an online lender.
Here are some of the things that ARC looks for when rating a lender’s servicing standards:
Open Banking refers to an open source technology that allows anyone to create apps and websites for the financial services sector. Developers use an application programme interface (API) to create software that allows customer data to be shared securely between banks and trusted third parties – with the customer’s consent.
The Open Banking Standard is publically available and can be accessed by developers when creating apps and websites. The final version of the Open Banking Standard is due to be in use by 2019.
Examples of Open Banking apps
Yolt is a money management app owned by ING Bank and launched in beta format in June 2017. Yolt allows users to view all their bank accounts, credit cards, bills etc. in one place – even if they are from different providers. Users can compare prices, including energy prices, and set budgets on their phone.
HSBC announced in September 2017 that it was testing an Open Banking platform that will allow its customers to view their current accounts, credit cards, loans, mortgages and savings from up to 21 different providers.
Wave offers a service for businesses to give clients access to all of their finances in one place. It acts as an invoicing service; tracks income and expenses to make accounting easier; allows for streamlined payment of staff and will leverage data from as many sources as possible. It also offers loans to clients by connecting with the online lender OnDeck.
DueDil is an app which uses data to make online due diligence passports for its clients so that they can prove their financial credentials.
Tandem collects the banking data of its customers from their banks, analyses their spending habits and provides suggestions for how they can save money.
As rents continue their inexorable rise, the appeal of living in inner London boroughs such as Camden – where the average monthly rent is £2,219 – is starting to lose its shine.
According to peer-to-peer lending platform Landbay, the central areas popular among students are being eschewed by graduates, who are looking to make the capital their long-term base.
Faced with spending up to 75 per cent of their take-home pay on rent, graduates looking to work in London are choosing to live in areas where they can remain in commuting distance but pay less. And with average student loan debts of more than £50,000 according to the Institute of Fiscal Studies, any savings are welcome.
Top ten outer London boroughs | Average rent and yield
Fincera Inc. (OTCQB: YUANF), a provider of online financing and e-commerce services for small and medium – sized businesses and individuals in China, has reported financial results for the second quarter ended June 30 , 2017.
According to their numbers, loan transaction volume across both CeraPay and CeraVest platforms for Q2 2017 totaled approximately RMB 6.9 billion (USD $ 1.0 billion ).
Chinese companies have raised $38.6bn through IPOs in the year to date, according to Dealogic.
Issuers in financial services — which, like education and leisure is at the confluence of the hot segments of consumer services and tech — include Ppdai, which is raising $350m in New York, Yixin, Lexin and Jianpu Technology.
Yixin illustrates another trend: many of those coming to market are backed by China’s tech royalty including Tencent, Alibaba, Baidu and JD.com. Auto financier Yixin, backed by the latter trio, is expected to raise about $200m.
Like Qudian, which listed last week, fellow online lender Lexin is heading to the US and is expected to raise around $600m, according to bankers. Jianpu Technology, a financial comparison site akin to Lending Tree in the US or MoneySuperMarket in the UK, filed for its IPO last Friday.
Recently, Rong360’s JianPu Technology has filed an IPO prospectus to U.S. Securities and Exchange Commission. Rong360, which started with a diversion business, this time takes the VIE model to list in US. Its business scope covers loans, credit cards and finance, as well as big data risk controls. However, it is noteworthy that Rong360 is still in the red, and its big data risk control business has also led to a compliance controversy.
According to the prospectus, the company plans to go public in the U.S. with a maximum of $200 million deal for it, and the underwriters are Goldman Sachs, Morgan Stanley, JP Morgan and Huaxing Capital. Rong360 was founded in 2011 and has finished four round of equity finance. The listed entity is a wholly owned subsidiary of Rong360, which was registered in the Cayman Islands in June 1st this year.
With the net loss of $7.2 million in the first half of 2017, Rong360 is still in the red. However, the deficit of JianPu Tech has been shrinking. The prospectus shows that the company’s revenue has increased from 168.4 million RMB in 2015 to 182.1 million RMB in 2016. And in the first half of 2017, its revenue has grown to 393.4 RMB, nearly tripled in less than two years.
Chinese online lender Qudian Inc is under fire in China after what observers said was a less-than-impressive interview by its CEO Luo Min Sunday that was aimed fending off criticism of the company’s business practices. The critics said it could instead exacerbate the company’s domestic image and hurt its share price.
Following its splashy debut in the US, Qudian was the subject of many negative news reports, mostly from popular social media accounts, about its business model, with some questioning its practice of targeting students for loans and others even describing the company as a “loan shark” – lending money at usurious rates.
“Our bad loan ratio is below 0.5 percent, that’s very low. So we can afford it when those people don’t pay up… Losses have been contained at a low level,” Luo said.
But part of the interview drew much attention and even mockery. Luo said, “Loans that weren’t paid on time were considered dead accounts. We never pushed people to pay back. We don’t even call. If you don’t pay back, then never mind, we’ll just give it to you as a gift.”
ING Partners with Kabbage, Inc. to Expand Automated Small Business Lending into France and Italy (Kabbage Email), Rated: AAA
Kabbage Inc., a global financial services, technology and data platform serving small businesses, and ING, a global bank, are expanding their strategic partnership into France and Italy to provide small businesses with real-time access to working capital. Building on ING’s successful launch in Spain with the Kabbage Platform TM , this partnership allows millions of small businesses throughout France and Italy to easily apply, qualify and access ongoing lines of credit up to €100,000 with ING in under 10 minutes.
Initiative Ireland has today announced the launch of Ireland’s first syndicated property finance platform.
The launch coincides with the company’s pre-approval of a €1.5 million secured loan, which has been approved for funding via the platform. The largest crowd-lending loan approved to date in Ireland, the loan will fund the development of 10 social housing apartments and a ground floor restaurant on the North Strand Road, Dublin.
One angle that needs to be discussed more is how the introduction of these new services is also lowering barriers to most financial activities.
For instance, the rise of cashless options has given the unbanked access to financial services especially in regions that banks find unserviceable. So, it is quite refreshing then that some new Fintech efforts are focused on this particular area since financial inclusion is considered as a key aspect to poverty reduction.
I recently spoke with Sharone Perlstein who is currently working on delivering microfinance services to emerging markets.
What attracted you to microfinance?
There are about 2.5 billion people in the world who are unbanked. Microfinance bypasses the banking system and can help unbanked people develop their own personal economy that will enable them to support their families, their communities, and ultimately the economy of their country.
What are the key challenges in microfinancing and how do you think they can be overcome?
Human resources: Until now, a very large workforce was required to provide this service to those who need it. Today, with automation and smarter information systems, we can significantly reduce manpower and streamline processes to make loans more economically viable for borrowers and lenders.
Most microfinance companies operate where they are most needed, namely in rural areas where the technological infrastructure is unadvanced and unstable. These areas are usually far from urban centers and transportation is inconvenient and expensive. As a result, communication between the microfinance service provider and its potential customers is complex and challenging.
Granting loans to people without a bank account may be risky from a business point of view, since it is difficult to know whether potential borrowers are trustworthy or will be able to meet the terms of the loan. It is also difficult to monitor their business and economic activity. In other words, it is very difficult to build a financial profile for a borrower with no banking activity. Here, too, mobile technology changes the picture.
Some argue that microfinance loans, supposedly meant to help poor people succeed financially, often leave them with debts they can’t afford because of the high-interest rates. What is your opinion on this matter? Is this a real problem? What causes it? And how can it be solved?
I think the best solution is to ensure that:
A. Potential borrowers understand the terms of the loan in depth.
B. The Microfinancier knows the potential borrower in depth.
Why do you choose to focus on Indonesia?
I researched the region’s economy a bit and discovered that there were more than 50 million small and medium-sized businesses, representing about 97% of the business sector in Indonesia and responsible for 30%, if not more, of its GDP growth. However, many of these businesses don’t have enough money to realize their full potential, especially in rural areas, and the banks do not provide the right solution. For this reason, the Bank of Indonesia has enacted a law according to which banks will have to devote at least 20% of their loans portfolio to microloans by 2018, thus opening a window of opportunity for businesses and other microfinance companies wishing to enter the local ecosystem.
Bitcoin could have you covered on your next home loan.
In this line, the longstanding contribution of traditional banks in the worldwide economy is undeniable. But due to their credit selectiveness, renowned bureaucracy and transactional costs, the question is: Can this system can be improved to better serve the 2 billion underbankedaround the world? Greater financial inclusion provides benefits far beyond improved economic health for underserved societies; it is also way for governments to reduce corruption and fraud and promote entrepreneurship and growth.
Anecdotally, at the end of 2015, Lending Club had a total loan volume of $15.9 billion. Year-end of 2016 shows a total volume of $24.6 billion so the annual volume for 2016 is the difference or $8.7 billion.
Just last year, Ripio Credit Network, which wrapped up a $31 million Ethereum ICO, entered the credit service market using Bitcoin as the transaction vehicle. A year later, BitPagos launched Ripio as a digital wallet that enables consumers to send, receive, store, and buy or sell Bitcoin in local currency and to make online payments. In January 2017, BitPagos rebranded as Ripio, with around 100,000 users in tow across North and South America.
Mambu is operating in 45 different countries indicating its ability to quickly adapt to diverse regulatory regimes.
Co-founded by CEO Eugene Danilkis and COO Frederik Pfisterer, Mambu is Berlin based Fintech, a standout in the emerging German Fintech scene. Danilkis started his career developing NASA-certified software for the International Space Station.
Can you please provide an update on Mambu and global utilization? How many different companies are using your digital banking services? Which countries are you operating in?
Mambu is live on 6 continents, countries of operation include the UK, Netherlands, Germany, Sweden, the US, Kenya, Australia, Philippines, China and Argentina, to name a few.
We have more than 180 live operations in over 45 countries, our solution powers over 5000 loan and deposit products which serve over 4 million end customers.
Our clients range from FinTech revolutionaries to traditional banks.
New10, ABN AMRO’snewly launched SME lending Fintech, went from concept to launch in 10 months and is offering a fast and fully digital loan application process for Dutch businesses.
Globe Telecom’s lending business Fuse
Is online lending, including P2P, marketplace and balance sheet lending, the most demanded service right now?
Eugene Danilkis: Across all lending verticals, consumer, business and marketplace, there is significant demand for digital and customer centric loan products.
That being said, we have experienced a rise in demand from institutions looking to launch new digital banking services, offering both deposit and loan products.
We’ve also seen a growth in institutions looking to explore a different approach and take a marketplace model similar to that of N26. They want to collaborate with product providers to offer clients a wider range of products and services.
There appears to be more traditional lenders (IE banks) more inclined to go it alone and launch their own platforms. Goldman Sachs launched Marcus which they developed in house. Is this a trend? Or an opportunity for Mambu?
Eugene Danilkis: As mentioned above, this is a trend that is gathering momentum and it is an opportunity for Mambu.
The Mastercard Foundation today announced that its fifth annual and largest Symposium on Financial Inclusion (SoFI) will take place in Accra, Ghana, on November 7 – 9, 2017. The Symposium champions the idea that, to achieve greater financial inclusion, financial service providers in developing countries must do more to meet the needs and expectations of people living in poverty.
Each year since 2013 the Foundation has convened hundreds of industry professionals to focus on barriers to greater financial inclusion around the world.
This year’s event will reflect on progress made over the past five years, explore challenges that still lie ahead, and plan how to expand and deepen financial inclusion for the world’s most underserved people.
Keynote Address II: Dr. Ernest Addison, Governor, Bank of Ghana
The Mastercard Foundation first awarded the Clients at the Centre Prize in 2015 to the Swedish mobile microinsurance firm BIMA. Last year, the Prize was presented to the South African international remittance company, Hello Paisa. Each year draws nearly 100 applicants from companies around the globe. The three 2017 finalists are:
Jumo, a large-scale, low-cost financial services marketplace that uses behavioral data from mobile usage to create financial identities for micro, small, and medium-sized enterprises;
ftCash, one of India’s fastest growing financial technology ventures which aims to empower micro-merchants and small businesses with the power of digital payments and loans; and
Destacame, a free online platform that empowers users by giving them control over their data to build their financial capabilities and to access financial products.