Friday November 24 2017, Daily News Digest

Lend Academy investment accounts

News Comments Today’s main news: Revolut sings 1 millionth customer. KBRA assigns preliminary ratings to Lending Club’s Consumer Loan Underlying Bond Credit Trust 2017-P2. Funding Circle to launch Isa. Orca is launching investment platform. Chinese regulators investigating potential Qudian data leak. China cracks down on shadow banking. China tells provincial goverments to halt microlender approvals. Swiss consortium adopts single digital identity for […]

Lend Academy investment accounts

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United States

United Kingdom

China

European Union

International

Australia

India

Africa

Canada

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United States

Goldman Sachs Faces Doubts About Loss Rates at New Online Lender (Newsmax Finance), Rated: AAA

As Goldman Sachs Group Inc. lends more money to Main Street, one question won’t go away: How many borrowers will pay them back?

A recent example it gave suggests the firm expects loan losses to be lower than what some rivals are seeing, and half of what many credit-card lenders experienced the last time the economy went south.

The bank is counting on its consumer push to deliver $1 billion in revenue growth over the next three years. While the firm looks to attract borrowers with better credit than many rivals, others think it may be underestimating the risks of a business where it’s the upstart.

My Quarterly Marketplace Lending Results – Q3 2017 (Lend Academy), Rated: AAA

If you have been reading these posts in the past year or so you will have noticed a steady decline in my returns, primarily caused by underperformance in my LendingClub accounts.

Earlier this year I adjusted my strategy and started investing across the entire risk spectrum but it is a bit like steering a battleship. Given my many thousands of notes it takes a while for any changes to show up in my portfolio returns.

My trailing 12 month returns for the year ended September 30, 2017 across all my accounts was 6.64%.

Source: Lend Academy

My main LendingClub account has performed poorly over the past 12 months. My TTM return is at a paltry 1.64%, my lowest return ever. All of my LendingClub accounts are below 5% and all have shown reduced returns over the past year.

Prosper continues to perform quite well. My three accounts are all returning between 7% and 8% which I consider quite respectable. My average interest rate of the loans I have invested in is just under 20% but returns have been quite consistent recently in the 7-8% range.

Source: Lend Academy

PeerStreet is a real estate platform focused on fix and flip properties. These are short term loans, typically between 6 and 24 months, and they are backed by the property. I use their automated investment tool to invest in only those loans that are paying 8% or more, up to a 75% LTV and a duration up to 24 months.

My first new entrant this quarter is AlphaFlow. They are a real estate platform that build diversified portfolios of fix and flip properties for you. What I like about AlphaFlow is that they deploy your money quickly, my entire investment was fully deployed in a matter of days. And they diversify across 75-100 properties, my own portfolio currently has 83 investments in 22 states with an average LTV of 68%.

Finally, as I do every quarter I want to end by highlighting the net interest number which for the last 12 months stands at $46,631.

Get the lowdown on the full range of Peter Renton investments here.

KBRA Assigns Preliminary Ratings to Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P2 (BusinessWire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P2 (“CLUB 2017-P2”). This is a $330.0 million consumer loan ABS transaction that is expected to close December 6, 2017.

Preliminary Ratings Assigned: Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P2

Class Preliminary Rating Expected Initial Class Principal
A A- (sf) $239,400,000
B BBB (sf) $34,600,000
*C BB (sf) $56,000,000

This transaction is LendingClub Corporation’s (“LendingClub” or the “Company”) third rated sponsored securitization and the second sponsored securitization consisting of “prime” unsecured consumer loans facilitated by LendingClub’s proprietary technology platform supporting an online marketplace that connects borrowers and investors by offering a variety of loan products originated by issuing banks through the platform, www.lendingclub.com (the “LendingClub Platform” or the “Platform”).

The transaction has initial credit enhancement levels of 35.45%, 26.05% and 10.83% for the Class A, Class B and Class C notes, respectively.

China War on Online Loans Makes Waves in New York: QuickTake Q&A (Bloomberg), Rated: A

Chinese President Xi Jinping’s campaign to reduce risk in the financial system is being felt in New York. The assault on the sector threatens to stymie any new listings of such lenders on New York’s stock exchange — as well as spelling trouble for investors in the handful of companies that have already listed.

Joseph Otting Has a Lot on His Plate as the New Comptroller (Crowdfund Insider), Rated: A

Joseph Otting, a former banker and CEO of OneWest Bank, was approved by the Senate in a party line vote last week to take over the helm at the Office of the Comptroller of the Currency (OCC).

If Otting decides to stand up to the banking hyperbole it won’t be an easy task.

All of this begs the question: who will gain if Fintech is allowed to compete with banks?

One-Third of Small Business Owners Work Half of the Major Holidays (Small Business Trends), Rated: A

One-third of small business owners work at least three of the six major holidays in the US.

Kabbage’s new survey reveals several work/life balance issues related to the sacrifices small business owners are willing to make. The research involved surveying 400 small business owners, with 67 percent stating they expect to increase revenues by the end of the year. More than half of the small business owners interviewed said they anticipate an increase in revenue of 10 percent or higher.

The survey found that 60 percent of small business owners only take one full vacation a year, while 23 percent take less than two holidays off annually. Furthermore, when on holiday, 75 percent of small business owners continue working.

Consumers Say Hedge Fund Financed Illegal Tribal Lending (Law360), Rated: A

Vermont residents on Tuesday hit a hedge fund with a proposed class action in federal court alleging it helped concoct a sham tribal payday lending scheme meant to skirt laws preventing companies from charging consumers exorbitant interest rates while hiding behind tribal sovereign immunity.

Plaintiffs Jessica Gingras and Angela Given accused the firm, Victory Park Capital Advisors LLC, of striking a deal with payday lender Plain Green and the Chippewa-Cree Tribe of the Rocky Boy’s Reservation to use the tribe’s name in exchange for a small…

Payday Lenders Try Legislative Run Around State Laws, CFPB Regulation (Chicago Crusader), Rated: A

The same deception that hides the real cost of predatory, consumer loans is reflected in the title of pending legislation in both the House of Representatives and in the Senate. The Protecting Consumers’ Access to Credit Act of 2017 (H.R. 3299 and S. 1624) would allow payday lenders, high-cost online lenders, and other predatory lenders to partner with banks to make loans that surpass existing state interest rate limits.

How the Fed Can Help Families Living Paycheck to Paycheck (Real Clear Markets), Rated: A

The next Chairman of the Federal Reserve System (Fed) confronts a deep and growing problem: rising inequality. A new Fed Chair could combat this problem in an unexpected way by implementing real-time payments. The few days between checks clearing are a major driver of why it is so expensive to be poor. They are also unnecessary given technology and easily removable with some regulatory will. Real-time payments could save billions of dollars for American families living paycheck to paycheck.

The check casher costs $20, but two overdrafts cost $70. Check cashing is a $2 billion a year business and represents yet another cost born by those who have less.

The technology for real-time payments has been around for a long time. The United Kingdom adopted real-time payments in 2008. Japan, Poland, Mexico and South Africa all have the technology in place today. Financial technology (FinTech) firms like PayPal are offering real-time payments for customers who exist on both ends of their system. But unless your employer will migrate to using a FinTech for payroll, you need the banking system to modernize.

Peer pressure (BreakingViews), Rated: A

The Federal Reserve’s eggheads are usually a pretty reliable bunch. So when researchers at the central bank’s Cleveland branch recently published a study asserting that peer-to-peer loans were defaulting at rates reminiscent of subprime mortgages a decade ago, it seemed to confirm the worst fears about the budding online-lending market. But industry critics and academics questioned the researchers’ data, forcing the Fed to pull the paper.

It’s not easy to come by good data for this nascent field of finance, which makes the botched study all the more regrettable.

SoFi Among Companies To Buy Six-Second Ads During Fox’ Thanksgiving Game (Sports Business Daily), Rated: B

Duracell and personal finance company SoFi have “snapped up” some of the six-second spots Fox has set aside for its Thanksgiving broadcast of Vikings-Lions, while Disney will “air a mini trailer for ‘Star Wars: Episode VIII The Last Jedi,'” according to Anthony Crupi

United Kingdom

Fintech group Revolut signs up its millionth customer (Irish Times), Rated: AAA

Revolut, an app-based banking alternative which has over 50,000 customers in Ireland, has now signed up 1 million customers globally and claims it has saved users over £120 million (€134 million) in fees.

London-based Revolut said it is now signing up between 3,000 and 3,500 new users every day, an increase of 50 per cent growth from three months ago.

Users have now made over 42 million transactions since the company officially launched in July 2015 with a total transaction volume of $6.1 billion.

In an email to its customers seen by Moneywise and confirmed directly with Funding Circle, the provider says it will allow existing customers to invest in an Isa from Thursday 30 November.

It has yet to announce a launch date for new customers and says this is because it is anticipating strong demand for the product. For the same reason, customers will not be able to transfer existing Isas to Funding Circle when the product is launched.

Customers must deposit at least £1,000 to open an Isa.

Funding Circle borrowers back joining European Free Trade Agreement post-Brexit (P2P Finance News), Rated: A

MORE THAN half of small business owners want the UK to join the European Free Trade Agreement (EFTA) once Brexit is complete, Funding Circle research has found.

A survey of 1,254 borrowers on the peer-to-peer lending platform found 57 per cent would support EFTA, also known as the ‘Norway option,’ as it provides a regional free trade area comprising of Iceland, Liechtenstein, Norway, and Switzerland.

Orca to unveil diversified P2P portfolios for investors (P2P Finance News), Rated: AAA

PEER-TO-PEER analysis firm Orca is set to launch an investment platform.

The proposition will automatically build portfolios of P2P investments across more than 50 per cent of the market.

The portfolios would include major lenders across the consumer, business and property lending space such as Zopa, Funding Circle and Assetz Capital.

Digital wealth manager start-up Fountain secures seed investment (AltFi), Rated: A

Fountain, a digital wealth management platform aiming to “empower” investors to achieve their financial goals has secured seed round investment.

The cash, an undisclosed sum, came from a number of City figures led by Patrick Day, chairman of Day Cooper Day, a specialist pensions provider.

Peer to Peer Lender ThinCats to Rebrand as Next Phase of SME Funding in UK (Crowdfund Insider), Rated: A

ThinCats unveiled a new brand last week at an event attended by more than 100 business leaders. The gathering took place at the National Space Centre in Leicester but the new branding will not be officially launched until mid-December.

Robo-guidance or electric dreams? (FT Adviser), Rated: A

Effectively, FG17/8 is the new bible for everyone interested in developing a new automated (digital /robo /telephone-based) advice solution. Or it is a checklist for those who have already trodden down this well-worn path.

Do note though – as if you did not already know – the paper “contains general guidance and is not binding”, is not “exhaustive”, must not be read in isolation of the handbook, and does not address any potential changes that might arise from the implementation of the Insurance Distribution Directive. (Heaven forbid anyone would actually take any accountability for what is between the covers).

Two years. Two years. To pull together in one document the working practices that professional firms already follow with their eyes closed?

Three-quarters of advisers unthreatened by robo-advice (Financial Reporter), Rated: A

New research shows that 78% of financial advisers are confident robo-advice offers no threat to their business, despite nearly half expecting more demand for robo-advice over the next 12 months.

The research from Aegon found that the degree of concern felt by advisers correlates to the typical size of their client portfolios, with advisers whose client portfolios are at the lower end of the scale more alert to the threat from the lower cost option of robo-advice.

For advisers with client portfolios of more than £200k, 88% feel it offers no threat to their business, and even for portfolios of up to £100k, the figure remains high at 73%.

While the majority of advisers believe robo-advice is no threat to their business, a third (31%) do point to robo-advice and similar digital services as one of the top challenges to the wider industry over the coming two years, a little behind Brexit (40%).

China

China Regulators, Police Probe Qudian Client Data Leak (Bloomberg), Rated: AAA

Chinese regulators and police are investigating a potential leak of data from online lender Qudian Inc., according to people with knowledge of the matter.

Officials are probing allegations that data from more than a million students who are clients of Beijing-based Qudian was leaked and possibly sold online, said the people, who asked not to be named discussing private information.

The probe’s initial findings show that at least part of the leaked data match information clients had provided to Qudian, the people said. Investigators are checking whether the data came from Qudian, if the company was aware of the breach, and whether it took necessary measures to ensure the safety of personal information it collects.

China Commences Crackdown on Shadow Banking (The Epoch Times), Rated: AAA

Chinese regulators introduced major rules on Nov. 17—the scale of which has been compared to the U.S. Dodd-Frank Act—to unify regulations for the asset managementindustry and curtail shadow banking activities.

The rules are broad-based, covering China’s $15 trillion of asset management products issued by all financial institutions.

For example, the rules will prohibit asset managers from promising guaranteed rates of return to investors, and require issuers to set aside 10 percent of their fees from managing client assets in escrow, to serve as a buffer against losses.

For publicly offered funds, total assets cannot exceed 140 percent of the funds’ net asset value. The same ratio is set at 200 percent for privately offered funds.

China Urges Local Governments To Halt New Internet Microlender Approvals (PYMNTS), Rated: AAA

China is regulating micro loans on the internet, with a high-level Chinese government agency issuing a notice urging provincial governments to halt approval of new web-based online lenders.

The firms are lending to consumers in China that have been turned down by Chinese banks. However, interest rates on these tiny loans can be very high — something borrowers don’t realize.

China’s Micro-Lender Assault Threatens Path to U.S. Listings (Bloomberg), Rated: AAA

According to the International Financial News, China plans to purge the country’s 157 online micro-lenders, leaving only large state-owned companies and the biggest internet firms intact with licenses. Few of the existing lenders will survive, said the newspaper, which is managed by the official People’s Daily.

A comprehensive cleansing of the industry, which offers almost immediate unsecured loans over the Internet, often at high interest rates, would escalate earlier moves to crack down on the sector and its estimated $152 billion of loans. News that China has halted further approvals for online micro-lenders has already pummeled the New York shares of firms like Qudian Inc. and PPDAI Group Inc.

“It would seem to be an enormous, enormous risk to try an IPO with that hanging over your head,” said Christopher Balding, an associate professor at Peking University HSBC School of Business. “It would most likely put a halt to any IPO plans of these companies now.”

Source: Bloomberg

China Online Lender Qudian’s Fast Track From NYSE Darling To Dog (Forbes), Rated: AAA

The listing of online lender Qudian at the New York Stock Exchange on Oct. 18 heralded the birth of a new China billionaire, 34-year-old chairman and CEO Luo Min. The stock rose by as much as 43% that day, giving Luo a fortune worth $2.2 billion amid optimism about industry prospects.

Five weeks later, more than half of Qudian’s value has been wiped out and he’s on the verge of dropping from the ranks of the world’s billionaires altogether. Qudian fell 16% last night and at yesterday’s closing price, Luo’s fortune (which he shares in a trust with family) was worth $1.02 billion. Investors in other China fintech stocks got socked yesterday, too.  Jingpu Technology plunged 12.9% to $5.75, way below it IPO price of $8 from last week.   China Rapid Finance fell 6% yesterday and PPDai fell a whopping 24%.

Debt: The secret sauce of Alibaba’s Singles Day success (Technode), Rated: A

One of most notable online lending players aptly named Huabei (花呗, Just Spend) comes from the company that invented Singles Day—Alibaba.

To help them give away money to uncle Jack Ma, as hand-choppers have joked, this year Huabei has raised its credit limit to almost 80 percent during the promotion activities before Singles Day, allowing users to spend an extra RMB 2200 on average.

Huabei is the credit card of millennials, it targets the young and the unbanked. According to a report published recently, 86% of Huabei users belong to the generations born after the 80s and 90s (in Chinese). The fact that the 60% of them never owned a credit card is a good illustrator why online lending has experienced such a meteoric rise in China.

According to Huabei data, 38% of users choose to repay their debt in 12 monthly installments (in Chinese).

Credit Suisse-Backed Online Lender to Plan $ 500 Million IPO (Bloomberg), Rated: A

WeLab Ltd. has picked banks to advise on a Hong Kong initial public offering that could raise about $500 million, according to people with knowledge of the matter. The China-focused lender, whose backers also include billionaire Li Ka-shing, is aiming to list as soon as next year, the people said, asking not to be identified because the information is private.

An Overdone Payday Mayday (Bloomberg), Rated: A

Stop panicking about China’s online lenders. The real target of the crackdown is rogue local governments.

Financial News said government entities can’t issue new licenses for internet micro-lending beyond the 157 institutions that already have them. The consequences were immediate: Zhejiang Busen Garments Co., for one, said in a filing Thursday it’s terminating plans to set up an online lender.

As of September, there were 8,610 micro-lenders with 970 billion yuan ($147 billion) of loans outstanding. Many of those weren’t licensed by national regulators such as the People’s Bank of China or the China Banking Regulatory Commission, which have strict rules.

Rather, authorization was handed out by local governments, most of which have no fintech expertise, to companies claiming to be affiliated with state-owned enterprises.

Source: Bloomberg

Mobile payment users in China exceed 520m (GB Times), Rated: A

Ant Financial, Alibaba’s financial affiliate, has announced that China now has more than 520m mobile payment users, reports state-owned news agency Xinhua.

report released by the People’s Bank of China detailing the country’s payment system in the second quarter of 2017, notes that Chinese banks dealt with 8.6bn payments from mobile services during that period – up 33.84 percent from last year.

The combined value of mobile payments increased by 33.8 percent to 39.2tn yuan (around US$6tn).

How fintech companies create an alternative capital market in China (The Asset), Rated: A

IN China, an alternative capital market is taking shape with the rise of fintech companies, where fintechs are the intermediaries linking borrower and lenders. Moreover, fintechs are edging into the credit rating space, leveraging on their big data capabilities.

One core competence of fintech companies is their IT stability in the areas of payments and cloud computation. The strength of their IT infrastructure makes the technology players resilient under extreme conditions. During the recent Singles’ Day sale on November 11 – China’s online shopping bonanza equivalent to that of the US’ Black Friday – Alibaba’s Alipay processed a peak of 256,000 transactions per second and Alibaba Cloud processed as many as 42 million instructions per second.

European Union

Swiss Consortium Adopts Single Digital Identity For Online Purchases (PYMNTS), Rated: AAA

A consortium of nine large companies — including UBS, Credit Suisse, Swisscom, Swiss Post, SIX, Raiffeisen, Swiss Railways, Zuercher Kantonalbank and Mobiliar — will enable Swiss consumers to use a single digital identity when making eCommerce purchases.

According to a report in Reuters, the idea behind the project is to get to a point where consumers can use one login to make purchases at shops, buy train tickets and engage in banking activities online. The group aims to create a joint venture in 2018.

Exclusive Interview with Lendoit CEO Ori Erez (Chipin), Rated: A

Lendoit is a Decentralized P2P lending platform, which connects borrowers and lenders from all over the world in a trusted, fast and easy way using the advantages of Smart Contracts and the Blockchain technology.

What do you think is the biggest problem Lendoit will solve and why is it important?

The lending industry is not efficient because it’s controlled by centralized financial organizations that set the interest rates according to their own interest. It’s not fair that honest borrower from Brazil is paying 60% interest rate while borrower from Japan pays around 1%.

Lendoit uses three types of scoring:

  1. Local rating provided by a local supplier from the borrower’s state. Lendoit is working to create cooperation with some entities in various countries to provide this service.
  2. International scoring providers that are using innovative methods such as scanning social networks and scanning the borrower’s e-mail.
    Lendoit is working to create cooperation with these International entities.We have already signed / in the process of signing with several companies in the scoring area, such as FriendlyScore, BLOOM, LENNO, and others, as noted in Lendoit’s WhitePaper.
  3. In the Lendoit eco-system platform, there is a special Smart Contract: a Reputation contract that retroactively checks each borrower who takes a loan, and set reputation score according to his or her historical activities within the platform

My P2P Lending Investment Portfolio at Bondora is now 5 Years Old (P2P-Banking), Rated: A

5 years have passed since I first started to invest into p2p lending at Bondora in October 2012. I still have 604 loans in my Bondora portfolio with an outstanding principal of 7,467 Euro at an average interest rate of 23.78%. Of these 2,746 Euro are in current loans, 778 Euro in overdue loans and 3,941 Euro in 60+ days overdue loans.

Bondora shows a net return of 19.0% for my portfolio. In my own calculations, using XIRR in Excel, assuming that 30% of my 60+days overdue and 15% of my overdue loans will not be recovered, my ROI calculations result in 17.2% return. Even if I assume total loss on all outstanding loans that are 60+days overdue my ROI calculation results in 15.6%.

Source: P2P-Banking

Finbee Expands into Czech Market (P2P-Banking), Rated: A

FinBee, a Lithuania based p2p lending platform, has started to expand internationally by launching in the Czech Republic. By 2020, FinBee plans to begin operations in another two European countries.

FinBee will provide personal lending services for residents of the Czech Republic as well as for investors from across the entire European Union.

International

Investors divide in peer-to-peer lending (Silicon Republic), Rated: AAA

Banks – local banks, in particular – have traditionally been the main and sometimes the only source of external capital for SMEs. However, increasing regulatory requirements have lowered the probability for SMEs to obtain access to bank financing.

P2P lending is part of the wider universe of crowdfunding. This is a bigger market than many people expect. For example, a 2016 paper for the European Commission reported that crowdfunding expanded by 167pc in 2014 and reached $16.2bn. North America remains the largest market ($9.5bn), followed by Asia ($3.4bn) and Europe ($3.3bn). While there are no accurate figures on the Irish market, Orca Money reports that the UK P2P market had £9.6bn cumulative lending since 2010, £1bn of which was in Q1 2017. In 2016, Orca Money reported that the UK P2P market comprised 177,000 retail investors with consumer (46pc), business (35pc) and property (19pc) borrowers.

P2P platforms have been very cautious about the loans they offer to investors, with most of them being classified as low-risk. This has resulted in low default rates and acceptable positive returns for investors. The potential for positive returns has attracted institutional and professional investors (eg investment banks, venture capitalist etc) into the game and created a disproportionate capital supply and demand. Such a trend is particularly visible in the US and UK, the two largest P2P markets, but it has recently emerged in smaller markets like Australia and New Zealand and is likely to occur, to a greater or lesser extent, in all regulated markets, including Ireland.

The lack of a clear regulation has arguably prevented the growth of the Irish P2P lending market by discouraging both investors and small businesses to participate. A clear regulatory framework is necessary to ensure transparency and to increase investors’ confidence in P2P lending markets.

Initial coin offerings: regulation and the risks (Lexology), Rated: AAA

On 12 September 2017, FCA published a consumer warning on initial coin offerings (ICOs), stating that they are ‘very high-risk, speculative investments’, and that ‘there is a good chance of losing your whole stake’ as a purchaser.

Earlier in September, the People’s Bank of China had denounced ICOs as ‘illegal fundraising’ and issued a ban that caused the value of cryptocurrencies such as Bitcoin to plummet. The following day, Canadian regulators accepted a firm offering ICOs into its regulatory sandbox as part of its broad goal of supporting innovative fintech projects. The European Securities and Markets Authority has been the latest to denounce ICOs, echoing the FCA’s warning to consumers that ICOs are ‘very risky and highly speculative investments.’

By applying the conditions from SEC vs Howey, the US Supreme Court test for determining whether transactions qualify as investment contracts (and by extension, securities), the investigation found that the tokens emergent from the DAO’s ICO are securities and thus could fall within the US regulatory perimeter.

The SEC made the classification by fulfilling the following criteria from the Howey test:

  1. Investment of money
  2. Reasonable expectation of profits
  3. Derived from the managerial efforts of others
  4. Investor voting rights were limited

FintruX Network: Making Unsecured Loans Highly Secure (BTCManager), Rated: A

The FintruX Network has been established to transform unsecured loans to highly secured loan without any hurdles to borrowers and investors. The platform has unique blockchain approach of global P2P lending highways which proposed to raise $30 million by selling digital tokens.

 

 

The FintruX Network aims to enhance credit enhancements by introducing cascading levels which involves:

  •         Additional collateral
  •         A local third-party guarantor
  •         Cross-collateralization
  •         Fintrux ultimate protection reserve
Australia

Financial services industry to get its Groundhog Day commission of inquiry (Financial Review), Rated: A

But it was probably not as long as the minimum two years contemplated by O’Sullivan and the Greens for the proposed Banking and Financial Services Commission of Inquiry.

It should not be a problem if the three judges have no background or experience in fintech, cryptocurrencies, blockchain, peer-to-peer lending, equity crowd funding and payment systems riding off messaging services such as those offered by WeChat, Facebook, Apple and Google.

After all, this is not about the future. This inquiry is about spending more than $200 million looking in the rear view mirror.

The age of algorithmic advice (Financial Standard), Rated: A

Futurist and chief executive of global consultancy firm Tomorrow, Mike Walsh, told the 2017 Financial Planning Association Professionals Congress that sweeping technological change driven by complex algorithms is nothing to fear as it’s simply “not unique.”

Walsh said financial planners’ fear-based thinking that technology will replace jobs must shift to ask how will jobs need to change.

India

YES Bank diversifies funding sources (The Asset), Rated: AAA

INDIA’s fifth-largest private sector bank, YES Bank, is raising a total of US$400 million in two transactions in the offshore syndicated loan markets as it further diversifies its funding sources.

The first transaction is a five-year loan amounting to US$250 million raised from a group of Taiwanese banks, led by CTBC Bank, Bank of Taiwan, Mega International Commercial Bank and Land Bank of Taiwan. The deal was upsized from the initial target of US$200 million as YES Bank exercised the green shoe option following an oversubscription of US$355 million from 13 other banks.

BankBazaar CEO Honored at India FinTech Awards 2017 (Finovate), Rated: B

Adhil Shetty, CEO of BankBazaar, was recognized by the India FinTech Awards 2017 earlier this month. Shetty was named Fintech Leader of the Year at the event, which featured more than 200 attendees, more than 40 speakers, and 20 shortlisted startups from six countries.

Africa

Millennials happy to take financial advice from robots (IOL), Rated: AAA

Millennials are not only developing a healthy appetite for financial advice, they are also more likely to trust digital advice from automated investment services than older generations.

  • Results from the study showed that in Europe 32% of online adults between the ages of 18 and 37 say they “rely on financial advice from professionals”, compared with 29% of older generations.
  • At least two-thirds of US Millennials were willing to share personal data in order to obtain better service from their financial institution.
  • Only 38% of US Millennials are confident that a bank or credit union will offer them valuable financial advice, compared with 46% of their older counterparts.
Canada

Upcoming ICO for Global Migrants and Their Unbanked Families (Digital Journal), Rated: AAA

The migrant and their unbanked families in emerging and frontier markets have been suppressed for the longest time without any access to basic services, financial or otherwise. Approximately 2.4 billion people in poverty worldwide are often excluded from free movement or basic rights which often leads them to corruption and crime, including slavery, human trafficking and in extreme cases, death. Migrants far too often are denied basic financial tools.

LALA World (“LALA”) is a wholesome ecosystem for the unbanked, starting with the migrants and their families back home. The base of this ecosystem is the LALA Wallet platform. By creating a whole new peer-to-peer infrastructure, LALA aims to revolutionize the way individuals, small businesses and micro-entrepreneurs transact, make domestic and cross-border payments, borrow money and associated products like insurances, cards, wealth and other general banking products.

LALA World Products from their Ecosystem

LALA Transfer – A Peer-to-Peer local and global remittance backed by crypto as well as fiat.
LALA Bill Pay – Local and International bill payments for you and your family.
LALA Lends – Domestic and International peer-to-peer lending via crypto and fiat, individual and small businesses.
LALA Card – Crypto and Fiat card synced to your Wallet and usable at millions of PoS globally.
LALA Kit – Contains a mobile phone with pre-loaded LALA Wallet, LALA Insurance, LALA Card, partners’ products, etc.

ICO Pre-sale – Nov. 25-Dec. 15, 2017 (discounts available).
ICO – Jan. 5-Feb. 5, 2018

Authors:

George Popescu
Allen Taylor

Wednesday October 25 2017, Daily News Digest

chinese investors

News Comments Today’s main news: RateSetter partners with Experian. Australia publishes fintech regulation draft laws. Lending Loop hits $10M financing milestone. TD Ameritrade offers stock trading through Facebook Messenger. Abra secures $16M in Series B led by Chinese electronics manufacturer. Zero raises $8.5M for credit card that acts like a debit card. Nested raises 36M GBP. TransferWise changes its fee structure, but […]

chinese investors

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United States

United Kingdom

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International

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MENA

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News Summary

United States

TD Ameritrade Clients Can Now Trade Stocks on Facebook Messenger (Bloomberg), Rated: AAA

TD Ameritrade Holding Corp. customers are now able to trade equities and exchange-traded funds using Facebook Inc.’s Messenger services, according to a company statement Monday. Clients can also make deposits, access quarterly performance video statements and receive weekly alerts that rehash market moves.

Hon Hai invests in fintech start-up (Taipei Times), Rated: AAA

Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics manufacturer, participated in a US$16 million Series B fundraising program to invest in US-based digital wallet start-up Abra, the new firm said on Monday.

Barhydt said that Abra’s existing investors — Arbor Ventures, American Express Ventures, Jungle Ventures, Lehrer Hippeau and RRE — also participated in the fundraiser that closed on Monday.

The program helped Abra reach more than US$35 million in total capital, Barhydt said, but did not elaborate on potential uses of the additional US$16 million.

Zero raises $ 8.5 million for a credit card that functions like a debit card (TechCrunch), Rated: AAA

Just one-third of young adults have a credit card, according to a Bankrate survey.

A startup called Zero thinks it has a solution to this and it is gearing up to launch a credit card that functions like a debit card. The startup is also raising $8.5 million in a funding round led by ENIAC Ventures, including participation from NEA, Lightbank and others.

Biometrics is Going to Eat the Finance World (Lend Academy), Rated: AAA

In a recent survey it was revealed that 81% of people use the same password for multiple accounts with that number being even higher, at 92%, for millennials.

The introduction of Touch ID on the Apple iPhone in 2013 was a seminal moment in the history of biometrics. People could suddenly use their thumb or finger print as an identity verification tool and forgo using a password. Today, on my phone I can login to my bank account, buy music or apps, buy a plane ticket, even check my Lending Club account all with the press of my thumb.

While still primarily in the testing stage in banking, this past summer Bank of America announced the trialing of iris scanning technology from Samsung. In the UK, TSB is becoming the first European bank to start using this same technology, also with Samsung phones.

Behavioral biometrics can capture things like hand-eye coordination, pressure, hand tremors, keystroke dynamics, gait analysis, mouse use characteristics, navigation, scrolling and other finger movements.

USAA offers three variations of biometrics authentication already in their mobile app. Just this week Samsung announced a partnership with Biocatch to bring behavioral biometrics to its Nexsign biometric authentication platform.

‘We’re moving from the back end to the front end’: Cross River Bank CEO Gilles Gade (Tearsheet), Rated: A

Cross River banks some of the biggest names in fintech, including at least a dozen online lending companies like Affirm, Marlette and Rocket Loans. It has also developed payments solutions for faster, more secure and lower-cost transfers that have been integrated by TransferWise and the bitcoin wallet Coinbase, as well as Google Wallet and Stripe in the past.

It’s been almost a year since you announced your VC funding. How have you been using it?
We have absorbed the capital very quickly, managed to deploy it on the marketplace lending side. We like to retain loans from the origination platforms so instead of selling 100 percent of the origination we retain 10 percent. As our partners are growing nicely, naturally that 10 percent has kept increasing.

Can both banks and fintech vendors deliver banking-as-a-service?
We’re strong believers that BaaS has to be delivered by a bank. The fintech players need access to payment rails and they’re going to use a bank ultimately to do that. As a service, the bank could be either the facilitator of a transaction or the purchaser of the BaaS technology to provide it to consumers. There is a level playing field now — consumers can have the same functionalities in a small bank in Nebraska that they can have with a Chase or Wells Fargo.

Are banks prepared?
Most banks are not equipped or not API-driven, ubiquitous, priced properly — and the banks that are, the big banks, have been unwilling to do that because it would cannibalize some of their business or presents high risk — do they have the required compliance and adequate staff to be able to manage the operations?

What’s going on inside Almond?
Almond is our exploratory R&D lab for us to understand the aspirations of consumers. We’re trying to develop a front-end solution that could possibly be a killer app that we could white label and sell as one BaaS functionality — so that would be an online or mobile app for a bank account. We’re moving from the back end to the front end.

loanDepot Announces Agreement with Artificial Intelligence Real Estate Technology Company, OJO Labs (PR Newswire), Rated: A

Today loanDepot announced an agreement with OJO Labs, Inc. to act as the mortgage provider of its machine-powered assistant known as “OJO.” By matching OJO’s leading AI technology with loanDepot’s digital lending platform, melloTM, the combined offering will allow house hunters to access real estate and mortgage information, and get pre-qualified, through an entirely digital, mobile-first experience.

Large banks make terrible partners, fintechs say (American Banker), Rated: A

While large banks and fintechs are ostensibly working more closely together than ever, in private conversations and even publicly at a few conferences, fintech leaders have expressed increased frustration about working with bank partners.

Though they won’t name names, they claim tier-one U.S. banks string them along, fail to communicate, don’t pay anything and, worst of all, out-and-out steal intellectual property.

More seriously, fintechs claim large banks are bad at paying for new technology and services.

Parker Crockford, commercial director for the U.S. at identity verification software startup Onfido, said at the RegTech conference in early October that when he’s engaging with large financial institutions, “we get pulled into a lot of innovation conversations where they just want to pick our brains and look cool. I don’t have time for that any more. I’ll say, ‘I’m happy to give you a white paper or a 20-minute chat over the phone.’”

‘Buy The Block’ on its Way to Raising Millions of Dollars for Property Development in Black Communities (BlackNews.com), Rated: A

Entrepreneur Lynn P. Smith is the founder and CEO at Buy The Block – one of the only Black-owned platforms in the country that is dedicated to making investments in real estate as a group more accessible. The movement is presently on its way to recording massive success in funding for diverse development projects across Black communities in the US.

This enviable initiative offers every Black American an opportunity to invest as little as $100, and connect with other investors – with an added advantage of helping every member buy a piece of their first block.

Evolve Capital Partners Advises on CleanFund’s Financing Transaction (Accesswire), Rated: A

Evolve Capital Partners,Inc. is proud to announce that its client, CleanFund Commercial Capital, Inc., the leading direct provider of commercial Property Assessed Clean Energy (“C-PACE”) financing, recently announced its first closing of a $15 million equity financing round, led by Vulcan Capital affiliated entities. The financing will accelerate CleanFund’s growth across the U.S. and help the company continue to meet growing demand from commercial property owners.

Thrive Delivers Landmark Performance Gains for Horizon (Thrive), Rated: A

Thrive Inc. (Thrive) is excited to announce the compelling performance of its digital lending technology, ensuing from its multi-year technology licensing agreement with Horizon Community Bank (HCB), a leading Arizona-based FDIC insured bank and subsidiary of Horizon Bancorp, Inc.

Key Performance Highlights:

  • Application Time: Avg. of 5 minutes, as opposed to days
  • Automated Decisioning: 90% of applications are instantly decided; powered by Thrive’s configurable credit rules based algorithms
  • Time to Decision: <1 Day, as opposed to several weeks
  • Loan Booking Rate: 100%, as applicants prefer the quick digital application and decision process
  • Offer to Close: 1.5 Days, digital closing enables efficiency

Key Portfolio Highlights:

  • Portfolio Interest Yield: Above market interest rates drive loan profitability
  • Customer Acquisition Costs: <$200, driven by leveraging internal bank customers as well as new customers
  • Delinquent/Charge-Off: 0%, effective underwriting and real time loan monitoring is driving modern and powerful risk management while also compressing loan reviews
  • Monthly Origination Growth: 60%, driven by customer demand for a quick, efficient and friendly loan application experience

IBM and Zelle team up to advance P2P payments (Banking Technology), Rated: A

IBM says it has launched an “industry first” solution to support the full lifecycle of peer-to-peer (P2P) transactions, from the back office of financial institutions to the mobile device.

The project is a collaboration with Zelle, a P2P network in the US built on the clearXchange platform. Zelle now includes over 20 banks and credit unions, and is poised to reach an estimated 85 million US customers this year.

How FinTech Companies Are Closing The Banking Gap (Forbes), Rated: A

According to the World Bank, there are two billion people globally who currently have no access to banking services.There are many reasons for this: they may not have built up enough traditional credit history, they may have bad credit because of poor financial choices in the past, or they may live in an area where access to credit and other financial services are limited.

For instance, Jennifer Tescher, founder and president of The Center for Financial Services Innovation (CFSI), has helped launch financial inclusion initiatives by incubating startups addressing U.S. financial health through their Financial Solutions Lab. Some of these startups include Propel, which streamlines the food stamp process; Bee, a mobile alternative to potentially predatory financial services for low-income people; and popular startups that aim to assist with savings and debt repayment including Digit, EarnUp and LendStreet.

Founder and CEO Shivani Siroya, of California-based Tala, is trying to fix the challenge of low access to financial services by providing alternative credit scoring and instant credit delivery via mobile wallet.

Mexico, for instance, sees 38% mobile wallet use, compared to 17% overall in the US, even though 93% of Americanshave access to financial services.

3 Types Of Alternative Lenders You Need To Know About (Bisnow), Rated: A

1. Crowdfunding Platforms

Real estate crowdfunding hit $2.5B in 2015 and shows no sign of slowing down.

Platforms like RealtyShares and Fundrise offer several loan options and flexible payment terms, and cater to different asset classes. The latter prioritizes small-deal properties valued under $50M, and the former charges no fees for the first two years, or until an investment earns a 15% annualized return.

2. Nondirect Marketplace Lenders

Nondirect marketplace lending uses technology to connect lenders directly with borrowers, bypassing traditional banks, reducing barriers to transaction, and offering strong savings for borrowers and good returns for lenders. Popular for auto and student loans, financial institutions have increasingly stepped into the commercial lending role on these platforms, creating a marketplace in which loans are packaged and sent out to individuals, hedge funds, wealth advisers and banks.

3. Direct Lenders

Money360 is a direct lender with discretionary capital that ensures certainty of execution and timely closings. The lender offers loans between $1M and $20M on both bridge and permanent loans, with competitive terms and features similar to traditional lenders. Bridge loans are interest-only, and like banks, permanent loans use 25- to 30-year amortization schedules.

12 Tips to Get The Right Loan For Your Startup (Killer Startups), Rated: A

1. How much do you need for a small business loan for your startup?

Microloans work with the Small Business Association (SBA). They are for businesses that need to borrow between $35,000-$50,000 and have a limited credit history.

2. How quickly do you need access to loan funds?

If you’re positive that you need $100,000 right-off-the-bat, then an installment loan may be a better option. If you need $50,000 to start, but believe you’ll need additional capital down the road when you start to grow, you may want to look into revolving credit.

3. What is the loan going to be used for?

4. How long have you been in business?

If your business is still in the early stages, it may be difficult to secure a loan from traditional lenders like a bank since they require a positive credit history, collateral, business plan, projected financial statements, and cash flow projections.

In this situation, you may have to search for a small business loan from an alternative lender like an online lender like Lending Club.

5. Do you have collateral?

Do you have an property or inventory that you can put up as a collateral? If not, you may not qualify for a loan from a traditional lender. Instead, you may have to seek alternative funding options where you would offer accounts receivable, future sales, or a percentage of the company in exchange for the loan.

6. Eliminate your bad debt.

7. Research possible loan provider options.

Do your due diligence and seek lenders that are transparent with their rates, terms, and have positive reviews from customers.

8. Consider your niche.

9. Find a grant or contest.

10. Crowdfund Your idea.

11. Pay attention to APR, fees, and other costs.

12. Investor or capital?

Payday lender Speedy Cash files for IPO (Axios), Rated: A

The parent company of payday lender Speedy Cash has filed for a $100 million IPO. It plans to trade on the NYSE under ticker symbol CURO, with Credit Suisse listed as left lead underwriter. The Kansas-based company reports $33 million of net income of $442 million of revenue for the first half of 2017, and is owned by private equity firm FFL Partners.

Islands, Bodyguards, and Mansions – How would you spend $ 1 Billion? (NJ Online Casinos), Rated: B

Our new survey finds out the top 10 ways that people across America would spend their money if they won a $1 billion jackpot, including how many would buy a mansion, and how many wouldn’t give any to charity.

  • 89% would give some to their close family
  • 49% would pay off their debts as their first act
  • 37% would give some money to their friends
  • 28% would put $100 – $500 million into savings
  • 28% would buy a mansion

Arcadia launches new online payment options (Drapers Online), Rated: B

The owner of brands including Topshop, Topman, Miss Selfridge and Dorothy Perkins has joined forces with payment provider Klarna to offer online customers the option of paying for goods 30 days after delivery, without being charged interest.

20% of millennials said they would feel less guilty if they were offered deferred payment options, while one in five were more likely to complete a purchase if they knew they could spread the cost over time.

United Kingdom

RateSetter partners with Experian to boost business credit assessment (P2P Finance News), Rated: AAA

RATESETTER has teamed up with Experian to boost its credit decision-making process as it expands its commercial finance division.

Under the partnership, Experian is providing credit reference data and analytical services to RateSetter.

This has enabled the P2P lender to increase the number of business loan applications it processes each month from 150 to more than 600.

Nested Raises £36M in Third Round of Funding (Finsmes), Rated: AAA

Nested, a London, UK-based PropTech startup, raised £36m in its third round of funding.

The round was led by Global Founders Capital.

The company, which has raised almost £50m in total funding to date, intends to use the capital to expand its business reach, initially within London and in the near future expanding across the U.K.

TransferWise changes fees for GBP transfers, introduces complicated flat transaction fees (TechCrunch), Rated: AAA

Fintech startup TransferWise has built a solid reputation when it comes to transparency. The startup just announced new fees for transfers initiated from the U.K. And it’s quite hard to understand if transfers are going to be cheaper or not after the change.

TransferWise is switching from a simple variable fee to a flat transaction fee with a lower variable fee.

Let’s take an example. If you’re trying to transfer £1,000 from the U.K. to the Eurozone. With the old fee, you’d pay 0.5 percent (or the equivalent of £5) in fees. With the new fee, you now pay 0.35 percent + £0.80, which represents £4.30. You eventually get more euros.

For a £1,000, you now pay 14 percent less if you take into account all fees. But this percentage is going to change depending on your transfer.

Because of this tiny little flat transaction fee, you’ll now pay morethan before if you transfer less than £530.

This is even worse for GBP/USD transfers. If you transfer less than £800, you now pay more than before. But it’s now cheaper if you transfer more than £800.

Is an IFISA-inspired boom coming to the P2P sector? (P2P Finance News), Rated: A

THE PEER-TO-PEER Finance Association (P2PFA) has reported yet another quarter of increased lending among members in the sector, and the figures show just how beneficial ISA manager status can be.

P2P platforms offering Innovative Finance ISAs (IFISA) have previously said that most inflows have been coming in this tax year, and the latest P2PFA data shows just how much of a boost the fully regulated firms are getting.

Lending Works and Landbay, which both received full Financial Conduct Authority (FCA) authorisation and launched IFISAs at the start of this year both recorded some of the biggest increases in loanbook sizes and lenders.

The property loan fund that won’t surprise you with a lock in (Citywire), Rated: A

For LendInvest Real Estate Opportunities, a small Luxembourg-based fund run by the former peer-to-peer lending platform LendInvest, post-referendum it has provided an opportunity.

Assets in the fund have more than doubled to £130 million since the Brexit vote as investors have viewed its investments in short-term loans to property developers as a different way to get exposure to bricks and mortar.

The fund can be held in a self-invested personal pension (Sipp) but is not an eligible investment for an individual savings account (ISA).

The real estate fund has become a key focus for LendInvest as it has moved away from peer-to-peer lending after the Financial Conduct Authority (FCA) made it clearer what it thought P2P actually meant.

The fund lends to professional investors, developers and landlords who use their property portfolio as a prime source of income, transact several times a year and operate as a business.

‘He then went into discussions with the bank because he wanted to keep the asset and let it out, so refinanced. It had a valuation of £10 million, so 100% return in 10 months. We charged 15% interest.’

With interest rates that high it is not surprising perhaps that the fund has so far achieved its annual target of an 8% net return.

Accounting and business banking fintech raises €750k in seed round (AltFi), Rated: A

UK startup Countingup has raised €750,000 led by Frontline Ventures along with private investors to support sole traders.

Uniting business banking and accounting into a single product, Countingup aims to use the funding to build an accounting bank to serve 1m entrepreneurs.

Invest in property development from just £500 (This is Money), Rated: A

A new crowdfunding platform is allowing retail investors the chance to back residential property developments by investing as little as £500.

The start-up, called Homegrown, is giving individuals the chance to invest in developments – such as a converted milk processing factory that’s being turned into flats and offices – and claims projected annual returns of around 12 per cent over roughly two years.

HOW DO I… ACCESS BUSINESS FINANCE? (BQ), Rated: A

While credit conditions have continued to improve over the last 12 months there is still an issue for smaller businesses when it comes to the best finance options available and information on how to access them. There has been rapid developments in the different types of funding available to businesses, including peer-to-peer lending, crowd funding and business angel finance, but small businesses don’t always have the time to navigate around all the types of finance available.

Businesses can discover the funding options available to them including The Start Up Loans Company by using the Business Finance Guide (published by the British Business Bank in partnership with the ICAEW, and a further 21 business and finance organisations).

Equity finance

Whether you’re starting out or experiencing a high-growth phase, equity can be an important resource to provide finance as well as broader expertise. There is a breadth of equity funding options available, including the Northern Powerhouse Investment Fund, which provides early or late stage equity finance ranging from £50,000 to £2m.

Debt finance

At any stage of its development your business is likely to need a mix of different forms of debt, all of which have their advantages for business growth. The Northern Powerhouse Investment Fund offers microfinance covering micro-finance ranging from £25,000 to £100,000 and debt finance covering larger business loans £100,000 to £750,000.

London – Still The #1 FinTech Hub (Let’s Talk Payments), Rated: A

In H1 2017, UK attracted $564 million of VC investment, up 37% on H1 2016. FinTech is worth $9.25 billion to the UK economy and now employs 60,000 people.

About 77% of UK businesses are aware of FinTech products and services and 65% have adopted at least one FinTech application, with a fifth (19%) taking on four. MarketInvoice, a London-based invoice financing firm found that these as result of using FinTech products and services, adopters reported saving (on average) over £5,500 a year.

London consistently attracts foreign direct investments (FDI) from around the world. Between 2006 and 2016, the capital has recorded investments from 67 different countries. The US, India, China, Japan and Spain together accounted for 56% of the investment. Of top source countries, the fastest-growing contributors to FDI into London are China, which has seen a tenfold increase over the last 10 years, Italy (+450%), and Canada (+400%).

Seven tips to help prepare to raise funds for your GP practice (Practice Business), Rated: B

1 Decide on equity or debt – or a combination

For example, if your business is already two-years old try Funding Circle.

Thirty per cent equity and 70% debt is a good ratio and can make the company easier to manage.

2 Test your financial model – it must be robust

3 Be realistic about your valuation

4 Decide on the appropriate people to approach

In the £1 to £5m area, try EIS/SEIS funds and VCT funds. This is where an expert adviser can be helpful in providing introductions and knowledge. For smaller amounts contact Angel Investors.

5 Make contact and ensure you follow-up

6 Prepare the right information for the right stage in the process

7 Take your team with you

Number of UK financial services trade marks surges due to fintech growth (Finance Feeds), Rated: B

According to data provided by professional services firm RPC, the number of trade marks registered by financial services firms has jumped 35% in five years – from 3,141 in 2011 to 4,228 in 2016.

Examples of fintech companies and challenger banks that have registered a number of trade marks recently include Atom Bank, Monzo, and Redwood Bank. Last year, the raft of fintech and financial services trade marks registered in the UK comprises names like “ Zentity” and “Numus Cash”.

China

A glimpse at how Qudian and China’s online micro lenders revolutionise financing (SCMP), Rated: AAA

One day in July, Carina Shi awoke to incessant phone calls by angry, loud men, seeking repayment on a 20,000 yuan loan taken out by a friend.

Unbeknown to Shi, the 20-year-old college student had been listed as the contact by a friend who defaulted on a loan borrowed from Qudian Inc, the Beijing-based online lender at the centre of the fourth-largest US initial public offering this year. Debt-collection calls only ceased after Shi called her friend’s mother in Inner Mongolia to resolve the debt.

Shi’s experience offers a glimpse into the inner workings of Qudian, a provider of micro loans that ballooned within three years into a sizeable lender offering a loans book of 38.2 billion yuan (US$5.6 billion) to 7 million active users during the first six months of 2017.

The annualised interest rate on 59.5 per cent of loans lent last year surpassed 36 per cent, according to the company. That compares with between 12 and 14 per cent among the country’s largest commercial banks.

That crackdown gave Qudian and other online lenders like Ppdai, Fenqile and Hexindai the niche to build a market, which expanded by 23 per cent in two years to 452.4 billion yuan at the end of last year.

Chinese overseas investors prefer tech stocks (Technode), Rated: AAA

China’s sizable middle class is on fire. A McKinsey & Company report projected that they would account for 76% of the country’s urban population by 2022.

When we say Chinese people are becoming increasingly tech-savvy, we don’t only refer to the fact they are the first adopters of cutting-edge technology software and voracious buyers of smart gadgets. We also have a knack and understanding for technologies to seek better investment returns. The report shows that tech stock is the most popular category for Chinese-speaking investors.

A dominating 56% interviewees said they have invested in Alibaba, which had a growth of nearly 80 percent since the start of this year. JD and Apple performed equally well to rank the second and third.

Source: Technode

As digital natives, the country’s younger generations are first-movers to the sector. The report points out that post-80s gen represents nearly half (47.2%) of the users with post-90s gen comes as a close second (36.2%).

Over 65% of Chinese traders prefer Chinese companies when investing in the US.

Over 55% of Chinese investors will hold a position for over three months, and 20.03% for longer than a year.

The Role of Punctuation in P2P Lending: Evidence from the People’s Republic of China (Asian Development Bank), Rated: AAA

Using data from Renrendai, one of the largest P2P lending platforms in the People’s Republic of China, we investigate how the amount of punctuation used in loan descriptions influences the funding probability, borrowing rate, and default. The empirical evidence shows that the amount of punctuation is negatively associated with the funding probability and borrowing rate. We propose that the use of punctuation affects the readability of a loan description and reflects borrowers’ self-control and cognitive ability.

Source: ADB.org

Download the full report here.

China’s Latest Fintech Offering Looks Overpriced (WSJ), Rated: A

Investors sent the stock of Chinese online microcredit company Qudian Inc. QD 7.00% —which literally translates as “Fun Shop”—up nearly 50% on its first day of trading on the New York Stock Exchange last week. But on Monday, following criticism of Qudian’s high lending charges in Chinese social media and newspapers, the stock tanked, dropping almost 20%.

The market does seem ripe for growth: Nonmortgage consumer loans are only around 20% of household deposits in China, according to Bernstein analysts.

Still trading at 6.6 times book value even after Monday’s share price tumble, Qudian is asking for a lot of faith compared with more-established lenders.

Source: The Wall Street Journal

Chinese P2P lenders face IPO scrutiny (International Financial Law Review), Rated: A

Online lending companies are facing a number of issues when planning an initial public offering in Greater China and the US, according to panelists at last week’s IFLR Fintech Asia conference in Hong Kong. Regulators’ attitudes towards business models,
accounting requirements and risk reserves are issues companies need to be mindful of.

Credit Industry Leader Joins China Rapid Finance Board of Directors (PR Newswire), Rated: B

China Rapid Finance Limited (“China Rapid Finance” or the “Company”) (NYSE: XRF), one of China’s largest consumer lending marketplaces, today announced the appointment of Zhou Ji‘an, Executive Director and General Manager of China United SME Guarantee Corporation (“Sino Guarantee”), to its board as a non-executive independent director.

A seasoned chief executive in the financial industry, Mr. Zhou brings to the Company more than 18 years of experience in global organizations, financial institutions and government.

European Union

3 Advices For Peer-To-Peer Investors From ‘Inspeer’ Ceo (Coinidol), Rated: A

AltFi Data Analytics, published by investment bank Liberum, shows that the ratio of operating costs to the loan portfolio at the crowdlending platforms is lower by almost 40% comparing to banks.

  • Diversification is a key
  • Know your borrower
  • Pay attention to risks
International

Creation of Billion Dollar Startups Shifting Out of US (BW Disrupt), Rated: AAA

Today, there are 214 unicorn startups globally — private companies that have reached a hefty valuation of over $1 billion.

Of these, the United States has taken the largest share of the world’s most valuable private companies, with 127 US-based startups reaching unicorn status since 2013. China follows in second place, producing 59 unicorn companies over the same time period.

Since 2013, the share of new unicorns born each year in the United States has consistently dropped, from 75 percent of all unicorn births in 2013 to less than half (49 percent) by 2015. That number sunk even lower to hit just 43 percent last year.

Chinese unicorns rising

In 2017 YTD, 16 new unicorns have been born in China.

In the third quarter of 2014, Lu.com, a finance marketplace that deals largely with P2P lending, reached a $10 billion valuation after a VC round backed by Morgan Stanley and Ping An Insurance.

Looking at companies with the highest valuations upon their entrance into the unicorn club, 7 of the top 10 spots go to China-based companies, with the US claiming the remaining 3.

Wish Finance: Small Business Lending Blockchain Platform (BlockTribune), Rated: A

BLOCK TRIBUNE: Could you tell us a bit how Wish Finance got started?

EUGENE GREEN: A decade ago I was a small businessman. Several of my closest friends are small businessmen in Asia, Europe and the US. All of them had the same massive problem, which I had – an inability to get a loan. So I founded Wish Finance to solve this major pain point.

BLOCK TRIBUNE: Where do you see the value of Wish tokens in the medium to long-term and the ultimate benefit for token holders?

EUGENE GREEN: We are not selling digital candy wrappers, but a token convertible to real company equity. The token price will go up with the company valuation, and comparable FinTech lending companies showed a fiftyfold valuation growth in only a few years. So the token holders could stand to benefit in a big way.

Better structure could protect investors in P2P market – BoJ paper (Central Banking), Rated: A

A research paper published by the Bank of Japan on October 23 suggests using specific purpose companies and specific purpose trusts to strengthen investor protection in the field of P2P lending.

P2P lending matches borrowers and lenders online without making use of traditional financial intermediaries such as banks. In recent years, the amount of outstanding loans in the P2P sector has grown significantly in the UK, the US and China.

Australia

Australia publishes draft laws for relaxed fintech regulation (Reuters), Rated: AAA

The Australian government published draft laws on Tuesday that would let financial technology companies operate without a full licence, a measure it said would encourage innovation without compromising existing levels of consumer protection.

Financial technology companies would be able to test products involving non-cash payments, crowdfunding, consumer credit and provide financial advice on pension funds, life insurance and domestic and international securities.

Industry superannuation funds need to adopt digital advice into their offering to retain those members who eventually seek advice elsewhere and inevitably leave their industry fund.

Through digital advice, super funds should begin focusing on what Cheung terms as “incremental advice”.

Instead of providing just intra-fund and single-issue advice, super funds should provide members with the ability to deal with cashflow, debt management, or protection and insurance needs, as needed.

India

Fintech Valley Vizag and Knowledge Partner KPMG Announce Finackathon 2017 (BW Disrupt), Rated: AAA

HackerEarth, a leader in innovation and talent management software, has been selected by Fintech Valley Vizag – a Government of Andhra Pradesh initiative, to host Finackathon 2017.

The hackathon will be held in two stages. The idea phase which began on September 14th is currently underway with entries set to close on October 30th. The shortlisted teams will participate in the final round to be conducted in the first week of December in Visakhapatnam. The winning teams in each category (Banks, Insurance, Capital Markets, and NBFCs) will be awarded a sum of INR 3,00,000. The winners will also be given a chance to carry out Proof of Concept (PoC) with corporates and will need to be executed in Fintech Valley Vizag. Investor network of The Fintech Valley, Vizag will be invited for Hack Day, where they will go through the prototyped solution.

The hackathon is looking for solutions across the following 5 themes:

  1. Customer Experience
  2. Process Automation
  3. Financial Inclusion
  4. Risk Management
  5. Lending
MENA

Betterpaydayloansonline.com Now Allows Getting Quick Payday Loans (MENAFN), Rated: B

Betterpaydayloansonline.com is a web-based service, which makes it possible to get quick, safe and convenient payday loans with no hassle at all.

Canada

LENDING LOOP HITS MILESTONE OF PROVIDING $ 10 MILLION IN FINANCING (Betakit), Rated: AAA

Lending Loop, a Canadian P2P lending platform, has officially provided financing of more than $10 million across the country.

The company says it has supported the expansion of over 180 small businesses through a system that allows investors to reach out to small businesses on Lending Loop’s digital marketplace.

Lending Loop’s investment model moves away from institutional or accredited investors; Canadians can even invest $50 into a pool of larger loans.

A new service is helping employers reduce turnover by paying their employees by the day (The Washington Post), Rated: A

Restaurant News reports that hourly employees can use a smartphone app to access money for hours worked and have it deposited on a debit card. The amount is limited to 50 percent of what’s earned and–to discourage impulse buying–employees only have an hour after their shift to access the money. There’s no fee for the worker, but businesses pay Instant Financial $1 per active user per month.

Barha is aiming to put a dent into the burgeoning payday loan industry, which was used by approximately 12 million Americans in 2015. His service is also being looked at as a potential recruiting and motivation tool by employers, particularly in — but not limited to — the retail and restaurant industries.

According to a recent USA Today report, almost 150,000 employees at more than 50 companies like McDonalds, Outback Steakhouse and Dunkin’ Donuts as well as other restaurants and retailers, trucking companies and staffing firms have access to the service.

GDS Link Joins Canadian Lenders Association to Support Innovative Lending; Sponsoring Canadian Lenders Summit (PRWeb), Rated: B

GDS Link, a global provider of risk management solutions and consulting for multiple verticals within the financial services industry including marketplace lending, retail finance, alternative financial services, credit card, auto, and business lending and leasing, today announced that it has joined the Canadian Lenders Association (CLA) as an affiliate member and will be sponsoring the Canadian Lenders Summit.

GDS Link is sponsoring the Canadian Lenders Summit, which has partnered with the CLA. The inaugural event will take place on October 26, 2017 in Toronto, Canada. Representing GDS Link is Rich Alterman, EVP of Business Development.

Latin America

Brazilian fintech Nubank offers accounts for transfers, payments (Reuters), Rated: AAA

Brazilian startup Nubank said on Tuesday it would expand from credit cards into digital accounts allowing users to make transfers, pay bills and earn more interest than average savings account, beefing up its challenge to traditional banks.

Tech-savvy millennials have been the core demographic for Nubank’s credit card, but Velez said he hoped new accounts would serve some of the roughly 60 million Brazilians – around 30 percent of the population – who do not have a bank account.

Venture capital firms including Sequoia Capital, Kaszek Ventures, Tiger Global Management and DST Global have invested $179 million in Nubank since 2013, giving it a value of $500 million in early 2016 that made it the largest Brazilian fintech startup.

Authors:

George Popescu
Allen Taylor