Thursday April 11 2019, Weekly News Digest

china p2p lending

News Comments Today’s main news: Lending Club loans $159M in the past week. OnDeck offers same-day funding. Kabbage secures $700M in funding. RateSetter ISA passes 200M GBP in subscriptions. Funding Circle CEO pocketed 4M GBP last year. Klarna launches global customer authentication platform. Today’s main analysis: Drivers of global growth in FSB’s shadow banking. (A […]

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china p2p lending

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United States

Need a loan for Tax Day? According to Lending Club data, you’re not aloan… er, alone (Thinknum), Rated: AAA

As seen in data from Lending Club ($NYSE:LC), there is a cyclical spike in the number of loans, as well as the money needed by those needing loans, right around the end of tax season. While this finding may seem pretty clear without any data, it essentially confirms an adage in the lending industry.

RIght now, there was only $21.5 million loaned out to lendees from April 8 to today. This past week, there was about $159 million worth of all sorts of loans — personal, mortgage, etc. — loaned out by the platform.

Lending Club Total Principal Loaned (Weekly)

ONDECK OFFERS SAME DAY FUNDING TO EMPOWER SMALL BUSINESS (OnDeck), Rated: AAA

OnDeck today announced that it will offer to fund and debit customer bank accounts with Same Day ACH transfers, eliminating a decades long pain point for small business owners accustomed to the traditional ACH transfer process, which can take multiple days and lacks certainty on when the transactions will hit bank accounts.

Same Day ACH transfers from OnDeck provide qualified OnDeck Term Loan and Line of Credit customers with funds up to the National Automated Clearing House Association (NACHA) cap of $25,000 by 5:00 pm local time on the same business day the customer books or makes a draw on their line of credit.* Qualified customers are also debited via the same day ACH service, providing them additional predictability in transaction clearing times and offering better clarity around day-to-day cash flow management.

Highlights from Jamie Dimon’s Annual Letter (PeerIQ), Rated: AAA

US payrolls rose by 196 k in March and the unemployment rate remained at 3.8%.

Source: Bloomberg, PeerIQ

Highlights from Jamie Dimon’s Letter to Shareholders

Jamie Dimon published his annual letter to shareholders. We look at some highlights below:

  • The banking system, and JPM in particular, is over-capitalized – Under the Fed’s most extreme stress-testing scenario, where 35 of the largest American banks bear extreme losses (as if each were the worst bank in the system), the combined losses are about 6% of the total loss absorbing resources of those 35 banks.
Source: JPM, PeerIQ

PM is investing billions in technology to compete – the cloud, AI, ML and digital banking

  • JPM customers can now open a bank account online in under 5 minutes and can reduce their mortgage closing times to 3 weeks.
  • The bank now has 49 Mn active digital customers, including 33 Mn active mobile customers
  • JPM is looking at fintechs in the US and in China as not just opportunities but also looming competition.

Online lender Kabbage rakes in 0m funding (Verdict), Rated: AAA

Kabbage, an online lender for small businesses, has fetched $700m in asset-backed securitisation (ABS) funding.

With the securitisation, the company’s debt funding increases to $940m.

Real-time data was Kabbage’s secret sauce, its first investor says (American Banker), Rated: A

The firm started life as a small, scrappy fintech startup in Atlanta in 2008, but has grown rapidly. It made $2 billion worth of loans in 2018 and more than $600 million in the first quarter of 2019. It also recently agreed to provide financing at the point of sale on Alibaba.com as part of a program called Pay Later.

Upstart Raises $ 50 Million and Announces New Bank Partners (Lend Academy), Rated: A

One of the big announcements on day one of LendIt Fintech USA 2019 is from consumer lender Upstart. They have announced a $50 million equity raise as well as three new partners for their “Powered by Upstart” banking as a service program. Oh, and they are getting into credit cards.

PeerStreet Lowers Minimum Real Estate Investment to $ 100 (Think Reality), Rated: A

The burgeoning peer-to-peer lending platform PeerStreet has unveiled product updates that enable investments of only $100.

The company recently announced it’s lowered the minimum investment to $100 for “small balance reinvestments” when using its automated investing product. The upgrade also expands the investment types available for automated investing to include cash offer loans and 30-day notes, which offer shorter terms than typical bridge loan investment options, the company said.

Sharestates Wins Top Real Estate Platform Award at LendIt Fintech USA 2019 (PR Newswire), Rated: A

Sharestates, a marketplace lending platform that connects real estate developers with investors, was crowned Top Real Estate Platform at LendIt Fintech USA2019 in San Francisco, California on April 9, 2019. The Top Real Estate Platform award is based on performance, volume, growth, product diversity, and responsiveness to stakeholders.

Now operating in 46 states, Sharestates offers diversified asset classes including residential, multi-family, mixed-use, commercial properties, and land acquisitions.

Since launching in 2015, Sharestates has closed on over $1.7 billion in total loan volume and returned over $675 million in principal to investors. Average annualized returns have exceeded 10% every year. As a result of its strong performance and valued relationships, 82% of Sharestates loan volume has come from repeat borrowers and 81% of its investors are repeat investors.

The stREITwise Platform Brings Real Estate Investment to All (Realty Biz News), Rated: B

The company has just announced a new acquisition to its investment portfolio, a $32 million mixed-use building in Carmel, Indiana, one of the most affluent suburbs of Indianapolis. The 140,000-square foot Allied Solutions Building, already around 87 percent leased, stands poised to increase dramatically in value thanks to its location in the heart of downtown Carmel in the heart of a busy mixed-use development surrounded by restaurants, coffee shops, fast-casual dining, service-oriented retail, and the locally renownedSun King distillery and food hall right next door.

13 cities where renting is cheaper than buying a home (AOL), Rated: A

Americans’ homeownership rate is 64.8%, according to the latest U.S. Census data.

Following are the 13 metros where renting is cheaper by more than $150 a month, beginning with cities with a smaller advantage for renters.

BlueVine Adds Term Loan to Suite of Online Working Capital Solutions to Fuel Small Business Growth (GlobeNewswire), Rated: A

BlueVine, which provides small- and medium-sized businesses with access to fast and simple online financing, announced that it is making term loan financing available for business owners through its suite of online financing solutions. The BlueVine Term Loan provides small- and medium-sized business owners with fast and simple access to financing to grow their businesses through BlueVine’s advanced online platform. More than 59 percent of businesses are looking for funds to grow their business, according to the 2017 Federal Reserve Small Business Credit Survey Report on Employer Firms. With a BlueVine Term Loan, business owners can quickly pursue larger projects and investments to bring their businesses to new heights.

Aura Approves 350,000th Affordable Loan (Bakersfield.com), Rated: A

Aura, a mission-driven financial technology company that offers affordable loans to hard-working families, this week approved its 350,000 th loan.

Since its launch in 2014, Aura has provided more than $437 million in credit-building loans to borrowers at approximately 1,200 partner locations using technology that enables local businesses to administer loan applications. Currently, Aura’s average loan size is around $1,600.

In total, Aura has raised over $403 million in social bonds across 21 bond issuances. The most recent issuance was in March for $50 million.

What Kind of Collateral Do I Need for a Business Loan? (Nav), Rated: A

Before you can qualify for a commercial loan, you’ll need to prove that doing business with your company is a good risk. This means you’ll need to pass successfully through a lender’s qualification process.

Next Wave of Personal Loan Growth May be Driven by Prime and Above Consumers (MarketWatch), Rated: A

The prime and above risk tiers have become a greater focus for lenders in recent years. Nearly two-thirds of unsecured personal loan balances originated in the first three quarters of 2018 were lent to prime and above consumers. FinTechs drove this shift as originations for prime and above grew to 62% in 2018, up from 52% in 2013. While still less conservative than banks, FinTechs’ overall risk profile for originations now aligns tightly with credit unions. At the end of 2018, FinTechs held the majority share of personal loan balances with 39%, while banks and credit unions followed with 28% and 21%, respectively.

Student Debt Isn’t Just An Employee Problem — It’s Also An Employer Problem (Killer Startups), Rated: A

The Federal Reserve Bank of New York reported in its Quarterly Report on Household Debt and Credit for the fourth quarter of 2018 that outstanding student loan debt increased to $1.46 trillion, which is $15 billion more than the previous quarter. It also reported that student loan debt rose by $79 billion in 2018.

The student debt load isn’t just impacting the individual students who enter the workforce, hoping they can find a job that enables them to make those monthly payments. I’s also slowing economic growth. A January 2019 Federal Reserve paper noted that young adults report their student loan debt is the reason they’re unable to buy a home. The same report also cited other research concluding that 20 percent of the decline in homeownership among young adults relates to student loan debt that’s been rising since 2005.

Amount Announces Cloud-Based Account Verification Platform (Kake), Rated: A

Amount today announced AmountVerify, a cloud-based platform for risk management across financial products. AmountVerify marks the first time industry leading fintech provider Avant is making a component of its cutting edge online lending platform available to financial service companies as a standalone product through Amount.

Onfido raises $ 50M to create the Identity Verification Standard for Businesses Globally (Markets Insider), Rated: A

Onfido, the global identity verification provider, today announced it has raised $50M in funding, bringing the total investment in the company to over $100M. The round was led by SBI Investment and Salesforce Ventures, with support from M12 (formerly Microsoft Ventures), FinVC and others, including existing investors.

Forward Financing Expands Capital Base with $ 90 Million Credit Facility (Yahoo! Finance), Rated: A

Forward Financing has closed on a $90 million credit facility, consisting of a $60 million senior revolving credit facility and a $30 million junior term loan. AloStar Capital Finance (“AloStar”), a division of Cadence Bank, N.A., served as the Agent on the senior facility.

Credibly Announces Investment Grade Senior Debt Offering (Yahoo! Finance), Rated: A

Today, Credibly announces the next phase in its balance sheet growth strategy with a $10 million Investment Grade-rated senior debt offering. The transaction closed on March 28, 2019.

Mitek Expands Auto-Capture User Experience Across All Digital Channels with the Addition of Desktop (GlobeNewswire), Rated: A

Mitek today announced it has upgraded its desktop browser experience to support auto-capture so customers can rapidly verify the identity of applicants across all digital channels: desktop browsers, mobile web and native applications.

According to Javelin Research, today only one third of users (34 percent) still complete the entire account opening process on their desktop.

MiSnap delivers a superior auto-capture experience for desktop and across mobile devices through:

  • Guided commands:  Real-time commands such as where to place a document in relation to the camera or detection of glare on the ID document are some of the conditions evaluated in order to help the user capture an optimal image, which improves image acceptance rates and reduces capture retries.
  • Advanced image analysis: Once MiSnap has achieved an optimal capture of the ID document, the software then further analyzes the image and makes the necessary adjustments in order to process all images consistently and accurately.
  • Modern architecture: Because MiSnap uses WebAssembly, it can perform at native speeds and is easy to integrate into customers’ web-based apps and requires minimal footprint.

58% of lenders will use AI in next two years (AI Foundry Email), Rated: A

Fannie Mae recently put out a 

  • Nearly two-thirds of lenders are familiar with AI
  • But, only 27% are using it in their businesses now, and…
  • Only half of that group are currently using it with customers (the rest are doing trials)
  • However, looking ahead two years – 58% of lenders expect to use AI/ML in their mortgage business.
  • Of the rest:
      • 22% predict they’ll be investigating AI
      • 19% foresee being in a “wait and see” mode

    These data points show us that “prime time” is coming soon for AI/ML in mortgages. 

    Fintech alone won’t be enough to boost credit union mortgage volumes (Credit Union Journal), Rated: A

    How can credit unions, especially small institutions, compete with Quicken Loans’ Rocket Mortgage “Push button, get mortgage” campaign?

    They can’t – and, sources said, they shouldn’t try.

    GROUNDFLOOR Wins 2 FinTech Awards (Groundfloor Email), Rated: B

    GROUNDFLOOR was named Best Crowdfunding Platform by the 

    Pulte Mortgage and Finicity Partner to Combat the Home Loan Paper Chase (MarketWatch), Rated: B

    Pulte Mortgage announced today it is partnering with Finicity — a leading provider of real-time financial data access and insights, to provide its borrowers with a faster, simpler and more secure way to navigate the home financing process.

    Hudson Data and LendingPoint partner to prevent Synthetic ID fraud (Finanzen), Rated: B

    Hudson Data and LendingPoint announced that they are partnering to create an industry solution to prevent synthetic identity fraud using powerful graph machine learning.

    Dharma crypto lending platform officially goes live (CoinGeek), Rated: B

    Dharma Labs completed a Series A funding round earlier this year to support its cryptocurrency lending platform project. The San Francisco-based company raised $7 million from companies such as Polychain Capital, Coinbase Ventures and others and, if there was any concern about the platform not going live, those concerns are now extinguished. Dharma announced this past Monday in a Medium post that the platform is now live.

    United Kingdom

    RateSetter ISA Milestone: Passes £200 Million in Subscriptions (Crowdfund Insider), Rated: AAA

    UK-based peer-to-peer lender RateSetter recently announced its ISA has now passed the milestone of attracting £200 million in subscriptions.

    “Investors have enjoyed an average annualised return of 4.5%, tax-free of course, since the RateSetter ISA launched in February 2018. The average RateSetter ISA balance stands at £11,000.”

    Funding Circle boss pocketed more than £4m last year (P2P Finance News), Rated: AAA

    FUNDING Circle founder Samir Desai (pictured) earned more than £4m last year, having cashed in some of his shares at the time of the peer-to-peer lender’s stock market flotation.

    Desai took home a salary of £210,000 last year, according to Funding Circle’s annual report, a four per cent increase from his salary of £202,000 in 2017.

    The majority of his total remuneration of £4.081m came from cashing in share options.

    Zopa rewrites outdated money idioms (The London Economic), Rated: AAA

    Each future-looking idiom challenges the status quo. For example, according to Zopa, the ‘signing for the bill’ gesture will be redundant soon. Instead, when people have finished their meal, people will be more likely to signal facial or iris recognition to the waiter. Jonesy gives his take and takes it one step further by illustrating a customer displaying his eyeball to request the bill.

    Source: The London Economic

    Fintech unicorns are leading job creation in London (Business Insider), Rated: AAA

    In 2018, there was a 61% increase in fintech job creation within London from the previous year, per a new report by Robert Walters, making it the fastest growing sector for vacancies in the city.

    The UK houses 25% of all fintech unicorns and their growth plans call for more talent. There are 29 fintech unicorns worldwide, seven of which are based in the UK, making the UK second only to San Francisco, which is home to nine.

    Over 30% of jobs in the UK’s fintech industry are for IT-related roles, compared with 24% in 2017. And fintech unicorns’ hiring for IT professionals increased 74% year-over-year (YoY).

    Source: Business Insider

    London to take San Francisco’s fintech unicorn crown (The Innovation Enterprise), Rated: A

    However, the report has predicted that London could take the lead as early as this year, as the city receives 39% of European fintech venture capital funding, with the runner-up, Berlin, taking just 21% of the total investment.

    With 50% against a global average of 33%, the UK also enjoys the highest rate of consumer fintech adoption of any Western country, only beaten by India and China, the report found.

    LendInvest gains £200m HSBC funding as it seeks home loan market entry (Verdict), Rated: A

    LendInvest, which operates an online marketplace for mortgages, has received an investment of £200m ($261m) from HSBC UK to support its foray into the regulated home loan sector.

    Peer-to-peer scheme for first-time buyers launches (FT Advisor), Rated: A

    Start-up company Stepladder is promoting a new way for first-time buyers to save for a house deposit.

    Arbuthnot Latham launches Arbuthnot Direct for those seeking long-term interest returns (Arbuthnot Email), Rated: B

    Arbuthnot Latham & Co., Limited (“Arbuthnot Latham”) is pleased to announce the launch of its new platform under the trading name of Arbuthnot Direct. Arbuthnot Direct offers fixed term deposits online, targeting retail customers who are seeking interest returns on their money over the longer term. The platform held a successful soft launch in February 2019 and has already met with a positive reception.

    China

    The rise and fall of P2P lending in China (Finextra), Rated: AAA

    It is worth mentioning that the size of China’s P2P industry is larger than that of the rest of the world combined, with outstanding loans of US$217.96BN.

    China’s online P2P lending industry grew rapidly between 2011 to 2015, with the number of P2P lenders growing from 50 to nearly 3,500 respectively.

    Trouble started brewing in China back in 2016, when statistics released by the Chinese Banking Regulatory Commission showed that about 40% of P2P lending platforms were in fact Ponzi schemes.

    This triggered the shutdown of P2P lending platforms; over 900 closed by the end of 2016. For 2018, only 1,021 providers remained in place.

    Source: Bloomberg News

    Shenzhen police arrest Zhang Wei, calling China Create Capital a ‘mafia-like gang’ (SCMP), Rated: A

    China Create Capital Limited, the investment holding company headed by the 46-year-old Heilongjiang native is a “mafia-style gang” involved in illegal fundraising, harassment, blackmail, illegal detention of people and the possession of firearms, the Shenzhen police said in a notice. The whereabouts of Zhang, who was arrested with 43 other executives of China Create, could not be ascertained.

    The arrests are the latest in the Chinese government’s crackdown on crime and corruption in the country’s financial system and capital markets, where 1,129 “mafia-like” syndicates were broken up across 10 provinces last year, with 4.94 billion yuan (US$737 million) of assets seized, according to the police. A number of Chinese oligarchs including Anbang Group’s

    former chairman Wu Xiaohui

    , CEFC Group’s founder Ye Jianming and financier Xiao Jianhua had fallen from grace since 2017.

    $ 60 Million and Rising: China’s Crypto Funds Try Lending to Beat Bear Market (CoinDesk), Rated: A

    These new crypto lenders include such notable names as Bixin Capital, FBG Capital and DGroup, founded by Dong Zhao, who made a name by operating one of the longest-running over-the-counter (OTC) trading desks in China. Along with a startup called Babelbank, these investors have originated a combined $60 million worth of loans over the last five months, denominated in cryptocurrencies or, in one firm’s case, Chinese yuan.

    European Union

    Klarna launches global customer authentication platform (Klarna), Rated: AAA

    Klarna today announced the launch of its global authentication platform — an aggregator with multiple global and local authentication solutions. The platform allows multinational businesses, including merchants and other banks, to provide a simple, secure and personalised customer authentication experience irrespective of market, through a one-time integration.

    Klarna Sees Payments as Evolving From Function to Engagement (WWD), Rated: A

    Klarna’s Hannah Bravo says customers chose brands based on payment options.

    This New Tool Is Helping Retailers Build Consumer Trust During Online Checkouts (Footwear News), Rated: B

    The Klarna platform enables businesses to choose from a range of global and local authentication methods so that they can find one that works best for their customer. Whether using SMS verification or emailed one-time passwords, brands and retailers can verify their customers’ identities with minimal interruption to the consumer’s shopping journey.

    International

    Drivers of Global Growth in FSB’s Shadow Banking (DBRS Email), Rated: AAA

    DBRS sees significant risks stemming from continued growth in shadow banking globally. Assets are now at $52 trillion globally, up from $30 trillion in 2010, according to the FSB. The U.S. has the largest concentration with 29% of global shadow banking assets. But, this is down from 48% in 2010, as other regions are growing faster.

    Summary highlights of the commentary include:

    • Shadow banking is still growing. This narrow, but rapidly growing, subset of nonbanks had assets of $52 trillion in 2017, up 75% from $30 trillion in 2010.
    • Since 2010, assets of nonbanks are also growing, up 61% to $185 trillion. That is 49% of the $378 trillion in total global assets in all financial institutions at the end of 2017, up significantly from 44% in 2010.
    • The key driver of this growth in nonbank assets is the expansion of OFIs. These OFIs are defined as all financial institutions that are NOT central banks, banks, insurance companies, pension funds, public financial institutions, or financial auxiliaries. Assets at these OFIs grew 71% since 2010 to a record $117 trillion in 2017, or just over 30% of assets in financial institutions globally.
    • By far, the largest segment of shadow banking globally is collective investment vehicles, which are subject to runs. These include fixed income funds, mixed funds, MMFs and hedge funds. Since 2010, this segment has grown by 130% to $36.7 trillion in assets. By contrast, growth in other segments has been less than $1 trillion, or even negative.

    Read the full report here.

    Crypto Lending Platform Salt Adds Support for Dash as Collateral (Crypto-Economy), Rated: A

    Cryptocurrency lending platform Salt will now be allowing its users to collateralize their Dash holdings including their Masternode staking coins to access loan facilities.

    India

    RentoMojo in talks to raise $ 40 million from GMO, others (livemint), Rated: A

    For RentoMojo, the latest fundraise comes almost two years after it raised $10 million in July 2017 from Bain Capital, Accel and Chiratae Ventures. Renauld Laplanche, chief executive of US-based Lending Club, also took part in his personal capacity.

    Asia

    Housing sector remains major source of complaints: BPKN (The Jakarta Post), Rated: A

    The BPKN received 154 complaints in the first quarter, most originating from the housing sector. BPKN communications and education coordinator Arief Safari said the agency had received 129 complaints on the housing sector in the first quarter, followed by six complaints on online peer-to-peer (P2P) lending, three on banking and the remainder on various sectors, including travel and e-commerce.

    Batumbu to help finance SMEs (The Jakarta Post), Rated: A

    PT Berdayakan Usaha Indonesia has announced that it aims to help small and medium enterprises (SME) access financial capital through a partnership program with its digital platform Batumbu.

    MENA

    Authors:

    George Popescu
    Allen Taylor

    The post Thursday April 11 2019, Weekly News Digest appeared first on Lending Times.

    Monday June 18 2018, Daily News Digest

    funding circle

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

    funding circle

    News Comments

    United States

    United Kingdom

    International

    Australia/New Zealand

    India

    Other

    News Summary

    United States

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

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

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

    Rising Rates and Inflation (PeerIQ), Rated: AAA

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

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

    Source: Federal Reserve, Bloomberg
    Source: Bloomberg, PeerIQ

    Forward Rates – Where do we go from here?

    Source: Bloomberg, PeerIQ

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

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

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

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

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

    But can the industry survive?

    Source: P2P Lending Expert

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

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

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

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

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

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

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

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

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

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

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

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

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

    Source: Tearsheet

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Source: American Banker

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

    United Kingdom

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

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

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

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

    According to Sky News Ra

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

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

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

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

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

    Source: Funding Circle

    Read the full report here.

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

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

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

    Here are some of the key moments in their journeys.

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

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

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

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

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

    Brexit has made UK SMEs worry about talent

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

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

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

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

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

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

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

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

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

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

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

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

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

    China

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

    Source: Seeking Alpha
    Source: Seeking Alpha

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

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

    European Union

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

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

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

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

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

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

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

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

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

    International

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

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

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

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

    Australia/New Zealand

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

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

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

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

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

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

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

    P2P lender cuts rates (Good Returns) Rated: A

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

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

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

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

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

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

    India

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

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

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

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

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

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

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

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

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

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

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

    Backers included CapitalG, SAIF Partners and LFT.

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

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

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

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

    Asia

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

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

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

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

    MENA

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

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

    Enter peer-to-peer lending.

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

    Authors:

    George Popescu
    Allen Taylor

    Monday February 5 2018, Daily News Digest

    Nav financing

    News Comments Today’s main news: Banco BNI starts lending through Fellow Finance. eBay drops PayPal for Adyen. Aviva exec backs robos. OneConnect secures $650M funding. Stripe sets up engineering hub in Dublin. EBANX gets $30M in funding from FTV Capital. Today’s main analysis: FT Partners’ Alternative Lending Market Analysis for January, and an interview with Nav CEO. Today’s thought-provoking articles: […]

    Nav financing

    News Comments

    United States

    United Kingdom

    China

    European Union

    International

    India

    APAC

    MENA

    Latin America

    News Summary

    United States

    eBay ditches PayPal for Adyen (Fintech Futures), Rated: AAA

    What the good fintech can giveth, it can taketh away. eBay has given PayPal the boot and turned to Dutch firm Adyen as its primary processing partner.

    Looking to sweeten this bitter pill, eBay says PayPal, a “long-time” partner, will be an option at the checkout for its buyers.

    PayPal powers BofA Merrill digital payments (Fintech Futures), Rated: A

    Bank of America Merrill Lynch’s (BofA Merrill) US-based commercial clients can now make payments in local currencies to payees who hold PayPal accounts.

    Strong Job Gains, Marcus Acquihires, MLA Testimony (PeerIQ), Rated: AAA

    Janet Yellen chaired her last Fed meeting as the committee kept interest rates on hold in January. Futures are pricing in a 93% probability of a rate hike in March and 3 rate hikes for 2018. The recent sell off on the long end of the curve has seen 10-year treasury yields edge past 2.85%, providing respite to banks who were seeing their loan margins compress as the curve flattened.

    In securitization news, Marlette completed its largest securitization to date, with MFT 2018-1 coming in at $464 Mn. The deal was significantly over subscribed and eventually upsized continuing the trend of larger deal size that we pointed out in ourQ4 securitization trackerThe senior tranches were rated AA by Kroll. The collateral pool has 40,303 loans with an average loan balance of $12k, weighted average coupon of 14.3% and a FICO score of 703. All the loans were originated by Cross River Bank.

    CEO Monthly Alternative Lending Market Analysis (FT Partners), Rated: AAA

    This month’s report features an exclusive interview with Levi King, Co-founder and CEO of Nav, which is a data aggregation platform and marketplace that bridges the gap between small businesses and financial institutions. In the interview, Levi discusses the motivation behind founding Nav and how the company solves the challenges small businesses face managing their credit and securing financing solutions, among other topics.

    Source: FT Partners

    Download and read the full report here.

    Open banking’s early adopters bet on ‘tremendous gains in value’ (American Banker), Rated: AAA

    Only a few banks have embraced open banking and offer APIs to almost anyone. But they are betting on having a head start on competitors, as trends in the industry, such as increased bank-fintech partnership and evolving regulation, will push the banking-as-a-platform movement toward reality.

    Operating as BBVA Compass in the U.S. in Birmingham, Ala., in 2016 it named a head of open APIs, and has engaged in several data-sharing agreements with fintechs. It is one of a handful of U.S. banks engaged in open banking — Capital One, Silicon Valley Bank, Citi and CBW Bank in Weir, Kan., also have such programs.

    Last May, BBVA opened up its API Marketplace and made commercially available eight APIs so companies, startups and developers would be able to build new products and services by accessing and integrating customer’s banking data — with their permission — into their applications.

    Source: American Banker

    Fiserv Has Largest U.S. Marketshare of Top Bank Core Processors (Bank Innovation), Rated: A

    According to data gathered by FedFis.com, the top processor is Brookfield, Wis.-based Fiserv. With more than 37% of the market share, Fiserv is well ahead of its competitors. The second, Monett, Mo.-based Jack Henry & Associates, has just half Fiserv’s market share with 17.6%. Close behind JHA is Fidelity National Information Services Inc., better known as FIS.

    Enova Reports Fourth Quarter and Full Year 2017 Results (PR Newswire), Rated: A

    Enova International (NYSE: ENVA), a financial technology company offering consumer and small business loans and financing, today announced financial results for the quarter and year ended December 31, 2017.

    Fourth Quarter 2017 Summary

    • Total revenue of $243.7 million in the fourth quarter of 2017 increased 20.4% from $202.4 million in the fourth quarter of 2016.
    • Gross profit margin was 47.7% in the fourth quarter of 2017 compared to 51.8% in the fourth quarter of 2016, driven by growth in the installment loan and receivables purchase agreement segment as well as a higher mix of new customers, which requires higher loan loss provisions.
    • Net income was $6.9 million, or $0.20 per diluted share, in the fourth quarter of 2017 compared to net income of $8.7 million, or $0.26 per diluted share, in the fourth quarter of 2016.
    • Fourth quarter 2017 adjusted EBITDA of $38.1 million, a non-GAAP measure, increased from $35.1 million in the fourth quarter of 2016.
    • Adjusted net income of $8.9 million, or $0.26 per diluted share, a non-GAAP measure, in the fourth quarter of 2017 increased from adjusted net income of $8.5 million, or $0.25 per diluted share, in the fourth quarter of 2016.

    Full Year 2017 Summary

    • Total revenue of $843.7 million in 2017 increased 13.2% from $745.6 million in 2016.
    • Gross profit margin was 53.0% in 2017 compared to 56.0% in 2016.
    • Net income was $29.2 million, or $0.86 per diluted share, in 2017 compared to net income of $34.6 million, or $1.03per diluted share, in 2016.
    • Full year 2017 adjusted EBITDA of $157.8 million, a non-GAAP measure, increased from $142.3 million in 2016.
    • Adjusted net income of $46.9 million, or $1.37 per diluted share, a non-GAAP measure, in 2017 increased from adjusted net income of $37.5 million, or $1.12 per diluted share in 2016.

    No Credit? No Problem! Microlender for Women Uses Novel Approach (WSJ), Rated: A

    Daniela Morales’s lender is demanding. Every Friday morning, at 9:45 sharp, she has to visit a small apartment in Woodside, Queens, to make her weekly payment—currently $293 plus $17 interest on a $6,900 balance.

    Ms. Morales’s lender is Grameen America, a nonprofit microlender for women entrepreneurs. To get a Grameen loan, you don’t need any collateral or credit history, just the support of a small group of Grameen loan recipients who can vouch for you. It is, essentially, a reputation-based loan.

    There are other nonprofit microlenders operating in the city, including Accion and BOC Capital Corp. But Grameen America, modeled on a Bangladeshi microlender, is unique in its peer support and loan-approval model.

    The loans, which start at $500 and command an interest rate of 18% on a declining balance, must be repaid in six months. The interest rate falls as the loan is repaid. Members who establish a good track record qualify for larger sums.

    How This Founder Is Using Fintech To Give Women More Financial Control (Benzinga), Rated: A

    Morty is an online mortgage broker. Our mission is to empower homebuyers to make smarter home financing decisions. With a modern tech stack and a marketplace of lenders, we offer customers the most options, great rates, and a transparent process.

    What surprised you the most in the fintech industry in 2017?

    That there wasn’t more innovation in the mortgage space. It’s the only lending vertical that hasn’t moved online- credit cards, student loans, small business loans, personal loans- all have a big online presence. There is still so much to be done in mortgage, it’s exciting.

    Hackers Targeting Payroll Direct Deposit (PYMNTS), Rated: A

    In an article penned for JD Supra by law firm Ogletree, Deakins, Nash, Smoak & Stewart, P.C., experts warned of a type of payroll scam that sees fraudsters diverting direct deposits from employee accounts to criminal accounts.

    According to the firm, fraudsters use a phishing scam by sending an email from an address similar to a legitimate company account.

    Ogletree Deakins warned that not only does this scam result in lost funds, but it is ultimately a data breach, with scammers gaining access to corporate systems and data. The report also noted that scammers are targeting all types of businesses using all types of payroll providers.

    Will Markets Ever Live Up to Our Expectations (Guru Focus), Rated: A

    The fintech industry is the powerhouse behind the meteoric rise of the peer-to-peer lending market. After several platforms launched online payments, it was only a matter of time before new ones emerged offering lending services that are offered by and to registered members.

    LendingClub Corp (NYSE:LC) has been one of the most notable players in this space and its popularity pushed it public in 2014. However, since then, the company has struggled to live up to expectations, reflecting the actual picture of the status of the peer-to-peer lending.

    According to critics, while peer-to-peer lending is an attractive option for borrowers looking for alternative financing solutions, it appears to have growth limitations due to lack of funding for new products. Peer-to-peer lending platforms do not take deposits and this is a limiting factor, but analysts suggest that if they are to grow to the point of rivaling the mainstream lending market, then they may have to start taking customer deposits.

    How to Win Man vs. Machine Advice Game (ThinkAdvisor), Rated: A

    TD Ameritrade put the competitive pressures tied to robo-advisors and other technology left, right and center at its LINC 2018 RIA conference this week in Orlando. Industry leaders highlighted the power and threat of technology and how to address these trends in the advice business.

    The dealmakers financing top adviser technology (InvestmentNews), Rated: A

    It’s impossible to look at the landscape of modern adviser technology without seeing Steve Lockshin’s footprints.

    As an early investor in Betterment, Mr. Lockshin, 41, was instrumental in encouraging the robo-adviser to pivot from competing against advisers to partnering with them.

    Brad Bernstein could see the role of advisers was changing.

    What was once an industry of investment managers and salespeople was shifting to financial planning. Driving the change was technology — automating and commoditizing many of the ways advisers traditionally added value for clients. Mr. Bernstein, 51, managing partner at growth equity firm FTV Capital, believed there was a demand for products that helped advisers better articulate their value to clients.

    That’s what attracted Brooks Gibbins, 45, to the industry when he founded FinTech Collective with his partner, Gareth Jones, in 2012. The venture capital firm has been one of the most active early-stage fintech investors over the past five years, seeding some of the biggest names on the adviser fintech scene.

    Seeing the opportunity for adviser fintech startups to get acquired by, or partner with, financial institutions, Ian Sheridan decided to draw on his more than 25 years of experience in the financial services industry — working in wealth, retirement and investing in startups — to identify which technology would be part of the next wave of innovation.

    Fidelity rocked the adviser fintech world in 2015 when it acquired eMoney, one of the most popular financial planning and client portal tools among independent advisers. The reported $250 million price tag proved there was money to be made in adviser fintech.

    “Prior to that, there was good technology out there, but there wasn’t this stream of new business models, this new equity flowing in,” said Mike Durbin, 50, the president of Fidelity Institutional who spearheaded the deal. “The pace has clearly quickened.”

    After a career that took him from E.F. Hutton to founding the Lockwood family of companies, Len Reinhart turned toward private investing in retirement.

    American Association of Private Lenders Opposes Florida Mortgage Licensing Bills (PR Newswire), Rated: A

    The Florida legislature kicked off its legislative session by introducing Florida Senate Bill 894 and House Bill 935, legislation that could cover private mortgage lenders. The bills, introduced by Sen. Rene Garcia (R-Miami) and Rep. Jeanette Nunes (R-Miami), would eliminate a longstanding business purpose exemption for loans secured by a Dwelling.

    On January 18, the bill passed the House Insurance and Banking Subcommittee with a 13-1 vote. On January 24, the House Commerce Committee passed the bill on a unanimous vote. The Senate similarly passed the bill on a unanimous vote in the Senate Banking and Insurance committee on January 23.

    American Association of Private Lenders’ (AAPL) position is that the proposed regulation would harm Florida residents, business and the state’s economic growth by consolidating power to a few licensed parties. Private lenders provide much needed capital to a marketplace which is underserved by large financial institutions. Professional business parties need to be able to work with each other without significant regulatory intervention. The proposed regulation would result in less market competition, translating to higher interest rates, a higher cost of credit and would force business out of Florida and into neighboring states including Alabama, Georgia, Tennessee, North and South Carolina, all of which exempt business purpose loans from licensing requirements.

    Amy Johnson Named as Chief Operating Officer at dv01 (PR Newswire), Rated: B

    dv01, the data management, reporting, and analytics platform that provides institutional investors insight into lending markets, today announced the appointment of Amy Johnson as Chief Operating Officer. Johnson will report to dv01 founder and CEO, Perry Rahbar.

    As COO, Johnson will be responsible for dv01’s finance, legal, and sales efforts, including helping execute the company’s vision and scale its operations.

    The 10 D.C. Area Startups That Raised Capital in January (DC Inno), Rated: B

    Reston, Va.-based online lender StreetShares closed $23 million in equity funding on Jan. 24. The lender focuses on veteran-owned small businesses and relies on a peer-to-peer lending model. About $20 million of the new round is from Bethesda, Md.-based firm Rotunda Capital Partners. Previously, StreetShares had raised $8.3 million between three rounds.

    United Kingdom

    Aviva executive backs robo-advisers in call for financial advice shake-up (New World News), Rated: AAA

    An Aviva executive has backed the rise of robo-advisers and called for a shake-up of financial advice to help open up the industry to the mass market.

    Andy Briggs, chief executive of Aviva UK Insurance, said the current regime is freezing out large swathes of the population because only the upper echelons can afford the hefty fees.

    Mr Briggs said robo-advisers could also be more powerful and beneficial to customers if the artificial intelligence did not have to carry out full financial assessments.

    Treasury begins SME finance inquiry (Bridging&Commercial), Rated: A

    The Treasury committee has launched an inquiry into SME finance to look at the state of the market and the lessons to be learned from RBS’s Global Restructuring Group (GRG).
    The Treasury’s inquiry will look at the extent of competition in the market, the various sources of funding available to SMEs – including P2P lending and crowdfunding – and whether the current regulatory framework provides enough protection to SMEs when they borrow money.

    The committee will also consider the regulation of SME lending and whether banks should be bound by a broader set of duties when dealing with SMEs.

    The pros and cons of each of the six types of ISA on the market (Your Money), Rated: A

    6) Innovative Finance ISA

    An Innovative Finance ISA (IFISA) is a peer-to-peer lending or crowdfunding product. In some instances, you can generate returns of around 8 – 9% by lending to private borrowers or by taking stakes in ‘crowdfunded’ investments. The IFISA is also subject to the same £20,000 annual ISA allowance so you can split your money between this ISA, as well as cash and stocks and shares.

    While this is regulated by the FCA, peer-to-peer lending is not covered by the FSCS meaning your capital is at risk.

    Things can only get better, says Christie & Co (The Caterer), Rated: B

    Easily available debt from banks, financial institutions, peer-to-peer lending and even crowdfunding, together with forecasts of revpar growth of 2.4% in London and 2.3% in the regions, will help drive investments. Strong leisure business enjoyed by hotels last year – up 20% – is expected to continue to grow, depending on a continued weak pound.

    Sainsbury’s and British Land chairmen join late payments start-up (Financial Times), Rated: B

    A UK start-up that is aiming to end the culture of late payment that plagues British business has recruited two FTSE 100 chairmen as investors and advisers.

    David Tyler, chairman of supermarket chain J Sainsbury, and John Gildersleeve, chairman of property group British Land, have joined the advisory board of Previse.

    The London-based business pays supplier invoices instantly and collects the money from customers later. By analysing years of payment data it uses artificial intelligence to calculate the likelihood it can collect from the big customer. It has pilots running with two large corporations and is in talks with dozens more, Mr Gildersleeve told the Financial Times.

    China

    Ping An OneConnect fintech subsidiary raises $ 650 million in financing (Finextra), Rated: A

    OneConnect is the only one-stop FinTech-empowered solutions provider in China. Financing of the three subsidiaries received positive responses, particularly from international institutional investors, including the SoftBank Vision Fund (which invested in Ping An Good Doctor and Ping An Healthcare Technology), International Digital Group (IDG) and SBI Group etc., proving that the capital market fully recognizes Ping An’s technological innovation, the business model for its technology as well as the growth potential and business value of the Group.

    European Union

    Banco BNI Europe Starts to Lend on Multiple P2P Lending Platforms (P2P-Banking), Rated: AAA

    Today Banco BNI Europe announced it will start lending on Fellow Finance.

    ‘Investing via Fellow Finance in consumer and SME loans offers us a great opportunity to easily expand our operations and we are very satisfied with the analytical and professional approach of Fellow Finance in credit intermediation’ echoes Pedro Pinto Coelho, Executive Chairman of Banco BNI Europa.

    U.S. Fintech Stripe Picks Dublin for New Engineering Hub (U.S. News), Rated: AAA

    U.S. payments firm Stripe said on Monday it would place its first engineering center outside its home market in the Irish capital Dublin, attracted by the city’s growing technology workforce and global outlook.

    Robo Advisers Start to Take Hold in Europe (WSJ), Rated: AAA

    Estimates differ, but according to TechFluence, a technology research firm with offices in Frankfurt and London, the European market had assets under management of about $3.5 billion at the end of 2017. That compares with an estimated $200 billion to $250 billion in the U.S., according to Burnmark, a fintech research firm. Estimates of the number of services range from 98 to 126 in Europe, compared with about 200 in the U.S.

    The cost of entry is also much lower: generally €5,000 to €10,000 (about $6,200 to $12,400), versus hundreds of thousands at least for a discretionary service through a bank, says Timo Pfeiffer, head of research and business development at Solactive AG, an index provider that has researched the growth of robo advisers in Europe.

    Popular with banks

    This has led to a number of banking groups preparing robo-adviser offerings, Mr. Mellinghoff says. One example is Comdirect, a subsidiary of Commerzbank , CRZBY -3.17% which launched a robo-advisory platform in May. This service, called Cominvest, had gained assets of more than €200 million as of end of December and is expected to grow rapidly in the coming years, says Sabine Schoon, head of corporate strategy and consulting at Comdirect.

    The European market has also attracted interest from major U.S. providers; BlackRock Inc. BLK -2.98% announced in June 2017 that it was taking a minority stake in Scalable Capital, a robo-adviser specialist that operates mainly in the German and British markets.

    BBVA’s digital push helps drive 20% profit rise (Financial Times), Rated: A

    Spanish bank BBVA’s dash to get customers to buy products digitally rather than in branches helped it report a 20 per cent rise in underlying full-year profits, with results boosted by lower costs as well as higher revenues.

    Top P2P Cryptocurrency Token Etherecash Gets Listed on QRYPTOS, Following Successful Crowdsale (The Daily Telescope), Rated: A

    Top P2P cryptocurrency startup Etherecash has announced that its ECH token will be listed on popular cryptocurrency exchange QRYPTOS on 6th of February 2018, following a successful crowdsale in which the company raised over 40 million USD. This news comes as The Estonian-based lending startup saw a very successful Q4 to 2017 as it gears up for its token distribution in early 2018.

    Crypto-lending ICO Etherecash recorded contributions of over 40 million USD and over 46000 new registrations.

    GN Compass Creating More Liquidity for its Token, GNCT (PR Web), Rated: B

    GN Compass is the first peer-to- peer lending platform for Cryptocurrency-Backed Loans.

    All transactions are verified and distributed on the Ethereum Blockchain. GN Compass is joining an expanding group of pioneering projects integrating the Bancor Protocol to maximize the trading liquidity of GN Compass tokens.

    Mifid tips balance against active funds in favour of ETFs (Financial Times), Rated: B

    New business inflows almost doubled for Europe’s exchange traded fund industry in 2017, in the run-up to the EU’s introduction of rules designed to improve market transparency and strengthen investor protection.

    Net inflows into European-listed ETFs reached a record $108bn last year, up from $55.7bn in 2016, according to ETFGI, a London-based consultancy.

    International

    Disruptive innovation in equity crowdfunding (Deloitte), Rated: AAA

    A 2017 report from Deloitte and the World Economic Forum, “Beyond Fintech: A pragmatic assessment of disruptive potential in financial services,” studies the disruptive forces shaping the future of equity crowdfunding.

    View the infographic here.

    Disruptive innovation in digital banking (Deloitte), Rated: AAA

    A 2017 report from Deloitte and the World Economic Forum, “Beyond Fintech: A pragmatic assessment of disruptive potential in financial services,” examines disruptive innovation in digital banking.

    View the infographic here.

    IdentityMind Global Introduces KYC and Anti-Money Laundering Plug-in for ICOs (Crowdfund Insider), Rated: A

    IdentityMind Global, Digital Identities You Can Trust, an SaaS platform that builds, maintains and analyzes digital identities worldwide, allowing companies to perform identity proofing, risk-based authentication, regulatory identification, and to detect and prevent identity fraud, announced the immediate availability of its KYC Plug-in for ICOs which provides a turnkey solution for customer onboarding functionality and user experience to walk ICO participants through the know your customer (KYC) process to meet regulations worldwide.

    BFB partners with US real estate fintech start-up (Trade Arabia), Rate: A

    Bahrain FinTech Bay (BFB) and the Fintech Consortium (FTC) have announced a strategic partnership with OffrBox, a New York City-based Fintech start-up that has developed an end-to-end real estate transaction platform on which one can buy and sell residential properties online.

    India

    How early-stage startups raise money (Times of India), Rated: A

    The first ’round of funding’ Abhishek Latthe got when he was setting up his wearable device startup SenseGiz in 2013 was from his family and friends. The next year, he set up a crowdfunding page on Kickstarter and raised $47,000. Late in 2014, he took out a bank loan. It was only two years later in 2015, that he could convince Karnataka Semiconductor Venture Capital Fund to back him with Rs 3 crore.

    Banks do not back companies without collateral and since the business model is unproven, other investors too hesitate. So, funding options include getting help from friends and family, crowdfunding, or dipping into one’s savings, but how do founders decide on the path to take?

    Gadkari says peer-to-peer lending and bridge funding, which fulfil a company’s short-term working capital needs, have also become popular. Choosing the best funding option depends on the company’s need. The next step for an entrepreneur is to negotiate the company’s valuation.

    FinTech will revolutionise lending in India, says Faircent CEO (money control), Rated: A

    Lending is one of the oldest professions in the world and is one of the pivotal reasons for the banking system to take shape.

    There is evidence of lending activities dating back to 2,000 BC between merchants, farmers and traders.

    However, up till now, lending as an activity has been largely limited to financial institutes such as banks and Non-banking Financial Companies (NBFCs).

    For instance, lenders on Faircent.com usually avail average gross returns of 18% to 26% per annum. This makes online P2P loans a lucrative alternative investment avenue for them.

    What makes online P2P lending even more lucrative as an asset class for potential investors is the fact that it offers lenders the opportunity to diversify their investments across multiple risk buckets and loan requirements.

    Source: money control

    Everything you need to know as pressure mounts on cryptocurrencies (GK Men), Rated: B

    Sapan Gupta a Practice-Head at Shardul Amarchand Mangaldas said, “capitalising on the blockchain technology could open new ways of securing peer-to-peer lending transactions, boosting trade finance, fintech and information repository sectors”.

    APAC

    After a Successful Crowdsale Campaign, Karma (KRM) Begins Trading With Blockchain (Coin Idol), Rated: AAA

    Decentralized p2p lending platform Karma has just announced trading as well as access to its platform and blockchain solutions. The project has now been backed by Danish fintech startup OpenLedger. Karma’s p2p lending platform can be used on the OpenLedger DEX platform and the Korean exchange CoinLink.

    Why Blockchain’s Growing Pains Could Benefit Underbanked SMBs (PYMNTS), Rated: AAA

    According to a report released earlier this month by EY, 21 percent of people in the world — about 1.6 billion people — are underbanked. More than 200 million micro and SMBs fall into the underbanked category, too, with access to finance the largest hurdle for many of these firms.

    EY pinpointed the APAC region as a particularly wide opportunity for financial services players to address this gap: Bank revenue in this market, researchers said, could reach $88 billion by 2020. If traditional banks don’t step in, alternative financial services firms will.

    “A lot of smaller, private small businesses are under-funded,” Tran noted. “It’s not like here [in the U.S.], where we have an established financial and banking system. If you implement something like a decentralized blockchain, a P2P lending system, that would enable [SMBs] to get funded a lot easier than going through the normal banking system. With blockchain technology, you can put a platform together that is smart contract-based, allowing individual investors to participate in a growing economy. On the other hand, you allow [SMBs] to get funded very quickly.”

    MENA

    Top 20 Fintech Startups In The Middle East (Forbes), Rated: AAA

    1 PayTabs
    Online payment processing solutions

    2 Souqalmal.com
    Financial products comparison site

    4 Beehive
    SME focused peer2peer lending platform

    5 Yallacompare
    Financial products comparison site

    8 liwwa
    Peer-to-peer lending platform

    StartAD launches on February 18 for fintech startups (Arabian Business), Rated: A

    Innovation platform startAD will host a ten-day entrepreneurship programme, Venture Launchpad, at New York University Abu Dhabi (NYUAD), from February 18-27.

    It will see ten fintech startups pitch their business ideas to investors. UAE-based early-stage startups are encouraged to apply by February 12, 2018, the application deadline.

    The programme will equip them with the tools and knowledge to develop a scalable and capital efficient scheme. These include insights into crowdfunding, peer-to-peer lending, blockchain, algorithmic trading, credit scoring, cryptocurrency, payments, insurance tech and money transferrals.

    Latin America

    Brazilian Fintech EBANX Secures $ 30 Million Investment From FTV Capital (Crowdfund Insider), Rated: AAA

    Brazilian fintech EBANX announced on Wednesday it has secured a $30 million investment from FTV Capital.

    EBANX also processes payments for major merchants from 50 different countries, including the U.S. and China. The company reported that just last year it processed $1.2 billion in cross-border transactions and achieved the milestone of helping more than 30 million users from the region gain full access to major international e-commerce merchants.

    Authors:

    George Popescu
    Allen Taylor

    The Israel Alternative Lending Market

    online alternative finance volume Israel

    Alternative lending has had a profound effect on consumer and small business lending around the world. The evolution and success of P2P lending can be gauged from the fact that the market had an exponential growth in 2015, having a value of $26.16 billion. It grew to almost $50 billion in 2016-17. The market is […]

    online alternative finance volume Israel

    Alternative lending has had a profound effect on consumer and small business lending around the world. The evolution and success of P2P lending can be gauged from the fact that the market had an exponential growth in 2015, having a value of $26.16 billion. It grew to almost $50 billion in 2016-17. The market is estimated to be worth $897.85 billion by the year 2024, and by 2025, the value is anticipated to reach $1 trillion. The alt-lending market is predicted to grow at a compound annual growth rate of 48.2% between 2016 and 2024.

    The Middle East and Israel

    In 2015, a total of $158.8 million were raised in the online alternative fund market of Middle East. Equity-based crowdfunding dominated the market followed by reward-based crowdfunding and peer-to-peer business lending. Israel is the market leader as far as regional markets are concerned, which, from 2013-2015, accounted for between 75%-80% of total market activity while UAE, Qatar, Jordan, Lebanon, and Palestine accounted for the remaining activity.

    Source: Cambridge Centre for Alternative Finance

    Israel’s Alternative Lending Market

    The Israeli fintech industry is relatively nascent, but the country has an advantage of human capital across various fields. Given Israel’s innovative and well- managed financial sector, it is the market leader in the Middle East as far as alternative lending is concerned. In 2017, transaction value in the Israeli marketplace lending segment amounts to US$88 million.

    Source: Cambridge Centre for Alternative Finance

    P2P lenders in Israel

    • Blender – Founded by Gal Aviv in 2014, Blender is an online P2P lending platform that provides multi-continental and cross-border lending services in developing, emerging, and western-world countries. It has been established with a view to providing a quick, flexible, and hassle-free credit solution as compared to the expensive loans given by banks and credit card companies. To date, it has raised $5 million in various rounds of funding. As per the company’s claims, within eight months of its launch, it provided loans amounting to NIS10 million (1 NIS=0.29 USD) with an average loan amount of NIS15000 – 20000. The average annual interest rate is 6%.
    • Tarya – Tarya is one of the largest Israeli P2P lending platforms and was started in 2014 by Eyal Elhayany. It has designed a digital platform where people can lend directly to other people, thus avoiding any middleman. The company’s rate of interest for borrowers ranges from 3.5%-8.0% depending upon the borrower’s credit score. Loan origination fees range between 0.9% – 5.5% and depend on both the credit rank and loan term. Lenders pay a fee of 1.0% on returns whereas lenders investing in diversified and micro-financed portfolios averaged between 5%-6% returns after fees. It has raised $2.6 million in funds since its inception.
    • eloan – eloan.co.il is a peer-to-peer lending platform founded in 2012 by Yigal Alkaslasy and Yoram Gavish. It allows private individuals to receive loans of up to NIS 47,500 for a period of up to five years. Each lender is entitled to lend up to NIS 1,000. Almost 84 Million NIS (approx $25 Million) has been financed by an estimated 4000 investors for over 4200 borrowers.

    Regulatory reforms

    Until recently, P2P lending platforms were not governed or supervised by any regulatory body in Israel. Due to no regulatory oversight, these platforms were able to scale their models. But the absence of regulatory supervision always concerns investors about the delinquencies and overall safety of funds on such platforms. This led Knesset, the unicameral national legislature of Israel, to pass laws regulating the activities of P2P platforms.

    The new amendment imposes a licensing obligation on operators of P2P lending platforms and subjects the platforms to supervision by the Supervisor of Regulated Financial Services. The P2P lending segment will also be divided into two licensing categories: A basic license for a limited volume of activity, and an expanded license for a material volume of activity.

    Within the scope of the law, and in order to also enable small businesses to obtain loans being offered via P2P lending platforms, the Securities Law was also amended so that companies can seek and obtain a loan of up to NIS 1 million through P2P platforms provided they are not deemed reporting corporations.

    A platform licensee constitutes an operating entity that must perform particular actions vis-à-vis borrowers and for the lenders in the system, such as debt collection. With the objectives of ensuring proper management and protection of the lenders’ funds being transferred, the amendment clarifies that a licensee will be required to manage a trust account for the funds of lenders and borrowers being transferred to it. A platform licensee will be allowed to charge commissions from both lenders and borrowers for the service it is providing, out of the funds being managed in the trust account.

    The Supervisor is authorized to issue various instructions to platforms relating to their ability to offer loans, considering the potential conflict of interests that might arise between the licensee and the lenders. The Supervisor is also authorized to prescribe rules in relation to various operational concerns.

    With the objective of providing optimal environmental conditions for growth to P2P lending platforms, the banks and the credit companies owned by them are prohibited from entering the P2P lending segment for three years after the inception date of the law.

    Conclusion

    Although the Israeli alternative lending market is in its nascent stage, the country’s tradition of investing in and fostering innovation and technology will certainly make it an important market in the region. The new laws help in pushing the $318 billion dollar economy in to the future of lending.

    Read more about the alternative finance market in Africa and the Middle East, including Israel, here.

    Author:

    Written by Heena Dhir.

    Using Prepaid Cards to Pay for Telecom Services in MENA

    prepaid financial services MENA

    NymGo is a telecom company in the Middle East/North Africa (MENA) region that allows users to make phone calls to landlines and mobile phones to anywhere in the world using Voice Over Internet Protocol (VoIP) technology. To further the company goal of making telecom more accessible to more people in the region, they’ve introduced the […]

    prepaid financial services MENA

    NymGo is a telecom company in the Middle East/North Africa (MENA) region that allows users to make phone calls to landlines and mobile phones to anywhere in the world using Voice Over Internet Protocol (VoIP) technology. To further the company goal of making telecom more accessible to more people in the region, they’ve introduced the NymCard, an online payment card to help facilitate telecom transactions.

    NymGo to NymCard

    Founded in Beirut, Lebanon in 2009, NymGo built itself into the largest VoIP provider in the MENA region. Despite gaining more than three million customers in the region, growth was hampered because customers had problems downloading the app and signing up. They would drop off when having to deal with online payments because, as the company dealt largely with the underbanked who didn’t have a credit card or a way to make payments online.

    The company first began to solve this problem by building a network of agents who serve as a physical place where these customers can use cash to pay for services, an idea that evolved when the company had grown to hundreds of thousands of customers in the MENA region.

    NymCard was the next step, and the same agents who acted as banks for those customers now issue the cards.

    Essentially, the NymCard is a prepaid Visa to be used in the digital communication world. Customers use the cards to buy games and apps online as well as Facebook ads, The average cost of a transaction is $17 as a majority of them are for low end items like $5 games. On the high end of that spectrum, you have freelancers who are buying Facebook ads, which run about $65 to $70.

    The card can also be used to purchase 3G or 4G, wifi, and banking services at low cost. The first cards started at a $250 prepaid limit then was raised to $500 as users got more comfortable with it and started to use it more. Now that the company has its own service, it is looking at a tiered approach. This will allow them to issue cards starting at $250 and raising limits as high as $2k, $3k, or even as high as $10k.

    The NymCard Today

    For funding, the company recently closed a pre-Series A, in which it raised $3M U.S. A Series A is in the works for next year to help expand in the MENA region. NymCard is also in talks with Visa and MasterCard to apply for licenses around the region for further expansion.

    Where the first generation of the company made money on an interchange fee and the small fees associated with prepaid cards, moving forward with the physical prepaid card, the company will be able to attach a subscriber fee.

    NymGo and NymCard Founder and CEO Omar Onsi tells us that by having everything in house and cloud-based the company can scale quickly, which, of course, will help them capture as much of the accessible market as possible.

    NymCard Tomorrow

    Onsi and his team aren’t about to be satisfied with just that, however; they have plans to add more services to the product. He tells us that “very soon” they will have a “pay later card,” which will allow them to extend credit to users, underwrite them quickly, and send them by virtual card.

    The company also plans to make great efforts to reach the underbanked in different parts of the world, but points out that every region has its challenges. What might work in the Middle East might not be as well-received in Africa, and vice-versa. As the company does its due diligence toward this expansion, Onsi tells us there is much happening to reach the underbanked in their home region of the Middle East.

    Onsi sees banks with prepaid services as the only real competition for NymCard, but reminds us that typical banks offer nothing digital, and the ones that do tend to struggle with it. “We have a lot of potential to corner the market. We understand digital very well, and we know how to develop the products. We can have a new release two or three times a week, and banks can’t keep up; they struggle to update their websites,” he said.

    The company works with “a bunch of different customer profiles,” but the biggest is easily the underbanked, Onsi says, telling of someone who gets on his pay card but has no further access to online credit.

    Coming from the telecom world, Onsi knows that smartphones are one of the only ways to get the population into online banking services. He reminds us that the telecom world started to grow rapidly when they did prepaid lines and that 70% of the subscribers are on a prepaid plan. He says that it so follows that prepaid cards for financial services will help the underbanked to get up to speed with the economy.

    Are there hurdles to overcome? Of course, and one of the biggest is regulation. Onsi says that, telecom being a highly-regulated industry, this type of venture doesn’t move as quickly as a typical tech startup.

    As part of the regulations, NymCard was accepted into a regulatory sandbox, which helped to develop products and services; these helped the company launch what Onsi calls an “ideal digital experience.” Following the guidelines of the regulation, NymCard was tested to measure success. This, in turn, helped the company to become more regulated. Upon graduation from that sandbox, with a full license, they have that in a partner’s role.

    Conclusion

    If Onsi is correct in stating his company’s biggest hurdles lie in regulation, then you might have to like their chances for success; their competitors will be subject to the same regulations, and if those companies don’t have a man with the foresight and confidence Onsi seems to possess, they might find themselves playing for second place.

    Authors:

    Written with Paul Keenan.

    Allen Taylor

    Friday October 20 2017, Daily News Digest

    Chinese IPOs

    News Comments Today’s main news: Betterment achieves private unicorn status. Venmo available at 2 million retailers. PayPal sees profits rise after targeting mobile payments growth. Finova secures $102.5M in equity, credit facility. Lendy investors see 100M GBP in returns. PayKey raises $10M for Asian expansion. Lendex.io plans ICO. Today’s main analysis: Qudian’s IPO underlines China’s fintech appetite. Mind the GAP in the […]

    Chinese IPOs

    News Comments

    United States

    United Kingdom

    China

    European Union

    Australia/New Zealand

    India

    Asia

    MENA

    Canada

    News Summary

    United States

    Betterment is now valued at $ 1 billion in private market trading (Business Insider), Rated: AAA

    Betterment, a roboadviser with $11 billion under management, is considered a unicorn in the private markets.

    Preferred shares of Betterment are being offered at a price of $11 on EquityZen, an online marketsite for shares of private companies, according to a list of investment opportunities seen by Business Insider. That gives Betterment an implied valuation of over $1 billion.

    EquityZen, a four-year-old New York-based company, provides a platform on which private company investors can sell their shares to accredited investors. It serves 20,000 investors and has secured $6.5 million in funding.

    Venmo users can now pay at over 2 million retailers (Business Insider), Rated: AAA

    PayPal is giving over 2 million retailers in the US the ability to accept Venmo payments, marking the firm’s most aggressive move yet to 

    PayPal tops profit estimates, lifts target on mobile payments growth (Reuters), Rated: AAA

    Sharp growth in mobile payments led PayPal Holdings Inc (PYPL.O) to report a better-than-expected third-quarter profit on Thursday and lift its guidance for earnings through the rest of the year.

    The San Jose, California-based payments company has been working hard in recent years to expand its reach to new customers through partnerships and acquisitions, particularly in mobile payments. Those deals are clearly starting to bear fruit, analysts said.

    PayPal shares were up 3.9 percent at $69.89 in after-hours trading following the results.

    The company’s adjusted profit rose 32 percent during the third quarter to $560 million, or 46 cents per share, beating the average analyst estimate of 43 cents, according to Thomson Reuters I/B/E/S.

    Revenue rose 21.4 percent to $3.24 billion.

    Its mobile payments volume jumped 54 percent during the third quarter compared with the year-ago period, to about $40 billion. Total payments volume rose 31 percent to $114 billion.

    Florida Fintech Finova Financial Secures $ 102.5 Million In Equity & Credit Facility Funding (Crowfund Insider), Rated: AAA

    Florida fintech firm Finova Financial announced on Tuesday it has secured $102.5 million in equity and credit facility funding. The financing was led by CoVenture with participation from existing investors.

    Finova’s current digital products include its Car Equity Line of Credit (CLOC) and Automobile-Secured Prepaid Card. Its services are available in Florida, California, Tennessee, New Mexico, South Carolina, Oregon and Arizona.

    Fundrise Growth eREIT Files to Raise $ 45.7 Million (Crowdfund Insider), Rated: A

    The Fundrise Equity REIT, or Growth eREIT, has filed with the SEC to raise up to $45,730,440 under Reg A+.  The amount includes $11.8 million from a previous offering circular.

    The Growth eREIT most recently paid an 8% dividend.

    The first Growth eREIT sold out at the maximum amount under Reg A+ of $50 million.

    Investors may purchase shares in the eREIT with at a minimum $1000. Under Reg A+, both accredited and non-accredited investors may participate.

    LILY Partners with Affirm to Offer Drone Buyers Pay Over Time Options  (PR Newswire), Rated: A

    Mota Group’s LILY® division today announced a new flexible time-payment option, partnering with Affirm to offer shoppers in the United States the flexibility of buying now and making simple monthly payments for their purchases.

    This new option is in addition to LILY’s existing payment methods of credit and debit cards, Bitcoin, and PayPal, making LILY the only consumer drone company to offer all five methods of payment.

    LILY customers may select Affirm at checkout and view their monthly payments up front before making their purchase. More information and purchasing options are available at www.lily.camera/affirm.

    Clearbanc, Michele Romanow work with Facebook for easy small business financing (Financial Post), Rated: A

    “The number one thing that prevents entrepreneurs from growing big businesses is access to capital,” says tech entrepreneur and CBC Dragon Michele Romanow. She’s looking to change that for e-commerce businesses.

    Today, Romanow’s Clearbanc, which provides revenue-based financing to online businesses, announced a new program with Facebook that will give the social media giant’s five million online merchants across Canada and the U.S. access to up to $500,000 in financing without having to give up any equity or fill out any paperwork or even undergo a credit check.

    Facebook advertisers that have been operating for more than six months and are looking for money to grow, and have positive economics on ad spends — meaning when they buy an ad they are making a positive margin on selling that product — can apply online through Clearbanc’s Chrged program, which provides tools to help businesses scale, and connecting their Facebook Ad Account and payment processor.

    Perspectives from Around the Industry on CFPB’s Small Dollar Rule (Lend Academy), Rated: A

    Sasha Orloff, CEO and Co-Founder of LendUp:

    As a socially-responsible lender on a mission to improve credit access for underserved consumers, LendUp shares the CFPB’s goal of reforming the troubled payday lending market. Since our founding, we’ve been a strong advocate for eliminating the predatory practices that have defined the short-term lending market and are pleased that many of these reforms are included in the rule.

    At a time when more than half of Americans are unable to access traditional banking products, it is critical that we offer consumers as many safe credit options as possible.

    Ken Rees, CEO of Elevate Credit:

    We believe the CFPB got it exactly right with the rule.

    The rule will dramatically change the landscape of non-bank, non-prime lending in this country. In addition to reducing the number of payday lenders and title lenders, the requirements for advanced underwriting and reporting will push most of the mom-and-pop, primarily brick-and-mortar lenders out of existence.  We believe that the growing need for non-prime consumer credit will be filled by more sophisticated technology-enabled online lenders.

    Lisa McGreevy, President & CEO, Online Lenders Alliance (full response here):

    The biggest problem with the rule is the very prescriptive nature for a product that is $500 or less. There is no room for any new products or innovation in this space.

    APR is an irrelevant measure for very short term loans like this. The CFPB quotes that more than 80% of these loans are rolled over for another loan within the month. That is unacceptable.

    CFPB Consumer Advisory Board to meet Nov. 2 (National Law Review), Rated: B

    The CFPB has published a notice in the Federal Register announcing that a meeting of its Consumer Advisory Board will be held in Tampa, Florida on November 2, 2017.

    Presumably, the loan discussion will focus on the CFPB’s final payday loan rule.

    Climb Credit Enters Into $ 130 Million Loan Purchase Agreements (PR Newswire), Rated: A

    Climb Credit, a student lending company that expands access to quality education for the new economy, today announced that it has entered into agreements with investors to purchase $130 million of student loans originated by Climb Credit.

    The transaction will enable Climb Credit to continue expanding its student loan programs beyond its current network of software development, UI/UX design, robotics, welding, nursing, and other skills-based programs in additional high-earning fields. Climb Credit’s focus is to transform the higher education paradigm by providing better access and affordable funding to students to attend schools that consistently demonstrate a strong return on investment (ROI) for their students.

    Roostify Unveils New Decision Builder to Improve Pre-Application Consumer Experience and Drive Leads (PR Newswire), Rated: A

    Roostify, a provider of automated mortgage transaction technology, today announced the upcoming release of Decision Builder, a new tool that will enable lenders to easily provide their prospective applicants with a clear, easily-digestible view of their loan options, based on the lender’s actual product and pricing system. The company will be offering live demonstrations of Decision Builder for the first time at the upcoming MBA Annual Convention.

    The Decision Builder tool can be placed on a lender’s existing website, and features a handful of dropdown questions, such as the desired loan amount, the expected down payment, and the ZIP code of the house to be purchased. With that information, Decision Builder will generate a series of loan options based on the lender’s product and pricing system, showing the consumer what products and rates they would qualify for. Each option is presented in a visual, easy-to-understand interface with clear explanation of the benefit of the loan product – for example, a lower monthly payment or low total interest. From there, the consumer can more easily evaluate which loan product is right for them.

    With accurate, realistic loan information from the lender’s website, the consumer can carefully consider their options on their own time, without the pressure of having to decide within the limited window of an appointment with a loan officer. When they’ve made a decision, the interface includes a convenient option to move forward on their chosen loan with the click of a button.

    How consumer banking leaders are embracing AI (American Banker), Rated: A

    Artificial intelligence is becoming a competitive advantage that will force institutions to incorporate it, according to participants at the BankAI conference this week.

    “People will have to adopt artificial intelligence,” said Brian Pearce, senior vice president of artificial intelligence at Wells Fargo. “It will have to become part of everyone’s set of tools.”

    What banks are doing

    Wells Fargo is piloting several chatbot technologies, though it has yet to suggest a launch date for any of them.

    The bank has a team dedicated to bereavement — they take these phone calls and help executors manage the estates of the newly deceased.

    Bank of America

    Michelle Moore, head of digital banking at Bank of America, shared an update on the virtual assistant it announced a year ago, erica. It’s now in use by 300 employees. Sixty percent of the time, employees choose to interact with erica by voice, though they could also use chat, Moore said.

    Ally Bank

    Ally Bank was one of the first to launch an AI-based virtual assistant two years ago: Ally Assist, which is based on technology from Personetics.

    Most people who commonly interact with Ally Assist are heavier transaction customers, Morais said.

    The bank is also using AI in the back office. For instance, the bank used robotic process automation to streamline an exception process that had required back-office staff to navigate multiple screens and type hundreds of keystrokes. It now takes three clicks.

    BBVA

    Robert Sears, executive vice president and global head of product for new digital businesses at BBVA, said the bank is applying AI in credit decisions and focusing on explainability.

    The Top 10 Most Affordable MBA Programs In The United States (BusinessBecause), Rated: A

    For those studying abroad, organizations like Prodigy Finance—a borderless, peer-to-peer lending platform—provide international, post-graduate loans.

    Student Loan Hero looked at 116 of the top American business schools to identify which programs are most financially affordable, taking into account the average debt of graduates, average starting salaries, and annual tuition fees.

    Rank Business School Average Indebtedness Percentage of graduates with debt Annual tuition and fees Average starting compensation
    1 Lehigh University $0 0 $19,350 $86,667
    2 Oklahoma City University $11,331 9 $16,230 $101,090
    3 University of Texas —​ Dallas $7,132 25 $19,048 $83,000
    4 Missouri University of Science and Technology $11,386 19 $15,402 $66,667
    5 Oklahoma State University (Spears) $18,728 22 $12,121 $70,700
    6 University of Missouri (Trulaske) $20,495 20 $14,599 $64,252
    7 Florida State University $14,379 31 $18,693 $67,308
    8 West Virginia University $18,608 33 $9,450 $58,488
    9 Louisiana State University—​Baton Rouge (Ourso) $17,900 27 $17,800 $62,429
    10 West Texas A&M $18,500 54 $9,600 $93,625

    Jay DesMarteau, head of commercial bank specialty segments at TD Bank, said early-stage businesses will often use their funds for operational necessities such as buying inventory and building products.

    Isaac Rodriguez, CEO of Provident Loan Society, notes that as a not-for-profit collateral lender, most of his organization’s loans are made for short-term expenses such as meeting payroll.

    David Reiling, CEO of Minnesota-based Sunrise Banks, confirmed this trend, noting that many of the bank’s small business customers now use their borrowed capital for technology purchases.

    For example, according to a recent survey from TD Bank, 69 percent of small business owners either believe they do not have a business credit score or believe that business credit scores do not exist.

    Of course, an alternative lender may be a better option if you want an even smaller loan or if you don’t qualify for a traditional bank loan.

    Has Dating Become a Financial Audition? (24/7 Wall St.), Rated: A

    Student loan marketplace and refinancing website LendEDU polled 1,000 Americans to discover their personal finance preferences when it comes to dating.

    The big question, though, was this one: “Would you consider [annual income, student loan debt, or credit card debt] to be a critical factor when deciding to date someone?”

    Just over 30% of respondents said that credit card debt was a critical factor in deciding whom to date, compared with just less than 19% who saw annual income as a critical factor and 12% who saw student loan debt as critical.

    OCC’s Noreika: National Bank Charters Should Be an Option for Fintech Firms (ABA Banking Journal), Rated: B

    Acting Comptroller of the Currency Keith Noreika today reiterated his view that companies providing financial products and services should be subject to the same regulations and examinations as traditional banks, while emphasizing that a path should exist for these companies to apply for a national bank charter.

    Zoinks! 6 Ways Home Buyers Scare Off Sellers (Realtor.com), Rated: B

    So, in case you want to make sure you aren’t doing anything that might send up red flags, here are some things buyers do that scare off sellers.

    For instance, a new, fly-by-night online lender might give some sellers the heebie-jeebies. So make sure to ask your agent (and also the seller’s agent) whether there’s a certain lender they trust.

    Online Lender OppLoans Appoints Data Everywhere Founder Andy Pruitt as New CTO (Crowdfund Insider), Rated: B

    Online lender OppLoans announced on Thursday it has appointed Andy Pruitt to the role of CTO. Pruitt is a hands-on technologist who has helped start and grow three Chicago-area software companies. He isfounder of Data Anywhere, a data management company.

    State rolls out refund program, checks on the way (KFOR), Rated: B

    CashCall refunds are still on the way.

    By the time Wanda took action she had already paid online lender, CashCall, $1800 dollars on an $800 dollar loan and she didn’t even get her loan through CashCall.

    The agreement gives the state one million dollars to distribute to customers.

    United Kingdom

    Lendy has repaid £100m to investors this year (P2P Finance News), Rated: AAA

    LENDY has announced that it has returned £100m to investors over the last year alone, as it celebrates its fifth birthday this week.

    The peer-to-peer property platform said on Thursday that this was a 120 per cent year-on-year increase and that it has now repaid £183m to investors since launch.

    Lendy recently announced the repayment of a £7.92m loan, one of the largest seen in the UK’s P2P sector to date. The facility had been repaid ahead of schedule and delivered annual returns of 12 per cent to investors.

    First Associates Receives FCA Authorization to Service Loans in the United Kingdom (First Associates), Rated: A

    First Associates Loan Servicing announced that they have received Financial Conduct Authority authorization to undertake debt administration and debt collection in the United Kingdom.

    In addition to having a stellar reputation for their loan servicing support and being the only loan servicer in their class to earn Morningstar Credit Ratings’ highest operational assessment ranking1, First Associates also offers lending support solutions to their roster of industry-lending clients including:

    • Capital Markets Support
    • Pre-Funding Support
    • Post-Funding Support

    IFISA investments ‘to take off’ in 2018 (P2P Finance News), Rated: A

    2018 MAY be the year in which the Innovative Finance ISA (IFISA) finally takes off, an industry expert has suggested.

    Neil Faulkner, chief executive and founder of peer-to-peer analysis firm 4th Way, noted that the small platforms that have already launched IFISAs have seen massive boosts to their lending volumes, and suggested that the amount of money in IFISAs “will go up many-fold” when the major platforms have their own accounts on offer.

    Take-up of IFISAs has been relatively slow so far, with HMRC figures suggesting that just £17m was invested across 2,000 accounts in the 2016-17 tax year, though these have been queried by P2P firms.

    Othera ​announces ​new ​contract ​with ​U.K.’s ​Lendhaus (LendIt), Rated: A

    Announced ​at ​Lendit ​in ​London, ​Othera, ​a ​blockchain ​software ​provider ​for ​the ​financial ​services industry ​has ​just ​signed ​to ​their ​proprietary ​blockchain ​platform, ​Lendhaus, ​a ​London- ​based ​loan originator ​providing ​syndicated ​lending ​for ​the ​commercial ​real ​estate ​sector.

    HSBC launches integrated financial offering through Bud and first direct (IBS Intelligence), Rated: A

    HSBC UK has announced a partnership with Bud through first direct to offer an integrated offering  of financial services products and tools across the market.

    This first direct trial kicks off in December and it includes proprietary algorithms – Market+ – to suggest the most suitable financial and non-financial products and services based on individual needs.

    Britain’s fintech BOOMS: Record levels of global investment ploughed into sector (Express), Rated: A

    More than £825million has been pumped into the UK fintech since January – double the amount raised in the same period in 2016 – proving the vote to leave the European Union (EU) has not turned investors off Britain.

    In fact, since the EU referendum vote, UK fintech companies have raised more than £1billion, according to research by London & Partners.

    The capital has been the major winner from investment, receiving around 90 per cent of all venture capital investment.

    London-based firms Funding Circle, Revolut and Receipt Bank each raised tens of millions of pounds of investment this year.

    3 Ways You Can Use Social Media to Get a Business Loan (NetNewsLedger), Rated: B

    There are several online lenders available to offer you loans; they use your social media data to take a decision. Kabbage is the most popular loan landers working online. Kabbage offers the loan to the small businesses and keeps the cash flow in the different businesses. Before giving you the loan, they will ask you to get the access to your social media accounts.

    Mark Arnold – a branding expert advises the credit unions and banks check a business credibility and see how effectively they are grabbing the market through social media. These businesses primarily look at different business especially at LinkedIn pages to determine the loan eligibility.

    Use some crowdfunding websites to raise money for your business-like GoFundMe, Kickstarter, and Indiegogo.Share links to your crowdfunding webpages on your social networks on Twitter and Facebook and motivate people to share on their social networks.

    China

    Qudian’s New York IPO underlines appetite for China’s fintech (Financial Times), Rated: AAA

    Qudian, one of China’s largest online lenders, had a debut to remember on the New York Stock Exchange this week. Its shares closed up 22 per cent, making a multi-millionaire of founder and chief executive Min Luo.

    The company, which raised $900m in the share sale, is the latest to underline investors’ appetite for the collision of lending and technology that has given rise to the Chinese fintech sector. Two days before Qudian’s debut on Wednesday, Chinese peer-to-peer lender Ppdai announced plans to raise $350m in New York, and at least a dozen similar issuers are preparing flotations.

    About 40 per cent of consumers in China make payments online, and 14 per cent have gone on the web to borrow money, according to DBS.

    Qudian’s IPO — the fourth-biggest in the US this year — comes on the heels of Chinese online insurer ZhongAn’s hotly received $1.5bn IPO last month in Hong Kong. ZhongAn’s stock is up 34 per cent from its debut.

    Source: Financial Times

    Wary of online lending, regulators have strictly limited online financial products such as high interest “payday loans” and microloans by capping interest rates at 36 per cent. Last May, new restrictions wiped out scores of P2P lending networks in China, after worries that it was fuelling real estate speculation and subprime lending.

    Source: Financial Times

    A rash of bankruptcies hits Chinese lenders backed by state firms (The Economist), Rated: AAA

    In the past two months at least seven online lenders backed by SOEs have collapsed. It was a business none should have been in, far removed from the industries they were supposed to focus on. The money potentially lost is trivial—roughly 1bn yuan ($150m), compared with government assets worth more than 100trn yuan. Still, these cases highlight how hard it is for the party to stamp its authority on the vast state sector.

    The troubled SOEs include distant subsidiaries of the national nuclear company, an aviation company and a big energy company in Shanxi, a northern province. They had acquired stakes, from as little as 20% up to 100%, in online peer-to-peer (P2P) lending platforms.

    They were “marriages of convenience”, says Joe Zhang, chairman of China Smartpay, a financial-services company.

    Source: The Economist

    Supply chain finance tipped to become US$ 2.27tn market for Chinese internet firms by 2020 (SCMP), Rated: A

    China’s supply chain finance sector is now being tipped to be worth a whopping 15 trillion yuan (US$2.27 trillion) by 2020, and the mainland’s booming internet-based businesses are lining up to grab their own share of it.

    And despite the reverberations from the recent peer-to-peer (P2P) lending crisis, a marriage between information technology and financial services is continuing to play a vital role in transforming Chinese business.

    That 15 trillion yuan figure was calculated by Forward Business, a Shenzhen-based consultancy focusing on studies of IT and other emerging industries, which also suggests mainland banks granted a combined 12.65 trillion yuan in new loans to the budding sector.

    But the grim reality remains, that the larger commercial lenders remain belligerently reluctant to grant small loans to businesses and individuals, who present anything like a risk.

    Established in 2013, Tiandihui is an online platform where cargo and trucks are matched.

    It s network stretches across 50 mainland cities and it handled some 64 billion yuan worth of transactions last year. The company, which charges fees for its matchmaking, has yet to break even.

    European Union

    Israeli fintech startup PayKey raises $ 10 million to expand in Asia (Tech.eu), Rated: AAA

    Israeli fintech startup PayKey has raised $10 million in its Series B round led by MizMaa with participation from SBI Group, Digital Ventures, SixThirty, Fintech71, and The FinLab.

    The new funds will be invested in global expansion, namely in the Asian market. Several of the investors in this round are Asian based while the startup graduated from the Singaporean FinLab accelerator.

    Mind the GAP in the Lending GAP (AltFi), Rated: AAA

    The Lending Gap has been one of the most quoted negative consequences of the financial crisis. Many political efforts have been conducted to stimulate the economy. New business models (e.g., private debt, direct lending, alternative finance, peer to peer) were born with the explicit aim and mission to “fill the gap”.

    Where are we today, 10 years after the crisis?  Are borrowers still suffering? What investment opportunities are out there, if any?

    • FACT #1. The lending gap has been reduced, and the drivers have changed.
    • FACT #2. New alternative lending opportunities have opened up.
    • FACT #3. Banks are in better shape today, but exposed to the digital revolution and various structural challenges.
    Source: AltFi
    • FACT #4. Credit expansion has resumed since YE 2014.

    P2P auto-lending is risking investor ethics and returns (P2P Finance News), Rated: A

    THE MOVE towards auto-lending among some peer-to-peer platforms may limit interest rates and be a stumbling block for investors worried about the type of businesses they lend to, a European automated P2P firm has said.

    Despite being automated itself, Latvia-based Robo.cash has claimed lenders may be missing out on higher interest rates with a passive investment strategy.

    As an example, Funding Circle recently moved from manual to auto-lending,now offering a conservation option at 4.8 per cent or a balanced approach at 7.5 per cent.

    Australia/New Zealand

    Australian marketplace MyDeal.com.au launches fintech loan offering for retailers (Australian Anthill), Rated: AAA

    Online retail marketplace MyDeal.com.au has launched business loan offering MyDeal Marketplace Loans to accelerate the growth of their listed retailers.

    Retailers who list their products through the MyDeal Marketplace can now apply for a business loan of up to $250,000 directly through their supplier management system and in many cases receive the funding in under 24 hours.

    This offering is in partnership with fintech business Prospa, Australia’s leading online lender for small business.

    Robo-Advice Decision Will Improve Kiwis’ Financial Fortunes (Scoop), Rated: A

    “We’ve long seen the potential for technology to deliver better personalised financial advice to Kiwis,” said Ramesh Naran, Senior Manager, Digital and Innovation at Kiwi Wealth. “With this decision by the FMA, we can go through the application process and turn Future You into the powerful, personalised tool we’ve always wanted it to be. It’s already on its way to becoming the platform that’ll set the industry standard.”

    Mr Naran said the FMA’s approach recognises the ability of technology to improve financial understanding and outcomes for New Zealanders.

    India

    What do RBI regulations mean for peer-to-peer industry (Financial Express), Rated: A

    In a much-awaited move, RBI issued guidelines to govern peer-to-peer lending or P2P. This is a landmark decision that will go the distance in achieving the objective of financial inclusion.

    For the time being, RBI has advised NBFC P2Ps not to offer or arrange any credit enhancement or credit guarantee. Against this backdrop, the principal protection fund, which has been an exclusive offering of i2iFunding so far, may need some tweaking. At present, we are neither guaranteeing any compensation from the third-party nor are we making a claim of apportioning our capital for the purpose. Therefore, we will approach the regulator to get more clarity on this and would do our best in the interest of members of the platform. Existing investors need not hit the panic button.

    Why State Bank of India is afraid of small but nimble fintech companies (ET Markets), Rated: B

    More than 24,000 branches and 42 crore customers make the State Bank of IndiaBSE 0.00 % the goliath of all banks by sheer size and physical presence but its new chairman Rajnish Kumar is worried about the competition from nimble fintech companies.

    “Today, the risk is the disruption that is caused by the technology ,“ Rajnish Kumar, chairman, State Bank of India told ET in an interview. “We have to be very alert to this challenge. Protecting the turf and meeting the challenges from all the new fintech companies is the priority .“

    Wallets and other payment mechanisms have become the preferred mode of payments as people walking into branches have dwindled.

    Asia

    Kazakhstan’s Lendex.io plans ICO in early 2018 (Blockchain News), Rated: AAA

    Founded and developed in Kazakhstan, the biggest economy of Central Asia, FinTech startup Lendex has announced plans for ICO crowdsale to finance the launch of a cross-border P2P (peer-to-peer) lending platform for underbanked consumers in Central and South East Asia.

    MENA

    Transitioning to a digital future in the Middle East (TXF News), Rated: AAA

    Global fintech investment has risen phenomenally in recent years – from $3 billion in 2013 to $24.7 billion in 2016.

    Although less than 0.1% of fintech investment originates in the Middle East, growing influence from a soaring millennial population, and increasing expectations for digital solutions, are giving rise to a burgeoning number of fintech initiatives throughout the region. In fact, the number of fintech companies in the Middle East and North Africa (MENA) region is expected to surge – from 105 at the start of 2016 to 250 by 2020. And fintech investment is predicted to grow by 270% in the Middle East this year, indicating the huge potential for digital change –and a strengthening drive to deliver it.

    Payments

    The majority of fintech innovation so far has been in the payments sector. Although fintech has already made a mark in the retail payments space – with new companies such as the UAE’s Beehive, an online marketplace for peer to peer lending, and Telr, an online payment gateway for emerging markets – effecting change in the corporate sector is more challenging. This is primarily due to the often more complex, cross-border nature of corporate payments and the accompanying regulations and security requirements.

    SWIFT gpi already has the backing of over 110 banks across the globe – including BNY Mellon – which represents over 75% of SWIFT’s global payments traffic. The UAE’s Mashreq Bank was the first Middle Eastern bank to join SWIFT gpi earlier this year.

    Trade finance and fintech development

    AI, for instance, offers solutions to improve documentation flow and cut the need for time consuming processes. Two types of AI that could benefit trade finance are optimal character recognition (OCR) and intelligent character recognition (ICR). OCR converts images of paper documents into machine-encoded text, enabling documents used in trade transactions to be verified automatically; while ICR is able to learn and identify patterns of behaviour embedded in trade documentation. These capabilities would both help to improve efficiency and reduce costs in the supply chain.

    Canada

    They launched their Toronto-based venture, MagneTree Books, in the spring of 2015 with the help of a Kickstarter campaign for presales of their inaugural book.

    Neither Josie, who was at the end of a maternity leave, nor Ronny, who worked for a humanitarian aid organization, had much savings to fund their startup or the first run of books, which together rang in at more than $65,000. A bank loan wasn’t an option; neither entrepreneur was in a position to cover the debt if something went awry.

    Online sales have been slow – just 15 per cent of their books are sold on the web. But corporate gifting and wholesaling has proven fertile. Still, the company has yet to break even. Profit on a run of books rings up at about $7,000.

    But they have a big problem: no cash to fund the second book’s production and marketing. Neither sibling is able to personally lend the company money, and they have begun crowdfunding once more.

    Expert advice

    Mr. Zakharia notes that the amount of money the siblings need to fund their second book is relatively small at between $7,000 and $10,000. Still, their inability to make a personal loan or secure a bank loan will make them unattractive to traditional lenders. “Banks are going to be very conservative,” Mr. Zakharia said.

    One option the pair might consider is Lending Loop, a peer-to-peer lending marketplace that might be their fastest route to raising cash. “Because it’s such a small amount, I think it would be pretty easy to raise,” he said.

    Authors:

    George Popescu
    Allen Taylor

    Solving the Student Loan Problem for International Students

    U.S. international students

    The most common and pertinent issue facing an international student looking to study in the United States is securing credit for various needs like tuition, credit card, and buying a car. The stress of settling in a new country coupled with finding the best loan option can be a daunting task. Nomad Credit realized there […]

    U.S. international students

    The most common and pertinent issue facing an international student looking to study in the United States is securing credit for various needs like tuition, credit card, and buying a car. The stress of settling in a new country coupled with finding the best loan option can be a daunting task. Nomad Credit realized there is a void with regards to helping international students and visa holders (H-1B, L1, etc.) find credible lenders, and vice-versa. Nomad Credit’s search engine provides comparable options for the credit seeker to compare and decide the best possible loan option for them. It functions as a pure marketplace.

    International Student Analytics

    The number of international students in the U.S. grew by 7.1% and crossed the 1 million mark in the 2015-16 academic year. China (328,547) is the biggest contributor followed by India (165,918), Saudi Arabia (61,287), South Korea (61,007) and Canada (26,973). In total, there are approximately 5 million international students around the world, and by 2025, the number is expected to reach 8 million.

    Source: NewAmericanEconomy.org

    Economic Benefit of International Students

    Source: NAFSA.org

    As per the latest NAFSA’s analysis, 1,043,839 international students contributed $32.8 billion and supported more than 400,000 jobs in the U.S. economy during the 2015-16 academic year. That means for every seven international students enrolled, three U.S. jobs are created.

    Source: NAFSA.org

    All of the above highlights the definitive impact international students have on the economy of the host nation. But the hurdles these students face in accessing credit is remarkable. Though they are a riskier credit bet as compared to local students, shutting down a multi-billion dollar market is just not feasible.

    Introduction to Nomad’s Specialized Marketplace

    Nomad Credit has its headquarters in Chicago and was launched in 2017. Founder and CEO Brian Hoffman initially launched a plain-vanilla education loan company, following SoFi’s footsteps. But soon the company’s focus changed from refinancing student loans to funding international students. It aims to find the right financial product for international students and/or visa holders currently or planning to live in the U.S. The main visa holders it serves are F1, J1, L1, and H-1B visas.

    Prior to Nomad Credit, Hoffman worked as an analyst at Sagence, a management advisory firm. In the beginning of this year, the company managed to raise $125,000 in angel funding.

    Business/Revenue Model

    The underlying business matrix is similar to already established fintech loan marketplaces like Lending Tree or Credit Karma. Nomad gets paid from partner lending companies for providing leads or customers. Payment structure may vary as it also deals with lenders based out of the United States, but could include a percentage fee, fixed fee per customer, monthly fee, or fee per led. This flexibility in payment options is necessary for serving and partnering with multiple lenders in different parts of the world.

    The company has invested its resources to help find international students find the right combination of lender, insurer, and other financial services depending on their needs. It uses a simple questionnaire focused on the school, degree, original location of the student, and other personal information.

    Partners and Unique Selling Proposition

    The young company has managed to stitch up multiple partnerships with 11 financial partners, 2 insurance companies, and one international payments company. Adding insurance to its list of services was a no-brainer as international students are simultaneously looking at travel, medical, and renter insurance.

    Though there are established players in the overall education and marketplace segment, such as Credible and Lending Tree, what sets Nomad Credit apart from its competitors is its specialization on becoming the one-stop shop for international students. It is the only company that is directly dealing with the U.S. as well as Indian lenders and is in the process of onboarding Chinese lenders. Though there is little competition from traditional lenders in India, well-funded Indian tech startups like BankBazaar are also turning their attention to student loans.

    Nomad Credit’s Ideal Customer

    Though the company is only 4 months old, it has managed to generate a lot of interest among international students while website traffic has been increasing two- or three-fold every month. It uses various marketing tools in India like advertising through partnerships, using paid ads, and blogging, and will be adding a student forum soon.

    Anyone from Asia or African country coming to the United States to get an advanced degree like MBA or M.Eng (Masters in Engineering) is a prospective customer. Lenders prefer students who are studying MBA or M.Eng because those are highly employable and lucrative degrees, and there is lesser chance of default.

    Though the company is based out of the United States, it has consciously decided to serve the entire international student ecosystem and not just students looking to come to the U.S. It has originated a lot of loans for students from India going to Germany or Singapore for higher studies.

    Future Headwinds and Goals

    Sallie Mae funds almost 95% of the U.S. student loan market. This has stifled innovation and made it imperative that Nomad targets markets where government entities are not the biggest players in student loans. Massive markets like India fit the bill; there is a lot of potential as the majority of the market is still untapped. That is the reason why this young startup sees more value in going after Asian countries.

    Once the company is able to establish a firm footing in India, it wants to further expand into China and Nigeria. It aims to form partnerships in more and more countries so that it is able to serve a wider range of the population. Moving forward, it wants to further improve its technology as well its products so that it can cater to people from different cultures with unique needs. Integrating multiple languages into the platform is an important step toward that vision.

    There are roughly 5 million international students today. They have more than doubled since 2000 and represent a hundred billion dollar opportunity for the financial services industry, currently being overlooked due to the fragmented nature of the customer base. Nomad Credit has been able to envisage the power of uniting this global industry on one platform and with funding and proper execution can actually target one of the last few untapped pockets of the alt-lending industry.

    Authors:

    Written by Heena Dhir.

    Allen Taylor

    Wednesday August 23 2017, Daily News Digest

    Delinquency rates

    News Comments Today’s main news: Walmart, Affirm discussing loan offerings to retail customers. Funding Circle has created 80K new jobs. Zopa’s revenue jumped 60% last year. Indonesia fintech investment to hit record high. Today’s main analysis: Consumer debt’s new peak. 3 investments to make before the market collapses. Today’s thought-provoking articles: The rumors of P2P’s demise are greatly exaggerated. Why China […]

    Delinquency rates

    News Comments

    United States

    United Kingdom

    China

    International

    Australia

    Asia

    Middle East

    News Summary

    United States

    Walmart in Talks With Finance Startup Affirm to Offer Loans to Customers (TheStreet), Rated: AAA

    Walmart Stores Inc (WMT) is in talks with financing startup Affirm Inc to use its services to offer installment loans to customers with limited credit histories, the Wall Street Journal reported.

    The upstart is reportedly nearing a deal with Walmart that could have it offering installment loans to Walmart shoppers as early as this fall. The loans would be focused on costlier items such as tires and other purchases over $200, insiders said.

    Consumer Debt Reaches New Peak: Will Losses Follow? (Forbes), Rated: AAA

    This week, the Federal Reserve Bank of New York released its quarterly Household Debt and Credit Report.

    • Total consumer debt reached a record $12.8 trillion. The prior peak was $12.7 trillion in 2008.
    • Since the financial crisis, auto loans and student loans have soared. Auto loans are now at $1.2 trillion, up 70% since the depths of the recession in 2010. Student loans have reached an incredible $1.3 trillion.
    • Total credit card debt has reached $784 billion, the highest level since the fourth quarter of 2009. Credit card delinquencies have also started increasing from historic lows.
    • Mortgage debt is growing again, having reached $8.7 trillion. However, it remains below the 2008 peak of $9.3 trillion.
    Source: Federal Reserve Bank of New York

    Student and auto loan data is worrying. The growth rate of both products has been extraordinary. Credit card growth looks nominal (despite the recent press) compared to the continued surge in student and auto loans.

    Source: Federal Reserve

    These loss rates are driven by poor underwriting in both the student loan and subprime auto markets. But while interest rates on auto loans (especially subprime) are high (and priced for risk), student loan interest rates are typically in the low single digits – not enough to cover the implied loss rate.

    Federal Reserve Bank of New York

    Tech giants like Amazon and Facebook more disruptive to banks than fintech start-ups (CNBC), Rated: A

    Banks are faced with more competitive disruption from tech behemoths than financial technology (fintech) start-ups, according to a report by the World Economic Forum (WEF).

    Drawing on interviews with finance and tech industry experts, the report found that banks were significantly lagging behind tech giants in the development of technologies like cloud computing, artificial intelligence and big data analytics.

    Lenders have instead been turning to tech corporations to provide these functions, the report said. It singled out AmazonGoogle and Facebook as three companies dominating the market in these areas of innovation.

    One example the report referred to was Amazon Web Services, which has lured several financial institutions including Aon, Capital One and Nasdaq to Amazon’s cloud computing business.

    WSJ’s Greg Ip: US needs more Amazon disruption from CNBC.

    RiverNorth: Executing on Providing Income for Investors in Marketplace Lending Loans (Crowdfund Insider), Rated: A

    RiverNorth is out with an encouraging note on its fund that invests in marketplace lending platform loans. As of the end of July 2017, RiverNorth’s portfolio consisted of 10,173 loans, with an average loan size of $10,176. The RiverNorth Marketplace Lending (NASDAQ:RMPLX) is designed to provide a high degree of granularity and diversification, and holds a duration of 1.5 with a weighted average FICO score of 708 on the consumer portion of the portfolio. Consumer loans represent a 76% allocation as of July. The Fund’s “subsidized and unsubsidized SEC” net yield currently stands at 11.02% and 9.27%, respectively.

    Cloud Lending Solutions Releases Software for Leasing and Asset Finance (BusinessWire), Rated: A

    Cloud Lending Solutions, a leader in cloud-based leasing software, announced major advancements to its end-to-end leasing solution, CL Lease™ for Self-Financed Lessors, Externally Funded Leases and Captives. CL Lease™ is designed as a customer-centric, cloud-based lease servicing application enabling lessors to efficiently service equipment leases.

    By automating operations, CL Lease effectively manages and tracks multiple assets in a schedule, and can manage your asset disposition process (repossessions, and returns). Its fully extendible integration platform works with collection agents, repossession agents, equipment resellers, and dealers. CL Lease can automatically apply fees, calculate taxes, and collect payments through ACH and credit cards.

    Recent economic research into the Equipment Lease and Financing industry indicate that equipment and lease software investment is projected to grow by 3.6% in 2017. The investment outlook for most equipment verticals continues to improve with 2017 seeing long-term leasing volume increasing in 10 of 12 leasing verticals, and recent momentum in first-half 2017 has accelerated in 8 of 12 verticals.

    A short list of advancements are:

    • Criteria Based Scorecards – Scorecard evaluations consisting of multiple parties with different legal entity types. Lessors will be able to assign different scorecards to different Legal Entity Type values and evaluate different scorecards for business versus individuals. Scorecard evaluations consisting of multiple parties with different collateral types. In this scenario, financial institutions will be able to assign different scorecards to different collateral type values.
    • Financial Statement Analysis – Enable lessors to be able to spread financials and store electronically, this includes balance sheets, income statements, and cash flow statements, as well as configure calculations and financial ratios to support financial analysis. CL Lease will enable financial institutions to customize financial statements with custom fields and generate financial statement information, such as cash flow, from configurable statement calculations and allow users to input, generate and analyze financial statements spanning multiple reporting periods.
    • Multi Company, Multi Currency – Support for being able to manage multiple companies in the same CL Lease implementation. Highly useful for companies operating in multiple countries or jurisdictions, CL Lease can support local regional specifications and manage leases across geographical country lines.
    • Credit Exposure Support – Enhanced to enable lessors to calculate direct exposure, direct proposed exposure, indirect exposure and indirect proposed exposure calculations for borrowing relationships, as well as get updates on the exposure for all borrowing relationships on a daily basis. CL Lease will also enable users to update exposure calculations on-demand.
    • Feature Updates – Additional updates include: Contract Restructuring, Debt Schedules, Delinquency Management, Asset Tracking, Financing of multiple equipment, Cash Management, Reporting and Dashboards.

    Cloud Lending Solutions Releases Software for Commercial Bank Lenders (BusinessWire), Rated: A

    Cloud Lending Solutions, a leader in cloud-based commercial lending and leasing software, announced upgrades to its end-to-end suite of products for its commercial lending clients using: CL Loan™, CL Lease™, CL Originate™, CL Collections™, and/or CL Marketplace ™ and released a new product in CL Portal™. These advancements to the Cloud Lending solution suite are designed to address fundamental challenges found across Global Banking, Community Banks, Credit Unions, Lending Societies, and Global Financial Institutions.

    A partial listing of feature advancements:

    • Underwriting Scorecards: Enables FIs to define rate cards consisting of configurable pricing and terms and assign them to configurable risk ratings. They can also define their scorecards, consisting of evaluation criteria, scores, and weights, which can be executed for a specific loan opportunity based on configurable criteria. Results of the scorecard evaluation, pricing, and terms can then be automatically applied to the loan or presented to the user for selection.
    • Financial Statement Analysis/Financial Spreading: Enables FIs to configure and generate financial statements, financial ratios for business and individual borrowing entities associated with a loan opportunity. Further, lenders can leverage the resulting financial statement data and analysis during the loan underwriting process and configure the layout and format of each financial statement, as well as the calculations and formulas that derive the financial statement values and the resulting financial ratios.
    • Risk Assessment and Exposure Lenders can configure risk assessment templates, generate risk scores/grades for borrowing relationships, define risk assessment criteria in scorecards and the risk rating thresholds, and evaluate risk assessments for borrowing relationships automatically or on-demand.
    • CL Portal™ A configurable front-end portal that provides a differentiated borrowing experience for consumer, commercial and small business loans for borrowers, investors and stakeholders; integrates product workflows and document management to create a personalized and unique experience for loans ranging from fully automated consumer loans to multi-entity, collaborative commercial loans.
    • Loan Committee and Communications: Providing a completely virtual committee experience where members can view, discuss, and vote on loan opportunities via their computer and communicate lending communications between team members online with an audit trail. Improves meeting efficiency by automatically capturing meeting minutes and enforcing loan presentation time limits.
    • Advanced Loan Origination provides FIs an ability define each of the stages of their loan origination process for each loan product and each mandatory task(s) required at each stage. Easily define loan origination tasks driven by additional criteria such as risk rating or loan amount and automatically assign each task to loan team members based on their role. This ensures an efficient process by enforcing due dates for tasks and ensuring policy compliance by enforcing task completion at the applicable stage of the loan origination process.
    • Relationship Dashboard Provides a 360-degree view of the customer relationship allowing financial institutions to obtain a comprehensive view of the entire borrowing relationship. Users get a real-time view into relationship documents and document exceptions; monitor, and evaluate relationship covenants, view financial accounts and loan opportunities in progress, and assess relationship risk using risk assessment templates and credit exposure calculations. This is provided in addition to customer relationship management functionality provided by Salesforce.

    Importance of digitally transforming credit risk management (Digital Journal), Rated: A

    The analysis suggests that banks urgently need to digitize their credit processes. This comes down to economics since lending continues to be a major source of bank revenue, especially with retail banking. It is the retail banking sector that is facing the greatest threat from new digital services, such as credit lenders. An example of such a lender is Kuliza, which is on-line only and deploys artificial intelligence to assess customer loan requests. A different approach is provided by Fusion Bank which uses ‘crowdlending’ to secure loans. A crowdlending platform brings investors (the crowd) together with borrowers and allows the investors (or lenders) to lend small sums of money directly to hundreds or thousands or borrowers, in anticipated of a return on the loan.

    An example of how a major bank can embrace what is happening in the market is provided by Premium Credit, which is a wholly owned subsidiary of Bank of America. To take on the challenge, Premium Credit worked with specialist technology company Arrk Group to create a digital customer acquisition platform. The success of this, for both bank and customer, was to reduce the time taken to process a loan from weeks to a matter of just minutes.

    Federal Arbitration Rule Will Harm ‘Little Guys’ (CEI.org), Rated: A

    Once again, the Consumer Financial Protection Bureau (CFPB) is putting forth a rule it presents as going after big banks, but will likely have its most devastating effects on small and startup financial institutions.

    Other victims of the rule are likely to be credit unions, community banks, and sharing-economy innovations such as peer-to-peer lending.

    As online commercial lending grows, some banks still prefer face-to-face meetings (Biz Journals), Rated: A

    Many local banks that don’t already offer online commercial loan applications acknowledge that time may come, but for now in-face meetings still offer a lot advantages to potential borrowers.

    Here’s a way for you to get a better handle on debt (MarketWatch), Rated: A

    People tend to consider using borrowed funds in two contexts and depending on which context they’re in, people’s attitudes about what purchases they’re willing to borrow for drastically change.

    Context 1: ‘How to pay’ decisions

    One reason people might incur debt is to take advantage of attractive financing.

    Context 2: ‘Whether to buy’ decisions

    Another far more common reason people may use debt is because they cannot pay for their purchases with other means. Perhaps they are waiting for their next paycheck, or they have designated their savings to other things (expenses, other purchases, investments).

    In a dataset from the Bureau of Labor Statistics that includes spending behavior from 30,242 households, we found that people who spent more on experiencesrather than material goods were also more likely to have greater credit card debt and to have paid more in credit card financing charges. We also saw this pattern in people’s likelihood of taking on a peer-to-peer loan. Using a large dataset from one of the biggest U.S. peer-to-peer lending companies, we found that people were more likely to have peer-to-peer loans for experiential purchases (for example, weddings or vacations) as compared to material purchases (such as swimming pools or motorcycles).

    The average American household spends $12,800 annually on discretionary purchases and has $7,200 in credit-card debt. Indeed, a recent surveyfound that 74% of Americans have borrowed to pay for a vacation.

    American Dream Leadership Series #2: Eric Sager of Online SMB Lender BlueVine (Forbes), Rated: B

    What leader in business do you most admire and try to emulate?

    I’ll focus on folks I’ve actually worked with. Francoise Brougher, Sarah Friar and Gokul Rajaram at Square are three people I learned a lot from, and there are certain things I try hard to emulate from each of them. Then of course there is Jack Dorsey, cofounder of Twitter and Square, who always impressed me with how thoroughly committed he was to the mission of helping small businesses succeed, and how that commitment influenced every decision I saw him make.

    What’s a piece of advice that turned out NOT to be helpful?

    To eliminate weaknesses or development opportunities. The truth, which I learned from both sports and business, is that my value to the team is way more about making the most of my strengths, and that any weaknesses, assuming I’m aware of them, can generally be covered very successfully by others on the team.

    United Kingdom

    Funding Circle has Supported the Creation of 80,000 New Jobs (Crowdfund Insider), Rated: AAA

    Last week, Funding Circle celebrated seven years of operation.

    Today, Funding Circle has helped to provide financing for more than 32,000 small businesses based in the UK, Germany, the Netherlands and the US. Funding Circle reports that 69,000 individuals and institutions are now lending on their platform. The company estimates that their lending service has supported the creation of around 80,000 new jobs (globally).

    Funding Circle is boxing its investors in (The Memo), Rated: A

    The vision was that ordinary people could loan their hard-earned cash directly to others, who could borrow at far cheaper rates than from the bank.

    But today Funding Circle joined Zopa and Ratesetter in abandoning that vision, instead announcing it will stop people from picking and choosing who to lend their money to, instead automatically pooling these investments across borrowers on the platform.

    Some have pointed out that these behaviours and changes now mean that these peer-to-peer platforms are now acting much more like a bank or a fund, becoming middle-men managing the investments they’re facilitating.

    Online lender Zopa’s revenue jumped 60% last year (Business Insider), Rated: AAA

    Peer-to-peer lender Zopa saw revenues leap 60% higher last year as losses narrowed.

    The online lender’s revenue rose from £20.6 million in 2015 to £33.2 million last year, accounts filed with Companies House this week show. At the same time, losses narrowed from £8.8 million to £5.8 million.

    Why Rumours of P2P’s Demise Have Been Exaggerated (Forbes), Rated: AAA

    Are we really saying that an industry that didn’t exist a decade ago is failing because only one in 20 or so Britons have used it over the past 12 months? In fact, that seems like a pretty impressive adoption rate, particularly in an industry such as financial services, where start-ups face all sorts of issues around trust and credibility.

    AltFi Data, one of the most trusted sources of analysis on the alternative finance sector, reckons peer-to-peer lenders have so far made advances of £1bn in the UK this year alone, taking their all-time advances close to £5bn. And those statistics are only for consumer loans; add in business finance and the figures are more like £3bn and £5bn respectively.

    Brexit claims another victim: Britain’s venture capitalists (Politico), Rated: A

    Since the country gave notice it was leaving the European Union in March, a growing list of British venture capital funds has been told they will not receive financial support from the European Investment Fund, an EU agency that provides almost half of the money for the region’s venture capital industry, according to several fund managers who held discussions with the body.

    While little-known outside tech circles, the Luxembourg-based fund remains the largest backer of European venture capital, often providing up to 40 percent of funds’ total investments, equal to billions of euros each year.

    In Britain, for instance, the European Investment Fund forked out €2.3 billion between 2011 and 2015 to support 144 local venture and private equity funds, or roughly one-third of overall investment for the sector, according to the latest figures available from the agency.

    Zopa scales back higher-risk lending due to UK consumer credit outlook (P2P Finance News), Rated: A

    ZOPA has reduced its exposure to higher-risk loans due to the UK’s worsening consumer credit outlook, which has led it to lower its projected returns on some investments.

    The peer-to-peer lender also said that it is expecting slightly higher losses on its existing loans and an increase in early repayments from borrowers.

    Subprime lender Provident Financial is in crisis (Business Insider), Rated: A

    Shares in Provident Financial, a UK-based door-to-door lender, lost more than 74% of their value on Tuesday after the company cut its dividend, issued a profit warning, announced the resignation of its CEO, and announced the regulator is investigating part of its business.

    Bradford-based subprime lender Provident warned investors it expects to make a loss of between £80 million and £120 million. Provident told investors in June to expect a reduction in profit of £60 million — but still a profit.

    Debt collection rates plummeted from 90% in 2016 to 57% after the company changed from using self-employed agents to full-time “customer experience managers.” Customers are also borrowing £9 million a week less.

    Interview with Terry Fisher, Founder at Huddle Capital (P2P-Banking), Rated: A

    In an already crowded space, Huddle is differentiating itself by it high quality origination and a focus on educating its lenders to help them make better decisions.

    What are the three main advantages for investors?

    The main advantage for lenders on Huddle is that we are owned and managed by Access Commercial Finance which is an FCA regulated, balance sheet lender. Our belief is that most fintech businesses in the marketplace are too much ‘tech’ and not enough ‘fin’ so we are looking to correct that balance on Huddle.

    What are the three main advantages for borrowers?

    The main advantage to borrowers is getting speedy access to funding for strong business cases that have been unable to achieve satisfactory funding elsewhere.

    What ROI can investors expect?

    Currently we have loans that pay lenders from 8% to 16% per annum, depending on their risk appetite.

    What were the main challenges launching your platform in a competitive (crowded?) market?

    Once your tech works there are only 2 real challenges in this business – attracting lenders and finding borrowers. Fortunately we have got plenty of borrowers both existing and in the pipeline – so our challenge is getting out there in front of more lenders so they can learn about our platform and the benefits of lending through Huddle.

    Which marketing channels do you use to attract investors and borrowers?

    We are marketing to investors through the usual channels of PPC & SEO, but the primary channel we use is content led marketing, providing educational led content, empowering potential lenders to understand the lending business better and be in a position to make informed lending decision.

    Peer-to-peer lending websites struggle (to attract borrowers (Financial Times), Rated: A

    Peer-to-peer lending websites are struggling to attract UK customers who want to borrow money, despite hundreds of millions of pounds of investment in the sector.

    Just 7 per cent of 1,100 people said they had used this sort of service to borrow in 2017, according to a survey by consultancy EY. Separate research from Blumberg Capital, a venture capital group, reported only 4 per cent of 1,050 British adults had used alternative lending services in the past 12 months.

    How banks could look into YOUR account to decide if they will give you a mortgage (Express.co.uk), Rated: A

    MORTGAGE loans and another types of lending are set to get tougher than ever thanks to a new way banks will measure who is a good candidate – by looking directly into into a bank account to check up on spending.

    Alastair Douglas, CEO of TotallyMoney.com, told Express.co.uk he expected the development to become the norm “within one or two years”.

    Fintech trade body chief steps down (Financial News), Rated: B

    The chief executive of the UK’s fintech trade body is stepping down next week after two and a half years in the role, with a former senior Nasdaq executive standing in until a permanent successor is found.

    Innovate Finance, a not-for-profit association founded in 2014 to represent the UK’s global fintech community, said in a statement today that Lawrence Wintermeyer will step down at the end of the month.

    Former Lloyds boss Eric Daniels sues to claim unpaid bonuses (Financial Times), Rated: B

    Eric Daniels, who ran Lloyds Banking Group when it was rescued by UK taxpayers, is suing the lender with a former colleague to claim £1m of unpaid bonuses linked to its HBOS acquisition, according to a person briefed on the lawsuit.

    The former Lloyds chief executive, who left in 2011, filed a claim this month with London’s High Court along with a separate claim filed by Truett Tate, the lender’s former head of wholesale banking.

    China

    China: Number One Fintech Country In The World? (Coin Telegraph), Rated: AAA

    China has not only caught up, but rather leapfrogged major cities such as New York, Silicon Valley and London. Many people are even claimingthat clusters of cities such as the Pearl River Delta in China are becoming the “new Silicon Valley.”

    Due to China’s relatively new capital market structure, a lot of legacy systems in place in Western countries just aren’t present yet in China.  On top of that, the major Chinese banks are all state-owned (ICBC, ABC, CCB and BOC). They’ve made a living off lending to other large state owned enterprises (SOEs), which has left a large section of the population, in particular small and medium sized enterprises (SMEs) without the proper access to loans and credit.

    Source: Coin Telegraph

    China has well over 700 mln Internet users, or more than double the entire population of the US.  Combined with a propensity to use smartphones and mobile payments thanks to WeChat and Alipay, Chinese consumers have spectacular adoption rates of Fintech applications in comparison to other nations. For example, 40 percent of consumers in China use non-traditional payment methods such as Alipay, compared to just four percent in Singapore.

    Source: Coin Telegraph

    With major e-commerce platforms such as Alibaba’s Taoball and Tmall, and JD.com, there has been a need for quick and easy e-payments, which can be done using Fintech applications such as Alipay. Not only has this created opportunities within the payments vertical of Fintech, but also within lending, insurance, investment and wealth management.

    Nation sees highest uptake of fintech (China Daily), Rated: A

    China ranks top among 20 world markets in terms of fintech adoption, with 69 percent of surveyed consumer respondents saying they are actively using fintech services, 33 percentage points higher than the global average.

    China ranks top among 20 world markets in terms of fintech adoption, with 69 percent of surveyed consumer respondents saying they are actively using fintech services, 33 percentage points higher than the global average.

    Around 64 percent of fintech users said they prefer using digital channels to manage “all aspects of their life”. And 13 percent of polled consumers said they are regular users of five or even more fintech services, which include money transfer and fintech, wealth planning, deposit and investment, borrowing and insurance.

    China’s first independent network bank gets authorized from CBRC (Xing Ping She), Rated: A

    On 21st August, Baixin Bank, the first independent network bank in China, announced that they had been authorized by CBRC (China Banking Regulatory Commission).

    According to public information, BaIxin Bank was jointly incorporated by China Citic Bank (shareholding ratio: 70%) and Fujian Baidu Borui Network Technology co. LTD (shareholding ratio: 30%). It takes more than one year for Baixin Bank to get the opening approval since Citic Bank’s Board Meeting passed the Bill on Establishment of a Pure Network Banking Company on November 17, 2015.

    Li Qingping, the President of Citic Bank, previously said that the two parent companies would not interfere the marketing operation of Baixin Bank. It will provide a platform of banking for common people, enable them to conveniently enjoy finance service. Meanwhile, the bank will take advantages of both Citi Bank’s risk control capacity and Baidu’s innovative technologies like AI, big data and cloud computing, so as to meet the personalized financial needs of customers.

    Credit Quality of Internet Companies Susceptible to Finance Business Actions (Financail Buzz), Rated: A

    Moody’s Investor Services has opined that the credit quality of Internet companies could be weakened by Chinese technology companies pushing their way into orthodox businesses like finance and banking.

    Lina Choi, senior credit officer, and the vice-president of Moody’s said that Internet companies can suffer from potential capital calls and contingent liabilities as a result of loans made to merchants and consumers. The scenario is also affected by wealth management distribution. Incidentally, these are the two main services offered by these online companies.

    The first shareholders meeting held today: 13 directors 7 supervisors list of candidates surfaced (EEO.com.cn), Rated: B

    Economic Observer learned that on August 22, the first shareholders meeting of Internet Clearing Co., Ltd. will be held in Beijing, after the meeting, the list of directors and supervisors will be officially released.

    Compared to the financier, Jingdong Finance, quick money, one wallet of several directors of the rise, the Alipay director of the candidate Wang Zuojiang for the director level.

    Tencent nominated director of the candidates Lai Zhiming in the technical and financial aspects have a very strong background.

    Ping An paid the nomination of directors Candidate Zhu Yinjia is the only product of all the nominated directors of the professional background of professional payment.

    International

    3 Investments You Must Make Before Market Collapses (Newsmax), Rated: AAA

    Exactly a year ago, in the wake of Brexit, the US 10-Year Treasury rate fell to an all-time low of 1.36%. At that point, bond yields—which move inversely to their price—had been declining for eight years with no end in sight.

    Then Trump won the US election; another unexpected twist. An uptick in inflation and a series of rate hikes followed shortly afterward, and the 10-year yield has risen 67% from its lows.

    • Europe

    Just a year ago, Europe looked like the last place you’d want to put your money in.

    While everyone was applauding the uptick in US growth after the election, Europe recorded higher growth in 2016.

    Despite improving fundamentals and strong performance, EU stocks remain relatively undervalued. For example, the Shiller P/E ratio is 55% lower for EU stocks than for their US counterparts.

    Source: Newsmax
    • Peer-to-Peer Lending

    P2P investors are currently averaging 7.3% returns on 36-month loans. Even those who took the most conservative approach saw returns of 5%.

    The likes of Goldman Sachs and Morgan Stanley now account for over 70% of new capital.

    Source: Newsmax

    Fiserv Acquires Dovetail Group To Reinvent Payments Infrastructure Worldwide (PYMNTS), Rated: B

    Fiserv, a financial services technology solutions provider, announced the acquisition of Dovetail Group Limited to further enable it to help financial institutions around the world transform their payments infrastructure. The new capabilities would be used to meet the evolving needs of wholesale, commercial and retail customers.

    Australia

    Amazon a bigger threat to banks than fintech: World Economic Forum (Financial Review), Rated: A

    The combination of “open banking” regimes and data migrating to the computer cloud will lure global technology giants to create platforms for distributing financial services, a move that will force incumbent banks to compete head-on to control customer relationships or risk becoming mere suppliers of commoditised financial products.

    That’s a view of the future set out by the World Economic Forum in a 194-page report on fintech disruption, released in New York on Tuesday, that warns traditional bank distribution models and economics “are at risk of being deeply disrupted by the drive towards platform models of banking”.

    It calls out the arrival of internet behemoth Amazon into financial services. Amazon Lending, quietly launched six years ago, offers credit to merchants selling on its platform and uses their sales data to measure risk. It has made loans worth over $US3 billion and is expanding in the US, Britain and Japan, according to a recent report in the Financial Times.

    It also points to Chinese tech giant Tencent’s Webank platform, which allows retail customers to purchase products from multiple competing credit and asset management providers, as a plausible model for financial services distribution in the future.

    Asia

    Indonesia’s fintech investments set to touch record high in 2017 (Deal Street Asia), Rated: AAA

    Investments into Indonesian fintech startups are set to hit a record high in 2017 at the current run rate, according to an analysis by venture intelligence platform CB Insights. It is estimated that there will be a total of about 50 deals this year alone.

    A recent study revealed that 80 per cent of the Indonesian population does not have a formal bank account, with 203 million Indonesians earning less than $4.50 a day.

    In January this year, private lender Bank Central Asia (BCA) launched its VC arm, Central Capital Ventura, committing Rp 200 billion ($15 million) in investments so far.

    In P2P lending, notable deals include Amartha raising $30 million in a round led by MCI in March this year. More recently, UangTeman announced a $12 million Series A round led by K2 Venture Capital with participation from Hong Kong-based STI Financial Group and American firm Draper Associates.

    Moka is one of the best funded merchant payment startups in Indonesia, counting Convergence Ventures, East Ventures, Fenox VC, and Wavemaker Partners among its investors. Other active firms in this area are Pawoon, backed by Ideabox and Kejora Ventures, and Cashlez, backed by MCI and Gan Capital.

    Middle East

    UAE-Based Fintech Start-Up Secures $ 700K Investment to Advance Financial Services Access for Underserved Migrant Workers (Fox34), Rated: AAA

    NOW Money has secured an investment of $700,000 from two U.S.-based venture capital investors – Accion Venture Lab, the seed-stage investment initiative of financial inclusion leader Accion, and Newid Capital.

    The investment comes a year after NOW Money’s initial seed funding, which allowed the company to expand the team and develop the technology and brand. With the latest investment, also a part of its seed round, the team plans to launch the service across the United Arab Emirates and expand into the other Gulf Cooperation Council (GCC) countries.

    Funding squeeze lifts ME non-bank lending (Oman Trubune), Rated: A

    Middle East investment companies are ramping up their lending to businesses, providing a lifeline for small and medium-sized firms struggling to secure finance from banks that tightened credit after a suffering rise in bad loans.

    Industry participants estimate non-bank lenders in the region could provide around $1 billion over the next three to five years, including secured loans, mezzanine debt, preferred shares and convertible loans and bonds.

    Authors:

    George Popescu
    Allen Taylor

    Monday August 14 2017, Daily News Digest

    OnDeck net interest margin

    News Comments Today’s main news: Varo Money applies for a bank charter. This news could blight SoFi for a time. MPOWER Financing launches $100M debt funding round. Zopa updates on IT glitch, disappearing money. JD Finance opens VC fund for early-stage projects.SoftBank invests in Flipkart.Money Forward to IPO in Tokyo. Today’s main analysis: PeerIQ on PayPal, LendingClub, and OnDeck. Today’s […]

    OnDeck net interest margin

    News Comments

    United States

    United Kingdom

    China

    European Union

    International

    India

    APAC

    Middle East

    News Summary

    United States

    Fintech Firm Backed by Warburg Pincus Files for Bank Charter (WSJ), Rated: AAA

    Varo Money Inc., a digital banking startup backed by private-equity firm Warburg Pincus LLC, last week formally applied for a national banking charter and deposit insurance, the company said. The filings aren’t public yet.

    Taking those steps could put Varo—which now partners with banks to provide services for its mobile banking application—on the path to becoming a full-fledged, regulated bank. That means it would take deposits, pay interest, make loans in any state, and issue cards, all through smartphone apps.

    Social Finance Inc., known as SoFi, is seeking to become a Utah industrial bank. A group of Silicon Valley venture-capital firms recently bought stakes in a New Jersey bank, CRB Group Inc., that partners with fintech software firms.

    Varo is going a step further, seeking a national banking charter from the Office of the Comptroller of the Currency, as well as the ability to take deposits from the Federal Deposit Insurance Corp.

    Another Silicon Valley Start-Up Faces Sexual Harassment Claims (The New York Times), Rated: AAA

    Social Finance, a hot financial start-up, is the latest prominent Silicon Valley company to face accusations that it turned a blind eye to sexual harassment.

    The former employee who filed the suit, Brandon Charles, worked at SoFi for only a few months this year. But the lawyer handling the case, Robert Ottinger, said that he expected to file another lawsuit next week claiming broader mistreatment of other SoFi employees and seek class-action status.

    A spokesman for SoFi, Jim Prosser, said that the claims by Mr. Charles were “investigated in depth by the company and found to have no merit. We will vigorously defend ourselves against any claims otherwise.”

    PayPal acquires Swift; Lending Club and OnDeck Q2 Earnings (PeerIQ), Rated: AAA

    PayPal acquired Swift Capital, a provider of working capital to small business owners. PayPal cited Swift’s talent and capabilities as rationale for the transaction, as well as a desire to strengthen PayPal’s overall merchant value proposition. We note that PayPal invested in LendUp just a few weeks ago. The payment processor appears keen on bulking up its lending footprint to compete with rivals Square, Affirm, and Amazon Lending.

    On Thursday, it was announced that KKR agreed to buy Australian non-bank lender Pepper Group for $518 Mn. Vyze, which offers a tech solution for point-of-sale financing, announced a $13 Mn investment led by Austin Ventures. Lastly, Coinbase, the cryptocurrency brokerage and exchange, has raised $100 Mn at a $1.5 Bn valuation.

    Lending Club Beats Estimates

    After a rough 2016, Lending Club has regained investor confidence with net revenue and originations at their highest levels since Q1 2016. As of Friday’s close, Lending Club’s share price was at $5.90, up 20% from its recent low of $4.92. A key success in Lending Club exceeding expectations was the CLUB securitization which netted $3.7 Mn–a key driver of Lending Club’s $4.5 Mn in Adjusted EBITDA this past quarter.

    • New revenue stream: Lending Club plans to continue with one securitization per quarter, with expectations of a prime deal in Q3. They plan to contribute approximately $100 Mn in prime loans off the balance sheet for Q3’s deal. 
    • The CLUB securitization netted $3.7 Mn and was highly oversubscribed: Through sponsoring the security, Lending Club earned ~$600k, via a combination of selling servicing rights, pricing above book value, and netting out costs. The other $3.1 Mn came from $4.6 Mn in interest income earned while accumulating near-prime loans, less $1.4 Mn in write downs as principal was paid off.
    • Increased bank participation: Lending Club saw 44% participation from banks in Q2 which decreases its “effective funding cost” and shows confidence in their loans.

    OnDeck

    OnDeck moved to a positive adjusted Net Income ($1.5 Mn) and generated gross revenue of $86.7 Mn (up 25% year-over-year). OnDeck has focused on tightening credit underwriting and cost rationalization; consequently, originations were down for the quarter to $464 Mn (from $590 Mn last year). OnDeck has successfully executed its $45 Mn cost rationalization plan and expects operating expenses of ~$40 Mn for each of the next two quarters.  

    Net Interest Margin and Net Interest Margin after Losses have fallen to their lowest points in recent times. A large contributing factor to this is Net Charge-Offs by quarter which has hit a recent high of 18.5%. We would expect charge-offs to decline in future quarters and NIM to expand due to management actions to tighten credit underwriting and cost rationalization.

    Source: PeerIQ, Bloomberg
    Source: PeerIQ, Bloomberg

    MPOWER Financing Launches $ 100 Million Debt Funding Round (Markets Insider), Rated: AAA

    MPOWER Financing (www.mpowerfinancing.com), an innovative fintech company and provider of educational loans to high-potential, international students, has launched a $100 million debt financing round to meet its growing pipeline of loan applications.

    MPOWER Financing also announced that Mike Davis, the company’s co-founder, has assumed the position of chief investment officer, replacing Alonso Garza, who will become a member of the company’s board of advisors and will serve as consultant for LATAM business and capital development out of Mexico City.

    Initial coin offerings have raised $ 1.2 billion and now surpass early stage VC funding (CNBC), Rated: AAA

    The amount of money raised by cryptocurrency and blockchain start-ups via so-called initial coin offerings (ICOs) has surpassed early stage venture capital (VC) funding for internet companies for the past two months.

    The total amount of money raised via ICOs in April was just under $100 million, but by May this had more than doubled to almost $250 million, according to Coinschedule, a website that tracks such data. In June, ICO funding had hit over $550 million and it was the first month ever that it surpassed angel and seed VC funding.

    Angel and early VC funding in June was just under $300 million, Goldman noted, according to CB Insights data. In July, ICOs were just over $300 million, while angel and early VC funding was just over $200 million.

     

    Fundrise Adds National For Sale Housing eFund to Growing List of Investment Options (Crowdfund Insider), Rated: A

    Fundrise, an online investment platform for real estate, has filed for a National For Sale House eFund. Fundrise has previously announced targeted eFunds dedicated to specific metro markets. Fundrise will be offering up to $50 million in common shares to the public at $10.00 per share. The minimum investment in our common shares for initial purchases is 100 shares, or $1,000 based on the current per share price. The offering circular has all the information you may want to review and this specific eFund is not yet available on the Fundrise real estate investing platform.

    Fundrise National For-Sale Housing eFund, LLC was formed to acquire property for the development of for-sale housing in metro areas other than Los Angeles and Washington, DC – where Fundrise currently has targeted eFunds.

    LendingClub CIO: Delinquencies Decline as Marketplace Lending Model Continues to Improve (Crowdfund Insider), Rated: A

    The executive explains that part of the power of the marketplace lending model is the iterative nature of the loan making process. Over time, data generated from lending provides a Kaizen like process of continuous improvement. This allows LendingClub to anticipate and adapt faster on behalf of both borrowers and lenders.

    Projected investor returns are also largely unchanged from the first quarter ranging from approximately 4% to 9%.

    Source: Crowdfund Insider

    RealtyMogul Update: Over $ 290 Million has Been Invested via the Real Estate Crowdfunding Platform (Crowdfund Insider), Rated: A

    RealtyMogul has now raised over $290 million online from over 135,000 investors.  RealtyMogul has returned more than $65 million to investors with zero principle lost, according to management. RealtyMogul also operates a 1031 exchange that allows current investors in real estate to defer capital gains tax on the sale of a property if they reinvest the proceeds in another qualifying property.

    Jilliene Helman: The are currently 11 investments in MogulREIT I, which recently declared its twelfth consecutive month of 8% annualized returns on investment.

    Jilliene Helman: With increasing demand for housing across the country, we see a huge opportunity in the multifamily marketplace. As millennials and Gen Z enter the workforce, they are of prime age and income for renting, and their preference to maintain a flexible lifestyle supports renting instead of buying a home.

    Opportunities exist in many geographies around the country, and while the underwriting process is very complicated, some factors we look for are favorable business climates, an upward trending influx of young people and strong job growth in key industries. Markets that meet these criteria include Atlanta, Dallas, Nashville, Raleigh and Salt Lake City.

    Application fraud continues to escalate, causing more and more companies to seek biometric solutions (PR Newswire), Rated: A

    LexisNexis® Risk Solutions, a part of RELX Group, and BioCatch, the behavioral biometrics industry leader, announced today that they are working together to help companies in all industries bolster efforts to stymie fraud scenarios, like application fraud, a rapidly-growing issue. According to the LexisNexis Risk Solutions card issuer fraud study, application and account takeover fraud represents 40 percent of total fraud losses.

    As a result of this new relationship, companies will receive additional risk scores through the LexisNexis® Risk Defense Platform that expand on the data typically provided by the customer (which can be compromised) by analyzing how the user behaves (which is innate). During the application process, this solution monitors behavior and is able to discern between a real user and an impostor. This approach is achieved by recognizing normal user behavior and fraudster behavior, which includes Application Fluency, how well a user knows the site; Navigational Fluency, how well a user knows various computer functions, and Data Familiarity, how well a user knows the information they are entering.

    Integrating behavioral biometrics to detect criminal behavior has proven to be very successful and has already prevented major financial losses. For example, BioCatch was able to save a major Latin American e-commerce retailer more than $200,000 a month against new account fraud, with nearly $2 million saved in the last Black Friday weekend alone.

    Online lender expanding into Utah, plans to hire 500 in 5 years (KSL.com), Rated: A

    In a move announced Thursday, San Francisco-based financial-tech company Earnest will expand into Utah, with plans to spend $5.6 million on a new office and hire 500 employees over the next five years.

    Marketplace lending sobering needs more time. (The Financial Revolutionist), Rated: A

    The fact that OnDeck and Lending Club posted upbeat Q2 earnings this past week is a constructive step. But in the wake of Goldman’s growing Marcus juggernaut, Affirm’s point-of-sale traction, Softbank’s $250-million infusion into Kabbage and ongoing rescue financings courtesy of Asian conglomerates and US credit hedge funds, it’s premature to suggest that the good times are back for the publicly traded former wunderkinds. And for that, we blame the 2014-15 fintech hype machine, which led the consumer and small business marketplace lending sector to achieve skyscraper technology multiples in the first place. Cleaning up after a wild party is never fun, and given the former frenzy of online lending start-ups, it’ll take more than a decent quarter to make things right.

    A road map for reclaiming the digital customer experience (American Banker), Rated: A

    The rapid pace of upheaval in banking and payments today is leading to many innovative non-banking customer experience ecosystems, with banks largely serving a utility function.

    The payments process is increasingly a minor, hidden step in the chain. With ongoing digital innovations, nonbanks could take over more of the payments space, too, as well as other financial services. But more importantly, banks stand to lose the all-important customer engagement layer entirely unless they reinsert themselves into the customer experience.

    Not only can banks easily orchestrate and field transactions across various industries that the customer interacts with, but banks are best-positioned to provide insights that help customers move closer to their overall goal of financial wellness. For example, in addition to offering card-linked retail promotions, banks can help customers control or channel their spending in the context of their financial status and goals.

    Customer experiences pertaining to payments, retail and financial health still operate to a large degree independently of each other. Each interaction in these ecosystems builds on a distinct silo from the customer’s overall financial profile. A fragmented customer experience means that our financial goals are fragmented, our shopping wish lists are fragmented and our planning is fragmented. As a result, customers have unmet needs in terms of maximizing their financial well-being, and must regularly look for reinforcement from external sources to validate the personal finance recommendations of walled-off ecosystems.

    Meet Brittany Laughlin, ‎Partner at Lattice Ventures (Vator.TV), Rated: A

    Brittany Laughlin is a ‎Partner at Lattice Ventures.

    Laughlin served as General Manager at Union Square Ventures, an early stage venture capital firm with $1B+ under management. Some portfolio companies include Etsy, Twitter, SoundCloud, Tumblr, Lending Club, and Kickstarter.

    VatorNews: What is your investment philosophy or methodology?

    Brittany Laughlin: So my perspective, even before staring Lattice, which was over a year ago, was just on how companies can successfully scale and grow.

    The philosophy at Lattice is making sure that the early stage entrepreneurs get the support, the connections, the talent, and the long-term perspective that they need to be successful over a long period of time.

    VN: What do you look for in companies that you put money in? What are the most important qualities?

    BL: In terms of the entrepreneurs, we look for people who have some attachment to the problem. We look for a kind of obsession with the problem because it’s going to be a long road ahead and if they don’t have that passion early on for what they’re solving then it’s really hard to keep them motivated as times get harder as they grow.

    We look for entrepreneurs that are able to build a team, because that’s such a key component: no business grows without a team. If the entrepreneur doesn’t have a certain skill, they can show that there are people around the table that do. We want them to be smart, hardworking, passionate, things that are required in any entrepreneur, but those are things we specifically hone in on and make sure they have.

    VN: These days a seed round is yesterday’s Series A, meaning today a company raises a $3M seed and no one blinks. But 10 years ago, $3M was a Series A. So what are the attributes of a seed round vs a Series A round?

    BL: That’s a question we’ve been asking ourselves too. As seed investors, we’re speaking to our companies about what they need to raise the next round.

    If you’re a SaaS-based business, they’re going to compare your revenue multiples to try to come up with a valuation that way. The rumored metrics for SaaS business, it used to be $100,000 MRR and now that’s creeping to $200,000. I think the reason you’re seeing the larger A rounds is that the businesses have a lot more traction than they did a few years ago so the bar is higher to meet those traction goals, and that’s why the funding reflects that.

    I think sometimes taking on too much money too early creates an artificial hurdle for that company where, if they don’t need it, they’re in a worse place than if they took less money, proved some traction, and then returned to market. They can always raise more if they had good growth versus trying to get a big lump sum at the beginning and then, only when they’re out of runway, really looking hard at where their numbers are or where they’re going. They can sometimes get stuck in between.

    Can Investors Profit From Peer-To-Peer Lending? (Stock Investor), Rated: A

    The question is whether LC could become a buying opportunity for investors anytime soon.

    As a result, P2P lenders are able to provide their services more cheaply than banks and other traditional financial institutions. P2P lenders therefore have the ability to achieve higher returns compared to what might be offered by banks. Borrowers can borrow at reduced interest rates even when a P2P lending company’s fee is included.

    However, P2P lending is not without its risks. There is a greater risk that the borrower defaults on his loan, since the lower interest rates of P2P lending appeal greatly to those who have low credit scores.

    PolicyGenius’ road to traction. (The Financial Revolutionist), Rated: A

    Today, Fitzgerald doesn’t get shown the door so abruptly by investors or major insurance incumbents, now that PolicyGenius has become a significant force in introducing life and other types of insurance to consumers eager to comparison shop. However, the “Kayak for insurance” metaphor that is sometimes attributed to PolicyGenius isn’t welcomed by Fitzgerald. That’s because shopping for insurance can be a complicated process with no hard and fast rules.

    Alternative Investing Platforms Partner with VIA Folio to Gain Access to Investors and Online Brokerage, Clearing and Custody (PR Newswire), Rated: A

    Alternative investing platforms now use VIA Folio’s fully integrated, online offering and brokerage platform to improve investor engagement and access to alternative assets, such as Reg A+ IPOs, Reg D private debt and equity and unlisted REITs.

    The alternative investing platforms working with VIA Folio include:

    • ALTZ Investment Strategies – enables access to alternative equity and debt investments, with offerings for Reg D-accredited investors that include real estate, renewable energy, private equity, Reg A+ IPOs and liquid alternative investment opportunities.
    • BANQ® – an electronic investment banking platform for small cap IPOs, public offerings and Reg A+ offerings and placements. It gives advisors exposure to rapidly growing sectors and new technologies, and provides investors with liquidity through dividends or the public markets.
    • Boustead Securities, LLC – an investment banking firm that executes and advises on IPOs, mergers and acquisitions, capital raises and restructuring assignments in a wide array of industries, geographies and transactions, for a broad client base.
    • Cambria Capital – a technology-driven investment bank that uses its institutional investor relationships, and high-net-worth and retail investor accounts, to raise capital for growth-stage companies throughReg A+ and other types of public and private offerings.

    Marketplace Lending News Roundup – August 12 (Lend Academy), Rated: A

    Lending Startup Earnest Is Working With Barclays to Find Buyer from Bloomberg – It will be very interesting to see who ends up buying online lending platform Earnest.

    LendingClub CEO Sanborn ‘Looking Ahead’ After Scandal from Bloomberg – Emily Chang interviews LendingClub CEO Scott Sanborn to discuss credit card debt, the economic cycle and more.

    Big banks kick small-business lending into high gear from American Banker – Banks have been steadily increasing their approval rates for small business loans.

    What JPMorgan’s latest moves reveal about online lending’s future from American Banker – Good piece by Kevin Wack giving more details of the Chase OnDeck partnership.

    ETHLend preparing for ICO (Bankless Times), Rated: A

    A decentralized peer-to-peer lending application built on top of the Ethereum Network is preparing for its initial coin offering.

    ETHLend uses blockchain technology to provide secure and transparent lending for people across the world, with the goal of eliminating interest rate differences by injecting liquidity into local markets by using blockchain technology to enable secure and transparent lending.

    Best Fintech Reports of 2017 (Crowd Valley), Rated: A

    According to Bloomberg, more than $8 Billion has been raised in Fintech so far in 2017. Also, 5 companies have already joined the “Unicorn” status with values over $1 Billion. We have compiled a list of best Fintech reports for 2017, from some of the leading names in the industry.

    1. Capgemini – The World Fintech Report 2017
    2. PwC – Global Fintech Report 2017
    3. EY – Fintech Adoption Index
    4. KPMG – The Pulse of Fintech Q1 2017 | The Pulse of Fintech Q2 2017
    5. CBInsights – Global Fintech Report Q1 2017 | Global Fintech Report Q2 2017

    Insurtech Reports:

    1. PwC – Global Insurtech Report 2017
    2. Capgemini – Top Ten Trends in Insurance 2017
    3. Accenture – The Rise of Insurtech 

    Payments Reports:

    1. Capgemini – World Payments Report 2017
    2. Nordea – Future of Payments 

    Peer to Peer Roundtables can help your small business grow (The Shreveport Times), Rated: A

    LED’s Peer to Peer Roundtable is a 10-month series of roundtable sessions where 15-18 small business owners meet to share their experiences and learn from one another in a supportive environment. Each roundtable is a problem-solving session that addresses the issues impacting your business right now.

    Applications are currently open for small businesses and we invite your business to apply today.

    Robo advisors look beyond wealth creation to automated personal financial advice (AITopics.org), Rated: B

    In addition to building an investment strategy based upon investment and risk preferences, the next generation of automated financial advisor would need to fully understand customers’ goals and how they prioritise some over others; an emotional dislike of being in debt may see the client seek to pay off cheaper debt and eschew potentially higher yielding investment opportunities, just to get it off their back.

    Introducing… Fintech Insider News (LinkedIn), Rated: B

    We at 11:FS and Fintech Insider have launched Fintech Insider News – a dedicated news and commentary platform for our people to come together and discuss what’s new and interesting in the financial services industry.

    FHA Slips a Little With Millennials (National Mortgage Professional), Rated: B

    Several months ago Ellie Mae started tracking loans made by millennials.  When they started, 36% of millennials chose an FHA loan.  That has dipped to 32% in the latest survey.  Conventional loans are now at 63% for that age group.  When one considers the skimpy loan limits in many areas and the cost of FHA insurance vs. PMI when you have a high score, this is not surprising.

    United Kingdom

    Zopa provides update on ‘disappearing money’ IT glitch (P2P Finance News), Rated: AAA

    OPA has said that it has fixed a technical issue that resulted in a small amount of money seeming to have disappeared from some investors’ accounts.

    The peer-to-peer consumer lender said in a blog post on its website on Friday that the glitch had occurred due to recent changes to how they value loans on the secondary market.

    Update on loan sale pricing (Zopa), Rated: AAA

    One of the ways investors can access their money early is by selling active loans to other investors on the secondary market. When investors sell their loans we work out their value, and compare them to new loans.  If the loans being sold are worth less than new loans, the seller compensates the buyer for the difference, which is reflected in the loan’s price. This happens as part of the loan sale process, which we manage for you.

    Due to a technical issue, some investors may have paid too much when buying or selling loans.

    Positive Lending to join Landbay’s panel of distribution partners (LendIt), Rated: AAA

    Landbay, the specialist buy to let mortgage lender, is today announcing a new partnership with Positive Lending, the latest specialist distributor to join its panel of distribution partners.

    Landbay will help Positive Lending service its professional buy-to-let landlord clients with bespoke mortgage offers, including products for HMOs, Multi Unit Freehold Blocks and expat borrowers.

    The partnership will also give Positive Lending access to Landbay’s online intermediary portal. This includes features such as case tracking and a property portfolio key, which will allow brokers to enter detailed analysis of a landlord’s full portfolio in advance of September’s PRA portfolio landlord changes. Once brokers have completed the online application process, Landbay issues an Offer in Principle within 48 hours and typically completes loans within 21 days.

    Flender looks to raise £2m from institutional friends (P2P Finance News), Rated: A

    SOCIAL lending peer-to-peer platform Flender is planning a funding round to prepare for its launch in the UK.

    The business and consumer lender, which lets borrowers share their fundraising campaigns on social media, is raising £2M in equity funding and looking for more in debt funding.

    Borrowers can create and share a personalised link to their campaigns on social networks, or invite selected individuals to contribute to their loans directly by email.

    Ablrate Receives Rapid Response to Recently Launched IFISA (Crowdfund Insider), Rated: A

    Asset-backed lending platform Ablrate announced it has received a rapid response following the launch of its new flexible IFISA. The online lender revealed the exciting news on Twitter.

    The launch of Ablrate’s flexible IFISA comes less than six months after the online lender received full authorisation from the Financial Conduct Authority (FCA).

    Prior to the IFISA, the company revealed it saw an 850% increase in loan volume within the last year.

    Mandatory bank referral scheme has delivered £4m to small businesses so far (AltFi), Rated: A

    At inception, the mandatory bank referral scheme was terribly exciting. The plan was simple enough. Big banks would direct small business loan applicants which they had rejected to neutral finance platforms, which would then find a more suitable funding solution for the applicant, using matchmaking technology. Those solutions were to come from a whole host of potential providers: from peer-to-peer lenders, to building societies, to challenger banks.

    The scheme took a long time to put together. Announced by government in August 2014, it wasn’t until November last year that the scheme finally went live. Initially there were three designated finance platforms: Funding Options, Funding Xchange and Bizfitech.

    New opportunities in P2P buy-to-let (MoneyWeek), Rated: A

    The big story for the UK’s alternative-finance sector is how many platforms are beginning to look less than “alternative”: Zopa is getting a banking licence, while Funding Circle’s deal with fast-food titan JustEat – to supply lending capital to takeaway food businesses – feels very much like the commercial banking relationships of old. But what has most caught my eye is peer-to-peer (P2P)  property-lender Landbay: more than £30m of its buy-to-let mortgages have been included in a large securitisation of loans with an AAA rating. 

    Digital Micro-Lender Oakam Announces Julie Haugen as Chief Product & Marketing Officer (CCR Magazine), Rated: B

    Oakam, a digital micro-lender for the UK’s unbanked and underbanked consumers, has appointed Julie Haugen to Chief Product & Marketing Officer. Most recently, she was Oakam’s Head of Digital Strategy & Customer Experience, playing an instrumental role in the digital transformation of the business. In her new position, Julie will drive customer-led digital product innovation through closer alignment of Oakam’s marketing and product teams.

    Julie has played a central role in Oakam’s digital growth over the past two years, including the launch of its award-winning mobile app in 2015, and the subsequent rollout of Oakam Grow in 2017.

    Firm advises on significant retail bond issuance by LendInvest (Simmons&Simmons), Rated: B

    International law firm Simmons & Simmons has advised LendInvest Limited on the establishment of a £500m Euro Medium Term Note Programme for its subsidiary LendInvest Secured Income plc, and on the issuance of £50 million 5.25 per cent Notes due 2022.

    China

    Jingdong Finance also do the investment? Grilled a Pa “1000 tree capital” past lives (Huxun), Rated: AAA

    On the Thousand Tree Capital, Jingdong Financial said, Thousand-tree capital investment target for the angel turn round A start-up company, the core idea is the data for the investment decision-making engine to the public ecological and financial technology for the post-support, through investment A small proportion of the shares, not too much in the strategic and operational restrictions and interference with the investment enterprises, and ultimately to be invested with enterprises to grow together to share the long-term growth in China’s consumption of the purpose of the dividend.

    Online lenders limit the withdrawals in the name of rectification, Is that normal? (Xing Ping She), Rated: A

    Recently, there have been a number of online lenders having long-term restrictions on withdrawals in the name of wed site upgrades and the bank depository connection. Many industry insiders said that it is abnormal , and investors need to be vigilant.

    Industry insiders also warned that the centralized release of compliance pressure lead the industry to the “detonation” risk period. If the period of delay in payment is over one week, you should be extremely vigilant about the risk of running.

    51 announced the launch of one billion credit card industry investment funds (epaper), Rated: A

    The new 51 billion credit card industry investment fund, will continue to focus on the Internet financial industry chain data, assets, traffic and other high-quality companies (51 credit card industry investment funds), will continue to focus on the Internet financial industry chain data, assets, traffic and other high-quality companies Expand the layout of ecological investment. As early as the beginning of 2016, 51 credit card has been in the Internet financial industry upstream and downstream layout of a number of projects. As of the press conference, has accumulated 15 investment projects, of which three in the investment projects have been recognized by other capital, access to follow-up financing.

    China preps central clearing house for mobile payments providers (Finextra), Rated: A

    The People’s Bank of China is set to make digital payment firms such as Ant Financial and Tencent use a new central clearing house, a move which will see companies forced to share transaction data with rivals.

    China has become the world’s mobile payments leader, with non-bank providers handling nearly $15 trillion in transactions last year, according to a central bank unit.

    China Sets up Centralized Clearing Platform for Online Payments (Crowdfund Insider), Rated: A

    The People’s Bank of China, the country’s central bank, has required all banks and third-party payment institutions to connect to a unified platform by June 30 of 2018 to ensure effective regulation and transaction security.

    The new platform, dubbed Nets Union Clearing Corp., is aimed at enhancing supervision of the country’s expanding online payment market. The platform was set up by 45 companies, including the PBOC which own a 12% stake in the platform.

    European Union

    German Fintech Startup Acquires Rival as Dealmaking Heats Up (Bloomberg), Rated: AAA

    Deposit Solutions GmbH, a Hamburg-based company that enables consumers to move their savings around a network of 15 European banks to find the best interest rate, today acquired Savedo GmbH, a Berlin startup in the same field. The terms of the deal, which Deposit Solutions announced in a statement, were not disclosed.

    Lenders and other corporations participated in almost a third of the funding rounds for European financial technology startups in the second quarter, a 31 percent jump from the same period in 2016, according to CB Insights, a New York-based research firm.

    In an April report produced by PricewaterhouseCoopers, half the banks surveyed worldwide said they’re planning outright acquisitions of fintech firms. That same month, BNP Paribas SA purchased Compte Nickel, a digital bank in France, for 200 million euros ($236 million).

    EU FINTECH REGULATION, MOBIZ PRESIDENT & OLAMOBILE (Delano), Rated: B

    • The European Banking Authority (EBA) has called for fintech regulation to be harmonised across Europe. A report published on its website from an analysis exercise carried out on 282 fintech operators in 24 member states in spring found 31% of companies reviewed were not subject to any regulatory regime.
    International

    10 MOST DEMANDED SECTORS FOR A FINTECH DEVELOPER (Mobil Unity), Rated: AAA

    In 2015, fintech hit $19 billion in total, and by mid-August 2016 global fintech funding had already reached $15 billion. Later, by September 2016, there were over 1,000 fintech firms worldwide and their value made $867 billion. PaymentGenes predicts that already by 2019, 5 billion people will be making digital payments. Moreover, 72% of the consumers of the financial services already use digital channels to open checking accounts, so banking technology in this case plays a major role. The article on Business Insider outlines that major fintech startups on modern market appear in such areas as investment and financial management, banking payments, currency and exchange, insurance, financing and lending.

    According to PaymentGenes, at the moment the most popular and in-demand fintech sectors are the following:

    • Mobile banking
    • Internet banking
    • Blockchain
    • Insurtech
    • Predictive analytics
    • Crowdfunding
    • Peer-to-peer landing
    • Smart finance management
    • Innovative payments
    • Robo-advisors

    At the same time, Efinancial Careers outlines seven most demanded skills fintech developers should have:

    • Machine learning expertise
    • Target data analysis
    • Domain (industry) expertise
    • Cyber-security
    • Business and sales expertise
    • Blockchain and distributed ledger expertise

    India

    SoftBank Fund Is Said to Invest $ 2.5 Billion in Flipkart (Bloomberg Quint), Rated: AAA

    SoftBank Vision Fund will invest about $2.5 billion in Flipkart Group, swelling the Indian e-commerce players’ cash hoard as it vies with Amazon.com Inc., people familiar familiar with the matter said.

    The investment includes approximately $1.5 billion directly into Flipkart and $1 billion for part of Tiger Global Management’s stake, the people said, asking not to be identified discussing the details. The deal will make the fund created by SoftBank Group Corp. Chairman Masayoshi Son the biggest shareholder of Flipkart, the people said.

    Fintech firm Payworld focuses on insurance, loans for growth (DNA India), Rated: A

    Digital transaction facilitator Payworld is now focusing on insurance and small ticket loan disbursal as next phase of growth story and has tied-up with a few insurers and NBFCs to tap potential customers, a company official said.

    Payworld, a nine-year old fintech firm, provides digital transaction services like mobile recharge, e-payment, railway reservation and remittances facilities.

    It aims to bring about 10 lakh lives under insurance cover in next one year through this tie-up.

    FinTech Impacts Financial Services: Journey of Fintech from Present to the Future (BW Disrupt), Rated: A

    Whether it is the portfolio management process or offering individual financial advice, digital disruption has impacted across every part of the industry. For example, a digital financial services company can now provide investment recommendations while leveraging machine learning to conduct on-going portfolio performance updates sent to customers via a smartphone. The impact of this will be felt increasingly as millennials gives way to even more tech-savvy generations in future for which digital will become the norm.

    Many banks will attempt to remodel themselves as technology companies, ȧ la Goldman Sachs, in an attempt to conduct “capital lite” activities that are more reliant on a technological or intellectual competitive advantage and less impacted by regulatory capital and size of balance sheet. For example, UBS Prime Brokerage claims to have a return on assets twice as a high as some of its competitors by using technology to reduce its costs to serve hedge fund clients.

    As a consequence of FinTech’s impact we will see the emergence of commercially viable digital businesses that have a sustainable economic advantage. They will not need to extract economic rents due to their privileged position as market intermediaries, providers of capital or holders of an asymmetric informational advantage.

    APAC

    Fintech startup Money Forward IPO expected September (Nikkei), Rated: AAA

    Fintech startup Money Forward could go public on the Tokyo Stock Exchange’s Mothers market by September.

    The funds raised from the initial public offering will be spent on boosting sales offices and expanding operations and the company’s market capitalization is expected to be between 10 billion yen to 20 billion yen.

    Philippines’ PBCOM participation in Lendr affirms FINTQ regional ambitions (EnterpriseInnovation.net), Rated: A

    Philippine Bank of Communications (PBCOM) will make available its consumer lending business including home, auto and personal loan products on the Lendr platform following the bank’s signing the agreement with FINTQ in late July 2017.

    By offering these products via a seamless, telco-agnostic digital platform like Lendr, PBCOM is extending the reach of its financial products and offering potential borrowers the convenience of applying for a loan, submitting their requirements, and getting notified about the status of their application all at the tap of their smartphones.

    PBCOM’s 2016 earnings grew on the back of a 28% expansion of its loan book to P44.3 billion, with focus on secured consumer loans as well as bankable large and middle market corporate accounts. It also provided credit worth P9.6 billion to clients in the same period, resulting in an 11.61% increase in net interest income.

    Middle East

    New FinTech Partnership in Abu Dhabi (The National Law Review), Rated: AAA

    On 7 August, Abu Dhabi Global Market (ADGM), the International Financial Centre (IFC) in Abu Dhabi, and the Responsible Finance & Investment Foundation (RFI), a think tank for responsible finance, announced their entry into a partnership to help the growth and sustainability of the FinTech ecosystem through financial inclusion and ethical and responsible finance practices.

    They will highlight emerging FinTech trends and support the development of innovative Shari’ah-compliant FinTech companies seeking to participate in the Middle East and African markets.

    Bahrain woos Indian fintech startups (The Hindu Business Line), Rated: A

    Bahrain plans to set up a Fintech Centre next year to provide accelerators and co-working spaces for fintech companies, Simon Galpin, Managing Director, Bahrain Economic Development Board (EDB) has said.

    The Fintech Centre, which is likely to be opened in February or March 2018, would also provide networking opportunities for both startups and big banks interested in the fintech area, Galpin told BusinessLine.

    Authors:

    George Popescu
    Allen Taylor

    Wednesday July 26 2017, Daily News Digest

    Lending Club loans

    News Comments Today’s main news: Seedinvest cancels Sharestates’ Series A Offering. LendInvest bond issue. How Samoyed Financial is outsmarting Tencent, Alipay. Faircent launches auto-invest. MoneyMatch to replace 5-6 scheme in Philippines. Today’s main analysis: The state of business lending. Fintech lending: Financial inclusion, risk pricing, and alternative information. Today’s thought-provoking articles: How Goldman Sachs is disrupting consumer lending. How FCA consultations will […]

    Lending Club loans

    News Comments

    United States

    United Kingdom

    China

    European Union

    International

    Australia

    India

    Asia

    Middle East

    Canada

    Philippines

    News Summary

    United States

    Seedinvest cancels Sharestates Series A Equities (Anonymous Email), Rated: AAA

    Seedinvest gave the investors this explanation, according to our anonymous source:

    The closing was held up and we subsequently discovered new material information. Sharestates’ offering (i.e. the ability to make new investments) came to a close during Q1 of this year. As we were working through closing operations, we requested a final set of offering documents from Sharestates’ counsel. This request in and of itself took months to be satisfied. While reviewing the red-line version of these updated documents, our counsel discovered that Sharestates had begun distributing quarterly management bonuses using cash they were generating through normal course of operations. As a result, we do not recommend proceeding with an investment. We are also withdrawing our fund’s commitment. 

    How Goldman Sachs Is Disrupting This Trillion Industry (The Motley Fool), Rated: AAA

    It’s been just over nine months since Goldman Sachs (NYSE:GS)launched Marcus, its newly created consumer lending venture, and the platform has been rather successful so far. In fact, the company recently announced that it has surpassed $1 billion in loans already, and it could have much more room to grow.

    It’s been just over nine months since Goldman Sachs (NYSE:GS)launched Marcus, its newly created consumer lending venture, and the platform has been rather successful so far. In fact, the company recently announced that it has surpassed $1 billion in loans already, and it could have much more room to grow.

    In addition, there’s no legacy credit card business to worry about, unlike most banks that also make personal loans.

    According to Talwar, Marcus customers enjoy rates that are 300 to 500 basis points lower than credit card interest rates, and Marcus’ loans come with no origination, prepayment, or late fees — a rarity in consumer lending.

    The State of Business Lending in 2017, According to Small Business Owners (Fundera), Rated: AAA

    The biggest factor that’s presently clouding small business lending is the post-financial crisis surge of alternative small business lenders. Fundera’s VP of Strategy, Brayden McCarthy (along with Karen Mills, former head of the Small Business Administration) identifies in his working paper on small business lending that tighter restrictions on lending were imposed on banks after the 2008 financial crisis. Because of these tighter restrictions, banks had their hands tied when it came to providing loans to small businesses—providing a space within the small business lending market.

    Main Takeaways

    • Small businesses are mainly applying for offensive financing rather than defensive financing.
    • Small businesses are still overwhelmingly going to brick-and-mortar banks to apply for financing.
    • A disconnect exists between small businesses owners and educational resources made specifically for them.

    When you look at the business owners we surveyed, they are, by-and-large, successful. 56% of the businesses surveyed had a revenue of greater than $100,000 a year, and 60% of those surveyed ran businesses that had been in business for five years or more.

    Furthermore, 80.6% of the small business owners reported having a personal credit score of 650 or above, one of the most important parts of the business loan application, and 68% reported having a business credit score of 80 or above.

    One of the more shocking results was that a mere 5.94% of the respondents sought business financing in order to refinance a loan.

    Meanwhile, only 10.89% of respondents said they applied for small business financing with an online lender. 

    That being said, our respondents demonstrated a preference for the experience of applying online. 57.23% applied for a business credit card online directly while another 16% applied online through an affiliate like Creditcards.com, Nerdwallet, or The Points Guy.

    Our poll found that 89.73% of those polled checked their personal credit at least once a year. Meanwhile, within the same sample of small business owners, 58.19% don’t check their business credit score at all.

    Even more, when we asked respondents if they would be interested in a free business credit check, 34.23% said that they were “not at all interested.”

    FINTECH LENDING: FINANCIAL INCLUSION, RISK PRICING, AND ALTERNATIVE INFORMATION (Philadelphia Fed), Rated: AAA

    In this paper, we explore the advantages/disadvantages of loans made by a large fintech lender and similar loans that were originated through traditional banking channels. Specifically, we use account-level data from the Lending Club and Y-14M bank stress test data. We find that Lending Club’s consumer lending activities have penetrated areas that could benefit from additional credit supply, such as areas that lose bank branches and those in highly concentrated banking markets. We also find a high correlation with interest rate spreads, Lending Club rating grades, and loan performance. However, the rating grades have a decreasing correlation with FICO scores and debt-to income ratios, indicating that alternative data is being used and performing well so far. Lending Club borrowers are, on average, more risky than traditional borrowers given the same FICO scores. The use of alternative information sources has allowed some borrowers who would be classified as subprime by traditional criteria to be slotted into “better” loan grades and therefore get lower priced credit. Also, for the same risk of default, consumers pay smaller spreads on loans from the Lending Club than from traditional lending channels.

    Download the white paper here.

    LendingTree Announces Top Customer-Rated Lenders by Loan Product for Q2 2017 (PR Newswire), Rated: A

    LendingTree today released its quarterly list of the top customer-rated lenders on its network based on actual customer reviews for the second quarter of 2017. The list features the top lenders in multiple loan product categories, including Mortgages, Personal Loans, Business Loans and Auto Loans, all of which are included in LendingTree’s online loan marketplace.

    Lender rankings are based on a weighted average of overall rating and the total volume of customer reviews for mortgage, personal, business and auto loans. Lenders were rated on offered rates, fees and closing costs, responsiveness, customer service and overall customer experience.

    Mortgage Category

    #1 Winner: Busey Bank

    Personal Loans Category

    #1 Winner: Avant

    Business Loans Category

    #1 Winner: RapidAdvance

    Auto Loans Category

    #1 Winner: RefiJet

    Mobile banking startup Varo Money has applied for a bank charter (TechCrunch), Rated: A

    But Varo Money, which provides a mobile-first banking product to consumers, is up to that challenge. In an effort to offer similar — but better — checking, savings and lending products to consumers, the company has applied for a national bank charter with the Office of the Comptroller of the Currency.

    To get the company off the ground, Walsh raised $27 million from Warburg Pincus and spent the last two years creating a mobile-first competitor to existing checking accounts.

    Meet the World’s First Robo-Lawyer for Real Estate Investing (PR Newswire), Rated: A

    Bootstrap Legal, a legaltech and fintech startup, today launched software that automates the drafting of complex legal paperwork for those raising capital for real estate projects of $2 Millionand under. For the first time, real estate investors can draft their own legal offering documents using artificial intelligence. The new online service was launched in recognition of the changing marketplace of real estate investing. More and more smaller investors are able to access investment opportunities online. For platforms and issuers originating these offers, a streamlined and low cost service to provide necessary legal documents is vital.

    This first-of-its-kind legaltech product both undercuts the legal fees associated with real estate capital raises and expedites the process. Real estate investors typically have limited time to raise capital for their project, and Bootstrap Legal’s new software allows users to control the legal process, so that they can have extra time to raise capital. Users who require additional assistance are connected to a real estate securities attorney to get questions answered.

    These Bay Area FinTech Companies Are Revolutionizing The Lending Space (Benzinga), Rated: A

    BeSmartee: BeSmartee is an artificial intelligence-powered lending and mortgage platform that originates documents, credit checks, and other financial information in just minutes.

    Capsilon: Capsilon builds technology solutions for the mortgage industry’s most imperative challenges.

    Credit Sesame: Credit Sesame is a fintech company that operates in the fields of education, credit, and personal finance.

    Home Captain: Home Captain is a lending company that pairs clients with a pre-screened realtor in their area with the help of a real estate concierge throughout the way.

    SuperMoney: SuperMoney compares financial products and services to give people the information they need to make better financial decisions.

    CoinList Attempting to Standardize & Self-Regulate ICOs (Crowdfund Insider), Rated: A

    CoinList, founded as a partnership between Angel List and Protocol Labs, is quietly trying to standardize initial coin offerings (ICOs) by self-imposing similar restrictions as the SEC imposes on companies that conduct certain private offerings under Regulation D.

    CoinList, which was founded in part by AngelList, appears ready to launch token offerings on its site that are similar to the offerings available on AngelList’s site; that is, offerings regulated by the SEC under Regulation D. In order to invest in the offerings on CoinList, investors have to be “accredited” which is the same requirement that investors on Angel List have to meet as imposed by Rule 506(c) of Regulation D. However, since the SEC hasn’t come out with any guidance on ICOs and token sales yet, the requirement that investors be accredited on CoinList is one that is self-imposed by CoinList.

    Why This Co-Founder Keeps His Calendars Public to His Employees (Entrepreneur), Rated: A

    From client meetings to doctor appointments to family time, most things Sam Hodges does is public knowledge to his employees. All they have to do is check out his online calendar, which is set to “public” for employees. So why is this co-founder and managing director OK with letting others in on even his private life? Because at Funding Circle, Hodges says he fosters a culture of openness and transparency — in every respect.

    “The first really crucial trait is around vision. As a leader your job is to understand the market, understand the business’ capabilities and then come back to the organization with a view on what you need to do in order to become successful.

    “A second really vital skill is communication — being able to communicate in the right way with many different types of stakeholders.

    “A third really important skill is problem-solving. In a leadership position, oftentimes what you face day to day are the things that are not going well and the opportunities that exist — so comfort with ambiguity, the ability to put structure around problems and the ability to be calm in the face of things blowing up.”

    The Emotional Robo-Counselor For Your 401(k) (NASDAQ), Rated: A

    So he co-founded Dream Forward, a 401(k) supplier that offers, as its website says, “Emotional Advisor A.I. technology.”

    Easterbrook: The super high level of what we do is we’re selling 401(k) plans, fix all the obvious problems, lower the cost, make it easier to use, cause less headaches, no conflicts of interest, and then add conversational AI that employees can talk to about whatever they don’t understand, whatever the issues are.

    Easterbrook: It looks like an online chat. It’s a chatbot. It’s designed to basically have 24/7 chat available to employees on whatever they don’t understand, whatever their issues are, whatever concerns they have. It talks to them in plain English in a way that we call it almost an emotional advisor instead of a robo-advisor.

    AI 100: The Artificial Intelligence Startups Redefining Industries (CB Insights), Rated: A

    Google can take on Amazon’s cloud dominance: PayPal co-founder (Fox Business), Rated: A

    Tech companies are increasingly becoming more mobile and cloud based. According to Affirm and PayPal co-founder Max Levchin, Google’s (GOOGL) best bet to rival Amazon (AMZN) is through the cloud services business.

    In his opinion, Google should diversify and focus on its cloud storage services as a means of competing and catching up to Amazon’s AmazonDrive.

    A quick guide to what’s at stake in the SoFi charter controversy (American Banker), Rated: A

    Social Finance’s application for an industrial loan charter has not only drawn opposition from a coalition of incumbent banks and community activists. It also serves as a microcosm of several perennial debates in financial services policy.

    From complaints about an unlevel playing field to warnings about systemic risk, from giving back to the community to fostering innovation, here’s a rundown of the issues.

    Why I Am Joining Affirm (LinkedIn), Rated: B

    I’m excited to share that I recently joined Affirm as Head of Product to help build honest financial products that improve lives.

    Affirm presents a new and unique opportunity for me at the intersection of technology, user experience, and financial services. If we’re successful, Affirm has the potential to be the most innovative and globally loved financial institution in the world.

    4 Fintech Companies That Might Replace Your Bank One Day (Benzinga), Rated: B

    Based in San Francisco, SoFi has changed the lending and wealth management space of fintech.

    Wealthfront has introduced to the automated financial advisor to the world. Based in Redwood City, the company has deployed high tech software to follow market trends and create analysis for good investments. The automated financial investor manages risk, lowers taxes, and minimizes fees. Wealthfront’s trademark product, PassivePlus, combines high-level research experts with high-level technology to create a speedy and precise automated financial advisor.

    Nerdwallet is the hub for free information on credit cards, banking, investing, mortgages, loans, credit scores, and more.

    LendingClub Corp LC, based in San Francisco, allows people to invest and borrow money. The company offers personal loans, small business loans, auto refinancing, and now loans for medical treatments. Investors make monthly payments in order for investors to make a monthly return. Scott Sanborn is the CEO of the company, which has lent $26 billion and has over 1.5 billion customers.

    United Kingdom

    LendInvest Bond Issue (SyndicateRoom), Rated: AAA

    Property investment platform LendInvest is launching a five year retail bond, offering investors a fixed rate of 5.25 per cent. The Bond is due to reach maturity in August 2022.

    The bonds will bear interest at a fixed annual rate of 5.25 per cent, payable semi-annually on 10th February and 10th August. The minimum initial subscription is £2,000, each Bond has a face value of £100. Once launched, investors will be able to sell their bonds on the open market at any time during market hours. The offer period is now open and is expected to close at 12 noon (London time) on 4 August 2017.

    Upcoming FCA consultations will shape future of UK P2P lending (AltFi), Rated: AAA

    Peer-to-peer (P2P) lending will continue to go from strength to strength, with low interest rates still squeezing bank margins, a trend towards fintech and a requirement for rapid decision making. P2P lending is establishing its position in the market even with an uncertain economic and political climate. As a result, myriad of opportunities and challenges must be considered across the sector.

    The regulator has also expressed concern that P2P firms’ wind-down plans may not be adequate and is planning to strengthen the rules around this. Firms should therefore expect to see an increase in capital requirements.

    Another cause of concern, which requires further exploration, is around potential conflicts of interest. There’s a risk that large investors will have greater access to preferential deals, over small investors, which creates problems for effective competition within the sector. Given the regulator’s mandate to promote competition more generally across financial services, it will be interesting to see how this gets applied to the new rules.

    Is new retail bond from LendInvest a buy? (AltFi), Rated: A

    That looks a smart move because it’s now planning to return to the retail market but this time via bond – Funding Circle, by contrast, chose to use an investment trust to raise money from the stock market, with a target annual yield of around 6.5%.

    Compared with the rates on offer from rival P2P platforms such as Zopa and Ratesetter, the yield of 5.25% is not bad and unlike its nearest rivals the investor also get secured assets to work against. That’s important when comparing the Lendinvest yield of 5.25% against the Funding Circle SME Loan income fund yield of around 6.5%. The latter is not secured and is mostly invested in risky SME loans.

    Also, Lendinvest has a sensible average LTV ratio at 63% which should give private investors some comfort although I would observe that if house prices fell more than 15% across the board, the bond might be in danger of breaching its covenant. I don’t think that is likely but it is always possible.

    The damaged reputation of asset-backed securities is on the road to recovery (City A.M.), Rated: A

    It’s been a decade since the collapse of two hedge funds managed by Bear Stearns. The funds were backed by subprime mortgages, and they failed when hoards of borrowers defaulted on their loans. This sparked a chain reaction which culminated in the global financial crisis of 2008.

    “ABS could therefore represent the future of crowdfunding more generally, but real estate crowdfunding in particular. This long-suffering acronym could very well make a comeback to help revolutionise the market for real estate investment as we know it.”

    Growth Street bolsters team with new sales and relationship management hires (LendIt), Rated: B

    SME lender Growth Street has brought on board a new Director of Sales, Head of Relationship Management and Business Development Manager as the firm’s expansion continues.

    The new appointments bring a wealth of sector experience to Growth Street. Chan Purewal, formerly of Boost Capital and Bibby Financial Services, has joined the business as Director of Sales.

    Nicola Weedall, previously of GE Capital and latterly Head of Risk and Compliance at invoice financing specialist DueCourse, has joined Growth Street as Head of Relationship Management. Her role will be split between London and Manchester.

    Meanwhile, Nick Owers, formerly Head of Banking Relationships at iwoca, becomes a Business Development Manager. Nick has also worked for Lombard and Royal Bank of Scotland in the past.

    VC investment into UK FinTech ‘fell by 40% in Q2 2017’ (Tech City News), Rated: A

    According to CB Insights’ ‘The Global FinTech Report: Q2’17′, venture capital-backed deals in UK FinTech fell by 40% during the second quarter of this year.

    The report says funding plummeted by 52% after a temporary surge in the first quarter of the year following Atom Bank’s and Funding Circle’s $100m deals.

    How to boost your retirement income with Peer-to-Peer? (Radio Times), Rated: B

    Over the past ten years, peer-to-peer lending has taken the UK by storm and has become a viable option for many people looking for a potential retirement income. To date, more than £10 billion has been invested through UK peer-to-peer lenders, returning on average 7.17% total gross interest. (source: AltFi Data)

    With the right peer-to-peer loans that are backed by tangible assets like property, such as ones offered by Assetz Capital, the risk of loss can be reduced as those assets may be sufficient to recover lent funds should the loan default.

    Creditors set to miss out in Morgan Tucker administration (The Business Desk), Rated: B

    Morgan Tucker, the Nottinghamshire-based consulting engineering firm, went into administration at the end of May owing over £3m to creditors, according to papers seen by TheBusinessDesk.com.

    The business’s expansion into the Middle East caused significant losses, it emerged in June.

    Among some of the firm’s biggest creditors were Funding Circle which was owed £218,513 and Vendor Loans which was owed £112,000. The firm also owed HMRC £286,513.

    China

    This Chinese Credit Card Company Plans On Outsmarting Tencent And Alipay With A More Secure Product (Forbes), Rated: AAA

    Startup firms like Samoyed Financial, a Chinese online credit card issuer, are on the cutting edge of consumer lending.

    Samoyed Financial offers prime consumers credit cards online at below-market interest rates. While so many consumers require loans to make larger purchases, online lending firms in China (particularly peer to peer lending firms) have in the past struggled to control risk.

    Credit card use in China has risen from five million in 2002 to 300 million at present.

    Because China lacks a complete credit risk credit rating system like FICO, firms have been forced to rely on their own credit risk assessments in the burgeoning consumer lending market. Lin’s firm uses data taken from the consumers’ phone records and online behavior, with consumers’ authorization. The data is then used to build a credit risk model.

    Samoyed Financial also incorporates artificial intelligence in the form of the Alpha S robot to review information and determine whether an applicant looks suspicious.

    China declares war on get-rich schemes, citing risk of social unrest (SCMP), Rated: A

    Chinese police will strike hard against shady financial schemes because of the risk of social unrest from such fundraising ploys, according to the Public Security Ministry.

    Guo said at a nationwide meeting with local police authorities on Sunday that law enforcers must use “big data” technology to uncover and stop such crimes as early as possible.

    Chinese Fintechs Use Big Data To Give Credit Scores To The ‘Unscorable’ (Forbes), Rated: A

    Last November 11, China’s so-called Singles’ Day, sales across Alibaba platforms reached new heights: RMB 120 billion, or $17.9 billion.

    Offline borrowing, however, is still largely absent. Hua Bei is basically a virtual credit card, but 60% of the users have never owned a physical credit card. Traditional banks are not lending money to individuals because they lack a reliable credit score. In fact, most Chinese people, by Western standards, are simply “unscorable”–only 25% of the population have a credit history.

    With spending increasing, credit card use per capita actually declined from 0.34 in 2014 to 0.29 at the end of 2015, according to People’s Bank of China. In that same year, however, mobile payment users grew 65%. For the whole year, $5.5 trillion third-party mobile payments were completed in China.

    Chinese P2P Neo Online Helps Children Realize Football Dream with International Champions Cup (Markets Insider), Rated: B

    Neo Online, a leading Chinese peer-to-peer lending platform under Neo Capital Management Group Co., Ltd. (“Neo Group”), joined with the 2017 International Champions Cup China to hold a public interest meeting under the theme “Big big kids in a big big world”.

    In January 2017Neo Online launched the public welfare program “Kids Are Awesome”, which supports adolescent development and growth in such areas as culture, sports, arts, and health.

    European Union

    P2P lending platforms poised to join Nutmeg and Seedrs on Fidor marketplace (AltFi), Rated: AAA

    One of the most interesting and recent of these partnerships is between challenger bank Fidor and host of other players such as digital wealth manager Nutmeg.  Fidor’s UK commercial customers can now access a whole suite of investment opportunities through the digital marketplace, including access to alternative investment opportunities via a number of the most respected fintech companies in the UK.

    Fidor Bank is a digital bank with over 100,000 users across Germany and UK.

    Interview with Loit Linnupõld, CEO of Crowdestate (P2P-Banking), Rated: A

    What are the three main advantages for investors?

    Pre-vetted real estate investment opportunities – Our experienced real estate and finance team evaluates thoroughly each aspect of every project and picks the best investment opportunities to be published for crowdfunding.
    Low minimum investment amount – the minimum investment on our platform is just 100 euros, meaning basically anyone can afford to invest into real estate with Crowdestate.
    Everyone can invest – Crowdestate is open to all investors all around the world, provided that they have a way to make an international bank transfer to their virtual investment account previously created on our platform.

    There are many different types of investment opportunities on Crowdestate. Debt, equity, secured, unsecured… Why did you decide to use so many different types for the offers?

    What ROI can investors expect?

    The historical money-weighted average internal rate of return on our exited investment currently at 29.59%. However, as the fast-increasing money supply is driving the expected returns down, the investors’ annual returns are probably going to remain between 10-20%.

    Stock loan falls short for buy side as liquidity source (Securities Lending Times), Rated: A

    In a joint survey by InvestOps and SimCorp, 14 percent of 100 respondents highlighted securities lending as their most popular source of liquidity.

    The survey did not detail respondents’ reasons for neglecting securities lending as a liquidity source or expand on whether heads of operations simply considered the practice as a back-up option.

    International

    ID Finance’s chatbot cuts client services workload by a third (ID Finance Email), Rated: AAA

    ID Finance, the digital finance, credit scoring and emerging markets company has developed and introduced a self-learning chatbot for MoneyMan, its online lending platform serving customers in Spain, Georgia, Russia, Poland, Kazakhstan and most recently Brazil.  Since launch at the beginning of July, over a third of customer requests are already being processed automatically.

    The chatbot interacts with new customers at the loan application stage and with registered users when they log in to their personal account. The chatbot helps to locate the information required to determine loan eligibility, and provides recommendations of relevant products tailored to the individual’s requirements and financial prudence. General advice on personal budget planning and financial literacy is also offered.

    The chatbot works within the NLP (Natural Language Processing) and NLU (Natural Language Understanding) AI frameworks. Information is processed based on statistical matches covering a wide range of frequently asked questions. And the NLU platform enables analysis of messaging flow so the meaning of the information can be sought out in context.

    Additional capabilities include finding non-trivial links in dialogue with users and providing relevant answers to questions unrelated to credit and finance. Thanks to the machine learning technology, the number of questions the chatbot is able to answer increases by 20 per cent daily. The average response time is around ten seconds and if a question cannot be answered the message is automatically forwarded to an available client support operator.

    Australia

    Former big bank CIO joins fintech board (Broker News), Rated: B

    Online loan marketplace and fintech HashChing has welcomed two new financial services heavyweights to its advisory board.

    Paul Rickard, managing director of CommSec and former executive at Commonwealth Bank of Australia, and Marty Switzer, chief operating officer of the Switzer Financial Group both joined the board in June earlier this year.

    India

    Faircent.com launches fully-automated ‘Auto Invest’ feature (DNA India), Rated: AAA

    In a pioneering development for the country?s fintech sector, Faircent.com, India?s largest peer-to-peer lending platform has launched a new Auto Invest feature for registered lenders.

    It eliminates the need for lenders to browse through several borrower profiles by automating the entire process.

    As per its latest Data and Analytics report, 90 percent of the lenders on the platform are earning 18 percent to 26 percent gross returns.

    Softbank to pick up 20% stake in Paytm’s parent company One97 Communications (Money Control), Rated: A

    The Competition Commission of India (CCI) on Tuesday approved Softbank’s acquisition of 20 percent stake in Paytm’s parent company One97 Communications.

    The Competition Commission of India (CCI) on Tuesday approved Softbank’s acquisition of 20 percent stake in Paytm’s parent company One97 Communications.

    The target launch is August 15, 2017.

    Why India’s Hike messaging app adding payment services matters (Kapron Asia), Rated: A

    Hike messenger, a popular phone messaging service app in India, has recently decided to introduce payment services on its platform.

    The payment service includes both peer to peer payments that do not require bank accounts and use in-app wallets, and bank to bank payments using the UPI platform introduced by the National Payments Corporation of India (NPCI).

    Hike has been able to beat Whatsapp to providing in-app payment services.

    Asia

    ‘Flexible’ Regulations Give Indonesia’s Peer-to-Peer Lending Startups Room To Grow (Forbes), Rated: AAA

    It’s been seven months since the Indonesian government issued regulations for the peer-to-peer (P2P) lending industry, and the mood in the sector is optimistic.

    Suleiman said the market is dominated by local companies that engaged with regulators as the guidelines were being created and were primed to grow once the legal structure was in place.

    Indonesia’s Financial Services Authority (OJK)stipulated that startups must have $200,000 in capital before they can be approved for an operating licenses as lenders, and capped loan values at $150,000. For now, that amount suits most P2P lenders just fine, Suleiman said.

    Suleiman said that most SMEs fail to secure traditional bank funding because they don’t have enough collateral, which he said is especially problematic in creative industries.

    One company meeting the demand for SME financing is Investree, a P2P marketplace startup that launched in 2016.

    Ant gold service together Malaysia’s second largest bank to build local version of Alipay (Tech.Sina.com.cn), Rated: A

    The ant gold service today announced an agreement with Touch’n Go (TNG), a subsidiary of CIMB, to form a joint venture to provide electronic wallet solutions for local users.

    At present, millions of Malaysians use the Touch’n Go card for electronic payments every day in retail stores, car parks and public transport systems. In the future, new e-wallet will help TNG’s new and old customers to get more services on their mobile phones, including electricity providers.

    Indonesian FinTech Launches App For Individual SME Investors (PYMNTS), Rated: B

    Reports Friday (July 21) said Mitrausahua Indonesia Group, which operates a peer-to-peer lending platform, has launched a mobile app for individual investors of small businesses.

    The app joins Mitrausahua’s flagship offering Modalku. For small businesses, interest rates range from 12 to 26 percent. For investors, Modalku promises returns higher than those of commercial bank deposit and fixed investment products.

    The app offers a feature, Automatic Funding, which automates the process by which investors can find SME borrowers suitable to lenders’ preferences. Investors can start investing at $75 but must have $750 deposited into their accounts.

    Middle East

    Middle East women seed crowdfunding campaigns attract more backers (Khaleej Times), Rated: AAA

    A total of 97 campaigns were successfully funded in the region in 2015 and 2016, 24 of which were female-led and 73 male-led. And while the number of campaigns funded in the region is still relatively low vis-a-vis more established territories, however, seed crowdfunding is still relatively new to the region. Average pledge amounts to female-led campaigns are 29 per cent higher than male-led campaigns, compared with a difference of only 5 per cent globally, said PwC and The Crowdfunding Centre report – Women Unbound: Unleashing female entrepreneurial potential.

    Seed crowdfunding generated a total financing of $ 3.25 million (with $527,300 going to female led campaigns) in the Middle East for 2015 and 2016, with female-led campaigns in the Middle East generating an estimated 5,320 backers, compared with 4,240 for those that were male-led, it added.

    Canada

    Despite recent gains, Canada lags in fintech adoption (The Globe and Mail), Rated: A

    Although the percentage of Canadians using new financial technology has doubled over the past 18 months, Canada lags much of the rest of the world in adopting services offered by online providers.

    In Canada, only 18 per cent of digitally active Canadians have used two or more fintech services in the past six months, compared with 33 per cent globally, according to Ernst & Young LLP’s FinTech Adoption index. And while the Canadian rate has almost doubled from 8 per cent in 2015, Canada remains in the bottom of world rankings along with Japan and Belgium.

    China has the highest adoption rate at 69 per cent, while India and Britain are close behind with 52 per cent and 42 per cent, respectively.

    Philippines

    New lending platform to replace ‘5-6’ scheme (The Standard), Rated: AAA

    MoneyMatch, an online peer-to-peer lending platform developed by local company FinTech Global Inc., aims to provide Filipinos an alternative to “5-6” scheme, or moneylenders charging exorbitant interest rates on loans.

    Bautista said a borrower could apply for loan from P10,000 to P2 million which could be used to start to a small business, get a housing loan, or a new car, and pay for their loan at terms that they could afford.

    The interest rate for the loans will range from 15 percent to 36 percent depending on creditworthiness of the borrower.

    Authors:

    George Popescu
    Allen Taylor