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

News Comments

United States

United Kingdom

European Union

China

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News Summary

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.

    Digital Identity Verification for Alternative Lenders

    Digital Identity Verification for Alternative Lenders

    Trust is the root of all business transactions. For any financial institution to lend money or offer a banking service, being able to identify the counterparty is a must. And though anonymity is a blessing in a lot of situations, business cannot be conducted under the cloak of secrecy. Financial services are a particular focus […]

    Digital Identity Verification for Alternative Lenders

    Trust is the root of all business transactions. For any financial institution to lend money or offer a banking service, being able to identify the counterparty is a must. And though anonymity is a blessing in a lot of situations, business cannot be conducted under the cloak of secrecy.

    Financial services are a particular focus area for the highest standards in identification, especially due to the strong regulatory push on money laundering, terrorism financing, and KYC (Know Your Customer). Also, according to the World Bank, around 1.1 billion people worldwide cannot prove their identity. They form a major chunk of the 2.5 billion people who don’t have access to financial services. This highlights that identity is a fundamental part of financial inclusion.

    Mitek Systems, a global leader in mobile capture and identity verification software solutions, is in the forefront of this growing niche industry. We had an exclusive chat with the company CTO, Stephen Ritter. He gave his views on the opportunity and developments in the ID verification space and how it will be an underlying pillar for the growth of fintech lending and blockchain-led services.

    Mitek’s Business Model and Technology

    Mitek started as a software company and has evolved to become the leader in mobile banking and mobile deposit solutions. It enables bank customers to take picture of checks for depositing, rendering the physical deposit process redundant. It has entered the digital ID verification market and has developed artificial intelligence (AI) and machine learning-powered proprietary algorithms. It will verify the ID by having the user take a picture of  a government-issued ID and compare it with a selfie. This allows the software to cross verify the selfie face with the picture on the government-issued ID.

    Mitek’s solutions specializes in accurately identifying the personal document, and can even recognize and evaluate IDs of multiple countries. It can also extract relevant information from the document. Its advanced forensic algorithms can detect signs of forgery or fake documents. Further, it can distinguish good and bad documents and provide a risk score to determine if the document can be trusted. Its algorithms can also determine if the human face is real or a spoof.

    The company’s core competency is computer vision, a specific niche within machine learning. The company has been developing software in the field for the last 15 years and considers itself among the pioneers in the space. With the intense speed of development in the field, the company is actively working with partners for integrating third-party sophisticated technology into their own solutions.

    The main solutions provided by Mitek include:

    • Mobile Fill – A solution which allows personal information to be pre-filled in the forms of the applicants, taking help of the Mobile ID capture solution provided by Mitek.
    • Mobile Verify – A combination of Mitek’s computer vision technology and auto capture experience, Mobile Verify validates the authenticity of identity documents thereby simplifying the KYC compliance processes.
    • Mobile Deposit – Mobile deposit is a solution that helps in saving time by allowing the person to deposit checks to the participating banks by uploading the image using the device’s camera.

    Mitek’s Competition, and Its Impact on Lending

    Mitek has an operating history of over two decades. With more than 6,100 banks and financial institutions as customers, the company has a wide moat compared to startups entering the field. Its direct competitors are few and usually early-stage companies. The more traditional players in the space would be the ones that follow the data bureau approach and are beginning to integrate mobile verify solutions for verification of IDs into their platforms.

    Lending will receive a boost across the board as lenders, both traditional and alternative, will be able to onboard customers faster and more securely. Alternative lenders, in particular, should see higher approval rates for prospective borrowers with increased confidence they are not being defrauded. Mitek is currently processing over several million ID documents a month. Both MoneyGram and Kabbage use Mitek’s MobileVerify technology. The company is seeing major traction in the fintech lending industry as players are nimble and the first target for most fraudsters.

    Financial Inclusion, Privacy, and Real Life Applications

    Ritter believes governments need to step up their efforts in ensuring everyone has access to an identity proof. Financial inclusion is positioned prominently in the United Nation’s 2030 Sustainable Development Goals agenda, and the need for a digital identity goes far beyond the ability to participate in the formal economy. Its impact is multifold and helps to increase overall trade and access to healthcare and government services. Mitek is also focused on data privacy laws, with GDPR the hot topic in Europe. It has taken GDPR as its baseline for information security and is operating with GDPR recommended data security not only in Europe but across the globe.

    Kabbage Case Study
    Kabbage facilitates easy funding options to small and medium enterprises through its automated technology-backed data platform. With Mitek’s digital identity verification solutions integrated into the Kabbage platform, users are able to automatically populate the loan application form with pre-filled data in less than a second allowing customers to access funding quickly. Mitek’s solution applies advanced algorithms that automatically assess the authenticity of the driver’s license, providing assurance about the identity of the ID’s holder and reducing the likelihood of fraud during the loan application process.

    Anonymous Payments Processor Case Study
    Customers were facing a lengthy identity verification process, which forced them to leave the platform before completing the transaction. Driven by the need to comply with Anti Money Laundering (AML) and KYC regulations, a leading global payment processor selected Mitek’s Mobile Verify to provide the customers with more efficient ways to reduce the verification process from days to just minutes. Mitek was able to eliminate 92% of the temporary restrictions that the company previously had to place on customer accounts whenever they would reach a certain dollar threshold. By eliminating these temporary restrictions, the company has improved customer experience as well as increased profitability.

    Mitek’s Collaboration with Nocks
    Mitek’s digital verification identity has enabled blockchain payments platform Nocks to improve their customers’ onboarding by 98%. A cryptocurrency payments platform, Nocks also has to execute AML and KYC compliances. Nocks has now been able to verify the identity of applicants in real-time, dramatically improving new customer conversion rates due Mitek’s Mobile Verify interface.

    MoneyGram Case Study
    MoneyGram, the money transfer giant, is also using Mobile Verify to validate its customers’ ID. To complete the identity verification step in the money transfer process, MoneyGram customers simply take a picture of their passport or other identity document using their mobile device camera. Mobile Verify then uses advanced machine learning technology to instantly validate the authenticity of the ID.

    Mitek is Experimenting With the Blockchain

    Mitek is also developing technology to leverage blockchain infrastructure. The public ledger approach in general is interesting as it could allow for generating self-sovereign IDs which are owned and managed by the users themselves. When businesses need their information, people can control their data and allow only limited or conditional access. Moreover, even banking customers are exploring blockchain-based solutions, and Mitek is experimenting to integrate its ID verification systems on a distributed ledger.

    Mitek’s Technology Leadership

    Mitek was founded in 1985 and is listed on NASDAQ with a market cap of an estimated $250 million. Mitek’s innovative solutions are embedded into the apps of more than 6,100 organizations and used by more than 80 million consumers.

    Stephen Ritter is the Chief Technology officer (CTO) of San Diego-based Mitek Systems. He helps in the technological development of the key processes of the company, along with overseeing Mitek Labs. He has more than 22 years of experience bringing new commercial software solutions to market. Ritter worked as tech lead with Emotient (acquired by Apple) before he joined Mitek.

    With the increase in regulatory complexities and fraudulent practices, it is critical for businesses to make sure that they are on the right side of the law and yet are simultaneously making their customers’ life easier. Mitek helps them balance this fine line with its suite of sophisticated identification technologies.

    Author:

    Written by Heena Dhir.

    2018 Predictions for MPL, SMB Lending, and Other Alternatives

    Lending Club

    In just over a decade, alternative lending has evolved from a niche fintech play into a hundred billion dollar industry. 2017 was somewhat of a bumpy ride. Growing competition, shrinking bottom lines, stringent regulations, and traditional banks’ willingness to take on alt-lending using their financial muscle were the key trends that emerged last year. It […]

    Lending Club

    In just over a decade, alternative lending has evolved from a niche fintech play into a hundred billion dollar industry. 2017 was somewhat of a bumpy ride. Growing competition, shrinking bottom lines, stringent regulations, and traditional banks’ willingness to take on alt-lending using their financial muscle were the key trends that emerged last year. It is difficult to be sure what 2018 will bring, but here is what experts and pundits are predicting.

    Marketplace Lending

    Ron Suber (Founder and former president, Prosper & chairman of the board, Credible) believes the marketplace lending industry has finally grown up. Companies will focus more on cash flow, profitability, and EBITDA. He encouraged online lenders to look for a lower cost of capital if they want to compete with the like of Marcus. He is also predicting the entrance of big technology companies like Amazon, Apple, Facebook, and Google.

    Peter Renton (Lend Academy) believes five of the top 25 banks will launch their own platforms. He also believes Congress will pass a Madden fix and the IRS will modernize with its own API. One startling prediction he makes that one of the top online lenders (Lending Club, SoFi, Prosper, OnDeck, or Avant) will be acquired, and he believes a major platform will be hit by a cyber attack. Like everyone else, he believes the tech giants will solidify their positions in alternative lending, and more interestingly, he says messaging apps will integrate with online lending platforms.

    Krista Morgan (CEO, P2Binvestor) makes predictions for MPL sector:

    • Companies will shift their focus on business models and unit profitability as hiring and spending decrease.
    • Mergers and shutdowns will continue as equity investors remain absent. She thinks it will be a tough year.
    • Investors believe the market is set for a correction; therefore, they will be looking at short duration assets for deploying their capital. Platforms will have to shift their focus to product development.
    • 2018 will be the year of increased diversity.

    Adam Stettner (Founder and CEO, Reliant Funding) predicts a year of instability. He also believes market variables will counterbalance themselves this year. The Fed is expected to increase interest rates, which will have a ripple effect in terms of rates for various types of loans. If unemployment levels remain low, it will lead to wage inflation. So the order of the day for alternative finance and small business funding companies will be adaptability, he says.

    Additionally, Stettner sees a year of increased fraud, and companies will have to invest in identification tools and fraud detection techniques.

    Two more predictions he points to are increased consolidation as companies overextend themselves and more disruption from big business names entering the space.

    The Motley Fool is predicting a Lending Club stock price turnaround.

    Juan Tavares (LendingPoint) predicts balance sheet lenders will take over, there will be more collaboration, and payments and credit will intersect more.

    Small Business Lending

    Trevor Dryer (Co-founder and CEO, Mirador) made predictions on small business lending:

    • Banks will continue to increase small business lending and alternative lenders will struggle.
    • Crowdfunding got a boost last year when Title III of The Jumpstart Our Business Startups Act (JOBS Act) was implemented, opening the gates for crowdfunding. Dryer believes this sector will thrive in 2018.
    • Alternative lending has removed physical barriers that makes the lending process faster and more convenient. Alternative lending will continue to be more inclusive and encourage more people to start businesses.
    • Legislative barriers will continue to fall.
    • Alternative lenders will focus on experience and relationship building. Companies able to streamline and automate the application processes will thrive.

    Alternative Lending in India

    Rajesh Gupta (Founder and CEO, Cash Suvidha) made the following predictions for the Indian alternative lending market.

    • A significant increase in alternative lending market share.
    • Favorable regulations, cash benefits, ease of usage, and increased internet and smartphone penetration.
    • Investors and venture capitalists will remain optimistic about the Indian alternative lending industry since it is the second most funded segment in Indian fintech.

    “2018 will witness a transformation in the Indian financial landscape, all thanks to alternative lending,” he writes.

    Traditional Financial Services and Alternative Investing

    Kevin McPartland (Greenwich Associates) says 2018 will be the year of digital. He believes product-agnostic investing will be huge, and passive investing will gain on active investing. 2018 will also be the year that alternative data goes mainstream, he believes while data will be more important than trading. He also believes wealth management will “come out of retirement” and, finally, a ton of innovation in the financial markets as banks focus on crypto.

    Chris Skinner (The Finanser Blog) writes a lot about banking’s reaction to alternative lending. He believes 2018 will be the year of artificial intelligence for banks and that banks will continue to drive digital technology deeper into their core systems. Not surprisingly, he also predicts that banks will develop more proof-of-concept operations for distributed ledger technology. Finally, he predicts the banks will develop an Enterprise Data Architecture this year to clean up their fragmented systems.

    Alexander Prokhorov (FinSight Ventures) made some general predictions for fintech that apply just as well to alternative lending:

    • Software will converge with financial products in the U.S. and Europe
    • Insurtech will be more prominent
    • Artificial intelligence will transform financial services
    • There will be a lot of innovation in emerging economies such as Africa, Latin America, and Asia
    • Wealth management will pick up speed
    • Crypo assets and blockchain will take center stage for retail investing

    Mitek believes 2018 will be the year of the cyber criminal and predicts there will be 150 million attempts to set up fraud accounts this year.

    Don Steinbrugge, CFA (Founder and CEO, Agecroft Partners) is predicting a banner year for the hedge fund industry. He believes hedge fund assets will reach an all-time high for the 10th straight year. He also believes there will be an increase in hedge funds shutting down. And there will be an increase in cryptocurrency funds. Strategies that will gain assets, he believes, include:

    • Asia long/short equity
    • Reinsurance
    • Those that blur the lines between private equity and hedge funds

    The Lending-Times Prediction

    Allen Taylor (Editor, Lending-Times) believes more U.S. platforms will open the doors to non-accredited investors. Blockchain will feature more prominently in alternative lending with more platforms focused on crypto-lending including a prominent alternative lender adding cryptocurrency to its list of core services. He also believes increased specialization will lead to platforms targeting specific industries, regions/states, and other narrow target markets.

    Conclusion

    2018 will surely see the alternative lending industry enter a consolidation phase to withstand the changes in market dynamics, and companies best able to cope with these headwinds would emerge bigger and stronger.

    Authors:

    Written by Heena Dhir and Allen Taylor.

    Allen Taylor

    Friday September 29 2017, Daily News Digest

    C-PACE financing

    News Comments Today’s main news: LendingClub completes 2nd self-sponsored loan securitization with $323M deal. Funding Circle restates IPO ambitions. Robo.cash tops 2M Euro, 1000th investor. AutoGravity surpasses $1B USD in finance amount requested. Singapore banks closing cryptocurrency, payments accounts. Today’s main analysis: Risk evaluation of commercial PACE securitizations differs from residential deals. Goldman Sachs’ aggressive push into consumer banking. Today’s […]

    C-PACE financing

    News Comments

    United States

    United Kingdom

    China

    European Union

    International

    Australia

    India

    Asia

    News Summary

    United States

    LendingClub Completes 2nd Self Sponsored Loan Securitization with $ 323 Million Deal (Crowdfund Insider), Rated: AAA

    LendingClub (NYSE: LC) has sponsored and contributed to its second securitization deal following the the last successful self sponsored deal this past June. The “Consumer Loan Underlying Bond” (CLUB) Credit Trust 2017-P1 (CLUB 2017-P1) issued $323.1 million in prime notes backed by consumer loan assets originated via the LendingClub platform. This is the sixth securitization supported or sponsored by LendingClub, and the fourth rated securitization of LendingClub facilitated loans overall. LendingClub described the deal as further expanding investor access.

    LendingClub reported the transaction was backed by approximately $350 million of collateral and includes $217.3 million of Class A notes rated “A-(sf)”, $51.0 million of Class B notes rated “BBB (sf)” and $54.7 million of Class C notes rated “BB (sf)”.

    Orchard’s Online Lending Ecosystem Update: “Lendscape” (Crowdfund Insider), Rated: AAA

    Orchard Platform, the nexus of loan originators and institutional investing, has updated their ongoing graphical view of the online lending  world or “Lendscape”.  As the online lending universe has moved from peer to peer lending, to marketplace lending to all forms of online lending, the Lendscape has changed and grown. New lending platforms have been launched, new verticals targeted, and a growing number of ancillary services have joined the space.  Orchard points to the addition of lenders like LendingPointLiberty LendingLendmartAllegro CreditUpLiftArtMoneyAscendOppLoans, and Lendistry.

    Perhaps the most important shift in online lending is the growing participation by traditional finance firms.

    Source: Crowdfund Insider

    Risk Evaluation of Commercial PACE Securitizations Differs From Residential Deals (Morningstar), Rated: AAA

    Morningstar Credit Ratings, LLC believes the next iteration of property assessed clean energy securitizations will be in the commercial sector. While securitization of residential PACE assessments tops $3 billion, there have been no public transactions consisting primarily of commercial liens.

    Evaluating Property Income Generated to Pay Debts In analyzing the credit risk of transactions backed by commercial assessments, Morningstar considers the debt service coverage ratio, because PACE lending is tied to the property rather than the owner’s creditworthiness.

    Evaluating Property Income Generated to Pay Debts

    Morningstar evaluates a property’s net operating income in relation to its annual debt-service payments. Among securitized commercial mortgages, the average DSCR is approximately 2.14x, according to Morningstar. C-PACE lenders and aggregators typically require a minimum total DSCR in the 1.00x to 1.15x range. Although, in some cases, the DSCR has dipped below 1.00x, especially if total debtto-value is low when operating expenses are higher than revenue. Factors possibly mitigating a lower DSCR, which include county support, property ownership affiliations within a network, liquidity account and equity position require case-by-case analysis. In addition, DSCR of the lien is more important than the DSCR of the overall debt.

    Evaluating Divergent Leverage Metrics

    The lien-to-value ratio is another leverage metric that Morningstar analyzes. Although a PACE assessment raises a property’s lien-to-value ratio, the increased risk to the underlying mortgage is likely minimal, as the obligation is usually small in comparison to the mortgage.

    It can be more challenging to calculate the lien-to-value ratio for C-PACE levies, because the properties can run the gamut from hotels, farmlands, nursing homes, and gas stations to nonprofit buildings such as churches. Across residential PACE deals, we have seen lien-to-value ratios around 6.7% and combined PACE-lien-plus-mortgage-tovalue ratios at around 62.7%. In C-PACE, lien-to-value ratios hover around 25.0%, not including mortgage debt.

    While we scrutinize total debt-to-value, the distribution of leverage offers insight into the financial health of the property. For example, we view a property with a 90% debt-to-value ratio that is composed of an 89% mortgage loan and a 1% PACE assessment more favorably than a property whose debt is composed of an 89% PACE obligation and a 1% mortgage because of higher subordination levels.

    Growing Market Size

    C-PACE financing has grown to about $482 million as of Sept. 1, encompassing 1,097 commercial projects, according to PACENation. More than 2,500 municipalities have C-PACE programs.

    Compared with residential programs, C-PACE is in its infancy, as R-PACE financing totaled about $3.67 billion and R-PACE securitizations totaled around $3.40 billion. A sliver of
    commercial assets was included in one of those securitizations, GoodGreen 2016-1, with commercial PACE levies representing approximately 4.8% of the pool’s assets.

    Source: Morningstar

    Get the full report here.

    The Top Sources Of Small Business Financing Based On Approval Rates (Forbes), Rated: AAA

    According to the latest Biz2Credit Small Business Lending Index, the monthly analysis of more than 1,000 small business loan applications on Biz2Credit.com. Loan approval percentages of institutional investors have continuously reached new heights this year in terms of approval rates. In August Institutional lenders’ loan approval rates in August reached 63.9%.

    Alternative lenders’ approval percentages continue to decline; in August the rate dipped to 57.1%. Approval percentages have dropped every month for more than a year.

    Approval percentages at small banks rose one-tenth of a percent in August to 49.0% from July’s 48.9% figure. It is conceivable that the number may cross the 50% benchmark.

    Big banks improved one-tenth of a percent to 24.6% in August, setting a new high for the Biz2Credit Index, which has tracked loan approvals since January 2011. The number is creeping up to one-in-four. It’s a good time for bank lending.

    Loan approval rates at credit unions dipped to 40.3% in August, falling to a new low for this category of lenders on Biz2Credit’s index.

    AutoGravity Surpasses $ 1 Billion USD In Finance Amount Requested, Launches Real-Time Dealership Inventory Nationwide (PR Newswire), Rated: AAA

    AutoGravity, a FinTech pioneer on a mission to transform car shopping and financing, today announced that it has reached $1 billion USD in finance amount requested on the AutoGravity platform. Additionally, AutoGravity has announced the launch of real-time inventory for new and used cars from partner dealership groups across the nation. Car shoppers can browse real vehicle inventory on dealership lots, find the specific car that’s right for them and secure up to four finance offers in minutes on the AutoGravity smartphone app.

    More over 750,000 car shoppers have downloaded AutoGravity, collectively requesting over $1 billion USD in financing. These users can now search inventory by car brand and model year – as well as characteristics such as body type, drivetrain and color. Car shoppers can find their desired car waiting for them on the showroom lot for the payment they want. With car selected and offers in hand, users can pick up their car and drive off the lot with the confidence of knowing they have secured a fair deal.

    AutoGravity partnered closely with the largest dealer groups in the country to design a seamless process by which dealers can easily load inventory feeds, including vehicle details and pictures, to AutoGravity’s secure platform. Inventory is updated and shown to users in real time.

    ID-verification firms seize on Equifax moment (American Banker), Rated: A

    The Equifax hack, combined with the rise of online lending, may have turned 2017 into a golden age for companies with new ideas for ID.

    The software company Mitek plans to roll out a product in the coming year called Mobile Verify for Lending, which offers lenders a five-step process to quickly verify customer identities. Borrowers first share their online bank account information with lenders. They then submit four pictures taken from their smartphones: the front and back of their driver’s licenses, a selfie and a pay stub.

    Other players are offering digital lending solutions to make it easier for banks to keep pace with speedy fintech competitors. Upstart, for example, is marketing software, called Powered by Upstart, to banks wanting to get into digital lending.

    DFS to Court: OCC Fintech Charter ‘Undermines’ Its Authority (New York Law Journal), Rated: A

    The U.S. Office of the Comptroller of the Currency’s plan to offer a special-purpose bank charter for financial technology companies “undermines” the Department of Financial Services’ regulatory authority in New York, the state agency argued in court documents.

    “The Fintech Charter Decision is an unlawful assertion of power that usurps New York consumer protection laws and would preempt plaintiff’s ability to regulate any number of the over 600 nondepository institutions she currently regulates,” wrote Matthew Levine, the executive deputy superintendent for enforcement at the department.

    Stockpile Raises $ 30 Million to Make Stock Investing Easy for Everyone (PR Newswire), Rated: A

    Stockpile, a brokerage popular with millennials that is pioneering fractional share stock investing, announced today that it has raised $30 million in Series B funding led by Fidelity backed Eight Roads Ventures, with participation by Mayfield, Arbor Ventures, Hanna Ventures, Wang Ventures, and others.

    This latest investment brings the total raised by Stockpile to more than $45 million.  Mayfield led Stockpile’s $15 millionSeries A in October 2015, with participation by Arbor Ventures, Stanford University, and actor Ashton Kutcher.  Stockpile will use the new funds to bring stock investing to more millennial customers and expand its unique features, Lele said.

    Chime raises $ 18 million for mobile banking without the fees (TechCrunch), Rated: A

    Chime is raising $18 million in Series B financing for its mobile-first approach to banking. Cathay Innovation led the round with participation from Northwestern Mutual Future Ventures, Crosslink Capital, Forerunner Ventures, Homebrew and others.

    It’s a bank account and debit card built for the digital age.

    Without monthly fees or overdraft charges, Chime tries to appeal to the millennial generation, touting its affordability and easy-to-use app. Since launching in 2014, Chime has signed up 500,000 customers, who are typically in their late 20s and making between $50,000 and $70,000 per year.

    Shinola’s new pitch: the installment plan (Crain’s Detroit Business), Rated: A

    Shinola/Detroit LLC is targeting millennials by adding an option to pay for its watches and other luxury goods in an old-fashioned way: the installment plan.

    The average order value for Affirm customers is 70 percent higher than the sitewide average, Kopitz said. And about half of those using the service with Shinola are 18-34 years old, the release said.

    Around 1,000 retailers now accept payment through Affirm.

    Is marketplace lending maturing? (Banking Exchange), Rated: A

    As new as fintech and marketplace lending—once known as “peer to peer lending”—may still seem, Noreika suggested that the online lending fraternity may be moving toward maturity.

    Noreika said the sweat that went into those ideas has hit $40 billion in consumer and small business credit, with volumes doubling every year since 2010. He noted that some project that at that rate, marketplace lending will hit $1 trillion by 2025—versus the $3.7 trillion in unsecured consumer lending as of yearend 2016.

    Noreika pointed out that marketplace lenders have been seeing cracks in their credit since the fourth quarter of 2015.

    ‘Fintechs tend to march to their own rules’: former SEC chair Levitt (American Banker), Rated: A

    “Hardly a day goes by where there isn’t a recording of some scandal or another,” Levitt said. “I think that’s generally true of emerging cultures and emerging standards and cultures. That makes the odds of winning much less than in well established companies with better established cultures.”

    His fellow fintech panelists, Sarah Friar, chief financial officer at Square, and Scott Sanborn, CEO of Lending Club, both pointed out that established companies have had their own share of scandals.

    Levitt said it’s difficult for startups to attract the kind of quality board members that larger, more mature companies are able to attract.

    “Regulators are always playing catch up,” he said. “Regulation today trails the fintech world and often presents impediments and costs that are unnecessary. Regulators are constantly protecting their space so they don’t get caught up in a scandal they’re held accountable for, so there’s a tendency to over-regulate.”

    McHenry and Booker Introduce Fintech Bill to Automate Income Verification (House.gov), Rated: B

    Today, Chief Deputy Whip Patrick McHenry (R, NC-10), the Vice Chairman of the House Financial Services Committee, and Senator Cory Booker (D-NJ) introduced the IRS Data Verification Modernization Act of 2017. This bipartisan bill will require the Internal Revenue Service (IRS) to automate the Income Verification Express Services process by creating an Application Programming Interface (API) allowing small businesses and consumers to access accurate credit assessments more efficiently. Joining McHenry as an original cosponsor of H.R. 3860 is Congressman Earl Blumenauer (D, OR-03), a senior member of the House Committee on Ways and Means.

    Plug and Play Selects Their Winter 2017 Batches (PR Newswire), Rated: B

    Plug and Play formally announces the startups accepted into their Winter 2017 batches. Plug and Play will run five programs this quarter focused on Health & Wellness, Insurtech, Internet of Things, Mobility, and Travel & Hospitality.

    Wunder Brings on Rich Mauro as Director of Capital Markets (Wunder Capital), Rated: B

    We’re incredibly excited to welcome the newest member of Wunder Capital’s team, Rich Mauro. As Director of Capital Markets, Rich will lead Wunder’s institutional fundraising activities, bolstering our capital stack and helping us scale Wunder’s platform to the next level.

    United Kingdom

    Funding Circle hits £50 million in revenue as CEO restates IPO ambitions (Business Insider), Rated: AAA

    Accounts for 2016 filed with Companies House this week show:

    • Revenue rose 59% to £50.9 million;
    • Operating expenses rose by 43% to £103.1 million;
    • Losses dipped by 3% to £35.7 million thanks partly to a foreign exchange boost;
    • £1 billion lent last year;
    • Loans outstanding rose by 61% to £1.37 billion;

    ‘It goes without saying that international is really hard’

    While Desai is bullish on international expansion, the accounts show Funding Circle stopped operations in Spain at the start of the year, a market it entered through the acquisition of Zencap in 2015.

    International revenues grew slower than UK revenues last year and Funding Circle parted ways with the head of its continental Europe operations in the middle of last year.

    In the UK, economic growth is slowing and consumer debt is ballooning, leading to fears of a possible economic slowdown that could hit lenders.

    Funding Circle remains a loss-making business (accumulated losses stand at £116.6 million to date) but Desai says it is on a long-term path to profitability.

    Funding Circle is onto a winning strategy (Business Insider), Rated: AAA

    Funding Circle, however, has remained a firm market leader, and its annual results for 2016 show it continues to do well.

    Its losses narrowed 3% from £37 million ($50 million) in 2015 to £36 million ($48 million) in 2016, as revenue grew 59% year-over-year (YoY) from £32 million ($43 million) to £51 million ($68 million), and originations saw a 61% boost from £846 million ($1.1 billion) to £1.4 billion ($1.9 billion).

    Source: Business Insider

    Funding Circle posts 59% revenue rise (Bridging&Commercial), Rated: A

    Post year-end highlights:

    Ranger Direct Lending fund expecting substantial dividend cut (AltFi), Rated: A

    The £220m Ranger Direct Lending fund could see its dividend pay-out for the second half of 2017 fall to nearly half of that in the first six months of the year, according to a statement by Ranger.

    It is expecting NAV returns in H2 2017 to average 0.4 per cent-0.5 per cent per month (c.5-6 per cent pa), and then recover to 0.6 per cent-0.7 per cent per month (c.7 per cent-9 per cent pa) in 2018, assuming the resolution of Princeton this year.

    As a result aggregate dividends of c.25p are expected for H2 2017, compared to 46p in H1.

    Source: AltFi

    ‘Oscars of the start-up world’ has an exciting new winner looking to disrupt property finance (CNBC), Rated: A

    LendInvest, an online marketplace platform for property lending and investing, was named the most valuable tech company at the prestigious Investor Allstars event in London on Wednesday evening.

    These 20-something Oxford grads just raised $ 30 million for their fintech startup (Business Insider), Rated: A

    A “RegTech” — regulation technology — company founded by three Oxford grads all under 30 has raised $30 million (£22.4 million) from investors including Microsoft’s venture capital arm.

    Onfido, an identity verification startup, has raised the “Series C” fundraising from Crane Venture Partners, Microsoft Ventures, and Salesforce Ventures, as well as existing investors. It takes the total raised by the London startup to over $60 million.

    Onfido’s latest $30 million funding injection follows a $25 million investment last April. Kassai says the latest funding will go towards technology investment and global expansion.

    Payday lender Wonga records £65m loss amid overhaul (BBC), Rated: A

    Wonga – Britain’s biggest payday lender – posted pre-tax losses of nearly £65m in 2016, but claims its business has been “transformed”.

    The lender, which operates in the UK, South Africa, Poland and Spain, saw its losses shrink from £80m in 2015 to £65m in 2016.

    How Fintech Is Disrupting Traditional Banking Models (Minute Hack), Rated: A

    One of the biggest changes in the financial sector in the UK has been the introduction of challenger banks.

    Crucially, these banks have not been mired by the many recent scandals and still rely on customer deposits to build their balance sheets. That’s why fledgling banks such as Metro Bank, Aldermore, Tesco Bank and United Bank UK and currently dominating the best buy tables.

    Retail banking is the area that has seen the biggest change as a result of the FinTech sector, but that’s not to say there hasn’t also been a significant impact in the commercial banking sector.

    A perfect example is Barclay’s mobile payments service Pingit, designed to compete with Apple Pay, while other banks have launched new mobile banking businesses away from their legacy businesses in an attempt to compete in a digital age.

    Bringing financial services to small businesses

    One example is peer-to-peer lending, a sector that has sprung up from nothing ten years ago to lend a total of £2.9bn in 2016. This is now filling the capital void for many growing businesses and lending at lower rates than many firms would be able to access elsewhere.

    New trustees join Finance Innovation Lab’s board (P2P Finance News), Rated: B

    SIX new trustees have been appointed to the board of the Finance Innovation Lab.

    The new trustees include Caroline Ellis, a social and organisational change consultant who is taking on the role of chair of the board, and Kate Ormiston Smith, director of finance and operations at The B Team, who is taking up the post of treasurer.

    The other new members of the board are: Hanna McCloskey, founder and chief executive officer of Fearless Futures; Toyin Ogundana – investment manager at CAF Venturesome; Paul Riseborough – chief commercial officer at Metro Bank and Julian Thompson, social innovation and fundraising strategist.

    How and where to get Crowdlending to fund your Business (TechBullion), Rated: B

    When considering your initial application for funding, crowdlending platforms will review your business plan, financial information and other details about your company. In other words, the platforms will review your company’s financial information as well as your personal information in much the same way as banks will do before offering you a loan. Therefore, it is imperative to ensure that your business plan is engaging, comprehensive and well thought out.

    Investors will usually seek to get more information about you and your business from social networks like FacebookTwitterand LinkedIn. It will serve you well to ensure that you have an online presence before you seek for funds through crowdlending.

    Going by the FundingKnightresearch, most UK investors have a love for the community and would want to give back to some UK SME to ensure its prosperity.

    China

    More Chinese fintech firms to eye Hong Kong IPOs, says JP Morgan (SCMP), Rated: AAA

    More Chinese fintech firms vying to go public could choose Hong Kong as their listing venue, after the city’s first fintech IPO received a hot response from investors, and that Hong Kong has unique advantages compared with other global financial hubs, said JP Morgan’s head of global investment banking in China.

    Zhong An Online Property and Casualty Insurance, China’s first online-only insurer, closed nine per cent up from its IPO price on Thursday in its Hong Kong debut. With an oversubscription of nearly 400 times from retail investors, the company had priced its IPO at the top end of the expected range, raising US$1.5 billion in the city’s biggest ever fintech offering.

    “The next Zhong An could show up in online payment, P2P lending, [financial] product distribution, or online insurance.”

    In particular, revenue from online payment is estimated to increase to 202 billion yuan by 2020. Revenue from online distribution of financial products could grow to 52 billion yuan by then, while that for online lending and online insurance may reach 142 billion yuan and 60 billion yuan respectively.

    ZhongAn Insurance Starts Trading on the Hong Kong Stock Exchange (Lend Academy), Rated: AAA

    ZhongAn’s IPO will likely make the company the 4th most valuable fintech company in the world with a market cap of about US$10.4 billion, following the top three fintechs, which are Paypal ($78bn), Ant Financial ($68bn) and Lufax ($18bn).

    Peter Renton interviewed the CEO of ZhongAn Insurance, Jeffrey Chen, on the Lend Academy Podcast over the summer. Jeffrey said in the interview that ZhongAn has 492 million insurance customers as of December 31, 2016. That is more than four times that of insurance giant AXA’s customer base (107 million, as of December 31, 2016). By this measure, ZhongAn truly is the world’s largest insurance company. And this is just a four-year old company!

    Why ZhongAn is So Succesful

    For the technology part, ZhongAn has been using artificial intelligence and big data analytics in each step of the insurance value chain, from marketing, underwriting, pricing to claims processing.

    Another example is that ZhongAn has partnered with a Chinese automaker to develop internet of things (IoTs) and telematics solutions. Telematics devices can capture drivers’ behavioral data, which can be fed to algorithms using big data techniques to tailor product pricing to observed risk levels.

    In ZhongAn’s early days, the revenue generated by shipping return policies accounted for almost 90% of the total revenue. This product would not have been such a success were it not for its partnership with Alibaba. Ant Financial, the financial affiliate of Alibaba, is also the single biggest shareholder (16.04%) of ZhongAn.

    Source: :Lend Academy

    KKR Invests in Shenzhen Suishou Technology (BusinessWire), Rated: A

    Shenzhen Suishou Technology Co. (“Suishou” or the “Company”), a leading personal finance management platform in China, and global investment firm KKR today announced the signing of a definitive agreement under which KKR will invest in Suishou’s Series C funding round to support the Company’s expansion across China.

    European Union

    Robo.Cash Tops €2 million with 1000th Investor (Crowdfund Insider), Rated: AAA

    Emerging peer to peer lender Robo.Cashhas topped €2 million in loans with the advent of the 1000th investor.  According to Robo.Cash, investors are spread across most of Europe with lenders now coming from 28 different countries. The short term loans are coming from Spain and Kazakhstan.

    The total sum of earned interests has amounted to more than €50,000 since the start of the platform’s work.

    The End of Fintech Is Nigh (FiNews), Rated: AAA

    Switzerland is one of the major global fintech centers and the industry is booming: Swisscom counted fewer than a hundred fintech startups in 2015, today there are 208 companies active in wealth management, comparative consulting, crypto finance, data management, payment services and lending (see illustration below).

    Blurred Dividing Line

    And this may also spell the end of fintech as we know it, in Switzerland, and abroad. That’s at least what Armands Broks (pictured below) believes. The founder and CEO of Twino, a peer-to-peer lending platform, thinks that the fine line between finance industry and fintech is about to be blurred and that fintech eventually will disappear.

    The only way forward for fintech is through cooperation agreements and in doing so, «the fintech industry is signing its own death sentence,» Broks said.

    PWC consultants said that about 60 percent of Swiss banks have links to fintechs. Four out of five banks are eyeing partnerships in the near future or are planning to expand existing ones.

    International

    Goldman Sachs’ foray into consumer banking is getting aggressive (Tearsheet), Rated: AAA

    The same year it launched GS Bank, it began building a digital-only consumer loan product, Marcus, that was fully developed and on the market 12 months later. Without having the legacy infrastructure under previously existing consumer products and services, the overhaul other major banks have been experiencing don’t exist for Goldman.

    “[The] platform approach has not been an obvious approach on Wall Street. Our competitors are generally structured in deep vertical silos and we have a different architecture: these shallower silos built on top of many layers of software, tech infrastructure, cybersecurity, enterprise platforms and increasingly, client platforms,” Marty Chavez, an engineer and Goldman Sachs CIO-turned-CFO this year, said in a keynote at Harvard University earlier this year.

    46 percent of Goldman jobs are in technology 
    CB Insights analyzed more than 2,000 open Goldman Sachs job listings by division and business unit to confirm it’s focused on building its technology and digital finance units.

    Many of the jobs are in digital finance. Earlier this month it reportedly poached 20 employees from New York-based online lending startup Bond Street — engineers, product developers, and risk and marketing specialists — presumably to build out a lending product.

    According to the research, published Tuesday, 46 percent of all of the firm’s jobs as of Sept. 14 are in technology, with the highest amount for core platform roles, followed by operations engineering and then equities technology.

    Source: Tearsheet

    Marcus is expanding in the U.K.

    Marcus, the online lending startup built inside the investment bank, has been growing tremendously in the eight months since it launched in October 2016. It has one product: a customizable personal loan for Prime borrowers, with at least a 660 credit score, of up to $30,000. It promises no fees and straightforward repayment terms. It recently passed $1 billion in loan originations with expectations to originate $2 billion by the end of this year. By comparison: SoFi, which launched in 2011, reached its first billion after 14 months; Avant, founded in 2012, took 28 months; 10-year-old Lending Club took 65 months; and Prosper, launched in 2006, passed $1 billion in 98 months.

    Goldmoney Inc. Adds Bitcoin and Ethereum to the Goldmoney Holding (Globe Newswire), Rated: A

    Goldmoney Inc. (TSX:XAU) (“Goldmoney”) (the “Company”), a precious metal financial service and technology company, today unveiled the addition of vaulted Bitcoin and Ethereum as secure and fully-reserved offline investable assets within the Goldmoney® Holding, a major enhancement that allows qualified clients to buy, sell, and exchange cryptocurrencies with nine global currencies as well as gold, silver, platinum and palladium bullion. With today’s launch, Goldmoney becomes the world’s first publicly traded and regulated financial service to offer insurable, auditable, and Anti-Money Laundering (“AML”) compliant exposure to cryptocurrencies.

    • Buying and selling of digital assets that are safely secured in vaulted cold storage. Cryptocurrency offerings currently include Bitcoin and Ethereum; additional leading digital assets will be added over time.
    • Funding of Goldmoney Holdings with 50 types of cryptocurrency, enabling wallet holders to sell a variety of cryptocurrencies and fund their Goldmoney Holding with fiat currency to access precious metals and other Goldmoney service offerings.
    • Will seek the establishment of peer-to-peer (“P2P”) lending capabilities on digital assets in partnership with Lend and Borrow Trust, allowing owners of Bitcoin and other assets to safely borrow against their positions.

    HNWs Would Use Amazon for Wealth Management (Financial Advisor IQ), Rated: A

    The majority of high net investors would turn to GoogleAppleFacebook and Amazon for wealth management, Bloomberg writes.

    If one of the four tech giants were to enter the advice space, 56.2% of wealthy individuals would entrust them with their money, according to a Capgemini survey of 2,500 individuals with a net worth of $1 million or more in North America, Latin America, Europe and Asia-Pacific cited by the news service. And among people under 40, more than 81% would use one of the four tech firms, according to the survey.

    Australia

    New fintech “Study Loans” aims to help cash-strapped students (Mozo), Rated: AAA

    It’s called Study Loans and is said to be the first online platform dedicated to providing loans to students for both vocational and higher education.

    Working closely with education providers, the fintech will track student performance and provide funds as you study through ‘tranches’ – which are based on the number of units you do and when they are completed.

    Think of tranches as a ‘pay as you go’ kind of deal. So whether you pass one unit or four, Study Loans will release the funds according to your course progression.

    Study Loans has raised $5 million debt equity so far, which is ready to be distributed as the first tranche to Aussie students who have already applied through the platform.

    Financing options for students: 

    • Student loans – Student personal loans are designed to help fund your education. They often have a more lenient application criteria and have lower interest rates than standard personal loans. But you are expected to make monthly repayments – so you’ll need to make sure your budget can handle the amount.
    • Peer-to-peer lending
    • HECS-HELP – This is a Government funded scheme for students enrolled in Commonwealth supported institutions with no real interest charged on the loan. You won’t have to pay your student fees upfront, however, you are expected to make repayments once you start earning a salary of $54,869.

    MONEFLY LAUNCHES FREE FINTECH PLATFORM WITH ENVESTNET | YODLEE FINANCIAL DATA (Yodlee), Rated: A

    Monefly is an innovative new Fintech platform in Australia, focused on providing tools and resources that empower its members to grow income, reduce expenses, build assets, eliminate debt and protect themselves from risk. Some of these exciting tools include free property valuations, automated budgeting, credit scores, bank account consolidation and much more.

    Monefly has partnered with Envestnet | Yodlee to help its members access comprehensive financial data available across banking and wealth management from over 15,500 data sources globally.

    The data being integrated into Monefly includes superannuation, cash, credit cards, personal debts, mortgages, assets, shares, real estate, credit scores and other investment data.

    India

    MyAdvo Ties Up with Online Loan Advisor Square Capital for Loan Services (newKerala), Rated: AAA

    MyAdvo, India’s leading Legal Tech Startup has entered into an agreement with Square Capital, the digital lending arm of India’s largest real estate transaction platform Square Yards to enable loan facilitation for lawyers on its panel.

    Square Capital currently facilitates USD 30- 40Mn(INR 200cr – INR 260cr) of loan disbursals every month, contributed majorly by secured mortgages spread across 50+ banking partners for their different products in home loan, loan against property and business loan.

    This exclusive tie-up will benefit MyAdvo registered lawyers in receiving immediate loan solutions without any hassle.

    Indians are warming up to robo-advisers (livemint), Rated: A

    Robo-advisers, or automated services based on computer algorithms, are catching on in the Indian market due to the relatively lower penetration of financial products in India compared to developed markets.

    According to a Business Insider Intelligence forecast, robo-advisers (with some element of automation) will manage investment products worth $1 trillion by 2020, which will go up to $4.6 trillion by as early as 2022.

    Scepticism notwithstanding, financial institutions in the country are realising the benefits of robo-advisory services by either building the product in-house or partnering with fintech companies to develop robo-advisers. Take the case of FundsIndia.com, which has a robo-advisory service for which it is forging partnerships with financial biggies. “We have a partnership with Axis Securities and one more company. There is a growing acceptance from the industry, and we are trying to enable better product design,” said Srikant Meenakshi, co-founder, FundsIndia.com. According to him, 15% of his company’s overall portfolio comprises robo-advisory services. Similarly, 5nance has an agreement with HDFC Mutual Fund for its robo-advisor.

    Robo-advisory start-up ArthaYantra uses a patented methodology called the Personal Financial Lifecycle Management on its online platform, Arthos. Since its launch in 2008, the site claims to have helped 120,000 customers across more 650 cities and 30 countries.

    Asia

    Singapore Cryptocurrency Firms Facing Bank Account Closures (Bloomberg), Rated: AAA

    Singapore banks have closed accounts of several companies which specialize in providing cryptocurrency and payments services, according to two local bodies which represent financial-technology firms.

    Chia Hock Lai, president of the Singapore Fintech Association, which has broader membership than Access, said some of his organization’s members also experienced account closures, though he didn’t provide figures.

    Access has 106 members and the Fintech Association has 185, though the two organizations said some companies belong to both groups.

    How technology drives a new Taiwanese banking landscape (The Asset), Rated: A

    According to Joseph Huang, president of E.Sun Bank, speaking in an interview with The Asset, payments is one area that every bank is looking to explore, although it does not generate huge profits for most banks.

    Banks are also more frequently working with technology companies. E.Sun Bank partnered with IBM Taiwan in building its digital branch, which opened in February 2017, making it the first digital branch in Taiwan. Similarly, CTBC partnered with LINE Pay to help merge its banking services with communication apps and social media.

    Taishin Bank’s e-banking application, Richart, which attracted over 120,000 subscribers, is targeting young Taiwanese users, while Cathay United Bank is also providing its products to retail customers through its platform My MobiBank.

    Authors:

    George Popescu
    Allen Taylor

    Friday September 29 2017, Daily News Digest

    C-PACE financing

    News Comments Today’s main news: LendingClub completes 2nd self-sponsored loan securitization with $323M deal. Funding Circle restates IPO ambitions. Robo.cash tops 2M Euro, 1000th investor. AutoGravity surpasses $1B USD in finance amount requested. Singapore banks closing cryptocurrency, payments accounts. Today’s main analysis: Risk evaluation of commercial PACE securitizations differs from residential deals. Goldman Sachs’ aggressive push into consumer banking. Today’s […]

    C-PACE financing

    News Comments

    United States

    United Kingdom

    China

    European Union

    International

    Australia

    India

    Asia

    News Summary

    United States

    LendingClub Completes 2nd Self Sponsored Loan Securitization with $ 323 Million Deal (Crowdfund Insider), Rated: AAA

    LendingClub (NYSE: LC) has sponsored and contributed to its second securitization deal following the the last successful self sponsored deal this past June. The “Consumer Loan Underlying Bond” (CLUB) Credit Trust 2017-P1 (CLUB 2017-P1) issued $323.1 million in prime notes backed by consumer loan assets originated via the LendingClub platform. This is the sixth securitization supported or sponsored by LendingClub, and the fourth rated securitization of LendingClub facilitated loans overall. LendingClub described the deal as further expanding investor access.

    LendingClub reported the transaction was backed by approximately $350 million of collateral and includes $217.3 million of Class A notes rated “A-(sf)”, $51.0 million of Class B notes rated “BBB (sf)” and $54.7 million of Class C notes rated “BB (sf)”.

    Orchard’s Online Lending Ecosystem Update: “Lendscape” (Crowdfund Insider), Rated: AAA

    Orchard Platform, the nexus of loan originators and institutional investing, has updated their ongoing graphical view of the online lending  world or “Lendscape”.  As the online lending universe has moved from peer to peer lending, to marketplace lending to all forms of online lending, the Lendscape has changed and grown. New lending platforms have been launched, new verticals targeted, and a growing number of ancillary services have joined the space.  Orchard points to the addition of lenders like LendingPointLiberty LendingLendmartAllegro CreditUpLiftArtMoneyAscendOppLoans, and Lendistry.

    Perhaps the most important shift in online lending is the growing participation by traditional finance firms.

    Source: Crowdfund Insider

    Risk Evaluation of Commercial PACE Securitizations Differs From Residential Deals (Morningstar), Rated: AAA

    Morningstar Credit Ratings, LLC believes the next iteration of property assessed clean energy securitizations will be in the commercial sector. While securitization of residential PACE assessments tops $3 billion, there have been no public transactions consisting primarily of commercial liens.

    Evaluating Property Income Generated to Pay Debts In analyzing the credit risk of transactions backed by commercial assessments, Morningstar considers the debt service coverage ratio, because PACE lending is tied to the property rather than the owner’s creditworthiness.

    Evaluating Property Income Generated to Pay Debts

    Morningstar evaluates a property’s net operating income in relation to its annual debt-service payments. Among securitized commercial mortgages, the average DSCR is approximately 2.14x, according to Morningstar. C-PACE lenders and aggregators typically require a minimum total DSCR in the 1.00x to 1.15x range. Although, in some cases, the DSCR has dipped below 1.00x, especially if total debtto-value is low when operating expenses are higher than revenue. Factors possibly mitigating a lower DSCR, which include county support, property ownership affiliations within a network, liquidity account and equity position require case-by-case analysis. In addition, DSCR of the lien is more important than the DSCR of the overall debt.

    Evaluating Divergent Leverage Metrics

    The lien-to-value ratio is another leverage metric that Morningstar analyzes. Although a PACE assessment raises a property’s lien-to-value ratio, the increased risk to the underlying mortgage is likely minimal, as the obligation is usually small in comparison to the mortgage.

    It can be more challenging to calculate the lien-to-value ratio for C-PACE levies, because the properties can run the gamut from hotels, farmlands, nursing homes, and gas stations to nonprofit buildings such as churches. Across residential PACE deals, we have seen lien-to-value ratios around 6.7% and combined PACE-lien-plus-mortgage-tovalue ratios at around 62.7%. In C-PACE, lien-to-value ratios hover around 25.0%, not including mortgage debt.

    While we scrutinize total debt-to-value, the distribution of leverage offers insight into the financial health of the property. For example, we view a property with a 90% debt-to-value ratio that is composed of an 89% mortgage loan and a 1% PACE assessment more favorably than a property whose debt is composed of an 89% PACE obligation and a 1% mortgage because of higher subordination levels.

    Growing Market Size

    C-PACE financing has grown to about $482 million as of Sept. 1, encompassing 1,097 commercial projects, according to PACENation. More than 2,500 municipalities have C-PACE programs.

    Compared with residential programs, C-PACE is in its infancy, as R-PACE financing totaled about $3.67 billion and R-PACE securitizations totaled around $3.40 billion. A sliver of
    commercial assets was included in one of those securitizations, GoodGreen 2016-1, with commercial PACE levies representing approximately 4.8% of the pool’s assets.

    Source: Morningstar

    Get the full report here.

    The Top Sources Of Small Business Financing Based On Approval Rates (Forbes), Rated: AAA

    According to the latest Biz2Credit Small Business Lending Index, the monthly analysis of more than 1,000 small business loan applications on Biz2Credit.com. Loan approval percentages of institutional investors have continuously reached new heights this year in terms of approval rates. In August Institutional lenders’ loan approval rates in August reached 63.9%.

    Alternative lenders’ approval percentages continue to decline; in August the rate dipped to 57.1%. Approval percentages have dropped every month for more than a year.

    Approval percentages at small banks rose one-tenth of a percent in August to 49.0% from July’s 48.9% figure. It is conceivable that the number may cross the 50% benchmark.

    Big banks improved one-tenth of a percent to 24.6% in August, setting a new high for the Biz2Credit Index, which has tracked loan approvals since January 2011. The number is creeping up to one-in-four. It’s a good time for bank lending.

    Loan approval rates at credit unions dipped to 40.3% in August, falling to a new low for this category of lenders on Biz2Credit’s index.

    AutoGravity Surpasses $ 1 Billion USD In Finance Amount Requested, Launches Real-Time Dealership Inventory Nationwide (PR Newswire), Rated: AAA

    AutoGravity, a FinTech pioneer on a mission to transform car shopping and financing, today announced that it has reached $1 billion USD in finance amount requested on the AutoGravity platform. Additionally, AutoGravity has announced the launch of real-time inventory for new and used cars from partner dealership groups across the nation. Car shoppers can browse real vehicle inventory on dealership lots, find the specific car that’s right for them and secure up to four finance offers in minutes on the AutoGravity smartphone app.

    More over 750,000 car shoppers have downloaded AutoGravity, collectively requesting over $1 billion USD in financing. These users can now search inventory by car brand and model year – as well as characteristics such as body type, drivetrain and color. Car shoppers can find their desired car waiting for them on the showroom lot for the payment they want. With car selected and offers in hand, users can pick up their car and drive off the lot with the confidence of knowing they have secured a fair deal.

    AutoGravity partnered closely with the largest dealer groups in the country to design a seamless process by which dealers can easily load inventory feeds, including vehicle details and pictures, to AutoGravity’s secure platform. Inventory is updated and shown to users in real time.

    ID-verification firms seize on Equifax moment (American Banker), Rated: A

    The Equifax hack, combined with the rise of online lending, may have turned 2017 into a golden age for companies with new ideas for ID.

    The software company Mitek plans to roll out a product in the coming year called Mobile Verify for Lending, which offers lenders a five-step process to quickly verify customer identities. Borrowers first share their online bank account information with lenders. They then submit four pictures taken from their smartphones: the front and back of their driver’s licenses, a selfie and a pay stub.

    Other players are offering digital lending solutions to make it easier for banks to keep pace with speedy fintech competitors. Upstart, for example, is marketing software, called Powered by Upstart, to banks wanting to get into digital lending.

    DFS to Court: OCC Fintech Charter ‘Undermines’ Its Authority (New York Law Journal), Rated: A

    The U.S. Office of the Comptroller of the Currency’s plan to offer a special-purpose bank charter for financial technology companies “undermines” the Department of Financial Services’ regulatory authority in New York, the state agency argued in court documents.

    “The Fintech Charter Decision is an unlawful assertion of power that usurps New York consumer protection laws and would preempt plaintiff’s ability to regulate any number of the over 600 nondepository institutions she currently regulates,” wrote Matthew Levine, the executive deputy superintendent for enforcement at the department.

    Stockpile Raises $ 30 Million to Make Stock Investing Easy for Everyone (PR Newswire), Rated: A

    Stockpile, a brokerage popular with millennials that is pioneering fractional share stock investing, announced today that it has raised $30 million in Series B funding led by Fidelity backed Eight Roads Ventures, with participation by Mayfield, Arbor Ventures, Hanna Ventures, Wang Ventures, and others.

    This latest investment brings the total raised by Stockpile to more than $45 million.  Mayfield led Stockpile’s $15 millionSeries A in October 2015, with participation by Arbor Ventures, Stanford University, and actor Ashton Kutcher.  Stockpile will use the new funds to bring stock investing to more millennial customers and expand its unique features, Lele said.

    Chime raises $ 18 million for mobile banking without the fees (TechCrunch), Rated: A

    Chime is raising $18 million in Series B financing for its mobile-first approach to banking. Cathay Innovation led the round with participation from Northwestern Mutual Future Ventures, Crosslink Capital, Forerunner Ventures, Homebrew and others.

    It’s a bank account and debit card built for the digital age.

    Without monthly fees or overdraft charges, Chime tries to appeal to the millennial generation, touting its affordability and easy-to-use app. Since launching in 2014, Chime has signed up 500,000 customers, who are typically in their late 20s and making between $50,000 and $70,000 per year.

    Shinola’s new pitch: the installment plan (Crain’s Detroit Business), Rated: A

    Shinola/Detroit LLC is targeting millennials by adding an option to pay for its watches and other luxury goods in an old-fashioned way: the installment plan.

    The average order value for Affirm customers is 70 percent higher than the sitewide average, Kopitz said. And about half of those using the service with Shinola are 18-34 years old, the release said.

    Around 1,000 retailers now accept payment through Affirm.

    Is marketplace lending maturing? (Banking Exchange), Rated: A

    As new as fintech and marketplace lending—once known as “peer to peer lending”—may still seem, Noreika suggested that the online lending fraternity may be moving toward maturity.

    Noreika said the sweat that went into those ideas has hit $40 billion in consumer and small business credit, with volumes doubling every year since 2010. He noted that some project that at that rate, marketplace lending will hit $1 trillion by 2025—versus the $3.7 trillion in unsecured consumer lending as of yearend 2016.

    Noreika pointed out that marketplace lenders have been seeing cracks in their credit since the fourth quarter of 2015.

    ‘Fintechs tend to march to their own rules’: former SEC chair Levitt (American Banker), Rated: A

    “Hardly a day goes by where there isn’t a recording of some scandal or another,” Levitt said. “I think that’s generally true of emerging cultures and emerging standards and cultures. That makes the odds of winning much less than in well established companies with better established cultures.”

    His fellow fintech panelists, Sarah Friar, chief financial officer at Square, and Scott Sanborn, CEO of Lending Club, both pointed out that established companies have had their own share of scandals.

    Levitt said it’s difficult for startups to attract the kind of quality board members that larger, more mature companies are able to attract.

    “Regulators are always playing catch up,” he said. “Regulation today trails the fintech world and often presents impediments and costs that are unnecessary. Regulators are constantly protecting their space so they don’t get caught up in a scandal they’re held accountable for, so there’s a tendency to over-regulate.”

    McHenry and Booker Introduce Fintech Bill to Automate Income Verification (House.gov), Rated: B

    Today, Chief Deputy Whip Patrick McHenry (R, NC-10), the Vice Chairman of the House Financial Services Committee, and Senator Cory Booker (D-NJ) introduced the IRS Data Verification Modernization Act of 2017. This bipartisan bill will require the Internal Revenue Service (IRS) to automate the Income Verification Express Services process by creating an Application Programming Interface (API) allowing small businesses and consumers to access accurate credit assessments more efficiently. Joining McHenry as an original cosponsor of H.R. 3860 is Congressman Earl Blumenauer (D, OR-03), a senior member of the House Committee on Ways and Means.

    Plug and Play Selects Their Winter 2017 Batches (PR Newswire), Rated: B

    Plug and Play formally announces the startups accepted into their Winter 2017 batches. Plug and Play will run five programs this quarter focused on Health & Wellness, Insurtech, Internet of Things, Mobility, and Travel & Hospitality.

    Wunder Brings on Rich Mauro as Director of Capital Markets (Wunder Capital), Rated: B

    We’re incredibly excited to welcome the newest member of Wunder Capital’s team, Rich Mauro. As Director of Capital Markets, Rich will lead Wunder’s institutional fundraising activities, bolstering our capital stack and helping us scale Wunder’s platform to the next level.

    United Kingdom

    Funding Circle hits £50 million in revenue as CEO restates IPO ambitions (Business Insider), Rated: AAA

    Accounts for 2016 filed with Companies House this week show:

    • Revenue rose 59% to £50.9 million;
    • Operating expenses rose by 43% to £103.1 million;
    • Losses dipped by 3% to £35.7 million thanks partly to a foreign exchange boost;
    • £1 billion lent last year;
    • Loans outstanding rose by 61% to £1.37 billion;

    ‘It goes without saying that international is really hard’

    While Desai is bullish on international expansion, the accounts show Funding Circle stopped operations in Spain at the start of the year, a market it entered through the acquisition of Zencap in 2015.

    International revenues grew slower than UK revenues last year and Funding Circle parted ways with the head of its continental Europe operations in the middle of last year.

    In the UK, economic growth is slowing and consumer debt is ballooning, leading to fears of a possible economic slowdown that could hit lenders.

    Funding Circle remains a loss-making business (accumulated losses stand at £116.6 million to date) but Desai says it is on a long-term path to profitability.

    Funding Circle is onto a winning strategy (Business Insider), Rated: AAA

    Funding Circle, however, has remained a firm market leader, and its annual results for 2016 show it continues to do well.

    Its losses narrowed 3% from £37 million ($50 million) in 2015 to £36 million ($48 million) in 2016, as revenue grew 59% year-over-year (YoY) from £32 million ($43 million) to £51 million ($68 million), and originations saw a 61% boost from £846 million ($1.1 billion) to £1.4 billion ($1.9 billion).

    Source: Business Insider

    Funding Circle posts 59% revenue rise (Bridging&Commercial), Rated: A

    Post year-end highlights:

    Ranger Direct Lending fund expecting substantial dividend cut (AltFi), Rated: A

    The £220m Ranger Direct Lending fund could see its dividend pay-out for the second half of 2017 fall to nearly half of that in the first six months of the year, according to a statement by Ranger.

    It is expecting NAV returns in H2 2017 to average 0.4 per cent-0.5 per cent per month (c.5-6 per cent pa), and then recover to 0.6 per cent-0.7 per cent per month (c.7 per cent-9 per cent pa) in 2018, assuming the resolution of Princeton this year.

    As a result aggregate dividends of c.25p are expected for H2 2017, compared to 46p in H1.

    Source: AltFi

    ‘Oscars of the start-up world’ has an exciting new winner looking to disrupt property finance (CNBC), Rated: A

    LendInvest, an online marketplace platform for property lending and investing, was named the most valuable tech company at the prestigious Investor Allstars event in London on Wednesday evening.

    These 20-something Oxford grads just raised $ 30 million for their fintech startup (Business Insider), Rated: A

    A “RegTech” — regulation technology — company founded by three Oxford grads all under 30 has raised $30 million (£22.4 million) from investors including Microsoft’s venture capital arm.

    Onfido, an identity verification startup, has raised the “Series C” fundraising from Crane Venture Partners, Microsoft Ventures, and Salesforce Ventures, as well as existing investors. It takes the total raised by the London startup to over $60 million.

    Onfido’s latest $30 million funding injection follows a $25 million investment last April. Kassai says the latest funding will go towards technology investment and global expansion.

    Payday lender Wonga records £65m loss amid overhaul (BBC), Rated: A

    Wonga – Britain’s biggest payday lender – posted pre-tax losses of nearly £65m in 2016, but claims its business has been “transformed”.

    The lender, which operates in the UK, South Africa, Poland and Spain, saw its losses shrink from £80m in 2015 to £65m in 2016.

    How Fintech Is Disrupting Traditional Banking Models (Minute Hack), Rated: A

    One of the biggest changes in the financial sector in the UK has been the introduction of challenger banks.

    Crucially, these banks have not been mired by the many recent scandals and still rely on customer deposits to build their balance sheets. That’s why fledgling banks such as Metro Bank, Aldermore, Tesco Bank and United Bank UK and currently dominating the best buy tables.

    Retail banking is the area that has seen the biggest change as a result of the FinTech sector, but that’s not to say there hasn’t also been a significant impact in the commercial banking sector.

    A perfect example is Barclay’s mobile payments service Pingit, designed to compete with Apple Pay, while other banks have launched new mobile banking businesses away from their legacy businesses in an attempt to compete in a digital age.

    Bringing financial services to small businesses

    One example is peer-to-peer lending, a sector that has sprung up from nothing ten years ago to lend a total of £2.9bn in 2016. This is now filling the capital void for many growing businesses and lending at lower rates than many firms would be able to access elsewhere.

    New trustees join Finance Innovation Lab’s board (P2P Finance News), Rated: B

    SIX new trustees have been appointed to the board of the Finance Innovation Lab.

    The new trustees include Caroline Ellis, a social and organisational change consultant who is taking on the role of chair of the board, and Kate Ormiston Smith, director of finance and operations at The B Team, who is taking up the post of treasurer.

    The other new members of the board are: Hanna McCloskey, founder and chief executive officer of Fearless Futures; Toyin Ogundana – investment manager at CAF Venturesome; Paul Riseborough – chief commercial officer at Metro Bank and Julian Thompson, social innovation and fundraising strategist.

    How and where to get Crowdlending to fund your Business (TechBullion), Rated: B

    When considering your initial application for funding, crowdlending platforms will review your business plan, financial information and other details about your company. In other words, the platforms will review your company’s financial information as well as your personal information in much the same way as banks will do before offering you a loan. Therefore, it is imperative to ensure that your business plan is engaging, comprehensive and well thought out.

    Investors will usually seek to get more information about you and your business from social networks like FacebookTwitterand LinkedIn. It will serve you well to ensure that you have an online presence before you seek for funds through crowdlending.

    Going by the FundingKnightresearch, most UK investors have a love for the community and would want to give back to some UK SME to ensure its prosperity.

    China

    More Chinese fintech firms to eye Hong Kong IPOs, says JP Morgan (SCMP), Rated: AAA

    More Chinese fintech firms vying to go public could choose Hong Kong as their listing venue, after the city’s first fintech IPO received a hot response from investors, and that Hong Kong has unique advantages compared with other global financial hubs, said JP Morgan’s head of global investment banking in China.

    Zhong An Online Property and Casualty Insurance, China’s first online-only insurer, closed nine per cent up from its IPO price on Thursday in its Hong Kong debut. With an oversubscription of nearly 400 times from retail investors, the company had priced its IPO at the top end of the expected range, raising US$1.5 billion in the city’s biggest ever fintech offering.

    “The next Zhong An could show up in online payment, P2P lending, [financial] product distribution, or online insurance.”

    In particular, revenue from online payment is estimated to increase to 202 billion yuan by 2020. Revenue from online distribution of financial products could grow to 52 billion yuan by then, while that for online lending and online insurance may reach 142 billion yuan and 60 billion yuan respectively.

    ZhongAn Insurance Starts Trading on the Hong Kong Stock Exchange (Lend Academy), Rated: AAA

    ZhongAn’s IPO will likely make the company the 4th most valuable fintech company in the world with a market cap of about US$10.4 billion, following the top three fintechs, which are Paypal ($78bn), Ant Financial ($68bn) and Lufax ($18bn).

    Peter Renton interviewed the CEO of ZhongAn Insurance, Jeffrey Chen, on the Lend Academy Podcast over the summer. Jeffrey said in the interview that ZhongAn has 492 million insurance customers as of December 31, 2016. That is more than four times that of insurance giant AXA’s customer base (107 million, as of December 31, 2016). By this measure, ZhongAn truly is the world’s largest insurance company. And this is just a four-year old company!

    Why ZhongAn is So Succesful

    For the technology part, ZhongAn has been using artificial intelligence and big data analytics in each step of the insurance value chain, from marketing, underwriting, pricing to claims processing.

    Another example is that ZhongAn has partnered with a Chinese automaker to develop internet of things (IoTs) and telematics solutions. Telematics devices can capture drivers’ behavioral data, which can be fed to algorithms using big data techniques to tailor product pricing to observed risk levels.

    In ZhongAn’s early days, the revenue generated by shipping return policies accounted for almost 90% of the total revenue. This product would not have been such a success were it not for its partnership with Alibaba. Ant Financial, the financial affiliate of Alibaba, is also the single biggest shareholder (16.04%) of ZhongAn.

    Source: :Lend Academy

    KKR Invests in Shenzhen Suishou Technology (BusinessWire), Rated: A

    Shenzhen Suishou Technology Co. (“Suishou” or the “Company”), a leading personal finance management platform in China, and global investment firm KKR today announced the signing of a definitive agreement under which KKR will invest in Suishou’s Series C funding round to support the Company’s expansion across China.

    European Union

    Robo.Cash Tops €2 million with 1000th Investor (Crowdfund Insider), Rated: AAA

    Emerging peer to peer lender Robo.Cashhas topped €2 million in loans with the advent of the 1000th investor.  According to Robo.Cash, investors are spread across most of Europe with lenders now coming from 28 different countries. The short term loans are coming from Spain and Kazakhstan.

    The total sum of earned interests has amounted to more than €50,000 since the start of the platform’s work.

    The End of Fintech Is Nigh (FiNews), Rated: AAA

    Switzerland is one of the major global fintech centers and the industry is booming: Swisscom counted fewer than a hundred fintech startups in 2015, today there are 208 companies active in wealth management, comparative consulting, crypto finance, data management, payment services and lending (see illustration below).

    Blurred Dividing Line

    And this may also spell the end of fintech as we know it, in Switzerland, and abroad. That’s at least what Armands Broks (pictured below) believes. The founder and CEO of Twino, a peer-to-peer lending platform, thinks that the fine line between finance industry and fintech is about to be blurred and that fintech eventually will disappear.

    The only way forward for fintech is through cooperation agreements and in doing so, «the fintech industry is signing its own death sentence,» Broks said.

    PWC consultants said that about 60 percent of Swiss banks have links to fintechs. Four out of five banks are eyeing partnerships in the near future or are planning to expand existing ones.

    International

    Goldman Sachs’ foray into consumer banking is getting aggressive (Tearsheet), Rated: AAA

    The same year it launched GS Bank, it began building a digital-only consumer loan product, Marcus, that was fully developed and on the market 12 months later. Without having the legacy infrastructure under previously existing consumer products and services, the overhaul other major banks have been experiencing don’t exist for Goldman.

    “[The] platform approach has not been an obvious approach on Wall Street. Our competitors are generally structured in deep vertical silos and we have a different architecture: these shallower silos built on top of many layers of software, tech infrastructure, cybersecurity, enterprise platforms and increasingly, client platforms,” Marty Chavez, an engineer and Goldman Sachs CIO-turned-CFO this year, said in a keynote at Harvard University earlier this year.

    46 percent of Goldman jobs are in technology 
    CB Insights analyzed more than 2,000 open Goldman Sachs job listings by division and business unit to confirm it’s focused on building its technology and digital finance units.

    Many of the jobs are in digital finance. Earlier this month it reportedly poached 20 employees from New York-based online lending startup Bond Street — engineers, product developers, and risk and marketing specialists — presumably to build out a lending product.

    According to the research, published Tuesday, 46 percent of all of the firm’s jobs as of Sept. 14 are in technology, with the highest amount for core platform roles, followed by operations engineering and then equities technology.

    Source: Tearsheet

    Marcus is expanding in the U.K.

    Marcus, the online lending startup built inside the investment bank, has been growing tremendously in the eight months since it launched in October 2016. It has one product: a customizable personal loan for Prime borrowers, with at least a 660 credit score, of up to $30,000. It promises no fees and straightforward repayment terms. It recently passed $1 billion in loan originations with expectations to originate $2 billion by the end of this year. By comparison: SoFi, which launched in 2011, reached its first billion after 14 months; Avant, founded in 2012, took 28 months; 10-year-old Lending Club took 65 months; and Prosper, launched in 2006, passed $1 billion in 98 months.

    Goldmoney Inc. Adds Bitcoin and Ethereum to the Goldmoney Holding (Globe Newswire), Rated: A

    Goldmoney Inc. (TSX:XAU) (“Goldmoney”) (the “Company”), a precious metal financial service and technology company, today unveiled the addition of vaulted Bitcoin and Ethereum as secure and fully-reserved offline investable assets within the Goldmoney® Holding, a major enhancement that allows qualified clients to buy, sell, and exchange cryptocurrencies with nine global currencies as well as gold, silver, platinum and palladium bullion. With today’s launch, Goldmoney becomes the world’s first publicly traded and regulated financial service to offer insurable, auditable, and Anti-Money Laundering (“AML”) compliant exposure to cryptocurrencies.

    • Buying and selling of digital assets that are safely secured in vaulted cold storage. Cryptocurrency offerings currently include Bitcoin and Ethereum; additional leading digital assets will be added over time.
    • Funding of Goldmoney Holdings with 50 types of cryptocurrency, enabling wallet holders to sell a variety of cryptocurrencies and fund their Goldmoney Holding with fiat currency to access precious metals and other Goldmoney service offerings.
    • Will seek the establishment of peer-to-peer (“P2P”) lending capabilities on digital assets in partnership with Lend and Borrow Trust, allowing owners of Bitcoin and other assets to safely borrow against their positions.

    HNWs Would Use Amazon for Wealth Management (Financial Advisor IQ), Rated: A

    The majority of high net investors would turn to GoogleAppleFacebook and Amazon for wealth management, Bloomberg writes.

    If one of the four tech giants were to enter the advice space, 56.2% of wealthy individuals would entrust them with their money, according to a Capgemini survey of 2,500 individuals with a net worth of $1 million or more in North America, Latin America, Europe and Asia-Pacific cited by the news service. And among people under 40, more than 81% would use one of the four tech firms, according to the survey.

    Australia

    New fintech “Study Loans” aims to help cash-strapped students (Mozo), Rated: AAA

    It’s called Study Loans and is said to be the first online platform dedicated to providing loans to students for both vocational and higher education.

    Working closely with education providers, the fintech will track student performance and provide funds as you study through ‘tranches’ – which are based on the number of units you do and when they are completed.

    Think of tranches as a ‘pay as you go’ kind of deal. So whether you pass one unit or four, Study Loans will release the funds according to your course progression.

    Study Loans has raised $5 million debt equity so far, which is ready to be distributed as the first tranche to Aussie students who have already applied through the platform.

    Financing options for students: 

    • Student loans – Student personal loans are designed to help fund your education. They often have a more lenient application criteria and have lower interest rates than standard personal loans. But you are expected to make monthly repayments – so you’ll need to make sure your budget can handle the amount.
    • Peer-to-peer lending
    • HECS-HELP – This is a Government funded scheme for students enrolled in Commonwealth supported institutions with no real interest charged on the loan. You won’t have to pay your student fees upfront, however, you are expected to make repayments once you start earning a salary of $54,869.

    MONEFLY LAUNCHES FREE FINTECH PLATFORM WITH ENVESTNET | YODLEE FINANCIAL DATA (Yodlee), Rated: A

    Monefly is an innovative new Fintech platform in Australia, focused on providing tools and resources that empower its members to grow income, reduce expenses, build assets, eliminate debt and protect themselves from risk. Some of these exciting tools include free property valuations, automated budgeting, credit scores, bank account consolidation and much more.

    Monefly has partnered with Envestnet | Yodlee to help its members access comprehensive financial data available across banking and wealth management from over 15,500 data sources globally.

    The data being integrated into Monefly includes superannuation, cash, credit cards, personal debts, mortgages, assets, shares, real estate, credit scores and other investment data.

    India

    MyAdvo Ties Up with Online Loan Advisor Square Capital for Loan Services (newKerala), Rated: AAA

    MyAdvo, India’s leading Legal Tech Startup has entered into an agreement with Square Capital, the digital lending arm of India’s largest real estate transaction platform Square Yards to enable loan facilitation for lawyers on its panel.

    Square Capital currently facilitates USD 30- 40Mn(INR 200cr – INR 260cr) of loan disbursals every month, contributed majorly by secured mortgages spread across 50+ banking partners for their different products in home loan, loan against property and business loan.

    This exclusive tie-up will benefit MyAdvo registered lawyers in receiving immediate loan solutions without any hassle.

    Indians are warming up to robo-advisers (livemint), Rated: A

    Robo-advisers, or automated services based on computer algorithms, are catching on in the Indian market due to the relatively lower penetration of financial products in India compared to developed markets.

    According to a Business Insider Intelligence forecast, robo-advisers (with some element of automation) will manage investment products worth $1 trillion by 2020, which will go up to $4.6 trillion by as early as 2022.

    Scepticism notwithstanding, financial institutions in the country are realising the benefits of robo-advisory services by either building the product in-house or partnering with fintech companies to develop robo-advisers. Take the case of FundsIndia.com, which has a robo-advisory service for which it is forging partnerships with financial biggies. “We have a partnership with Axis Securities and one more company. There is a growing acceptance from the industry, and we are trying to enable better product design,” said Srikant Meenakshi, co-founder, FundsIndia.com. According to him, 15% of his company’s overall portfolio comprises robo-advisory services. Similarly, 5nance has an agreement with HDFC Mutual Fund for its robo-advisor.

    Robo-advisory start-up ArthaYantra uses a patented methodology called the Personal Financial Lifecycle Management on its online platform, Arthos. Since its launch in 2008, the site claims to have helped 120,000 customers across more 650 cities and 30 countries.

    Asia

    Singapore Cryptocurrency Firms Facing Bank Account Closures (Bloomberg), Rated: AAA

    Singapore banks have closed accounts of several companies which specialize in providing cryptocurrency and payments services, according to two local bodies which represent financial-technology firms.

    Chia Hock Lai, president of the Singapore Fintech Association, which has broader membership than Access, said some of his organization’s members also experienced account closures, though he didn’t provide figures.

    Access has 106 members and the Fintech Association has 185, though the two organizations said some companies belong to both groups.

    How technology drives a new Taiwanese banking landscape (The Asset), Rated: A

    According to Joseph Huang, president of E.Sun Bank, speaking in an interview with The Asset, payments is one area that every bank is looking to explore, although it does not generate huge profits for most banks.

    Banks are also more frequently working with technology companies. E.Sun Bank partnered with IBM Taiwan in building its digital branch, which opened in February 2017, making it the first digital branch in Taiwan. Similarly, CTBC partnered with LINE Pay to help merge its banking services with communication apps and social media.

    Taishin Bank’s e-banking application, Richart, which attracted over 120,000 subscribers, is targeting young Taiwanese users, while Cathay United Bank is also providing its products to retail customers through its platform My MobiBank.

    Authors:

    George Popescu
    Allen Taylor

    Monday September 11 2017, Daily News Digest

    Zopa trailing 12-month net return

    News Comments Today’s main news: Equifax cybersecurity breach. Goldman to take on UK retail banks. China cracks down on online lenders, cryptocurrency dealers. Klarna is testing credit cards with employeees. Today’s main analysis: CECL overview. Today’s thought-provoking articles: Consumers who go to Equifax for help after data breach may not be able to sue. The data behind Zopa’s lowered return […]

    Zopa trailing 12-month net return

    News Comments

    United States

    United Kingdom

    China

    European Union

    International

    Australia/New Zealand

    India

    APAC

    News Summary

    United States

    Equifax Cyber Incident (Equifax Email), Rated: AAA

    At Equifax, we recognize that consumers and customers expect us to provide superior data security, and we work hard to do that every day. Unfortunately, on September 7th, 2017, we announced a cybersecurity incident involving consumer information.  This cybersecurity incident strikes at the heart of who we are and what we do.  Above all else, our first priority is to support consumers and you, our customers, by doing what we can to make this right.

    What happened?

    On July 29, 2017, Equifax identified a cybersecurity incident potentially impacting approximately 143 million U.S. consumers. Criminals exploited a U.S. website application vulnerability to gain access to certain files. Equifax discovered the unauthorized access and acted immediately to stop the intrusion. We promptly engaged a leading, independent cybersecurity firm that has been conducting a comprehensive forensic review to determine the scope of the intrusion, including the specific data impacted. We also reported the criminal access to law enforcement and continue to work with authorities.

    What information may be impacted?

    The information accessed primarily includes names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers. Criminals also accessed credit card numbers for approximately 209,000 U.S. consumers, and certain dispute documents with personal identifying information for approximately 182,000 U.S. consumers.

    Additional Information:

    We have found no evidence of unauthorized activity on Equifax’s core consumer or commercial credit reporting databases.  In addition, we have found no evidence that this cybersecurity incident impacted Equifax’s core consumer or commercial credit reporting databases, including,  ACRO, Workforce Solutions, including The Work Number payroll data, NCTUE, IXI and  CFN.

    Where can I learn more?

    We have set up a dedicated website at www.equifaxsecurity2017.com:

    • To see if you are potentially impacted, you can click on the Potential Impact Tab
    • To enroll in complimentary identity theft protection and credit file monitoring services and how to find out if your personal information may have been impacted, you can click on the Enroll Tab.
    • To learn more about the complimentary offering, you can click on TrustedID Premier Tab. TrustedID Premier provides you with copies of your Equifax credit report; the ability to lock your Equifax credit report; 3-Bureau credit monitoring of your Equifax, Experian and TransUnion credit reports; Internet scanning for your Social Security number; and identity theft insurance.

    To speak to someone directly, we have also established a call center at 866-447-7559, available every day (including weekends) from 7 a.m. – 1 a.m. EST, for individuals to ask questions.

    Consumers Who Go to Equifax for Help After Data Breach May Lose Their Right to Sue (Money), Rated: AAA

    On Thursday credit bureau Equifax said a data breach put personal information of 143 million people at risk. Now its response is drawing more outrage, as lawmakers and others accuse it of encouraging consumers who come to it seeking answers to sign away their chance to seek recourse in the courts.

    Following the breach, which compromised tens of millions of Social Security numbers and other valuable data, Equifax set up a website to help worried consumers determine whether or not their information was at risk. That website encouraged visitors to sign up for a program known as TrustedID Premier, the company’s credit monitoring service, which provides automated alerts to credit changes and up to $1 million in ID theft insurance. That’s where the trouble began.

    TrustedID’s terms of service include an arbitration clause, insisting that customers agree “all claims, disputes, or controversies…shall be finally settled by arbitration” rather than a court of law. Such clauses aren’t unusual for credit monitoring services — or indeed many other consumer products. But in this circumstance, it created the impression that Equifax was asking consumers it had harmed to surrender their legal rights — including becoming part of a class-action law suit — before it would agree to help them.

    One key legal avenue that arbitration clauses typically close off for consumers is the class-action lawsuit. That could be significant for Equifax — at least on one proposed class-action lawsuit was already filed against the company late Thursday, according to Bloomberg.

    Equifax free credit monitoring service has some concerned (News Channel 6 Now), Rated: A

    The 143 million Americans whose information was compromised by the Equifax data breach may still be on edge even with the free credit monitoring service being offered by the company.

    Everything from names, addresses, social security numbers and credit card numbers were hacked in the Equifax data breach.

    Kuehner said right now the company is sending out letters letting people know if they have been potentially affected. They can also check online at equifaxsecurity2017.com.

    However, it is not only the breach that has consumers concerned, it is the company’s response.

    “We’re taking unprecedent step of offering every U.S consumer in the country a comprehensive package of identity theft protection, ecredit file monitoring at no cost,” said Rick Smith, Equifax Chairman, and CEO, in a statement released online.

    CECL Overview (PeerIQ), Rated: AAA

    This past Wednesday, FASB released an update to the current expected credit losses methodology (CECL) for estimating credit loss allowances. This new accounting standard, which was initially published in June 2016 (in conjunction with regulators such as the FDIC, OCC, and NCUA), will apply to financial assets carried at amortized cost, including loans held for investment and held-to-maturity debt. Once in place, these assets must be held on the balance sheet net of an expected loss account. Changes are effective for fiscal years beginning after Dec 15, 2019, for all for-profit companies that file with the SEC.

    Once firms adopt CECL, management will have increased discretion around forecasts and ultimately net asset carrying value. This represents a dichotomy for investors. Assets should be carried at more accurate levels and better reflect the organization’s financial position. However, management estimates will significantly affect the balance sheet and income statement.

    The major change with the CECL methodology is that organizations are expected to include forward looking information when determining credit losses. Banks will need to calculate expected credit loss at the loan level for the entire life of the loan and then aggregate with similar instruments.

    Since ECL is calculated for the life of the financial asset, rather than the annual rate, almost all held-to-maturity instruments that are not risk-free will have a credit loss allowance. These long-dated assets may appear more volatile than financial statement users are accustomed to because their impairment has large implications for the balance sheet and income statement. Under the new regulation it will be more important to have correct, auditable, and explainable expected credit losses.

    Source: PeerIQ, FASB, FDIC

    Overall, we applaud the coming changes to US GAAP and expect investors to respond favorably.

    Square Becoming a Bank Is Brilliant. Here’s Why (Inc.), Rated: A

    However, there is much more to this story. In fact, this strategic decision could be one of the best moves the company has made. Square’s decision could start a revolution and revamp the entire financial institution structure to address the changes in the transaction and lending environment.

    Square essentially is proving how the traditional bank is no longer necessary. By becoming their own bank, they do not have to seek out a separate institution as a strategic partner. They don’t have to add specific business banking services to their portfolio.

    Although the banking sector has tried, most banks still have too many fees and capital requirements to provide business accounts with their needs. Numerous freelancers or startups just can’t satisfy those requirements because banks are still designed with the larger business in mind.

    More small businesses need smaller sized loans to tap into for their launches and expansion. Recognizing how peer-to-peer lending has grown together as an entire industry illustrates how ripe the financial industry is for more competition. Peer-to-peer lending is more personal, with a much needed boost to the financial sector in watching to find new ways to provide the much-needed financial support of smaller entities and businesses.

    With these products, it makes sense that the company could become a one-stop shop for financial needs. To become a one-stop service requires obtaining a bank charter, which is what the company has now applied for under the moniker, Square Financial Services Inc.

    King of fintech defined by optimism (San Francisco Business Times/Ron Suber Email), Rated: A

    Source: San Francisco Business Times

    PeerStreet – Real Estate Investing for Rich Millennials (Nanalyze), Rated: A

    While your average American doesn’t have much in the way of savings, the younger “millennial generation” is actually saving at a higher rate than any other generation. More than 80% of those “investment professionals” will then go on to underperform the market and get paid anyway.

    If all of this sounds too daunting already and you want the easy way out, use Betterment.

    Founded in 2013, Los Angeles startup PeerStreet has taken in just over $21 million in funding from investors that include Andreessen Horowitz to build “a marketplace that provides unprecedented access to high quality real estate loan investments“. Before you start getting too excited, take note that you’re going to need some cash to bring to the table. PeerStreet shows you some dropdown boxes when you create your account and unless you choose the one that says you make $300,000 a year or the one that says you have $1 million in assets, you’re not going to be allowed in. Those of you who were smart enough to major in a STEM subject are more likely to be squared away here while those of you who majored in underwater basket weaving should probably just stop reading right now.

    Right away we can see that this is a property that is out of reach for the majority of Americans with a hefty $3.78 million price tag.

    This means that the amount of money we could get from selling our property falls to around $3 million which still makes it very easy to pay off a $2 million loan. In fact, the only point we would start to worry is if property prices fell more than -53% over an 18-month period. This would represent a “black swan” type of event which has a very low probability of occurring. Of course there’s always the risk of PeerStreet going under but then you still have the property as collateral for the loan and you are first in line to receive payback should their property portfolio be liquidated. For providing everyone with this great service, PeerStreet takes a reasonable .75% fee which is paid each month alongside the interest payments.

    The first thing to note here is that the price of entry is an extremely attractive $1,000. You’d be joining the 295 other investors who have already plunked down an average amount of $6,169 which brings the loan up to 91% funded. If you then went out and found 9 other properties to invest in, you’d have a nice little diversified portfolio of 10 various property investments that are transparent and relatively simple to understand (provided you took the time to understand the risks as we have done with this example), all for just $10,000.

    Source: Nanalyze

    Lend360: Fintech is No longer a Boutique Financing Option, but a Key Component of Lending Market (Crowdfund Insider), Rated: A

    The early days of peer to peer lending have morphed into a far more complex and data driven credit service that is competing against not just innovative Fintech startups but traditional lenders seeking to maintain relevance. Crowdfund Insider recently asked Lend360 organizers a few questions on their perspective of the online lending industry and what has changed – and what they expect going forward.

    What has changed in the lending environment in the past 12 months?

    The biggest change is that Fintech is no longer just viewed as a boutique financing option, but a key component of today’s lending market. For proof of this change one only needs to look at the push for a national Fintech charter.

    Where do you see current opportunities?

    As long as there is a demand for credit, there will be an opportunity for Fintechs to step up and fill the void.

     

    Unexpected expenses hit non-prime Boomers hard (Banking Exchange), Rated: A

    New research, “The unGolden Years: Non-prime Baby Boomers,” from the Elevate Center for the New Middle Class indicates that non-prime Boomers are borrowing against their 401k accounts three times as frequently as prime Boomers do. The survey found that 4% of prime Boomers have 401k loans, while 13% of non-prime Boomers have borrowed against these retirement plans.

    Less than half—43%—of the non-prime Boomers in the company’s research feel comfortable with their ability to manage their day-to-day finances, let alone prepare for retirement. Not that prime Boomers all feel confident, either, with 76% saying they can manage daily financial needs.

    Elevate’s study, based on a survey of over 1,000 prime and nonprime consumers, found that non-prime Boomers are 14 times as likely as prime Boomers to have difficulty predicting monthly income—and 4 in 10 say they live paycheck to paycheck. They also tend to have difficulty predicting monthly expenses and are therefore more likely to experience unexpected expenses, the research says.

    Among non-prime boomers, 7 in 10 run out of money at least once a year, in spite of generally decent employment levels—frequently, in fact, with more than one job apiece.

    The study asked respondents how they would meet an emergency need for $1,200. Among the non-prime Boomer respondents, nearly half had difficulty coming up with a source of funds—1 in 8 could think of no solution at all.

    • 22% of non-prime Boomers could cover the $1,200 surprise through savings—about half of the portion of prime Boomers who could do so.
    • 22% said they could use a credit card to cover the surprise, but less than a third said they could pay off that borrowing before it began to accrue interest.
    • 11% said they could tap family or friends for the money. Interestingly, only 2% of prime Boomers would go that way.
    • A small portion—4.4%—of non-prime Boomers would use payday lenders, deposit advances, or overdraft programs. Interestingly, in a separate question, 13% of non-prime Boomers said they’d used a payday loan in the previous 12 months.

    HedgeCoVest Rebrands, Pivots Toward a TAMP (Wealth Management), Rated: A

    HedgeCoVest is pivoting away from being a platform to help investors access hedge funds in favor of being a turnkey asset management platform. To reflect the change, the company is rebranding as SmartX Advisory Solutions.

    And as part of the change, SmartX is bringing on 27 new investment strategies from firms like Blackrock, Morningstar Investment Management and Nasdaq Dorsey Wright. The models will cover strategies including ETFs, income portfolios, international equities, global/macro investing and U.S. equity strategies.

    RIA in a Box Introduces Trade Monitoring

    The technology company has a new employee trade-monitoring tool for its MyRIACompliance software platform that RIA in a Box says will help firms comply with Rule 204A-11, which requires the submission of securities holdings and transaction reports. The new tool digitizes the process, provides an interface for employees to electronically link applicable personal brokerage accounts, and provides chief compliance officers with supervision, administration and reporting capabilities.

    Cryptocurrency IRAs

    CoinIRA, a subsidiary of Goldco focused on digital currencies, is launching Digital IRA Bundles, new investment products that come prepackaged with combinations of popular cryptocurrencies such as Bitcoin, Litecoin and Ethereum.

    Commonwealth Selects Quovo for Aggregation 

    Commonwealth Financial Network announced the completion of an upgrade to the account-aggregation features within Investor360 using Quovo.

    Don’t Fall for Loan Sharks Just Because They Have Hip Branding  (Lifehacker), Rated: A

    We all know payday lenders, loan sharks, and credit cards profit when you go into debt and, therefore, they can be dangerous. But many of these companies conceal their danger with clever marketing. Beware: a debt trap by any other branding is just as dangerous.

    Over at the Outline, writer Gaby Del Valle discusses one such company, Affirm. v

    The difference between this service and a typical subprime loan seems to mostly lie in the marketing. Unlike other loans, Affirm is a bit more upfront about the terms you’re getting into.

    Everyone is picking on Affirm here, but the issue is not unique to them. This reminds me of the recent fiasco with Navient, the student loan servicer that was sued by the Consumer Financial Protection Bureau (CFPB) over shady business practices like misapplying student loan payments. In the lawsuit, Navient said they have no obligation to act in their customers’ best interest. But that’s not exactly the message that comes across on their “Financial Tips Blog.” These companies use financial literacy to hook you into making bad financial moves.

    How to Use a Peer-to-Peer Loan to Pay off High-Interest Debt (Forbes), Rated: A

    High-interest debt, such as credit cards, sometimes seems impossible to pay off.

    Peer-to-peer loans are unsecured — you don’t have to tie any collateral to them. They’re attractive to borrowers with high-interest rate debt because they provide concrete payoff dates and an option for a fixed — and potentially lower — interest rate.

    In fact, according to peer-to-peer platform Lending Club, its borrowers — on average — secure a 24% lower interest rate when using its peer-to-peer loans to consolidate debt.

    SS&C Announces Major New Release of Precision LM Loan Management Solution (Business Insider), Rated: A

    SS&C Technologies Holdings, Inc. (Nasdaq:SSNC), a global provider of financial services software and software-enabled services, today announced the availability of Precision LM™ 3.0, the latest version of the company’s loan origination, servicing, accounting and asset management solution. The new version marks the culmination of significant input and engagement from Precision LM clients as well as SS&C’s proven ability to execute on its comprehensive development roadmap.

    Pefin, a fintech start-up, is using A.I. to offer financial advice. Just don’t call it a ‘robo advisor.’ (CNBC), Rated: A

    Automated financial advice is becoming more commonplace in the hunt for bigger returns, yet Pefin bills itself as “the world’s first [artificial intelligence] financial advisor.” The company aims to use machine learning to deliver a range of financial planning and investment advice via a chat interface.

    “I started Pefin mainly because when you think about less affluent people, there’s really no access to financial advice aside from robos,” Joseph told CNBC in an interview recently.

    “Robos are trying to execute a transaction, while we are trying to manage your finances. Investing is optional with us, and we’ll help you if we think it’s the right move for you” rather than generating fees for the company, she told CNBC.

    Pefin Welcomes Catherine Flax as Chief Executive Officer (Benzinga), Rated: A

    Pefin, the world’s first Artificial Intelligence (AI) financial advisor, welcomed Catherine Flax as Chief Executive Officer today.

    Flax has had a multi-decade, distinguished career on Wall Street, as the Managing Director and Head of Commodity Derivatives, Americas at BNP Paribas and as Chief Marketing Officer of J.P. Morgan. She was named the Most Influential Woman in European Investment Banking in 2012 and one of the 100 most influential women in European Financial Markets in 2010 and 2011. Flax has been a leader in the FinTech space, as a Board Member of leading blockchain company, Digital Asset Holdings, and for the last two years, as an Advisor to Pefin in matters of Marketing, Regulation, Business Development and International Growth.

    CoverWallet, Benzinga Fintech Award Winner, Appoints OnDeck’s Paul Rosen As COO (Benzinga), Rated: B

    CoverWallet, the winner of Best Insurtech Solution at the 2017 Benzinga Global Fintech Awards, has hired Paul Rosen, formerly the chief sales officer at On Deck Capital Inc ONDK, as its chief operating officer.

    Insurtech reminds Rosen of what fintech looked like five to six years ago, he told Benzinga.

    Former OnDeck Director Joins Pearl Capital as Chief Revenue Officer (Monitor Daily), Rated: B

    Pearl Capital Business Funding, a provider of direct financing to small and midsize businesses, announced Jared Kogan joined the company as chief revenue officer.

    Kogan joined Pearl following a 10 year career in the fintech space, most recently serving as the director of OnDeck’s broker division where he funded 10,000 loans for over $650 million in volume and was able to grow production from $14 million to over $40 million per month. Prior to OnDeck, Kogan served as vice president at Newtek, the largest non-bank SBA lender in the country.

    Bad Credit? Business Loan Options For Entrepreneurs (Business Computing World), Rated: B

    Online Lending Platforms

    Typically, these lenders operate only on the web and promise quick assessment and disbursal with less bureaucracy. Some specialist bad credit lenders are ready to structure loans according to your convenience. You can also look at peer-to-peer lending platforms that give you access to individuals who are looking to invest their money in different ventures. Again, these platforms can get cash relatively more quickly into the system.

    United Kingdom

    Goldman Sachs to take on UK retail banks (Financial Times), Rated: AAA

    Goldman Sachs is looking to expand its retail banking business to the UK, replicating its mass-market offering in the US, as it continues a steady march from Wall Street to Main Street.

    The New York-based investment bank began to pivot in the US about 18 months ago, offering high-interest online savings accounts for a deposit of as little as $1. Last October it took a step further by launching Marcus by Goldman, a digital consumer-lending platform that seeks to rival the San Francisco trio of Lending Club, Prosper and SoFi.

    Now Goldman is taking it international, aiming to launch an online deposit business in the UK about the middle of next year. According to Stephen Scherr, the bank’s head of strategy, the lender plans a greenfield start in the UK under the Marcus brand, but could look to buy a book of deposits — as it did in the US — if the opportunity came its way.

    The data behind Zopa’s lowered return projections (AltFi Data Email), Rated: AAA

    Zopa has an enviable track record of delivering net returns as evidenced by a more than 10 year track record of delivering 4-7% returns  (after losses and fees).

    Source: AltFi Data
    Source: AltFi Data

    Investors value projected returns over track record (P2P Finance News), Rated: A

    INVESTORS rank the expected rate of return as the most important factor when choosing an investment provider, research shows.

    Analysis by bond provider Minerva Lending, based on a poll of 1,000 adults with more than £50,000 to invest, found 61 per cent consider the rate of return as the most important factor when choosing who to trust their money with.

    The research, released on Friday, does not refer to peer-to-peer lending but investors appear to be looking for many factors that P2P firms offer.

    Zopa’s Andrews warns on post-Brexit skills shortage (P2P Finance News), Rated: A

    THE UK is facing a technology skills shortage that may worsen because of Brexit, Zopa’s co-founder and chairman has warned.

    Giles Andrews (pictured) said that the peer-to-peer consumer lender’s decision to open a hub in Barcelona was partly due to a concern that it would be harder to recruit top tech talent following the UK’s departure from the EU.

    Assetz signs for Manchester Green office (North West Place), Rated: B

    Assetz Capital, part of the Manchester-based Assetz Group, has relocated from Newby Road in Hazel Grove where it occupied 3,000 sq ft of a 6,000 building, to take the newly refurbished Building 3 on a 10-year lease.

    China

    Cryptocurrency dealers and online lenders feel heat in China (Nikkei), Rated: AAA

    On Friday, Caixin, a Chinese business news outlet, reported that financial authorities have decided to shut down virtual currency exchanges.

    Beijing appears eager to eliminate money laundering and choke off capital outflows by shutting down bitcoin exchanges and other virtual currency trading platforms. It is also tightening its grip on peer-to-peer lending, in which individuals privately contract to borrow and lend.

    Some exchanges have temporarily halted trading in response to the report. Investors rushed to sell their digital currencies for cash, sending bitcoin about 20% lower versus the yuan at one point on Saturday, compared with the day before, to below 24,000 yuan ($3,703).

    Report Casts Doubt on Future of China’s Bitcoin Exchanges (Coindesk), Rated: A

    Regulators in China are said to be considering a move to close all domestic bitcoin and cryptocurrency exchanges.

    As of now, no official announcements from regulators have been seen. However, there are reasons to believe the report may be authentic.

    The work group was first launched by China’s State Department in 2016 to tackle market risks in the country’s financial technology industry such as p2p lending.

    Emerging Digital Payments are Crowding out the Banking Market (Xing Ping She), Rated: A

    According to report from the Central Bank, in the second quarter of 2017, banking financial institutions have handled 36.247 billion electronic payment services, amounting to 545.58 trillion RMB, which was down about 4.4% from the same period of last year.

    Actually, non-bank payments including Alipay and wechat Pay are growing rapidly. The Central Bank’s data also shew that in the second quarter of 2017, the scale of non-bank payment market reached to 570.95 trillion RMB. Compared to the amount of 23.35 trillion in the same period last year, it has significantly increased 34.87 percent.

     

    WeiyangX Fintech Review (Crowdfund Insider), Rated: A

    On September 6th, Zhao Jianjun, deputy director of the Department of Finance at Ministry of Education, announced at a press conference that online marketplace lenders are banned from lending to college students in China.

    On September 6th, Zhao Jianjun, deputy director of the Department of Finance at Ministry of Education, announced at a press conference that online marketplace lenders are banned from lending to college students in China. According to WeChat Pay, users of the new product will be able to make payments and transfer, send Hongbao, pay back credit card debt and be awarded with interest on their digital wallet balances.

    As response to the latest regulation, NEO Council announced it would offer refunds for NEO purchased through its ICO.

    On September 4th, China’s leading digital payment service Alipay announced to expand its operation to Norway.

    Early this week, Proptech BBT announced that the platform had managed to secure RMB 60 million Pre-A funding from Hongdao Capital at the beginning of August.

    European Union

    Klarna is reportedly testing its own credit cards among employees (Business Insider), Rated: AAA

    Since Klarna received its full banking license this summer, there have been many questions as to how exactly it would be leveraged. One among many speculative scenarios includes launching the company’s very own credit- and bank cards.

    Now there are some initial reports indicating that the credit card rumours are for real. Referring to internal documents it has been able to access, Breakit reports that the Swedish e-invoicing giant, valued at $2,5 bn, is testing credit cards in-house.

    A memo sent through the company’s intranet has supposedly given Klarna’s Swedish employees the opportunity to test proprietary payment cards for a limited amount of time.

    Knowledge is power in Grid Finance’s revolution (Independent.ie), Rated: A

    SME lender Grid Finance is expanding its offering to include a digital pension product targeted at the owners of small businesses. The company has engaged Conexim to provide the back office infrastructure on the product – as well as the regulatory umbrella – while Grid will act as distributor.

    It is the latest piece of innovation being undertaken by the company, which is looking to build what chief executive Derek F Butler calls “a small business bank in all but name”.

    10 Swiss Fintech Startups to Watch (LinkedIn), Rated: A

    The 10 selected entrepreneurs reflect the acceleration of the Swiss fintech scene in the recent years and the impressive quality of its startups. They will join the intense journey taking place from September 10 – 16 in New York.

    • Advanon, Phil Lojacono: Advanon in its basic version is an online platform that allows SMEs to pre-finance their open invoices directly through financial investors.
    • Algo Trader, Andy Flury: The startup provides an algorithmic trading software that allows automation of complex, quantitative trading strategies.
    • Creditgate24, Teddy Amberg: CreditGate24 is an independent Swiss company and a fully automated platform for lenders and borrowers which offers efficient, transparent and scalable credit processing at high quality.
    • KiWi (eBOP), Christian Sinobas: KiWi transforms merchant’s phone into a smart point of sale.
    • Monito (Global Impact Finance), François Briod: Sending money abroad? Monito is the Booking.com for money transfers, helping migrants and expatriates find, review and compare money transfer services.
    • OneVisage, Christophe Remillet: OneVisage is a leading cyber-security company developing biometric solutions to help financial services eliminating identity theft and increasing user’s digital experience.
    • SONECT, Sandipan Chakraborty: SONECT enables every shop in the neighborhood to act as a virtual ATM.

    Should you let a ‘robot’ manage your retirement savings? (BBC.com), Rated: A

    Consultancy firm Accenture found that 68% of global consumers would be happy to use robo-advice to plan for retirement, with many feeling it would be faster, cheaper, and more impartial than human advice.

    Joe Ziemer, vice president of communications at Betterment, a US robo-adviser with more than $9bn under management, says: “The Betterment service takes your information and uses a series of algorithms to create an asset allocation plan, which might be, for example, 90% equities and 10% bonds for a retirement saver.”

    Wealth Wizards, for example, typically charges £65 for investments up to £30,000, and 0.30%, or £300, on a £100,000 investment pot. Betterment charges 0.25% a year.

    That’s peanuts compared to human advisers’ fees, which come in at about £580 for advice on a £200-a-month pension contribution, or £1,000-£2,000 for guidance on what to do with your £100,000 pot when your retire, according to UK adviser network Unbiased.

    Robo.cash Reports Steady Growth in European P2P Lending (Crowdfund Insider), Rated: A

    The young lender says the total amount of investments now exceed €1.8 million. Approximately €400,000 in loans were added in August. The average invested amount per investor gained 2.2% to the previous month at €3,270 in August. In regards to the number of investors using the platform, in August Robo.cash added 188 users. Currently, there are more than 900 investors in total who have joined the platform in the first six months of operation.

    Source: Crowdfund Insider
    International

    Mitek Unveils Mobile Verify® for Lending (Globe Newswire), Rated: A

    For the first time at FinovateFall, Mitek (NASDAQ:MITK) (www.miteksystems.com), a global leader in mobile capture and identity verification software solutions, will demonstrate Mobile Verify® for Lending. This new, five step digital lending experience enables lenders to verify identity and bank account information in real time for fast loan decisions with a simple process for borrowers.

    When applying for a consumer loan from a desktop computer, the borrower will first log into their online bank account and agree to have their account information shared with the lender. A text message is then sent to the borrower’s smartphone directing them on how to take four photos: front and back of their driver’s license, a selfie and a photo of their pay stub or other trailing document, to complete the loan application process. This new digital experience is quick and easy for the borrower and provides the lender with real-time identity and bank account verification.

    Moroku lands on the BNP Paribas Radar (Moroku Email), Rated: A

    Dear friends

    Last week Moroku was identified as one of the top 4 Fintech’s globally best positioned to take on the battle for Millennials 

    Fintech has transformed payments but not savings, says BlackRock’s chief executive (SCMP), Rated: A

    The financial technology boom has transformed the way over a billion people engage with financial services, particularly when it comes to making payments, but Larry Fink, chief executive of BlackRock, the world’s largest money manager, said that no company has yet managed to use technology successfully to get people investing for the long term.

    Both in China, and in Europe and North America, a plethora of investment platforms and robo advisory services are evolving, but none has yet reached critical mass.

    Memorandum of Understanding Signed with GoldMint (LSE), Rated: B

    Eurasia, the platinum, palladium, iridium, rhodium and gold production company, is pleased to announce it has entered into a Memorandum of Understanding with GoldMint PTE (“GoldMint”), a Singapore based Limited Company.

    Australia/New Zealand

    Broker numbers to swell in SME space (AustralianBroker), Rated: A

    More brokers will diversify into the SME loan space due to increased competition in traditional markets and growing demand from clients, the lender’s head of sales Michael Burke said.

    “Brokers are not only looking to move into online lending because of the speed and ease of doing business it offers, but because their time-poor customers are demanding a more convenient solution involving faster turnaround times.”

    As well as providing a digital platform to facilitate the loan process, OnDeck’s underwriting policy also helps ease the broker’s burden, Burke told Australian Broker.

    PledgeMe joins Equitise in eyeing Australian market (Scoop), Rated: A

    PledgeMe, the equity crowdfunding and peer-to-peer lending platform, has joined rival Equitise in signalling plans to enter the Australian market ahead of a law change coming into effect across the Tasman this month.

    Co-founder Anna Guenther will relocate to Brisbane for six months to establish the Wellington-based company’s Australian arm, according to a PledgeMe blog post. PledgeMe will participate in the Queensland government’s HotDesQ programme, which provides networks, support, and funding for companies to relocate to the state.

    India

    SoftBank Vision Fund makes second bet in two months; fintech remains investors’ favourite baby (Yourstory), Rated: A

    SoftBank Vision Fund, the world’s largest pool of private capital, placed its second major bet on an Indian startup in a span of two months with its investment in OYO Rooms. The $250-million funding has taken OYO’s valuation from $460 million in August last year to between $850 million and $900 million.

    APAC

    This Not-for-profit Fintech Hub Wants To Impact The Unbanked Population (BLLNR), Rated: A

    Allow me to set the scene: in the wider region of Southeast Asia that surrounds Singapore, where Lattice80, our not-for-profit fintech hub that we launched last year is based, there is a huge unbanked population. KPMG estimates put the number at about 438 million. In poor countries like Cambodia, the population with a bank account falls to just 5 percent.

    McKinsey did a similar study in 2010 on the world’s 2.5 billion unbanked. Asia’s emerging markets were identified as a hotbed of unbanked. The same study suggests that reaching the unbanked population in ASEAN could increase the economic contribution of the region from US$17 billion to US$52 billion by 2030.

    Multi-asset funds offer ‘all-in-one solutions’ (Straits Times), Rated: A

    Q WHAT IS THE ATTRACTION OF MULTI-ASSET INVESTING?

    It is the ability to combine a range of asset classes with different and largely independent economic drivers in order to achieve consistent return and reduce downside risk.

    Years of central bank intervention in markets have depressed interest rates and left investors hunting for reliable yield. More asset classes beyond traditional equities and bonds have become more accessible in the past decade.

    Q WHAT IS THE COMPOSITION OF YOUR MULTI-ASSET PORTFOLIOS?

    More recently, we added peer-to-peer lending, mortgage and corporate funds that offer excess return over corporate bonds for a similar level of risk, litigation financing and credit funds. The world’s largest institutional investors have already diversified into these assets. Now, smaller institutions and individual investors can too, through our multi-asset strategies.

    Authors:

    George Popescu
    Allen Taylor

    Wednesday February 8 2017, Daily News Digest

    uk p2p average growth interest rate at origination

    News Comments Today’s main news: What the SoFi acquisition of Zenbanx means for FinTech’s future. Promontory Interfinancial Network clears path for community banks to purchase SoFi loans. Fund investments into UK FinTech plunge 33%. Today’s main analysis: AltFi takes a closer look at the UK P2P sector. Today’s thought-provoking articles: Review, takeaways from 2017 private placement conference. 3 reasons FinTech […]

    uk p2p average growth interest rate at origination

    News Comments

    United States

    • What the SoFi acquisition of Zenbanx means for FinTech’s future. GP:” With SoFi able to take deposits and looking at credit cards next, I now believe SoFi is the new leader in the fintech credit market. I continue to believe it is a market that is ripe for disruption, innovation and hundreds of billions of dollars in size.” AT: “This is really stating the obvious.”
    • Community banks to have ability to purchase SoFi loans. GP:” Lenders have two main problems: finding borrowers and capital. The bigger the lender the worse the capital issue becomes as borrowers you can nearly always buy by spending more money. Another great move for SoFi, but not a new move: Lending Club and many other lenders had done this years ago. ” AT: “This is a step in the right direction. Online lending really needs a secondary market.”
    • Review, takeaways from 2017 private placement conference. GP: “A healthy active issuance market.”
    • Patch of Land hires CFO, CMO. AT: “It looks as if the new CMO is already making great strides.”
    • Breakout Capital secures credit facility with Drift Capital Partners. GP:” A $25mil in revolving debt.”
    • 3 reasons FinTech is failing. GP:” Failing is in the eye of the beholder. Did Apple look like a failure at any point? Is losing billions of dollars failing? How much did it cost to develop the iPhone and was that expense a loss until revenue started coming in? I personally believe that, like in politics, one can really tell what is success and what is failure only once history has settled. “AT: “While an interesting read, it seems self-serving. FinTech isn’t failing so much as experiencing a few growing pains. I agree with the three points mentioned as “reasons,” but I don’t so much think the implication that all FinTech companies must follow a similar path to success is true. The key to success is differentiation.”
    • We need a government that embraces financial innovation. AT: “The underlying premise is a sound one, but the U.S. has never done anything like the rest of the world. That said, if we’re going to have a FinTech charter, it should foster innovation and help the industry grow.”

    United Kingdom

    United States

    What the SoFi Acquisition of Zenbanx Means for the Future of Fintech (Lend Academy), Rated: AAA

    Fintech companies of all kinds have started to partner with banks but this deal is different. It marks the first time that an online lending platform will have the ability to accept deposits.

    The size of this deal brings to mind a similar deal from a few years ago when Spanish bank BBVA acquired the digital bank startup Simple for $117mn. Since that acquisition occurred, reporting shows that customer acquisition and disruption in the banking space is not as easy as it may sound. According to a Quartz report in May of 2014 the BBVA-Simple deal was a challenge from the start as the size of the deal raised alarm in the banking community and Simple’s customer growth was slowing down.

    BBVA is still grappling with the ramifications of their 2014 acquisition, American Banker reports today that BBVA has taken nearly $90mn in goodwill impairment charges related to the Simple deal. While the charges seem steep, the company is still happy with the Simple deal from a digital standpoint and they have hired 260 more employees to help that part of the business run. Valuing a digital bank seems to be an inexact science to say the least; Simple went to BBVA for $117mn in 2014 and now BankMobile is on the market from Customers Bancorp in what analysts think will be a deal valued around $100mn.

    Mike Cagney has also said that also on the list for SoFi will be their move into offering a credit card. As the roll out of their banking products begins, we will learn more about how this acquisition will affect their overall strategy.

    Promontory Interfinancial Network Clears a Path for Community Banks to Purchase SoFi Loans (Yahoo! Finance), Rated: AAA

    Promontory Interfinancial Network, LLC and Social Finance, Inc. (SoFi) today announced a new program to enable community banks to purchase super-prime student loans originated by SoFi. The program will help community banks gain access to SoFi’s high quality assets by streamlining the due diligence process.

    To assist banks in assessing these loans, Promontory Interfinancial Network commissioned Promontory Financial Group, LLC, an IBM Company, to review and report on SoFi’s underwriting, operations, and systems.  The report provides information and analysis banks can use to complement their own due diligence and assists them in their efforts to satisfy regulatory expectations for loan purchases and third-party risk.

    The report describes SoFi’s current loan origination and post-origination practices and outlines the controls that SoFi has in place, including those that promote regulatory compliance, consumer privacy, and information security.  In preparing the report, Promontory Financial Group reviewed SoFi policies, procedures, and contracts related to underwriting and servicing and tested loan files so as to confirm compliance with federal laws, regulations and guidance.

    SoFi President and Chief Financial Officer Nino Fanlo said, “This unique partnership opens us up to a new group of bank investors and further diversifies our funding sources. Large banks have been buyers of our loans for several years, but this program will help small to mid-sized banks participate in the growth of this asset class, and we look forward to building relationships with them. With one of the largest bank networks of its kind, representing more than 47% of all U.S. banks, Promontory Interfinancial Network is an ideal partner for us.”

    Review and takeaways from the 2017 private placement conference (Morningstar), Rated: AAA

    The corporate bond market started 2017 with a healthy dose of new issue volume priced in the public debt markets. New issue supply in the corporate bond market totaled $178.5 billion in January. New issuance last week included several large new bond deals, such as Microsoft’s (rating: AA+, stable) $17 billion transaction. In December 2016, Morningstar Credit Ratings, LLC downgraded Microsoft by one notch, placing our AA+ corporate credit rating one notch lower than Moody’s and S&P. Our downgrade took into account the company’s trend toward higher use of debt, the result of a more aggressive shareholder-payout policy, and funding for the $26 billion acquisition of LinkedIn. Apple (rating: AA-, negative) also brought a large deal to market, pricing a $10 billion multitranche new issue. Again, our credit rating is lower than the other agencies, as we believe Apple’s credit profile has been affected by management’s trend toward more aggressive capital allocation and a dramatic increase in debt.

    Patch of Land Adds Executives Including New CFO and  CMO (Crowdfund Insider), Rated: AAA

    Real estate crowdfunding platform Patch of Land has announced several management changes with two executives. Min Lee will be joining the real estate marketplace as the Chief Financial Officer and Robert Greenberg has been appointed as its Chief Marketing Officer.  Patch of Land said the executives would help accelerate platform growth while stating the company has grown at a compound annual growth rate of more than 290%.

    Greenberg has already implemented a program that has apparently grown monthly leads by nearly 270 percent compared to the average monthly totals of the previous nine months. Greenberg has also grown the number of crowdfunding investors registered on the company’s platform to more than 20,000 at year-end 2016.

    Breakout Capital Secures Credit Facility with Drift Capital Partners (Benzinga), Rated: A

    Breakout Capital, a technology-enabled small business lender, announced today it obtained a new revolving credit facility from Drift Capital Partners, LLC, an alternative asset management company based in Charleston, South Carolina. The facility is structured to scale in alignment with Breakout Capital’s rapid growth, and at least $25 million in revolving debt is expected to be available to provide working capital solutions to Breakout Capital’s current and future customers. Drift’s commitment equips Breakout Capital with significant incremental funding capacity to continue on its strong trajectory and to meet the robust and accelerating demand among small businesses nationwide for Breakout Capital’s transparent, flexible, and innovative financing solutions.

    In addition to becoming one of the fastest growing lenders in the market, Breakout Capital is a Founding Member of the Coalition for Responsible Business Finance and a vocal advocate for comprehensive, standardized product and cost disclosure, and full transparency across all alternative finance products.

    3 Reasons Fintech Is Failing (Forbes), Rated: A

    Everyone from online lenders to bank technology companies has experienced elongated fund-raising cycles, missed targets, and mounting losses.

    Right now, the pain is most acute in the online lending space, with industry juggernauts like OnDeck, Lending Club, and CAN Capital seeing depressed stock prices or worse.

    While fears of a popping fintech bubble are justified, there is good news. It is by no means too late for the sector to pivot. The first step in saving the industry is to understand why it is failing.

    Reason #1: There is a fundamental strategic contradiction between tech and finance

    According to Mr. Flowers, “the tech idea that you must get big fast and dominate a sector” is at odds with the slow-moving nature of finance, and lending in particular.

    Reason #2 Market realities encourage short-term thinking

    If you engage with online lenders like Lending Club or OnDeck, you’d think that they were data companies first, and lenders second.

    As competition increases, fintech organizations begin making riskier and riskier decisions. For companies like mine, it could mean accepting clients and deals that aren’t an ideal fit for our product. For online lenders, it means riskier and less desirable loans.

    Reason #3: Incumbents in the market are powerful and resistant to change

    Incumbents in the finance sector are incredibly powerful and complacent. Most don’t fear fintech companies looking to take their business because, frankly, not a single one poses a real threat at this time.

    We Need a Government that Embraces Financial Innovation (Crowdfund Insider), Rated: A

    The proposed Fintech charter is anti-FinTech. That’s right. Many Fintech firm founders started their companies because of the already undue burden placed upon the American populace. Most people struggle to access reliable banking products, cheaper credit, real-time payments and investment opportunities. Unfortunately, these are services and products that are rarely made available for the masses.

    The OCC’s proposed charter will put us back at least a 100 years.

    The white paper published by OCC spends most of its time arguing that the bureau has the “grounds” and certainly the “right” to establish a Fintech specialty charter. It reads like a legal opinion and argument on why the OCC is the single bureau to establish the Fintech charter and they are the ones that should regulate the charter membership. The white paper does not provide any incentive for Fintech companies to seek membership and gave no consideration to the undue burden the additional regulation will place on Fintech firms and established Fintech startups. It simply does not make any sense for any Fintech companies even to consider applying for the OCC’s proposed Fintech Charter.

    OCC’s Proposed Fintech Charter is Anti-Innovation

    The OCC provided us an illusion that somehow Fintech companies are at a disadvantage and only with a Federally issued bank charter would we finally become competitive to the banks.

    This is simply not the case. The Banks support Fintech companies because they are not bound by outdated and overzealous regulation.

    Innovative products and services from firms such as SoFi would have died on the table day one within larger institutions that are regulated by bureaus such as the OCC.

    OCC’s Proposed Fintech Charter is Anti-Competitive

    I have spent a fair amount of time recently in Australia and Asia, talking to Fintech founders and CEOs. Regulation and compliance is always a focal point of our conversations. Often, these conversations end up with their perceptive countries Fintech Sandbox.

    The USA is Falling Behind

    The United States has fallen far behind some of our global competitors such as China, India and the UK.

    The last thing we need is for another government agency to throw its weight around and cast another shadow on our global competitiveness.

    We want the OCC and other agencies to revise their proposal and provide the following:

    • A single national charter that allows Deposits, Money Movement and Lending regulated by a single agency and supersedes all state regulation. Not multiple charters for multiple activities and an industry that must adhere to local and state regulations on top of federal rules.
    • A Fintech sandbox that immediately allows all Fintech startups to move money through existing and alternative money movement rails. 
    United Kingdom

    Fund investments into UK fintech plunge 33% (Fund Strategy), Rated: AAA

    A report by Innovate Finance and Pitchbook shows investment from venture capital funds fell 33.7 per cent in 2016 to $783m (£632.7m) compared to $1.2bn in 2015. Total investments following the referendum were $368m.

    Fifty four per cent of investments came from UK-domiciled venture capital funds.

    “Some of the steam is perhaps coming out of the peer-to-peer phenomenon with a shake out of the sector appearing likely as some of their portfolios start maturing.”

    Globally the report found fintech investment increased 10.9 per cent to $17.4bn, compared to $15.6bn in 2015.

    Alternative lending and financing accounted for 29 per cent of investment and challenger banks accounted for 20 per cent.

    The US also saw investment decrease in 2016 to $6.2bn, down 12.7 per cent on the previous year. It was surpassed by China with deal value at $7.7bn.

    Alternative Finance – a closer look at P2P (AltFi), Rated: AAA

    Since the EU referendum vote last year, inflation in the UK has accelerated (thanks to sterling’s depreciation) but wage growth has remained stagnant, and mortgage rates have risen from their record lows but the interest rates on our savings haven’t budged. Life, as we’re often reminded, just isn’t fair.

    Thanks to AltFi Data, we have also been able to track how this nascent industry has evolved since its conception. In particular, it is interesting to note how gross yields across the UK’s largest P2P lending platforms, despite the differing characteristics of their various business models, appear to have converged over time and currently sit around the 8 – 9 per cent range.

    RateSetter, which pioneered the concept of a “provision fund” to shelter investors against losses from borrower default, is an outlier here with its consistently low average yields (around 4 per cent).

    Another observation worth highlighting is how arrears have crept higher in recent years, driven predominantly by borrowers with lower credit ratings. AltFi Data’s numbers on Zopa, which provide us with the most granular data we have, suggests that borrowers in the A* band almost never fall behind on payments, while those in the lowest bands, C, D & E have seen their arrears rise steadily since 2014 (see Fig. 2 below). This has contributed to more instances of bad debt in the 2014 and 2015 vintages (see Fig. 3 below), although the overall picture remains fairly robust thanks to Zopa’s core A* offering anchoring the numbers.

    Saving Stream Milestone: Value of Outstanding Loan Book Grows By 126% (Crowdfund Insider), Rated: A

    On Tuesday, P2P lending platform Saving Stream announced its value of outstanding loan book grew by 126% during 2016. In its year review, Saving Stream stated over the last year, its outstanding loan book increased from approximately £73m in December 2015 to £165m in December 2016.

    Saving Stream, which was founded in 2012 and is regulated by the FCA, stated its loan portfolio has also significantly increased, having now lent over £250m to property developers and purchasers. In addition, £60m has been repaid to investors. The platform has grown and has more than 13,000 registered users.

    Nasdaq-listed fintech Pioneer Mitek launches in the UK (Yahoo! Finance), Rated: B

    Mitek (MITK), a global leader in mobile capture and identity verification software solutions, has launched in the UK with a new office established in London. The US-based company works with over 5,500 organisations providing its technology to 70 million consumers across the globe. Mitek provides financial institutions and other highly regulated businesses with mobile verification technology underpinned by artificial intelligence (AI) that establishes an individual’s identity remotely to accelerate the digitisation of Know Your Customer (KYC) and Customer Due Diligence (CDD) processes around on boarding and payments.

    This technology is already used by more than 70 million consumers, and is embedded in over five thousand apps by banks, insurance providers, payments providers, and other financial services. Mitek also offers “selfie authentication”, where the user can use their mobile device’s camera to perform a facial recognition scan in order to on-board into a service or authorise a transaction.

     

    Authors:

    George Popescu
    Allen Taylor