- Today’s main news: Funding Circle US to bolster capital markets team. US investors in Yirendai try to preserve lawsuit. Fed wants a say in fintech rules. Ablrate gains ISA manager status. Mizuho commits to fintech partnerships.
- Today’s main analysis: AI fintech startups offer loans on new credit. Global fintech report from CB Insights.
- Today’s thought-provoking articles: Multi-seller ABS approach to flourish. Tradeplus24 CHF100m raise in Switzerland. OJK’s regulation on fintech lending. World Bank offers African fintech startups better odds.
- FC US to boost capital markets team.
- US investors in Yirendai fight to preserve suit.
- AI fintech startups offer loans on new credit. AT: “There could be a day when more fintechs will operate on AI than not. This piece highlights specific companies.”
- Fed wants a say in fintech rules. AT: “Who doesn’t?”
- Ten MPL options for accredited investors. AT: Virtually all MPL opportunities are for accredited investors. I think it would be more interesting to highlight the few that non-accredited investors can pursue.”
- Could facial recognition tech transform insurance? AT: Rhetorical question. Of course it could. But is the insurance industry ready for it?”
- Senator McHenry working on new fintech bill.
- GDR wins fintech breakthrough award.
- Female fintech founder on Series F and the future of payments. AT: “There are some interesting insights here both for male and female entrepreneurs.”
- Small Change announces Liberty Bank Building offer.
- State bank regulators sue to stop OCC fintech charter. AT: Another take on the news annouced last week.”
- Are robo-advisors in your future?
- Fintech fireside chat with PayJoy.
- Poloniex Lending Bot vs manual Poloniex lending.
- Ablrate gains ISA manager status, passes 20M GBP in loans.
- Multi-seller ABS approach to flourish.
- VPC Specialty Lending NAV rises.
- FC to shut down forum.
- How will your career evolve as fintech grows?
- The Global Fintech Report Q1 2017. AT: “A must-read.”
- Mizuho commits to fintech partnerships.
- OJK reguation on fintech lending.
- Vietnamese fintechs and the $35B dream.
- Are crowdfunding and P2P lending good investments?
- United States
- Funding Circle US to bolster capital markets team (AltFi), Rated: AAA
- US Investors In Chinese Online Lender Fight To Preserve Suit (Law360), Rated: AAA
- AI Fintech Startups Offer Loans on New Credit (Nanalyze), Rated: AAA
- Federal Reserve wants a say on U.S. fintech rules -Brainard (NASDAQ), Rated: AAA
- Ten Marketplace Lending Options for Accredited Investors (Lend Academy), Rated: A
- Could Facial Recognition Technology Transform Insurance? (FA Magazine), Rated: A
- McHenry Working With Senate Democrat on New Fintech Bill (Bloomberg BNA), Rated: A
- Global Debt Registry Wins FinTech Breakthrough Award (GDR Email), Rated: A
- Female Fintech Founder On Series F And The Future Of Payments (Forbes), Rated: A
- Small Change Announces Pittsburgh’s Liberty Bank Building Real Estate Offering (Crowdfund Insider), Rated: A
- State Bank Regulators Sue to Stop the OCC’s Fintech Charter (National Law Review), Rated: A
- Are Robo-Advisers in Your Future (My Prime Time News), Rated: A
- FinTech Fireside Chat with PayJoy (Center for Digital Strategies), Rated: B
- Poloniex Lending Bot vs Manual Poloniex Lending (The Merkle), Rated: B
- United Kingdom
- Ablrate Gains ISA Manager Status and Passes £20 Million in Loans (EIN News), Rated: AAA
- Multi-seller ABS approach to flourish (Structured Credit Investor), Rated: AAA
- VPC Specialty Lending Net Asset Value Rises As Dividend Is Lifted (Alliance News), Rated: A
- Funding Circle to shut down forum amid property loan debate (P2P Finance News), Rated: A
- How will your career evolve as the fintech sector grows? (Silicon Republic), Rated: A
- European Union
- Tradeplus24 CHF100m Fintech raise in Switzerland signals Insurance move into SME Lending (Daily Fintech), Rated: AAA
- 26 on trial over China P2P fraud (XinhuaNet), Rated: AAA
- THE GLOBAL FINTECH REPORT: Q1’17 (CB Insights), Rated: AAA
- ASIC targets $ 200m in fee for no service (Money Management), Rated: AAA
- Kristen Lunman: Taking a chance on financial technology (NZ Herald), Rated: A
- Japanese Megabank Mizuho Commits to Fintech in Series of Partnerships (Crowdfund Insider), Rated: AAA
- OJK’s regulation on financial technology-based lending services (Lexology), Rated: AAA
- Vietnamese fintechs and the $ 35 billion dream (VietnamNet), Rated: A
- Are crowdfunding and P2P lending good investments? (The Star), Rated: A
- World Bank offers African FinTech startups better odds (IT Web Africa), Rated: AAA
Funding Circle US to bolster capital markets team (AltFi), Rated: AAA
A Funding Circle spokesperson told us that Sachin Patel is now running capital markets for the firm globally.
There are currently five capital markets jobs listed in the US.
US Investors In Chinese Online Lender Fight To Preserve Suit (Law360), Rated: AAA
Shareholders in Chinese peer-to-peer lending company Yirendai Ltd. asked a California federal judge on Thursday to keep their securities fraud suit against the company and its executives alive, saying their request to dismiss the case rested on mischaracterizations and factual arguments the court couldn’t consider.
The investors sued Yirendai in 2016 after news that Chinese regulators were cracking down on the peer-to-peer lending business sent its stock tanking.
AI Fintech Startups Offer Loans on New Credit (Nanalyze), Rated: AAA
We’ve found more than a dozen AI fintech firms through our friends at CB Insights that claim their machine-learning algorithms can evaluate loan applications in milliseconds while minimizing defaults.
Many of these companies target so-called thin-file borrowers—people with little credit history—who are usually trying to consolidate debt from high-interest credit cards.
CB Insights reported in its 2016 Global Fintech report that investments dropped from an all-time high of $14.6 billion in 2015 to $12.7 billion last year. Online loan companies, in particular, took something of a hit in 2016. The last quarter was particularly tough, with a 31 percent tumble in loan originations. (However, overall, the top online loan sharks companies tracked by S&P Global Market Intelligence improved their bottom-dollar on loan originations by 15 percent from year-to-year, mostly on the backs of small businesses and students.)
Avant offers direct unsecured personal loans ranging from $1,000-$35,000 with funding delivered as soon as the next business day. It has served more than 500,000 customers worldwide, though last year’s downturn for digital lenders also hit Avant. Its year-to-year loan originations were down 12 percent to about $1.7 billion.
Led by a bevy of former Google-ites, including former Google CIO and ZestFinance CEO and founder Douglass Merrill, ZestFinance has raised $62 million in equity financing, including an undisclosed amount last July. Total funding is $262 million thanks to a couple of additional rounds of debt financing. Peter Thiel’s name again appears on the long list of investors.
Key VC tech investors like Andreessen Horowitz and Khosla Ventures have helped pour $320 million of equity into Affirm, bringing total funding to $420 million after a $100 million round of debt financing from Morgan Stanley. The company is led by PayPal co-founder Max Levchin.
Upstart is an AI fintech version of Lending Club. Meaning it provides peer-to-peer lending. Like ZestFinance, it particularly markets to the skinny jeans crowd, offering loans of up to $50,000 to help consolidate debt, pay off student loans and build credit history for those living in hipster cities like Portland and Brooklyn. The machine learning bit involves taking less tangible variables like education, college major and astrological sign into account.
Upstart CEO (and former president of Google Enterprise) Dave Girouard told TechCrunch he expects his company to become profitable this year. He predicts Upstart will originate about $1 billion in loans this year after doing about $650 million in loans in its first 2½ years.
Federal Reserve wants a say on U.S. fintech rules -Brainard (NASDAQ), Rated: AAA
The Federal Reserve wants to give input on future rules governing how technology companies move into consumer lending markets, Fed Governor Lael Brainard said on Friday.
Policymakers will have to determine whether financial technology, or fintech, companies may tap the Fed for services that large, traditional banks enjoy.
“The OCC’s proposal raises interpretive and policy issues for the Federal Reserve regarding whether charter recipients would become Federal Reserve members or have access to Federal Reserve accounts and services,” Brainard told a conference at Northwestern University in Evanston, Illinois.
Ten Marketplace Lending Options for Accredited Investors (Lend Academy), Rated: A
LendingHome launched in 2014 but quickly established themselves as the leader in the category. They are the only real estate crowdfunding platform to have reached $1 billion in total loans issued, a milestone they crossed in December, 2016 just two and half years after launching.
PeerStreet were founded just 18 months ago but they are already making a name for themselves. They are also focused on the fix & flip market providing loans ranging from 6-24 months in length. They target 6-12% returns and they maintain a conservative maximum LTV (loan-to-value) of 75%.
Sharestates has offered both debt and equity investments, although the vast majority of their deals are for debt. These deals are similar to other platforms with loan terms typically 6-24 months targeting 8-12% returns.
RealtyMogul is one of the most established players in the space having launched in 2013. They have done around $260 million in deals and today they focus primarily on commercial property.
Patch of Land is 100% focused on debt deals tied to mainly residential properties but with a small number of commercial properties as well.
RealtyShares is a “full stack” capital provider, meaning they offer both debt and equity deals on a single project for borrowers. They have done some large deals including this $5.9 million deal for a 132-unit apartment complex in Ohio.
The world leader in marketplace lending for small business loans offers US accredited investors a solid option. Loan terms range from 12 – 60 months and interest rates from 5.49% – 27.79%. Loans are rated from A+ for least risky down to D grade. They have a marketplace where you can browse the loans on offer or you can setup automated investing strategies based on loan grade. As I wrote this there were 12 loans available on their marketplace. Funding Circle provides financials and other details about each company although they don’t provide the company name.
Streetshares is a relatively new small business lender, they launched in 2014, and they are focused primarily on providing funding for military and veteran community businesses. Run by two veterans they provide three different products: term loans (3 – 36 months), lines of credit ($5,000 – $100,000) and government contract financing (for companies dealing with federal or state government contracts).
P2Binvestor, or P2Bi for short, is an asset backed lender providing revolving lines of credit typically backed by accounts receivables. These lines of credit range from $250,000 to as much as $10 million.
Upstart has been something of a quiet achiever when compared to some of their well-established competitors. Founded by ex-Googlers they have a very data-centric approach to their business. One of the things that makes Upstart unique is they were the first platform to look at a borrower’s education and factor that into the lending decision. Interest rates range from 6.37% – 29.99% APR, loan terms are three or five years and amounts range from $1,000 – $50,000.
Could Facial Recognition Technology Transform Insurance? (FA Magazine), Rated: A
In Wilmington, N.C., a high-tech company called Lapetus Solutions has developed a technology it calls Chronos that interprets facial characteristics such as baggy eyes, rosy cheeks and double chins to estimate a person’s life expectancy. One purported use of this futuristic-sounding software is to help insurance companies assess risk quickly and inexpensively. Customers could then purchase life insurance online in record time, perhaps circumventing the usual medical examination altogether.
In theory at least, insurance carriers want to provide coverage only to those less likely to need it. The better the carriers understand and predict risks, the better they can manage their liabilities. So if facial recognition technology identifies risks that were previously unknown or unknowable, it could render some consumers uninsurable, an advantage perhaps for the insurance company but not the consumer.
But Erin Ardleigh, president and founder of Dynama Insurance, an independent insurance brokerage based in New York City, isn’t so sure. “How would facial recognition technology help underwriters? I suppose if it could identify clients [who were] engaging in risky behavior, such as smoking or skydiving,” she says.
Rodgers, though, contends that the decision of whether to try this or any other new technology may ultimately come down to dollars and cents.
McHenry Working With Senate Democrat on New Fintech Bill (Bloomberg BNA), Rated: A
A leading House Republican on financial technology issues said April 25 he is working with a Senate Democrat on a revised “permanent beta test” bill to prod regulators to foster fintech innovation.
“You must have a default ‘yes’ to new innovation,” Rep. Patrick McHenry (R-N.C.) said in a speech at the American Action Forum in Washington.
McHenry said the 2017 version of the act would include “significant changes and revisions,” but he declined to discuss those. He also declined to identify the Democratic senator with whom he is working. He said he hopes to introduce the new bill in two months.