Friday December 1 2017, Daily News Digest

interest rate sensitivity

News Comments Today’s main news: Affirm partners with Shopify Plus.The Fed is thinking about starting a cryptocurrency.Payday lending group sues Consumer Financial Protection Bureau (CFPB).Funding Circle gets first IFISA sign-up within 15 minutes of opening.Assetz Capital to launch IFISA with manual lending.KappAhl to offer mobile payments in store with Klarna. Today’s main analysis: How should […]

interest rate sensitivity

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Canada

News Summary

United States

Affirm Joins Forces With Shopify Plus to Help High Growth Retailers Rapidly Scale Online Store Sales (BusinessWire), Rated: AAA

Affirm, Inc., the company started by Max Levchin to provide fair and honest consumer financing, today announced it has joined the Shopify Plus Technology Partner Program to help more retailers quickly scale their online store sales by giving their customers a quick and easy alternative to credit cards.

Affirm App Gives Loans For Designer Jeans, Holiday Flights And More (International Business Times), Rated: A

Affirm’s chief of staff and head of international expansion, Ryan Metcalf, told International Business Times the startup works with 1,200 retailers nationwide and issued $1 billion worth of loans in 2017.

“We are able to approve 126 percent more people than industry averages. A large portion of these people have no access to credit or if they do they are being mispriced in the market because their FICO score is outdated,” Metcalf said. “Around one in 10 Americans have ‘unscorable’ credit reports. That’s around 30 million people. So we’re also able to offer credit to those people as well.”

According to the Fair Isaac Corporation’s data, 20 percent of American credit card owners are ranked as “subprime” because their FICO score is 600 or lower.

Expert Commentary: how should equity investors position for a secular uptrend in rates? (INTL FCStone Email), Rated: AAA

In Four Interest Rate Myths, I made a theoretical case for higher rates by debunking the New Gospel of the New Normal. The Slow Agony of and Old Bull highlighted seven signs that the bond bull market was already over. This report discusses the most important question facing market participants for the next five years – how should equity investors position for a secular uptrend in rates?

The report reviews the performance of U.S. sectors, currencies, and international indices during prior hiking cycles and their recent correlations with yields. Six conclusions emerge:

  • Almost tautologically, bond proxies have consistently underperformed during prior hiking cycles.
  • Currently, only two sectors are positively related to interest rates: financials and energy. Since their valuations remain below average, these sectors are a cheap option against the risk of rising rates.
  • Investors should monitor the correlation between yields and tech stocks: higher rates would kill the bull market if the correlation between tech stocks and bond yields turned negative.
  • U.S. stocks and the dollar index have tended to fall in prior hiking cycles.
  • Korean equities and, to a lesser extent, Japanese stocks have outperformed during prior hiking cycles.
  • The performance of emerging markets and commodity-driven markets is mixed: they have outperformed massively during in the 2003-2006 cycles, but have suffered during the hiking cycles of the 90s.

Read the full report here.

Dudley Says Fed Has Started Thinking About Official Digital Currency (WSJ), Rated: AAA

Federal Reserve Bank of New York President William Dudley said Wednesday the U.S. central bank is beginning to explore whether it could adopt its own digital currency, in an appearance at Rutgers University where he also expressed optimism about the economy.

Bitcoin is “really more of a speculative activity,” Mr. Dudley said. But he said aspects of the technology are interesting and worthy of attention. “It’s premature to be talking about the Federal Reserve offering digital currencies, but it is something we are starting to think about,” he said.

Some academics have called for the Fed to offer its own digital currency. They believe it would afford the central bank better control over the economy by tweaking interest rates at the consumer level, bypassing fickle financial markets that often work at cross-purposes with Fed policy aims.

THE FINTECH EFFECT: AMAZON, GOOGLE, AND THE DISRUPTION OF SMALL BUSINESS LENDING (The Boss Magazine), Rated: AAA

If banking bigwigs and fintech entrepreneurs have seemed a bit queasy since October’s Lendit Europe conference, they might be blaming Karen Mills for daring to illuminate the elephants in the room: Amazon and Google, and their ability to disrupt the small business lending industry.

Mills, a former White House administrator for small business and current Harvard Business Review fellow, succinctly pointed out the obvious. With the tremendous amount of financial and personal data these behemoths collect, a broadening of scope into small business lending may be inevitable.

While Google hasn’t made any notable overtures into the lending business yet, Amazon launched its lending business to support its merchants in 2012. As reported by Bloomberg, the retailer issued $1 billion in loans in the 12 months between May 2016 and June 2017. To date, they have extended $3 billion to over 20,000 small businesses here, as well as in the U.K. and Japan.

The Magnificence of Micro Loans

Merchant services provider Square has given its merchants loans of over $1.5 billion since its in inception in 2014, and PayPal’s Working Capital program has loaned over 115,000 global businesses a total of $3 billion.

Amazon and Square merchants repay the loans automatically based on the amount of sales they make. PayPal’s maximum small business loan amount is 30 percent of a merchant’s annual PayPal sales, not to exceed $97,000 for the first loan.

Small Business Domination

Small businesses account for roughly 99.9 percent of all businesses in the U.S., and are responsible for 61.8 percent of the new jobs established from Q1 1993 to Q3 2016. About 80 percent of the nation’s 29.6 million small businesses are nonemployers.

Payday lending group plans to sue the Consumer Financial Protection Bureau (USA Today), Rated: AAA

The Community Financial Services Association of America plans to challenge one of the federal watchdog’s signature achievements could signal how the consumer bureau’s previous enforcement policies will shift under new Trump administration leadership.

The anticipated battle would target a new rule that was indeed published in the Federal Register on Nov. 17, capping a contentious 18-month public comment and lobbying battle between the payday loan industry and consumer advocates.

Federal budget director Mick Mulvaney, installed by Trump as the bureau’s acting director, has been critical of the payday lending rule and has received campaign backing from the industry. He received $31,700 in 2015-2016 federal campaign cycle contributions from payday lenders, ranking ninth among all congressional recipients, according to data analyzed by the Center for Responsive Politics.

Federal judge refuses to block Trump’s designation of Mulvaney as interim head of CFPB (Legal NewsLine), Rated: A

A federal judge on Tuesday rejected arguments by Leandra English, who was named the deputy director of the Consumer Financial Protection Bureau by outgoing director Richard Cordray, in a lawsuit she brought over the agency’s interim leadership.

Judge Timothy J. Kelly for the U.S. District Court for the District of Columbia, according to a minute order and entry on the case docket, denied English’s emergency motion for temporary restraining order after a motion hearing held Tuesday.

English filed her lawsuit Sunday night in attempt to block President Donald Trump’s naming of Office of Management and Budget Director Mick Mulvaney as the bureau’s acting director.

In a minute order filed Wednesday, Kelly said the parties will meet, confer and submit by Dec. 1 a joint proposed schedule for briefing the merits and/or for briefing a preliminary injunction, or separate schedules.

Payday lender going public as new sheriff takes over at CFPB (Seeking Alpha), Rated: B

Curo Group is looking to raise about $100M with the sale of 6.7M shares at hoped-for range of $14-$16 each. Prospectus here

Marlette Funding President Offers Insight on Personal Loan Market (LendEDU), Rated: A

Q: So we know that Fintech personal loan lenders are starting to attract more consumers and take up more of the market. How do you expect traditional banks to react to this over the next couple of years if the trend continues?

A: You’re starting to see banks wake up to this new way of lending. They’ve been impacted by a regulation-focused environment in recent years, driving them towards a compliance mindset. However, banks are starting to think of ways to grow their consumer lending businesses, and technology is a big part of this.

Q: What sort of future do you see for blockchain technology in the Fintech personal loanmarket? What sort of challenge would its implementation pose to Fintech lenders?

A: One use that I could see for Fintech lending is creating a more secured identity verification process for the customer. From the recent Equifax news, you have a single source of data where all relevant info is in one location, and a breach creates both chaos as well as problems with trust. Distributed ledger tech creates an interesting opportunity to limit this concern, but it’s going to take a long time before it can be implemented fully.

For Workers In A Pinch, Start-Ups Experiment With No-Interest Loans (Forbes), Rated: A

Dave is part of a new crop of financial technology companies that are trying to help consumers avoid nasty overdraft fees, as well as payday loans, pawn shops and other expensive forms of debt, via zero-interest loans. They’re going after workers who may struggle to make ends meet, but who could benefit from a minor influx of cash at the right time.

Dave analyzes a consumer’s bank account history to issue warnings about potential overdrafts up to seven days in advance. Then, for users who still find they’re in a pinch, it may approve a loan of up to $75. Dave doesn’t charge interest, but the app costs $1 a month and users are asked to leave a tip on advances. The Mark Cuban-backed service has amassed 100,000 users since it launched in April.

In 2016, financial institutions hauled in $33.3 billion on overdraft fees alone, according to Moebs Services, an economic research firm.

Dave, in addition to companies like Even and Earnin (formerly Activehours), are attempting to do away with the high interest rates and fees that they say put a financial institution’s incentives in contrast with those of the borrower. Their answer: Small, zero-interest advances on a person’s next paycheck with no hidden or punitive fees.

According to one study of low and moderate income families, household income spiked — or fell — by more than 25% in six months out of every year.

YieldStreet CEO Milind Mehere: Excited about Growth and YieldStreet’s Future (Crowdfund Insider), Rated: A

Launched in NYC in 2015, YieldStreet aims to allow people to invest in alternative investments that are backed by real collateral. With a world-class advisory board which recently added three new members Ron Suber (Prosper Group), Mitch Jacobs (On Deck)Alexandra Wilkis Wilson (Gilt Group) and a growing leadership team, including Volfi Mizrahi who just joined as Managing Director of Originations and Ivor Wolk as General Counsel, the platform’s growth is undeniable.

Erin: On what other elements of your YieldStreet street vision are you currently working?

Milind: Continuing to expand our product and audience offering – AutoInvest will let users choose their investment preferences such as asset class, yield and duration, then the algorithm our platform uses will match them as offerings become available. In 2018 we hope to open the platform to non-accredited investors, and we are working to provide liquidity on our platform, as well as creating products for the Financial Advisor/RIA market and IRA market.

Erin: How do you expect YieldStreet to grow? How do you source deals?

We work with a network of originators and asset managers, as well as many funds (from $50M to $10B) in the private credit space.

Erin: What lessons from Yodle — from its beginnings to its $342M sale to web.com in 2016 — have you applied to YieldStreet?

Milind: We have been incredibly efficient at YieldStreet because of that. We have just raised $3.7M in seed capital to reach $200M in originations, where some of our peers have raised anywhere from 6x-25x to achieve the same results. Yodle taught me to be extremely disciplined about where to invest and when.

Erin: What are YieldStreet’s future plans for growth by 2018? by 2020? by 2025?  How do you predict the sector will change and be disrupted?

Milind: According to a recent report by PricewaterhouseCoopers (PwC), the asset management industry is set for “transformational change” and booming growth in the next decade. Alternative asset classes, such as real estate and private debt are expected to grow to about $21.1 trillion by 2025.

Innovative Approaches to Expanding Home Availability and Affordability (Lend Academy), Rated: A

It seems like almost every day I see a story about increasing real estate prices in the major metropolitan areas of the US. Prices in cities like San Francisco, New York, Seattle, Washington DC have made homeownership unobtainable for many people.

SoFi comes to mind with their jumbo mortgage which allows borrowers to put just 10% down and offers loans up to $3 million.

Landed is taking a different approach. I spoke with Alex Lofton who is Head of Growth and Co-founder at the company. They first came on my radar this summer when TechCrunch profiled them. They are similar to companies like Unison (who recently was on the Lend Academy podcast) and Point with a slight twist. Currently, the company focuses on teachers to help purchase a home, providing up to 50% of the down payment. Like other similar products, Landed participates in either the upside or downside when the home is sold.

PWC CHARGE: ASSET MANAGERS ARE DIGITAL TECH ‘LAGGARDS’ (AllAboutAlpha), Rated: A

In filling out the particulars of this claim the authors of the new report make four more specific points: one, asset management is a buyers’ market and will become more so, in large part because “institutional investors have the tools to differentiate alpha and beta,” and they want to pay for the former not the latter. They also say that asset managers have been filling gaps in the financial system that emerged in the wake of the global financial crisis – they’ll need to capitalize on and expand these once-niche markets. Thirdly, while they make the common point that traditional active managers feel a squeeze between passive management on the one hand and alternatives on the other, they go further in that direction than other analysts have, saying that the way to react to this squeeze is not to try to beat back the competing forces but to join them, to turn a management firm into a “multi-asset solutions firm.”

But perhaps the most surprising of the four points is the contention that asset management has been a refuge of digital technology “laggards,” and that this will change in the near future, as “technology giants … enter the sector, flexing their data analytics and distribution muscle. The race is on.”

Lincoln Financial Network Launches Integrated Technology Platform to Drive Greater Client Engagement and Collaboration in Financial Planning (BusinessWire), Rated: A

Lincoln Financial Network (LFN), the retail wealth management affiliate of Lincoln Financial Group (NYSE:LNC), today announced that it has successfully launched a meaningful enhancement to its fully integrated wealth management platform for financial advisors and their clients – Automated Account Opening (AAO). AAO encompasses a full suite of new capabilities, integrated tools, and client-servicing solutions that will increase client satisfaction and collaboration with advisors.

Banks resist pressure to raise rates, but for how long? (American Banker), Rated: A

Online banks have been aggressively raising the rates they pay on consumer deposits, and that is putting pressure on mainstream banks to consider following suit or risk losing valuable deposits to their more nimble competitors.

A recent survey of 100 banks conducted by MoneyRates.com found that online banks such as Ally Bank, Goldman Sachs’ GS Bank and Sallie Mae Bank are paying significantly higher rates on savings and money market accounts than their brick-and-mortar counterparts.

U.S. regional banks delve deeper into advisory services to boost growth (NASDAQ), Rated: A

Smaller banks, like their bigger Wall Street rivals, have aggressively cut costs since the 2008 financial crisis and trusted ultra-low interest rates to increase loan volumes.

U.S. Bancorp, BB&T Corp, SunTrust Banks Inc, Fifth Third Bancorp, KeyCorp and Citizens Financial Group Inc together earned $6.97 billion in non-interest income in the third quarter, up 10.6 percent from a year earlier and 15.2 percent from the second quarter.

That compares with growth in net interest income of 7.7 percent and 2 percent, respectively.

RICH PICKINGS

The number of millionaires in the United States is at the highest since Chicago-based research company Spectrem Group started measuring it in 2004, but thresholds of – for example $250,000 to invest – mean many are too small to get personal attention from the big Wall Street firms.

Born between the early 1960s and 2000, Americans from Generations X and Y who have an average annual income of about $200,000, account for 18 percent of millionaires compared with 8 percent in 2012.

Yet only 58 percent have financial advisers compared to 72 percent five years ago, according to a study by Fidelity Investment.

KeyBank Forms Strategic Partnership With Snapsheet To Provide Powerful Insurance Claims Payment Solutions (PR Newswire), Rated: A

KeyCorp (NYSE: KEY) announced today its strategic investment and partnership with Snapsheet, an innovator of self-service claims solutions for insurance carriers. This investment follows the joint launch and announcement of Snapsheet Transactions, a payment platform on the back end of Snapsheet’s existing claims solution.

Snapsheet Transactions provides carriers with a payment hub that features a variety of payment options, without adding complexity or risk to insurance carriers’ back-end processes. Key and Snapsheet will continue to partner with each other to support the rollout and execution of enhancements and innovations related to Snapsheet Transactions.

Concord President & COO Shaun O’Neill to Lead Panel at Marketplace Lending Conference in New York City (PRWeb), Rated: B

Shaun O’Neill, President and COO of Concord Servicing Corporation, a leading force in the portfolio servicing and financial technology industry, has been invited to serve as moderator of a finance-related panel during the upcoming Information Management Network’s 3rd Annual Investors’ Conference on Marketplace Lending. O’Neill’s panel will focus on the highly topical “Trends and Best Practices for Loan Servicing” during the conference, to be held December 1st at the Marriott New York Downtown, in New York City.

LendingTree Logo To Appear On Greensboro Swarm Jerseys As Part of Company’s Partnership With Hornets (NBA.com), Rated: B

The Charlotte Hornets, Greensboro Swarm and LendingTree announced today that the LendingTree logo will appear on the jerseys of the Swarm as part of the Founding Level Partnership announced earlier this month between the Hornets and LendingTree.

Family loans: How to dodge the drama (Work IT, SOVA), Rated: B

There are advantages of a family loan for a borrower: no credit check, low or no interest and flexible payback terms.

Family loans may also come with tax considerations, whether the lender charges interest or not. Charge zero interest, and you may face a gift tax; a borrower who receives a gift may have to report it as taxable income. Tack on an interest charge and you must follow IRS-specified guidelines for the rate you charge and report it as income.

BORROWERS: EXHAUST OTHER OPTIONS FIRST

When weighing the pros and cons of a family loan, also consider alternative options, including a personal loan borrowed from a bank, credit union or online lender that can be used for any purpose.

Personal loans from credit unions and online lenders typically have more flexible qualification requirements than a bank loan.

LENDERS: ASSESS THE REASON FOR THE REQUEST

If you are lending the money, try to set your emotions aside and look at the reason for the loan. Has your family member been rejected by banks and other lenders? If so, why? Will your loan help promote good financial decisions?

United Kingdom

Funding Circle IFISA motors ahead with instant sign-ups (P2P Finance News), Rated: AAA

Funding Circle has begun rolling out its Innovative Finance ISA (IFISA) to investors and had a customer sign up within 15 minutes.

The peer-to-peer business lending giant started emailing users on Thursday morning, in order of when they opened accounts and started investing.

The IFISA account is a flexi-ISA, meaning you can withdraw any available funds without affecting your annual £20,000 ISA subscription limit, providing you transfer them back in by the end of the tax year.

Assetz Capital Announcement: Soon to Launch IFISA Set to Include Manual Lending (Crowdfund Insider), Rated: AAA

The online lender reported that the IFISA will be launched next month, with users able to use their £20,000 annual tax-free allowance on the Assetz Capital platform. Users will be able to transfer in past years’ ISA savings from their cash and shares ISAs. Assetz Capital also noted that new and existing investors will be able to open an IFISA wrapper on the platform and then invest into any automated Assetz investment account. The IFISA is also set to include the popular Manual Loan Investment Account (MLIA) in the New Year.

Digital banking: a tough way to make money (Financial Times), Rated: A

It’s been a busy period for the UK’s fledgling digital banks. Since January, eight UK digital banks have collectively raised $600m and two challenger banks were acquired for $2B+. Digital banks have built out the tech, landed banking licenses, and started winning customers – but they have arrived at a ‘now what’ moment. How can they capture a large enough customer base to validate their significant collective investment?

Monzo reported that its prepaid card scheme loses around £50 per active customer per year, and other digital banks face similar costs. While on the one hand the cost to acquire these current account customers is not very high, given the ‘buzz’ around the sector and banks’ word of mouth-driven growth – these current accounts, with their low average balances, are also inherently unprofitable. So it’s a steep climb for digital banks to recoup their operational costs, much less make a lot of money per customer.

P2PGI unveils new strategy that speeds up timetable for target returns (P2P Finance News), Rated: A

P2P GLOBAL Investments (P2PGI) has brought forward its timetable for reaching its target returns of six to eight per cent after unveiling its new portfolio strategy on Thursday morning.

The investment trust said it now expects to provide a dividend of at least 15p per quarter by the end of the second quarter of 2018, which analysts say reflects an annualised yield of 7.8 per cent.

LendInvest: How our BTL launch will fill the portfolio landlord lending gap (Mortgage Solutions), Rated: A

The prospects of the dinner party landlord, who picked up a property or two during the boom years, have been dented by moves like the additional rate of stamp duty on second homes and the changes to mortgage interest tax relief.

In contrast, it’s the professionals who are best placed to adjust their budgets and ride out such changes. These are the investors who spend their working hours – rather than just their spare time – focused on running their property businesses.

Countrywide’s letting index in August flagged up the fact that the number of homes on the market to tenants has jumped by 171,000 over the last two years, despite the number of landlords falling by 154,000 over the same period.

Three reasons why investors must consider alternative lending (Money Observer), Rated: A

With cash held at the bank slowly being eroded by inflation, many investors have been attracted to the enhanced return prospects offered by alternative – or ‘peer-to-peer’ – lending.

Alternative lending is very interesting from this perspective, as it is one of the few income options available to retail investors that may be shielded from market volatility. This has grown in importance recently as many markets are currently trading at historically high valuations. Markets follow a supply and demand dynamic and the traditional asset classes are definitely vulnerable to sudden downside pressures in stressed market environments.

China

Was 2017 the year that Chinese fintech grew up? (Ecns.cn), Rated: A

While investments in the Chinese fintech sector tripled to almost 10 billion US dollars in 2016 compared to the year before, 2017 has seen a significant drop in corporate fintech investments across Asia. KPMG reports that corporates have only put 840 million US dollars into the sector in 2017, compared to 6.8 billion US dollars in 2016.

Decline of P2P, robo-advisors

One other area that has struggled in 2017 has been robo-advisors. In 2016, China Merchants Securities predicted that by 2020, some 5.22 trillion yuan (758 billion US dollars) worth of assets would be managed by robot financiers.

China leverage and shadow banking biggest threats to growth (The Asset), Rated: A

FINANCIAL system leverage and shadow banking pose the biggest threat to China’s economic growth, according to a live poll of attendees at the Fitch on China Forum.

The forum was organized by The Asset in association with Fitch Ratings and held on November 30 at the Four Seasons Hotel in Hong Kong.

Source: The Asset

Ant Financial and QCash scoop FT fintech awards (Financial Times), Rated: B

A big Chinese group and a US not-for-profit have triumphed in the second annual Financial Times fintech awards, with Ant Financial taking the “impact” prize and QCash winning for “innovation”.

European Union

KappAhl first to offer mobile payments in store with Klarna (NB Herard), Rated: AAA

KappAhl is the first major fashion chain to offer its customers digital payment solutions in stores via their smartphones. Customers will have the option to make their purchases with Klarna In-Store, paying either on the spot or upon invoice.

This new payment solution will become one of the cornerstones in KappAhl’s digital transformation, with customers in stores benefitting from the same payment options that they have in Shop Online.

The service has been rolled out gradually and, as of 1 December, will be available in all 173 KappAhl and Newbie stores in Sweden. From 1 December, the service will be available in all 96 Norwegian stores, and, from 4 December, in all 58 stores in Finland.

Fintech company Deposit Solutions raises $ 20 million from existing investors (Tech.eu), Rated: A

Deposit Solutions, a German fintech company, has raised $20 million in a round led by e.Ventures and Greycroft, both existing shareholders.

The new funds will be used to grow the Hamburg-based company’s Open Banking platform for savings deposits for both B2B and B2C services, and to expand internationally. Its APIs allow banks to connect to the platform to build and offer deposit services. It has partnered with more than 50 banks.

Why Scandinavia’s Biggest Bank Is Setting Up Its Own Fintech Startup Fund (Forbes), Rated: A

The bank has announced that it’s setting up Nordea Ventures, to make strategic investments in fintech start-ups.

A case in point is Tink the Swedish-based fintech company, where Nordea provided capital and advice and integrated some of Tink’s own technology into its own digital products while preserving Tink’s name and brand.

Tink’s app helps consumers to aggregate financial transactions in one place, to compare and switch mortgages to a partner bank or open a savings account, for instance. Another Tink app for banks and payment services like Klarna provides account aggregation and payment capabilities.

Nordea invests in fintech company Betalo (Nordea), Rated: B

Nordea is investing in the fintech company Betalo. This takes our partnership with the Swedish company to the next level after a cooperation agreement was signed in March 2017.

PSD2 BRINGS DELAYED DISRUPTION TO THE FINTECH ECOSYSTEM (TechSavvy), Rated: A

A new EU-directive is about to force banks to open up their data vaults and allow third parties to access their user data. Nordea has chosen to embrace the change with open eyes, and a fintech startup predicts tough competition embarking on the opportunities it brings along.

The release of bank data is bound to cause a stir in an otherwise traditional and established sector. One of the incumbents that have already made an imprint is the fintech startup Spiir.

American tech giants might end up owning the financial space. Rune Mai looks to China to catch a glimpse of what the financial future might hold. The retail giant Alibaba owns half the payment market here with an all-encompassing app that offers everything from dating, financing to shopping.

Nordea is more inspired than afraid of Amazon. The bank has more than 10 million customers in the Nordic region, and they have decided to face the coming change with open eyes. They are actively pursuing a first mover strategy and has allocated more than 100 people to ready themselves for the coming digital disruption.

International

Blockchain P2P Lending, Sending, and Spending: Etherecash Garners Support from Over 40,000 Contributors During Pre-ICO (Digital Journal), Rated: AAA

A little over three weeks are left in the Etherecash token sale and it’s been a fantastic run so far; the success they have seen comes after a big appearance at the World Blockchain Summit, Dubai, which was closely followed by a heated Pre-ICO.

The platform is the remedy to the overly-complex and lengthy process of getting a traditional bank account, and will provide access to finances through a cryptocurrency-backed P2P (Peer-to-Peer) fiat currency loan marketplace. P2P loans are backed by the borrower’s own crypto-wealth allowing them to borrow up to 80 percent of their wallet’s value.

On top of this, once the crypto debit card is available, users will be able to store multiple types of cryptocurrency on it, allowing them to shop anywhere and everywhere as they please, even abroad.

Based on the Ethereum standard token ERC20, purchasable with Bitcoin or Ethereum, the exciting ICO Launch began 15th November, 2017 – ending December 19th, 2017.

Australia

Treasurer of Australia Scott Morrison Visits Online Lender Prospa’s New Office in Darlinghurst (Crowdfund Insider), Rated: AAA

Prospa, an online lender serving SMEs in Australia, had a visit from the Honorable Scott Morrison yesterday. The Treasurer of Australia help to open up Prospa’s new high tech Darlinghurst office, which apparently is quite large extending over two floors housing a team of 150.

Prospa expects to add another 50 hires over the next 12 months as it accommodates platform growth.

India

KrazyBee looks to expand in Tamil Nadu (The Times of India), Rated: A

Online lender KrazyBee says it is rapidly expanding its business in Tamil Nadu and its focus in the state will be on solving unique needs of the student community.

KrazyBee, which earlier operated in five cities (Bengaluru, Hyderabad, Pune, Vellore and Mysore), said that is expanding aggressively in over 11 cities, including Chennai. With more than four lakh registered student borrowers on its platform, KrazyBee says it currently processes over 3,000 loan applications and disburse around 1,700 loans per day.

Asia

Asian banks’ operating income could be hit by fintech disruption (Channel News Asia), Rated: A

Asian banks that do not take any action against the rise of financial technology (fintech) could see their operating income take a hit, said the Monetary Authority of Singapore (MAS) on Thursday (Nov 30) in its latest Financial Stability Review.

For lenders in Singapore that do nothing to stave off the disruption, that could mean a 5 per cent loss in operating income over the next five years, the central bank warned.

 

Mobile wallets taking hold in Asia (The Asset), Rated: A

WHILE the development of digital payments started with the launch of the first universal credit card in the 1950s, the space has rapidly evolved, and now the mantle is being passed to e-wallets, otherwise known as mobile wallets.

In 2014, credit and debit cards accounted for more than half of e-commerce payments in terms of transaction value. However, that share is predicted to drop to 49% in 2019 as mobile wallet options start to gain ground, according to a report by the United Nations Conference on Trade and Development.

Canada

Activists across Canada demand fair banking for low-income people (TheStar), Rated: AAA

At the Toronto rally held outside Finance Minister Bill Morneau’s constituency office, a 46-year-old man was holding the loan he got in August from a payday loan company and was trying to get pedestrians to look at it.

He took out a $5,500 loan to pay his rent in August, to be paid back at 60 per cent interest by 2020.

Don is a member of the grassroots activist group called Association of Community Organizations for Reform Now (ACORN), and one of thousands of people who, on Tuesday, rallied across Canada demanding fair banking.

Mobetize’ CEO to speak at first BC Tech Association FinTech Day (Globe Newswire), Rated: B

Mobetize Corp. (OTCQB:MPAY), a leading fintech service provider for payments, remittances and mobile banking solutions, today announced CEO Ajay Hans will be the keynote speaker at BC Tech’s Fintech Day event on December 5.

Authors:

George Popescu
Allen Taylor

Thursday April 27 2017, Daily News Digest

banks online lenders

News Comments Today’s main news: Conference of State Bank Supervisors files lawsuit against OCC. The actual complaint. P2PFA members lent more than 1B GBP in Q1. Marc Franson’s comment on CSBP lawsuit: “The proposed OCC FinTech charter had enough obstacles and questions of its own, but the Conference on State Bank Supervisors has sued the OCC in […]

banks online lenders

News Comments

United States

  • CSBS files complaint against OCC. GP:”The US is in an interesting equilibrium between state power and federal power. In the internet era state control of online institutions will lead to cross-state-boarder regulation arbitrage. States entering regulator-competition could be good for the fintechs. On the other side I don’t see why and how a federal regulator isn’t allowed to create new types of charter and compete with the states as well. I do hope that the rumore is true and the states will be more constructive in offering better alternatives instead of blocking innovation. ” AT: “This has been a long-time coming, and quite frankly, I’m surprised it’s taken this long.”
  • The actual complaint against OCC. AT: “I can’t say that I disagree with the CSBS position that the OCC deciding on its own to start a charter and regulate digital banking is an overstep of its authority. Nevertheless, I’m not convinced that states are the best regulators of an industry that inherently is cross-boundary. Constitutionally, the federal government is the regulatory authority for interstate commerce.”
  • How banks can compete against an army of fintech startups. GP:”An interesting summary worth a read.”AT: “This is a great read with practical solutions, but banks will never be as agile or as nimble as tech startups.”
  • Rising rates pose risk for students looking to refinance. GP:”A raising rates environment favors for the borrowers fixed rates and for everybody else floating rates. The rism with adjustable rates credit is of course to push the borrowers into default. There is an equilibrium between lenders seeking profits and making sure not to push borrowers into default.”
  • Helping investors avoid The Lending Club trap. GP:”Global Debt Registry offers a 3rd party solution to increase investor confidence in online loans. A good approach for the industry. They already signed up a few markee customers like Avant.”
  • Fintech apps bring stability to stressed families. GP:”There is an advantage in having credit cards you can use in case of emergency. Online lines of credit will likely act in the same way”
  • Marketplace real estate lending. GP:”…growing number of online real estate platforms…”
  • Fintech funding in New York companies is tanking. GP:”New York investors are more risk averse then Silicon Valley ones. “AT: “Maybe it’s because the more interesting innovations right now are happening somewhere else.”
  • PeerStreet named ‘Best Overall P2P Lending Platform’.
  • Kabbage CEO discusses future of entrepreneurship, IP.

United Kingdom

China

International

European Union

Australia

India

Canada

News Summary

United States

CSBS Files Complaint Against Comptroller of the Currency (CSBS), Rated: AAA

The Conference of State Bank Supervisors (CSBS) announced today it has filed a complaint in the United States District Court for the District of Columbia against the Office of the Comptroller of Currency (OCC).  The complaint seeks to prevent the agency from moving forward with an unlawful attempt to create a national nonbank charter that will harm markets, innovation and consumers.

“The OCC’s action is an unprecedented, unlawful expansion of the chartering authority given to it by Congress for national banks.  If Congress had intended it to be used for another purpose, it would have explicitly authorized the OCC to do so,” said John W. Ryan, CSBS President and CEO.  “If the OCC is allowed to proceed with the creation of a special purpose nonbank charter, it will set a dangerous precedent that any federal agency can act beyond the legal limits of its authority.  We are confident that we will prevail on the merits.”

The complaint asserts that by creating a national bank charter for nonbank companies, the OCC has gone far beyond the limited authority granted to it by Congress under the National Bank Act and other federal banking laws. Those laws authorize the OCC to only charter institutions that engage in the “business of banking,” which under the National Bank Act requires an institution, at minimum, to receive deposits.  Yet the OCC is attempting to create a new special purpose charter for nonbank companies that do not take deposits, without express statutory authorization. The OCC does not have the authority to create a special purpose charter for nonbanks without specific congressional approval.

CONFERENCE OF STATE BANK SUPERVISORS v. OFFICE OF THE COMPTROLLER ) OF THE CURRENCY and THOMAS J. CURRY (BankCSBS), Rated: AAA

  1. CSBS, the nationwide organization of state banking regulators in the United States, brings this action challenging the OCC’s recent decision to create a new special-purpose national bank charter for financial technology (“fintech”) and other nonbank companies.
  2. Although the OCC’s decision primarily focuses on fintech companies, the OCC has declared that it is empowered to create a charter for nonbank financial services providers regardless of the extent to which they are technology-driven.
  3. State authorities (including CSBS’s members) have been successfully overseeing and regulating nonbank companies—including those viewed as fintechs—for many years. In addition to supervising state-chartered banks, most state banking departments regulate a variety of nonbank financial services providers, including money transmitters, mortgage lenders, consumer lenders and debt collectors. Among other prudential requirements, these companies are required to meet state safety and soundness requirements and conform to both state and federal consumer-protection and anti-money-laundering laws.
  4. The OCC contends that the number of fintech companies in the United States and United Kingdom has reached more than 4,000, with investment in the sector growing from $1.8 billion to $24 billion worldwide in just the last five years. Regardless of the accuracy of the OCC’s calculations, it is without question that the OCC’s actions will have significant economic consequences—for example, the largest 100 money transmitters alone transferred more than $800 billion in funds in 2014.
  5. The OCC’s interest in nonbanks culminated in Comptroller Curry’s announcement in December 2016 that the OCC has decided to create a new national bank charter for nonbank companies, which would pull chartered nonbank fintech companies into the national banking regulatory system, potentially preempting and replacing the licensing, regulation, and supervision responsibilities of state authorities.
  6. It is well settled by court precedent, federal banking statutes, and industry custom that carrying on the “business of banking” under the NBA requires, at a minimum, engaging in receiving deposits. Yet the OCC has, through its latest effort, created, without express statutory authorization, a new charter for nonbank companies that would not be engaged in deposit-taking and, thus, would not carry on either the business of banking or any expressly authorized special purpose.
  7. Because the OCC has acted beyond its statutory authority, its creation of a national bank charter for non-depository companies, and the regulation upon which the OCC relies in doing so, are contrary to the NBA and violate the Administrative Procedure Act (“APA”), and therefore cannot stand.
  8. Notwithstanding the significance of the Case 1:17-cv-00763 Document 1 Filed 04/26/17 Page 3 of 31 4 fintech and non-depository industries to the financial markets and the consequences of this new charter, the OCC has declined to pursue publicly vetted regulations.
  9. Instead, the OCC has indicated that it will, as part of the chartering process, determine which (otherwise inapplicable) federal banking laws will be applied to each charter holder and will incorporate those laws through private operating agreements individualized to the business model of each applicant. The OCC does not intend to publicly disclose such operating agreements, and the OCC’s negotiations with each charter holder will be secret. The OCC’s failure to follow proper rulemaking procedures in effecting such a fundamental change in national bank regulatory policy likewise violates the APA.
  10. Further, because the OCC made its decision to offer these special-purpose charters without adequately considering and addressing the myriad policy implications and concerns raised by the public or conducting an adequate cost-benefit analysis, and because the OCC has not offered a reasoned explanation for its decision, its actions should be deemed not only contrary to law, but also arbitrary, capricious, and an abuse of discretion.
  11. Finally, the OCC’s creation of this nonbank charter program will allow chartered entities to operate outside the bounds of existing state regulation, thus creating conflicts between state and federal law that will trigger significant preemption issues. Because Congress has not granted the OCC the requisite authority to charter these nonbank entities, much less expressed the intent that the OCC’s nonbank charter program should preempt state law, the OCC’s program violates the Supremacy Clause and the Tenth Amendment of the U.S. Constitution.
Read the full complaint for declaratory and injunctive relief here.

How Banks Can Compete Against an Army of Fintech Startups (Harvard Business Review), Rated: AAA

It’s been more than 25 years since Bill Gates dismissed retail banks as “dinosaurs,” but the statement may be as true today as it was then. Banking for small and medium-sized enterprises (SMEs) has been astonishingly unaffected by the rise of the Internet. To the extent that banks have digitized, they have focused on the most routine customer transactions, like online access to bank accounts and remote deposits. The marketing, underwriting, and servicing of SME loans have largely taken a backseat. Other sectors of retail lending have not fared much better. Recent analysis by Bain and SAP found that only 7% of bank credit products could be handled digitally from end to end.

The glacial pace at which banks have moved SME lending online has left them vulnerable.

Lending to small and medium-sized businesses is ready to move online

In a recent survey from Javelin Research, 56% of SMEs indicated a desire for better digital banking tools. In a separate, forthcoming survey conducted by Oliver Wyman and Fundera (where one of us works), over 60% of small business owners indicated that they would prefer to apply for loans entirely online.

Transaction costs associated with making a $100,000 loan are roughly the same as making a $1,000,000 loan, but with less profit to the bank, which has led to banks prioritizing SMEs seeking higher loan amounts. The problem is that about 60% of small businesses want loans below $100,000.

Last year, less than $10 billion in small-business loans was funded by online lenders, a fraction compared to the $300 billion in SME loans outstanding at U.S. banks. Morgan Stanley estimates the total addressable market for online SME lenders is $280 billion and predicts the industry will grow at a 47% annualized rate through 2020.

Can banks out-compete the disruptors?

Banks’ cost of capital is typically 50 basis points or less. By comparison, online lenders face capital costs that can be higher than 10%, sourced from potentially fickle institutional investors like hedge funds. Banks also have a built-in customer base, and access to proprietary data on depositors that can be used to find eligible borrowers who already have a relationship with the bank. Comparatively, online lenders have limited brand recognition, and acquiring small business customers online is expensive and competitive.

Rising Rates Pose a Risk for Students Looking to Refinance Debt (WSJ), Rated: A

Interest-rate savings on student-loan refinancing are also shrinking as short-term rates have started to move higher, according to a new report.

Refinancing student loans has taken off in the last five years as fintech lenders, led by Social Finance Inc. or SoFi, have been offering to replace borrowers’ federal student loans with new loans that have lower interest rates.

Until recent years, rates on many federal student loans weren’t based on market rates, but a higher uniform rate set by the government.

Now, the savings are declining for some of the most creditworthy borrowers. Those with the highest credit scores who refinanced early this year received an interest rate that on average was about 2.2 percentage points lower than the rate on their original loan, according to LendKey Technologies Inc., which tracks student loans at credit unions and community banks. In 2014 and 2015, the average interest rate savings exceeded 3 percentage points.

Helping Investors Avoid The Lending Club Trap (PYMNTS), Rated: A

In an interview with Karen Webster, Charlie Moore, president of loan validation platform Global Debt Registry, said that within the last 18 months there has developed a clear need for better investor confidence in online loans — specifically loans being funded by institutional capital across different lending models.

One of the big challenges, said Moore, is for the institutional investor to be able to validate the integrity of the loan data itself.

The spreadsheets themselves might indicate, hypothetically, that a woman with a 700 FICO score, between the ages of 35 and 44 in New York City has taken out a loan of $10,000, but they won’t, as Moore stated, get the full PII or validating information that this is a real person with a real income that can be used to pay that loan’s terms. “The investors are buying on trust,” he said.

The Global Debt Registry, in turn, seeks to confirm the information in the spreadsheet, with affirmation that the borrower is a real person, that they have a social security number, that the credit score is real and that they have the capacity to pay back the loan.

Fintech Apps Bring Stability to Stressed Families (WSJ), Rated: A

The past few years have seen a proliferation of apps designed to help families—not rich people looking to allocate 401(k) retirement accounts, but the larger number struggling to make it from paycheck to paycheck, coping with the uncertainty of everyday life and trying to keep the promises they made to themselves to save.

About 12% of respondents to a 2015 Federal Reserve survey said their income varied “quite a bit” from one month to the next during the past year; an additional 20% said they occasionally had some unusually high or low months.

A three-year-old app called Even, for instance, is a response to the volatility of some people’s income. Based on past paychecks, Even estimates the amount a person makes on average, advancing money on bad weeks that the user pays back on a good week. The cost of the credit extended is covered by a subscription fee—$3 a week for individuals, though for many users employers subscribe and offer Even as an employee benefit. The company has raised $12 million in venture capital.

Another app, Digit, from Hello Digit Inc., attempts to make saving easier.

The Prism app, from Prism Money, began by simply putting all of a user’s bills in one app to cut down on the hassle of keeping track of them all. But the founders realized that managing the payment of bills was a huge source of stress to many people and shifted their focus to helping users with that, says Tyler Griffin, until recently Prism’s CEO and now entrepreneur in residence at the Center for Financial Services Innovation. Users connect the app to their bank accounts and monthly bills. The app reminds users when a bill is due and allows them to pay it with one click.

 

Marketplace Real Estate Lending (Prime Meridian), Rated: A

Today, online lending to both consumers and small businesses continues to grow in acceptance and popularity, thanks to applied technology that has enabled a smoother, quicker, and better experience for the borrower relative to traditional lending.

Real estate lending has also gone online and continues to flourish for the same reasons.

There are a growing number of online real estate platforms and, combined, we estimate that they originated well over $1 billion in loans in 2016[1]. Examples of these platforms include ShareStates, Patch of Land, Realty Mogul, LendingHome, and Money360, to name just a few.

The U.S housing market demonstrated strong growth over the past year. Price appreciation accelerated from 4.9% to 5.3%, existing home sales outpaced 2015 by almost 3%, new home sales were up 13% and housing starts were up 6%[2]. We expect this positive market environment to continue in 2017, supported by demographic trends of increasing demand that should, in turn, support more renovation and new construction of most property types.

Fintech funding to New York companies is tanking (Biz Journals), Rated: A

According to data provider CB Insights, fintech funding to VC-backed New York companies fell 35 percent on a quarterly basis.

New York fintech deals increased for the second straight quarter. The tally rose 26 percent from the fourth quarter of 2016. However, that’s 33 percent below the same quarter last year.

PeerStreet Named “Best Overall Peer-to-Peer Lending Platform” In FinTech Breakthrough Awards (Yahoo! Finance), Rated: B

PeerStreet, a marketplace for investing in real estate backed loans, is pleased to announce that it has been recognized as the Best Overall Peer-to-Peer Lending Platform in the 2017 FinTech Breakthrough Awards.

The mission of the FinTech Breakthrough Awards is to honor excellence and recognize the creativity, hard work and success of FinTech companies, technologies and products. Winners are chosen by a panel of senior-level, experienced FinTech professionals that have personally worked in the industry including journalists, analysts and technology executives.

Kabbage CEO discusses the Future of Entrepreneurship and Intellectual Property (BusinessWire), Rated: B

Rob Frohwein, CEO and co-founder Kabbage, will deliver the keynote at the 13th IP Hot Topics Luncheon at Georgia State University College of Law at noon Wednesday, May 10, at the Knowles Conference Center, 85 Park Place NE, Atlanta.

Frohwein will share his experiences going from a practicing attorney to a global entrepreneur that raised nearly $1 billion based on patented IP for a global lending technology platform. An accomplished author and former radio host, Frohwein will entertain attendees with his vision of the changing industrial and financial climate.

United Kingdom

P2PFA members lent out more than £1bn in first quarter (P2P Finance News), Rated: AAA

THE PEER-TO-PEER Finance Association (P2PFA) members – including new entrant Folk2Folk – lent out more than £1bn in the first quarter of 2017.

The nine P2P platforms – Zopa, RateSetter, Funding Circle, Landbay, LendInvest, Lending Works, MarketInvoice, ThinCats and Folk2Folk – collectively represent more than 80 per cent of the UK market. They originated more than £636m in business loans during the first three months of the year and lent out around £368m to individuals, according to data released by the trade body on Wednesday.

Borrowers becoming increasingly picky (Securities Lending Times), Rated: A

This has created a buyer’s market, with borrowers picking and choosing which lenders they trade with on the basis of the RWA ratings of their available stock.

Another panellist commented that the rise of peer-to-peer lending is likely at help improve liquidity, which is a key concern for European market participants in the context on the European Central Bank’s public sector asset purchase programme.

Collateral to launch P2P app for investors and borrowers (P2P Finance News), Rated: A

The peer-to-peer pawnbroker, which offers investors annual returns of up to 12 per cent, said that it will begin the beta testing phase in the coming weeks and will fully launch the new offering in a couple of months.

Despite the P2P sector’s emphasis on technology, most of the best-established platforms still do not have their own apps. Funding Circle has an app purely for investors, but Zopa and RateSetter do not have apps available. Smaller platforms Crowd2Fund and LendingCrowd already have their own apps, just aimed at investors.

Sikoba, a Decentralized P2P IOU Platform on Blockchain, Launches Presale Ahead of Token ICO (Yahoo! Finance), Rated: A

Sikoba, a global decentralized money platform based on peer-to-peer IOUs and blockchain technology, is taking the first step towards its upcoming ICO by launching a token presale. The presale will give participants a chance to receive a 50% bonus on SKO tokens. These tokens are designed to be used for making transactions on the Sikoba platform. The ICO will run from April 25 to May 15, 2017.

Sikoba’s P2P credit relationships are governed by smart contracts with specific conditions, fee structures, and repayment rules. Through the use of ‘credit conversion’, payments between participants who either do not know or do not trust each other are made possible. Fiat currencies or cryptocurrencies can act as a medium of exchange when there are no credit links between participants, or to repay outstanding balances when needed.

My Lendy Experience – Portfolio Review After 2 Years Investing (P2P-Banking), Rated: A

Lendy is a platform offering bridge loans secured by property. I last reviewed my portfolio performance here on the blog in January 2016. Since then the following major changes have taken place at Lendy:

  1. Different interest rates
    Initially all loans had carried 12% interest. Interest range for investors on new loans now are in the range between 7 and 12%.
  2. Lendy sold the security of the second defaulted loan (Garden Center).
  3. Since March 2017 investor can not buy loans on the secondary market and deposit funds afterwards (this still is possible on the primary market).
  4. Since April 2017 there is a new default policy in effect. For loans more than 90 days overdue interest continues to accrue but will not be paid until Lendy has received payment by the borrower. All loans more than 180 days overdue are now automatically classified as default loans. The number of defaulted loans has risen to 14 at the time of this writing.

My portfolio amount is 10K GBP spread out over 14 different loans. The vast majority is in 12% interest rate loans.

My yield (self calculated with XIRR) so far is 12.1% in GBP. Unfortunately I deposited most funds during the time when the pound was at a high, therefore calculated in Euro currency the yield is only 4.4% for me.

Peer to Peer Lending Car Documentary (Gumtree), Rated: B

I am doing a documentary on the peer to peer lending phenomenon. Specifically peer to peer car lending.

Looking for to talk to anyone who has done this. Good experiences or bad.

Fee paid for your time.

China

P2P Lending News (Xing Ping She Email), Rated: AAA

The annual salary of employees from AI(Artificial Intelligence) field start from $1M!

Chinese fintech market keep booming these years, and the scarcity of talent for the area, especially those who have comprehensive abilities are the most needed. Some professional employees’ annual salary starts from $1M, and it is also very common for a professional expert to earn over one million dollars every year.

In the battle for talents between traditional financial institutions and fintech companies, some traditional institutions are restricted by salary and institution system. According to analysis from industry players, an increasing number of traditional financial institutions cooperate with fintech enterprises, leading fintech intelligence turning to the new financial area.

Chinese:
百万年薪抢夺人工智能人才,新金融公司“截胡”传统机构
金融科技热浪袭来,尤其是复合型人才缺口日益增大,金融科技人才的身价也水涨船高。尤其以人工智能领域人才最为稀缺,年薪起步价即达到百万元,相对成熟的人工智能专家百万美元年薪亦非常普遍。在传统金融机构与新兴金融科技公司争夺金融科技人才的卡位战中,受制于薪酬体系以及机构体制等要求,部分传统金融机构略显疲态。业界人士分析,传统金融机构越来越多与金融科技公司的合作,正是金融科技人才向新金融公司集中的必然走向。

Parent Company of a P2P Lending Platform divests its traditional business, taking P2P Lending as Primary Business.

Recently, P2P lending platform Niwodai reported its annual report, which showing the net profit increased fivefold. Jiayin Fin-tech(New Third Board:832031), the parent company of Niwodai, adjusted their structure of communications business of 2016. They have ceased the communication network technology services from the third quarter of 2016, which means Jiayin is gradually divesting its traditional business, and focus on P2P lending in future.

Chinese: 
你我贷母公司剥离传统业务,网贷成主营
近日发布年报净利增长5倍的互金平台你我贷的母公司嘉银金科,于2016年对通信相关业务结构进行调整,出售了主要从事通信网络技术服务的子公司上海汇祥信息工程有限公司和上海复跃信息科技有限公司,2016 年第三季度起公司不再从事通信网络技术服务。此举也意味着嘉银金科正在逐渐剥离原有传统业务,今后网贷业务将成为公司的主营业务。

60% P2P Lending Institutions may not finish Funds Depository in time.

Unlike the indifferent attitude in the past, banks begin to compete for P2P lending funds depository business after the government’s instruction released. According to a P2P lending platform with listed company background, some banks have been grabbing customers in terms of depository. However, it’s still not easy for platforms to get access to the threshold.“If a platform has not yet carried out depository, we can basically consider it may not continue their business in the near future” an insider of the P2P lending industry said,“Currently the number of potential platforms for depository cooperation is few , and it is estimated that around 60% platforms cannot accomplish depository within the rectification period.”

Chinese:
网贷存管上演“生死时速”,六成机构将“随波逐流”
某上市系网贷平台表示,过去银行对平台爱搭不理,在存管发布后已有多家银行上门咨询合作意向。看似银行已经开启抢业务模式,但网贷存管门槛仍旧不低。“如果这时候还没有开展存管业务洽谈,基本判断平台不想继续经营或实力不够已被挡在门外。”一位网贷行业人士表示,潜在签约平台已不太多,根据当前已签约机构数估计,将有六成左右平台无法在整改期限内完成存管。

CEO Tang Ning and CreditEase Honored for Contribution to Financial Literacy (PR Newswire), Rated: A

Ning Tang, Founder and CEO of CreditEase, received the China Financial Literacy Distinguished Contribution Award at the 2nd China Financial Literacy Annual Conference held in Beijing and Shanghai from March 18 to 20, 2017. As an institution, CreditEase was also honored with the China Financial Literacy Distinguished Contribution Award.

The event with the theme “FinTech and Blockchain” was co-organized by Chinese Museum of Finance Group, China Center of Financial Literacy and China Blockchain Research Center. Financial experts from China and abroad, as well as financial regulators convened to talk about opportunities and challenges brought by FinTech, particularly blockchain, as well as necessity to improve financial literacy of the general public, especially students.

During the keynote speech, Tang stated that China has become a global leader in FinTech innovation and regulation, boasting the comparatively matured payment and online lending industries and expecting more innovations aiming to solve financing difficulties of SMEs.

International

Where funding for financial technology is going, in five charts (Tearsheet), Rated: AAA

CB Insights’ Global Fintech Report reported Wednesday that investment in financial startups soared 222 percent quarter over quarter in Europe and 89 percent in Asia, while North American investment took a small dip.

In the first quarter, fintech startups raised $2.7 billion across 226 deals. That’s a 33 percent rise in funding on a quarterly basis but down 47 percent from the same quarter last year. Deal activity increased 12 percent from the fourth quarter of 2016.

At the current rate, Europe fintech deal activity could top 2016’s total by 57 percent, according to CB.

UK fintech companies raised $328 million in the first quarter, including more that $200 million invested in Atom Bank and Funding Circle.

European Union

Venture Capital Enthusiasm for Fintech Startups Shifts to Europe (Fortune), Rated: AAA

Venture capital investments in financial services startups are showing a geographical split, with funding for so-called “fintech” companies in the United States cooling but soaring in Europe, according to a new report out Wednesday.

In the first quarter this year, venture-backed fintech companies in the U.S. raised $1.1 billion, an 8% drop from the previous quarter and down 39% from the same period a year ago, according to a new report from venture capital database CB Insights.

U.S. fintech startups closed a total of 90 financing deals, down 9% from the previous quarter, and the median deal size in dollars also fell.

Meanwhile, investments during the first quarter in European venture-backed fintech companies jumped to $667 million, a 250% increase over the previous quarter and 133% climb from a year ago.

The number of fintech deals in Europe spiked 74% from the previous quarter to 73, and the average deal size ticked up.

BBVA steps up fintech acquisition strategy with purchase of Openpay (Finextra), Rated: A

BBVA’s ongoing strategy to buy out promising fintech startups has moved ahead with the acquisition of Mexican B2B payments platform Openpay.

Currently, Openpay has a network of more than 15,000 payment reception points in Mexico, connected in real time through its Paynet network, and manages more than one million transactions a month. The Openpay platform is used by more than 1000 businesses in Mexico, from startups to SMEs and large corporate clients.
Australia

Millennials’ financial heartache drives P2P lending (Financial Standard), Rated: AAA

According to P2P lending platform RateSetter, millennials are coming in droves to seek out alternatives to traditional saving and investment products. The investor group is now one of the largest retail investor groups in the P2P market after increasing its involvement by 250% in the last 12 months.

In an analysis of RateSetter investors, the platform found 64% of its millennial investors had chosen to move money from low interest savings accounts and term deposits, while 23% had redirected money from equities into the P2P investment market.

The increase in investment however did not only come from millennials. In the past 12 months, post-millennials, pre-retirees, and retirees have all increased their investment in P2P by 209%, 264%, and 212% respectively (see Table 1). As the average investor numbers continue to climb, so does the average amount of money invested, with pre-retirees increasing their average amount invested from $25,929 a year ago, to $50,123 today.

Australian Govt Regulator Inks FinTech Agreement with Indonesia (Cryptocoins News), Rated: A

Australia’s corporate regulator, the Australian Securities and Investments Commission (ASIC), has entered a FinTech cooperation agreement with its Indonesian counterpart in a bid to bolster innovation in the sector.

Signed on Friday between the ASIC and Indonesia’s Otoritas Jasa Keuangan (OJK) in Melbourne, the agreement will see the two regulators combine to develop and establish a framework that promotes financial services in each other’s markets.

India

New segments to enter fintech landscape in India this year (India Times), Rated: AAA

Fintech market landscape in India has been dominated by payments and lending firms so far, although other segments, particularly personal finance and enterprise solutions, are poised to gain ground this year, a recent PwC report has found.

Canada

Mobetize and G&F Financial Group Launch Mobile Lending App (News.sys-con.com), Rated: A

Mobetize Corp. (OTCQB: MPAY), a provider of mobile financial services (MFS) technology for the multi-billion dollar business to business (B2B) segment of the Fintech as a Service (FaaS) sector, and G&F Financial Group (G&F), a full service credit union that provides personal, business and wealth financial solutions in British Columbia, are pleased to announce the launch of an online and mobile lending application “Smart Money Loan“. Both parties are excited to invite other financial institutions to join in this innovation and offer the same service to their own clientele.

Smart Money Loan is a proprietary digitized lending product that allows borrowers to apply for secured and unsecured loans ranging from $500 up to $35,000 to refinance credit card debt, student loans, weddings, or household projects.

Key benefits for FI’s include:

  • An omnichannel and simple user experience for fast loan decisions and funding
  • Digitized back-office processes and interoperability
  • Ability to lead innovation with configurable KYC and heuristic adjudication rules
  • Configurable workflow of applications
  • Easy white-labeling configurability for branding and rapid launch
  • Opportunity to leverage new lending business models
  • Ability to respond to and address security and regulatory requirements

Authors:

George Popescu
Allen Taylor

Monday March 27 2017, Daily News Digest

marlette funding

News Comments Today’s main news: CFPB fines Experian $3M. Marlette Funding closes $333M securitization. EU considers passporting for fintechs. CreditMonk makes user reviews relevant for SMBs. Today’s main analysis: Recent securitizations. MFT 2017-1. Today’s thought-provoking articles: RateSetter provides update on wholesale lending. China the new leader in fintech worldwide. IT Consortium CEO calls for reg postponement on fintech. United States CFPB […]

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China

India

Asia

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News Summary

United States

CFPB fines Experian $ 3 million for lying about consumers’ credit scores (Housingwire), Rated: AAA

Experian, one of the nation’s three major credit reporting bureaus, misled consumers by telling them that the credit scores they purchased from the company were the same ones that lenders used to make credit decisions, the Consumer Financial Protection Bureau said Thursday.

And for that deception, the CFPB is fining Experian $3 million.

According to the CFPB, Experian developed its own proprietary credit scoring model, which it calls the “PLUS Score.” Experian then took that “PLUS Score” and applied it to information in consumer credit files to generate a credit score it offered directly to consumers.

Experian then marketed and sold the PLUS Score to consumers.

According to the CFPB, Experian violated Dodd-Frank from at least 2012 through 2014 by “falsely representing that the credit scores it marketed and provided to consumers were the same scores lenders use to make credit decisions.”

Additionally, the CFPB said that Experian also violated the Fair Credit Reporting Act, which requires a credit reporting company to provide a free credit report to consumers once every twelve months.

Until March 2014, consumers getting their annual report through Experian had to view Experian advertisements before they got to the report. This violates the Fair Credit Reporting Act prohibition of such advertising tactics, the CFPB said.

Marlette Funding Closes $ 333 Million Securitization Transaction (Yahoo! Finance), Rated: AAA

Marlette Funding, LLC, a provider of online consumer lending platforms and services, announced today it closed its second proprietary “MFT” securitization. Approximately $333 million of Best Egg collateral was financed via three classes of Notes and one class of Certificates with certain loan sellers retaining risk on a portion of the Notes and/or Certificates.

The transaction was significantly oversubscribed and successfully priced which was based upon Marlette’s differentiated product offering and superior credit trends. Underwriting the transaction were Goldman Sachs, who served as the structuring agent, Deutsche Bank and Citi. The Class A, B and C fixed-rate Notes were rated A (sf), BBB (sf) and BB (sf), respectively, by Kroll Bond Rating Agency (KBRA).

The “MFT” securitization is yet another significant milestone for the company, and a cornerstone of its long-term capital strategy. The transaction involved the sale of loans by Marlette and four other whole loan buyers who accessed the securitization markets via Marlette’s effective creation and management of the MFT shelf. The transaction was also notable for complying with the Dodd-Frank Act’s risk-retention requirement by utilizing a jointly sponsored entity comprised of Marlette and the originating bank, Cross River Bank.

Recent Securitizations (Orchard Platform), Rated: AAA

Data extracted from Finsight’s US ABS Market Overview.

Marlette Funding Trust 2017-1 (MFT 2017-1), (PeerIQ), Rated: AAA

Financing headlines dominated the news cycle this past week. OnDeck, an SME lender, amended its asset-backed revolving credit facility with Deutsche Bank to extend the facility’s maturity date to March 2019 and increase the borrowing capacity to $214 Mn. Further, Fundation, a leading credit solutions provider for small business, secured an asset backed credit facility from MidCap Financial.

Marlette has a strong capital market team led by ex-DB banker Karan Mehta and uses securitization as a funding channel. Citi Held for Asset Issuance 2016-MF1 (CHAI 2016-MF1), closed on March 4, 2016, was the first deal from the Marlette Platform which executed in challenging market conditions; Marlette Funding Trust 2016-1 (MFT 2016-1), closed on August 2, 2016, and was the second deal and first under the MFT shelf. MFT 2017-1, backed by $333 Mn of consumer loans, represents its third and the largest ABS transaction (Exhibit 1), led by Goldman Sachs, Deutsche Bank and Citigroup. Due to high demand, MFT 2017-1 was upsized by 18%, from $257 Mn to $304 Mn before pricing last Friday.

In a sign that regulatory uncertainty continues, the Marlette transaction did not include any loans from Colorado. Most recently, in February, Colorado state regulators filed a complaint against Marlette and demanded various remedial actions including refunding any excess charges to Colorado residents. Originators relying on the partner-funding bank model to impacted markets (such as NY, CT, VT) are structuring transactions to mitigate regulatory risk. 

Source: PeerIQ, Bloomberg, Kroll Rating

Besides credit supports, senior tranche investors have additional structural protection in the form of cumulative net loss rate triggers, which lead to accelerated repayment of principal in the event of worse-than expected collateral performance.

Such CNL trigger profiles represent the first order approximation of loss timing curve. If the CNL triggers are set too tight, the triggers have elevated risk of being breached, leading to reputational hazard to the issuer; if too wide, the original bond rating may be challenged and the senior bond holders may not receive the structural protection they expected.

 

Honeymoon’s Over for Peer-to-Peer Lending (Bloomberg), Rated: A

If they were, perhaps Promise Financial would still be making loans to finance wedding dresses and cakes and bad DJ’s. This relatively young firm was offering to make unsecured loans of around $10,000, typically for weddings, and charged interest rates that went up to nearly 30 percent.

But it stopped making loans at the end of January, according to a Bloomberg News article on Friday by Matt Scully. Instead, it’s changed its name to DigiFi and will provide technology to bigger banks.

And second, it makes more sense for many smaller online lenders to team up with larger financial operations rather than try to go it alone in an unforgiving and complex world.

This is yet another sign of the slow abandonment of the original vision of peer-to-peer lending in the U.S., where individuals lend to one another in a decentralized, Internet-based platform. The largest online lending firms, such as LendingClub and Prosper Marketplace, finance loans through securitizations, money from institutional investors and banking relationships. Promise, for example, raised around $100 million of funding agreements from investors including Greg Lippmann, a legendary mortgage-debt trader.

Does Marketplace Lending Offer Greater Transparency for Your Investment? (NREI Online), Rated: A

Companies that do the bulk of their business online are in many ways more accessible than traditional brick-and-mortar establishments, and that’s particularly true when it comes to marketplace lending.

Marketplace lending, also known as peer-to-peer lending, refers to the practice of matching borrowers and investors through online platforms. These transactions can be based on a number of consumer- or industry-driven needs—anything from student loans to commercial real estate deals. Taking advantage of advanced technology, data-driven algorithms and innovative credit models, these platforms may frequently better serve their client base. They have broad options in terms of asset class and geography, quick response times and lower overhead costs, which can translate to an overall better value for both borrower and investor.

Digital technologies provide greater transparency and actionable intelligence to the marketplace, allowing investors to better understand loan performance and, in many cases, to research potential loan transactions directly and thoroughly from the convenience of their desktop or mobile device.

Digital technologies also allow for better consistency of reporting standards, loan origination data and portfolio performance, which leads to better decision-making by investors.

These digital technologies enhance the speed and efficiency of a transaction, many times providing real-time data afforded by the ability to better monitor information associated with a particular deal.

Alt-Lending Reshuffles, Auto Loan Alarm Bells And HHGregg Goes Bust (PYMNTS.com), Rated: A

Alt lending, particularly marketplace lending, looks like it is about to become a much smaller neighborhood. The auto-lending market continues to kill canaries in those coal mines at an alarming rate. And the retail death cycle mows on with HHGregg officially declaring bankruptcy and Sears more or less admitting to its shareholders that the same fate may soon befall them.

All in all, Prosper lost $118.7 million last year, up from $26 million in 2015. According to the in-house explanation, those losses are primarily derived from lower loan volumes, higher costs that are also attributed to legal settlements and restructuring efforts.

And Prosper isn’t alone in losing money in marketplace lending — OnDeck reported $85.5 million in annual losses for 2016, and LendingClub is looking at $146 million.

The latest data out of Ally Financial indicates that growth in the auto lending segment will come in between 5 percent and 15 percent of adjusted earnings in 2017.

The National Automobile Dealers Association indicates that its used-car price index has dropped 8 percent from a year ago and now sits at its lowest level in seven years.

Back on March 6, HHGregg filed for Chapter 11 bankruptcy, and, without a buyer in line, it has no choice but to move forward with the filing.

Competing with fintech on business loans isn’t rocket science (American Banker), Rated: A

If you’re a business, applying for a loan from a bank is not a fun experience. For most borrowers, it’s as bad today as it was 20 years ago. Banks in 1997 required borrowers to meet in person with a banker. They asked for piles of paper documents like tax returns and articles of incorporation. They took their time getting back to the business with an answer. And all of that’s true in 2017.

One reason is that fintechs are figuring out ways to win on their own or with large partner banks. These firms give business borrowers a world-class user experience: Websites are beautiful, minimal data is required to start and a loan request can be answered immediately. Fintechs will continue to get better and better, and borrowers will end up pursuing the path where it is easier to borrow. After all, business owners are consumed on a daily basis with simply running their business; in many cases, they’d rather pay a higher interest rate than spend scarce time on a lengthy process with an unsure outcome.

The other reason banks need to respond now is that business lending innovation is within reach. Here are a few obvious opportunities.

  • Put your application online
  • Allow your borrowers to upload required documents
  • Eliminate the paper
  • Publish your criteria and your process
  • Create a fast lane
  • Communicate with your borrowers

BlackRock and Vanguard call for delay to fiduciary rule (Financial Times), Rated: A

BlackRock and Vanguard have called on US officials to delay the introduction of landmark rules set to govern America’s $16tn retirement industry just weeks after President Donald Trump ordered a review of the controversial measures.

Mr Trump ordered the DoL to revise or scrap the rule, which the Obama administration predicted would generate $17bn annually in cost savings for American workers and retirees, if it found the measures would limit savers’ access to financial advice or increase litigation against advisers.

The new regime is expected to lead to a rise in financial advisers recommending cheaper passive funds over expensive actively managed products that pay a commission. BlackRock and Vanguard, which have large passive fund ranges, were expected to be among the winners of the measures.

Fifth Third invests in 5-year network upgrade as part of $ 112M contract (American Banker), Rated: A

Fifth Third Bancorp has made a major investment in its electronic network as part of an effort to modernize its branches and partner with fintech firms.

The Cincinnati company discussed the five-year project to upgrade its network Thursday at American Banker’s Retail Banking 2017 conference in Miami. Part of a $112 million renewal of a preexisting contract, the upgrades will allow customer videoconferencing with remote experts, Wi-Fi inside branches, distance learning and real-time data feeds to fintech partners.

Fifth Third has already begun piloting self-service video kiosks in its branches. People tend to be intimidated at first, but once they use a video teller they become comfortable, said Jerry Frederick, chief infrastructure officer at Fifth Third. Wi-Fi in the branches is allowing staffers to help customers using computer tablets.

Important Fintech Terms to Help You Understand the Fintech Industry (TechBullion), Rated: A

According to a report by PwC, the cumulative investments in the fintech sector will exceed $150 billion by 2019. The report also notes that 20 percent of financial services businesses will be taken over by fintech startups by 2020. Here are 10 important terms to help you understand the industry.

Payment Gateway refers to a service provider authorizing credit card payments. It acts as an intermediary between an online payment portal and a financial institution such as a bank.

Coined by the UK Financial Conduct Authority (FCA), RegTech is a combination of two terms; regulation and technology. It refers to the systemic changes taking place in the fintech industry where traditional regulation would not be effective. RegTech makes use of blockchain, big data, cloud technology and artificial intelligence making it a fast and effective method.

KYC is the acronym for “Know Your Customer.” The phrase is widely used in the fintech and financial services sector as a whole. It refers to the procedures that companies should use in identifying their customers and determining the legality of their transactions. The object of KYC procedures is to combat money laundering.

P2P Lending is the short form for peer-to-peer lending. P2P lending refers to a modern development where one can obtain a loan from another individual without involving a financial institution acting as an intermediary. It is a way of obtaining social loans.

What do you want to ask SoFi CEO Mike Cagney at Disrupt NY? (TechCrunch), Rated: B

Today, however, the company is tackling an even wider range of services, from mortgages to personal loans, to wealth management and life insurance. And thus far, SoFi’s business has been a hit, with total equity financing of $1.9 billion.

I’m going to have Cagney on stage in a fireside chat, and I’ll have plenty of my own questions.

But, in the spirit of social sharing and community that SoFi aims to espouse, I’d like to hear what you want to ask Cagney. You can send me your questions anonymously, or by email: remember to put “SoFi Disrupt” in the subject heading.

House Committee Schedules Hearing on the State of Bank Lending (Crowdfund Insider), Rated: B

The Subcommittee on Financial Institutions, part of the House Financial Services Committee, has scheduled a hearing on the state of bank lending in the US. The hearing will take place at 2PM Tuesday, March 28th. Typically these hearings are live-streamed on the HFSC website.

United Kingdom

RateSetter provides update on wholesale lending (P2P Finance News), Rated: AAA

The peer-to-peer lender stopped taking on new wholesale partners last December, after it emerged that the City watchdog had concerns about the practice within the P2P sector.

RateSetter added more details to its annual performance table earlier this month, introducing new sub-categories that include a breakdown of how much of the funds are channelled to wholesale lending.

Last month, the FCA confirmed its position on wholesale lending and highlighted that if a lending business borrows through a P2P platform and lends that money to others, it may be “accepting deposits”.

If the borrower does so without the correct regulatory permissions, this would involve a breach of the Financial Services and Markets Act (FSMA) and may be a criminal offence.

HOW I GOT STARTED: GRAY STERN OF LANDBAY (BQ), Rated: A

Of course. When I moved to the UK I had a very limited network here. Luckily, I met my co-founder and CEO John Goodall very early on (July 2013). He had just completed his MBA and had been looking at the burgeoning peer-to-peer lending space – so we were both looking at the opportunity from different sides (John as a saver, and me as a property investor). It was a logical step then to launch Landbay as a peer-to-peer funded mortgage lender.

Our equity funding has been split between private individuals and a number of institutional investors, including a hedge fund and the listed company Zoopla Property Group. As a mortgage lender we also have to raise lending capital.

To date, we’ve been funded by retail investors, but over the course of this year we will be complementing this with significant institutional funding. Getting those facilities in place has been a challenge, but we’ve come out the other side with the capacity to rapidly scale our lending operation.

As a mortgage lender we also collect a lot of data, so applying this data to help streamline other processes, say the provision of insurance, tax/accounting, conveyancing, property management – this is the logical next step. A streamlined process saves on time and cost – and my hope is that we can redirect these savings back into the properties themselves, creating better homes for more people.

How An IFISA Can Help You Save Tax (iexpats.com), Rated: A

Many peer to peer lenders offer IFISAs, but if you do not know about them, most do not tell you about the tax saving option.

Any income paid as interest on loans is wrapped in the ISA and remains tax-free. Money paid into an ISA is not taxed and any cash taken out is tax-free as well.

However, lending money online is risky, which is why the return is often between 5% and 7%, compared with the meagre returns from high street banks and building societies.

Expats remaining UK tax resident while on assignment abroad still pick up ISA tax breaks, but non-residents do not.

European Union

In blow to London, EU considers passporting for fintech services (Reuters), Rated: AAA

The European Commission could introduce EU passporting and lower regulatory requirements for financial technology firms, moves that could undercut London’s leading position in “fintech” as Britain gets ready to leave the European Union.

The EU executive’s vice president Valdis Dombrovskis said on Thursday that the Commission is considering how to regulate the expanding sector to encourage its development in Europe, while protecting consumers from risks that may emerge.

He said the Commission was exploring new rules that would give fintech companies passporting rights to expand across borders and operate anywhere within the EU’s single market.

That could threaten London’s status as the European hub for fintech companies, because firms based there are likely to lose their passporting rights when Britain leaves the bloc at the end of a two-year divorce process due to start next week.

RBS mulls mortgage robo advice service, shuts 158 branches (AltFi), Rated: A

The Royal Bank of Scotland is testing its robo advice services for mortgage loans and expects to make a decision on whether to roll it out by the end of the third quarter.

The government-owned bank has already cut hundreds of jobs and replaced them with “robo” like advisors, in an attempt to cut costs.

China

China is new leader in fintech worldwide with 39% of global volume (e27), Rated: AAA

2016 became the first year when the US lost its dominant global leadership in fintech  –  lost to Asia! Only the previous year, Asian fintech was twice smaller than the US, and just last year, it easily surpassed the US, accounting for 47 per cent of the global volume, as you can find in the new issue of Money Of The Future 2016/2017 fintech report.

While China dominates Asian fintech market by amount of funding, India is number one, in terms of the number of fintech deals (Paytm is the leader).

Fintech helps Chinese SMEs get loans (Straits Times), Rated: A

Mr Li Dongrong, President of the National Internet Finance Association of China, said financial technology, called fintech in short, can help solve the “last mile” problems of delivering banking services to those in remote areas. “In this age of mobile finance, we can achieve a breakthrough in this,” he added.

Indeed, in the last three years, JD Finance, the online finance arm of e-commerce giant JD.com, has lent more than 250 billion yuan (S$50.7 billion) to over 100,000 small business, and given credit worth tens of billion yuan to some 4 million farmers, said Mr Chen Shengqiang, chief executive of JD Finance.

China: WeiyangX Fintech Review (Crowdfund Insider), Rated: A

On March 15, the People’s Bank of China issued a report “Development of payment services in rural areas” to summarize and analyze the payment business in China’s rural areas during this past year.

By the end of 2016, the number of users of online banking has witnessed impressive growth in the rural areas, and online banking transactions also grew significantly.

Overall, in the rural areas, online banking maintained stable growth, and mobile banking continued to grow at a rapid speed. While telephone banking transactions fell significantly.

On March 13, Chunghwa Post announced that it would launch a cross-border payment business in April this year with Alipay.

On March 16,Yirendai released its financial results for Q4 of 2016 and full year of 2016. According to the report, the net income was RMB 1.1164 billion (US$160.8 million), achieving a 305% year-on-year growth. However, the subprime loans accounted for around 90% of the total loans, which would be a severe potential risk for the company’s long term development.

India

Fintech Tracker: Can CreditMonk Make User Reviews Relevant To Small Business? (Bloomberg Quint), Rated: AAA

That’s the idea behind financial technology firm CreditMonk – an open-source platform that allows businesses to rate each other based on payment behaviour.

The company is creating a database which clients can access to get an idea of the payment track-record of firms they may be dealing with. This is not unlike the information that credit bureaus like CIBIL provide. The difference is that while CIBIL gets its data on repayments of loans from banks and financial institutions, CreditMonk depends on ratings generated by users.

The process of rating a company on the website is similar to rating a hotel on a website like TripAdvisor. A reviewer first has to sign in to the website and disclose which company they represent. A company that is listed on the website can then be rated on a scale of one to five on the basis of various parameters.

The reviewer can choose to post the review anonymously on the website but since a log-in is mandatory to write a review in the first place, CreditMonk can investigate claims of a false review, if such a situation arises, Doongursee said.

CreditMonk is likely to face a challenge in building credibility while it sets up its database, according to Mahesh Murthy, a venture capitalist, and a co-founder at Seedfund.

Mobetize Expands B2B Data Top-Up Service to India with Smart Charge (Korea IT Times), Rated: AAA

Mobetize Corp. in Vancouver Canada, a provider of  mobile financial services (MFS) technology for the multi-billion dollar business to business (B2B) segment of the Fintech as a Service (FaaS) sector announced the expansion of its B2B Data Top-up/Gifting service to India with smartCharge from the press release of Globe Newswire on March 24.

Mobile data traffic is expected to increase by 800% on a global basis within five years.

During 2016 alone, India experienced significant growth in mobile traffic – up 76% from last year, and by 2021, consumer mobile traffic in India will grow 7.4-fold at a Compound Annual Growth Rate of 49% year over year. Much of this growth will be fueled by pervasive consumer adoption of smartphones, smart devices and the use of machine-to-machine connections with an estimated 1,380 million mobile-connected devices by 2021.

Asia

Lufax plans online platform as part of transformation from P2P to wealth management company (SCMP), Rated: A

Lufax, China’s biggest peer-to-peer (P2P) lender backed by Ping An Insurance, is planning to set up a platform to facilitate global asset allocation for middle income earners in Asia and Chinese investors.

The Singapore-based platform will be launched this year, according to Lufax chief executive Gregory Gibb.

The company will also target middle class Asian investors in countries such as India and Indonesia, who want to invest internationally with smaller amounts down to US$10,000.

The challenge for Lufax is how to communicate with customers using standardised information and tell them of investment risks and opportunities via a mobile phone screen – all in 30 seconds to one minute.

Lufax was valued at US$18.5 billion in a January fundraising and is in talks with four investment banks – JP Morgan, Citigroup, Citic Securities and Morgan Stanley – for a planned initial public offering in Hong Kong.

Africa

IT Consortium CEO calls for regulatory postponement on Fintech (Ghana News Agency), Rated: AAA

Mr Romeo Bugyei, Chief Executive Officer of IT Consortium has appealed to government to allow the Financial Technology (Fintech) industry in Ghana to grow and be fully established in order to foster the growth of financial inclusion.

Mr Bugyei, who runs IT Consortium, a Fintech organisation engaged in payment aggregation and enabling the use of systems for financial services, said Fintechs help to make things cheaper by giving alternative ways of banking using digital or technological solutions.

He explained that because Fintechs were currently not regulated, they were required to partner with banks when doingtransactions that required depositing, which meant that the banks indirectly regulated Fintechs.

He said the central bank, at the meeting held with Fintechs, declared its intention to leave the sector unregulated for the time being, but said it would monitor the sector to know the technologies being used and guide where there were problems.

He stated that the Bank of Ghana was one of three central banks globally, including the central banks of Philippines and Mexico, that had been selected by BFA Global, to participate in a programme funded by the Gates Foundation called ‘Regtech for Regulators Accelerator (R2A)’ designed to help pioneer the next generation digital financial supervision tools and techniques

Authors:

George Popescu
Allen Taylor