Wednesday July 25 2018, Daily News Digest

Lending Club IPO

News Comments Today’s main news: Square, eBay partner on businesss loans. BNP Paribas launches UK fund for SME lending. Crowdstacker seeking 800K GBP on Seedrs. PPDAI to boost tech investment. Alipay, WeBank competition heats up. Today’s main analysis: The good news and bad news about Lending Club. Today’s thought-provoking articles: Americans are splurging on personal loans. How irresponsible mortgage lenders […]

Lending Club IPO

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News Summary

United States

eBay & Square Partner on Business Loans (Crowdfund Insider) Rated: AAA

eBay (Nasdaq:EBAY)  and Square Capital (NYSE:SQ) have signed an agreement to provide up to $100,000 in credit to sellers – in as little as one day. The partnership is not only a streamlined offering of financing for small businesses that use eBay but also a whack at traditional banks which are mostly unable to match such a speedy lending agreement.

Scott Cutler, Senior Vice President, Americas at eBay, says that eBay is committed to helping their sellers and providing credit in partnership with Square simply makes sense.

For example, if you have $30,000 CC debt and good credit you can get a 3-year payoff at about 6% and a 5 year at about 7%. That is a big improvement over a typical rate of 17.5% on purchases and an amazing 23.5% on cash advances. So you take out the $30,000 loan, pay off your credit cards and save thousands in interest while you are at it. In addition, your CC is now zero and you can start using it again.

Source: Seeking Alpha

They came to market via an IPO late in 2014 and were an immediate hit rising over 50% their first day. They were immediately valued at over $9 billion. Today they are at less than $2 billion, a drop of almost 80%.

And finally here is LC’s chart since the IPO. Talk about ugly.

Source: Seeking Alpha

Americans are splurging on personal loans thanks to fintech startups (Quartz) Rated: AAA

The stock of personal loans outstanding has grown to about $120 billion as of March, according to TransUnion data. That compares with $71.9 billion a decade ago—worth around $90 billion adjusted for inflation—when the subprime mortgage crisis crescendoed. About 17 million Americans have this type of debt which, unlike mortgages and automobile loans, isn’t collateralized by an asset.

Source: Quartz

Upstart financial technology companies like Lending Club, Prosper, and Avant account for about a third of this lending, up from less than 1% in 2010.

Source: Quartz

How Irresponsible Mortgage Lenders Created A Second Housing Bubble (Seeking Alpha) Rated: AAA

Rents Are Falling, But Prices Are Surging

I believe the culprit is a new crop of lenders who are outside of Fannie Mae and Freddie Mac regulations on FICO scores and DTI. For example, San Francisco lender Social Finance (SoFi) is offering up to 3 million dollar loans with 10 percent down and “flexible DTI.

Source: Seeking Alpha
Source: Seeking Alpha

Firms like SoFi are the engine driving the madness in the California housing market. Here’s what Michael Tannenbaum, former Vice President of SoFi, had to say about their loans in 2016, “Sixty-five percent of the business we do is first-time home buyers; it’s a big deal we’re opening up to the jumbo first-time market.” A year later, he was gone. Other gems from the San Francisco Chronicle article – SoFi’s average loan at the time was $800,000 and two-thirds were in California. I shudder to think what their average loan size and DTI is now. Also, in addition to not being big fans of debt to income ratios, SoFi isn’t big on using other traditional measures like FICO scores to evaluate borrowers. In 2016, they declared their company a “FICO Free Zone” in a press release. Said a former business development associate, “The volume of applications coming in was crazy.” Other sources reported on the wild sex culture at the firm. As for their underwriting practices? As long as housing prices went up, they were more or less irrelevant. But, if prices go down, SoFi and their backers stand to lose a lot of money.

A Conversation with Figure’s Mike Cagney (Financial Revolutionist) Rated: A

Mike Cagney’s return to fintech’s center stage had been foreshadowed by a handful of reports suggesting that his new company would be focused on the origination of real estate-related assets and that, somehow, blockchain would figure into the mix. But Cagney, who played a foundational role in building SoFi into one of fintech’s biggest success stories before his departure, isn’t the type of entrepreneur who thinks small and nichey. With his new company, Figure, and the blockchain protocol it has built, Provenance, Cagney and his team of 80 professionals are taking aim at the gigantic world of institutional capital markets transactions. Why? Because that’s one place where the vig (i.e., rent-seeking) still sloshes around in copious amounts. But unlike SoFi, which is taking aim at banks, Cagney is now fixing his gaze on the administrators, trustees, custodians and other intermediaries who take a cut out of each securitization and other types of deals. On the eve of the first transaction to be put on Provenance (a HELOC), The FR’s Gregg Schoenberg sat down with Cagney to learn more about his plans and how blockchain is central to his mission.

Could Fintech & Blockchain Lending Further Drive The Housing Market Boom? (Forbes) Rated: A

Those who do not have the scores to secure loans from traditional lenders now have alternatives particularly in the form of P2P lenders. These platforms pool together money from interested investors and loan them out to borrowers.

They also have a much quicker turnaround compared to what customers might experience with banks and other large lenders. While these services started out only to fund smaller personal loans, some like LendingClub have grown and expanded to allow larger-value loans like mortgages to be made on the platform.

Blockchain-based lenders have built upon this crowdfunding concept and enhanced it with blockchain’s capabilities with smart contracts and tokenization. While initial efforts as espoused by the likes of 

Employer-focused PFM company gets $ 40 million (Business Insider) Rated: A

US-based personal finance management (PFM) company Even has raised a $40 million Series B funding round led by Keith Rabois of Khoshla Ventures, and including Valar Ventures, Allen & Company, Harrison Metal, Ron Conway, and Silicon Valley Bank.

Source: Business Insider

Even integrates with attendance, payroll, and banking systems to help consumers improve their financial health. Its features include Instapay, which enables users to request the money they have earned before their actual payday, and it uses AI to give users an “okay to spend” amount, so they don’t get surprised by sudden expenses. Additionally, it offers an automatic savings feature, similar to other PFM companies including Acorns and Cleo.

Fintech Startup LoanSnap Raises $ 8m in Series A Financing (Finsmes) Rated: A

LoanSnap, a San Francisco, CA-based developer of technology that protects people against dumb loans, raised $8m in Series A financing.

The round was led by True Ventures with participation from Baseline Ventures, Richard Branson’s Virgin Group, Core Innovation Partners, Joe Montana’s Liquid 2 Ventures, OVO Fund, Transmedia Ventures, and angel investors.

BlockFi Raises $ 52.5M for Cryptoasset-backed Loans (Business Wire) Rated: AAA

BlockFi, the leading cryptoasset to USD lender, announced today it has raised $52.5M to expand operations. Galaxy Digital Ventures LLC, a digital currency and blockchain technology investment firm founded by Mike Novogratz led the deal. This marks the industry’s first institutional investment in cryptoasset backed loans. BlockFi’s existing investors, which include ConsenSys Ventures and PJC, also participated in the funding round.

  • BlockFi planning rapid expansion of cryptoasset-to-USD lending platform
  • BlockFi partners with Galaxy Digital Lending LLC on loan purchasing facility and receives equity investment from Galaxy Digital Ventures LLC
  • Marks first institutional investment in cryptoasset backed loans

Credit Card Payoff App Tally Raises $ 25 Million (Cheddar) Rated: A

Tally, an automated debt-managing app, has raised $25 million in Series B funding with the goal of expanding its reach and finding new ways to alleviate consumers’ financial anxiety, Cheddar has learned.

Southern States Multifamily Portfolio Sells, Exceeding Targeted Returns for ArborCrowd Investors (The Daily Times) Rated: A

ArborCrowd (the “Company”) today announced its Southern States Multifamily Portfolio (SSMP) investment has been realized ahead of schedule, outpacing targeted return estimates. One of the properties in the portfolio is located in Mississippi and sold in late 2017. The two remaining properties, located in Alabama, recently sold. The aggregate portfolio sales price was $25.85 million, generating an internal rate of return (IRR) of over 29% for ArborCrowd investors.

The transaction marks the first of ArborCrowd’s six deals to complete its investment cycle, and its success is a great sign of the long-term viability of the Company’s growing platform. The SSMP investment opportunity was quickly oversubscribed when ArborCrowd presented the deal on its platform in February 2017, raising over $2.1 million in just 5 days. The over 29% IRR generated by the sale of the portfolio far exceeded the targeted 17% to 20% IRR projected by ArborCrowd at the time of the offering.

Lendio Reports Q2 Results: 90% Year-Over-Year Revenue Growth (Lendio) Rated: A

Lendio, the nation’s leading marketplace for small business loans, today announced record growth across all areas of its business, including 90 percent year-over-year quarterly revenue growth. To date, Lendio has helped facilitate more than $900 million in financing to over 45,000 small businesses across the U.S. and Canada through its marketplace of more than 75 small business lenders. The growth milestone comes after an 80 percent increase in loans funded through the Lendio platform in the last year.

From July 2017 to June 2018, Lendio facilitated nearly $400 million in loans to more than 22,000 small businesses. The average initial loan size among Lendio’s small business customers grew to nearly $35,000. The top five industries funded through Lendio’s marketplace include construction, retail, restaurants, health care and information media.

GM Maven CEO: Peer-To-Peer Auto Lending Will Be A Large Market (Bloomberg) Rated: A

Julia Steyn, Maven CEO, on their new peer-to-peer lending program for GM car owners, and the progress Maven is making in the shared economy.


Whitepages Pro Unveils Pro Insight, a Global Identity Review Solution Powered by Machine Learning (Global Newswire) Rated: A

Whitepages Pro, a global leader in digital identity verification, today announced Whitepages Pro Insight, a new and improved manual review solution designed to help businesses assess the identity risk of their customers, approve good transactions, and investigate fraud on a global scale. As the only global identity review solution that provides six ways to search, it enables users to balance accuracy and efficiency through direct workflow integrations, machine learning-informed insight, and robust analytics.

Within Pro Insight, users are first presented with Identity Review, a comprehensive interface that verifies and cross-checks both digital and traditional identity attributes (name, email, phone, primary and secondary addresses, and IP) to verify the identity behind a transaction. The solution analyzes and presents the relationships between the five core identity attributes in several intuitive ways:

  • Confidence Score – An overall measure of the risk associated with a transaction that cross-references the five core identity attributes. The Confidence Score is powered by machine learning insights from billions of transactional patterns across the Whitepages Pro Identity Network and the 70+ data signals of the Identity Check API.
  • Positive and negative signals – A concise list of primary factors that influence a given Confidence Score.
  • Results columns – A detailed list of matches, mismatches, and invalid inputs based on the links between a transaction’s identity elements. Users can click on specific attributes to further investigate associated people, historical data, and more.
  • Distance Map – A visual representation of geographical distances between phone, primary address, secondary address, and IP address.

Center For The New Middle Class: Non-Prime Consumers Spending More Responsibly On Vacation (Payment Week) Rated: A

Non-prime consumers are significantly less likely to be taking to the road for vacation this summer, opting for staycations instead, and spending far less on vacations if they take one, a new study released today from Elevate’s 

Source: The Center for the New Middle Class

Key findings from the CNMC survey conducted in June include:

  • The non-prime are 29% less likely to take a vacation
  • The non-prime are 22% more likely to “staycation”
  • If they do take a vacation, the non-prime spend half as much
  • The non-prime are 2x as likely to have turned down a vacation due to financial constraints
  • The non-prime are 61% more likely to borrow money for a vacation
  • Non-prime spend 18% less per child on summer entertainment
  • Those with children were more likely to take vacations and borrow money to cover costs

The research also indicated that across both credit segments, summer community resource utilization (i.e. pools, parks, libraries, etc.) was relatively high, with more than 85% in both segments using these facilities. Summer entertainment expenses per child were also very similar between the prime and non-prime groups.

Read the full report here.

United Kingdom

P2P Lender Crowdstacker Now Seeking £800,000 Through Seedrs Funding Round (Crowdfund Insider) Rated: AAA

Crowdstacker, a UK-based peer-to-peer lending platform, is now seeking £800,000through its equity crowdfunding campaign on Seedrs. Founded in 2014, Crowdstacker describes itself as an award-winning FCA regulated online alternative investment platform that provides ISA eligible P2P loans, bonds, and loan notes.

BNP Paribas launches UK fund for SME lending (FinTech Futures) Rated: AAA

BNP Paribas Asset Management will launch BNP Paribas UK SME Debt Fund 1, offering clients access to the UK SME lending market.

The asset management arm of the bank’s new fund will invest in senior loans to SMEs with an annual turnover of less than £50 million through its BNPP AM’s SME Alternative Financing platform.

The platform uses proprietary big data technology, which pairs with the bank’s balance sheet and infrastructure.

Podcast 159: Christoph Rieche of iwoca (Lend Academy) Rated: A

Christoph Rieche is the CEO and Co-Founder of iwoca, a small business lender based in London with operations also in Germany and Poland. The name iwoca stands for instant working capital so they have leveraged technology in order to provide capital to small businesses quickly and efficiently.

In this podcast you will learn:

  • Why Christoph decided to start iwoca.
  • The segment of the small business market they focus on.
  • What is behind the continued decline in overall small business loan volumes.
  • The loan product offered by iwoca.
  • The typical size of their credit lines.
  • The kinds of businesses applying for credit at iwoca.
  • How their underwriting works and level of automation they use.

Navigating through the P2P property maze (Peer2Peer Finance) Rated: A

Landbay investors can expect returns of around 3.54 per cent on its fixed-rate product, or 3.18 per cent with its tracker-rate option, by investing in loans secured by UK property.

The Peer-to-Peer Finance Association member launched its IFISA in February last year, meaning that Landbay customers can also benefit from tax-free earnings on their investments.

LandlordInvest’s investors have earned average annual returns of 11.3 per cent to date, secured by residential or commercial property, with the option of an IFISA wrapper

London Proptech Firm Goodlord Forms New Open Banking Partnership With TrueLayer (Crowdfund Insider) Rated: B

Goodlord, a UK-based proptech platform, has formed a new open banking partnership with TrueLayer. Founded in 2014, Goodlord reports that its cloud-based platform is trusted by hundreds of agencies across the UK. The company has created a one-stop-shop by providing access to a dynamic suite of specialized services, including insurance, e-signing, referencing, and e-payments.

Starling Bank takes on Monzo with daring debit card design (FinTech Futures) Rated: B

UK digital challenger Starling Bank is upping its design game with the launch of a new teal-coloured vertical debit card as it plays catch up with Monzo.

The new card has all customer details, including name, card number and expiry date, on the back – and it’s rolling them out this week.

The card is inspired by the blue-green tones of the plumage of the starling bird. It is also one of the initial group of 16 original “web colours” formulated in 1987 to display web pages, reflecting Starling’s digital heritage.

China

PPDai to boost technology investment (Shine) Rated: AAA

PPDai, China’s first online peer-to-peer lending platform listed in the US, said today it would increase its registered capital to 1 billion yuan (US$149 million) and expand its artificial intelligence applications to hedge risks and improve investor confidence amid concerns over P2P lending.

The Shanghai-based company, which has about 71 million users ,employs AI, Big Data and blockchain to fight against risk and fraud.

Alipay and WeBank competition heats up as China reins in leverage (Financial Times) Rated: AAA

Alipay and WeBank are set up perfectly to take advantage of new priorities from Chinese policymakers to increase the flow of capital to small companies and households, their approach is different as WeBank looks to use bank partnerships to make capital connections.

Alipay uses scale, data and technology capabilities to compete with banks for deposits and funds its borrowing through the ABS market.

Alipay and WeBank plan to list their finance arms soon which will continue to put pressure on the rivalry as well as the broader financial market in China.

Zennon Kapron on what’s next for Chinese fintech (China Economic Review) Rated: A

Analysing these questions is all part of the day job for Zennon Kapron, the head of fintech research and consulting firm Kapronasia. In this interview with China Economic Review, Kapron gives his take on some of the market’s recent developments, and explains why China’s fintech industry is such an exciting space to watch.

CER: How worried should we be about the recent panic surrounding China’s small P2P lending platforms?

ZK: The fact that P2P lending platforms are failing is not surprising. Many of these platforms had inadequate internal operational processes, poor lending practices, and in some cases, were just complete scams. What will be interesting to see is if retail investors will still want to put new money on these platforms. I get the impression at the moment that many investors are just trying to get their money out. Even if the P2P industry manages to right itself, it may find that all the investors are gone.

China’s P2P Online Lending Dominoes Continue to Fall (Ciaxin) Rated: A

Another domino in China’s peer-to-peer lending industry fell.

Beijing-based iqianbang.com was the latest online P2P lending platform to close down. The company announced a “benign exit” last Friday night, citing “deteriorating online lending environment and drying up liquidity.”

Investors in several P2P platforms, including iqianbang.com, gathered Monday at a local Beijing police station to report the loss of money to police.

Chinese P2P Lender’s Controller Disappears After Sponsoring Portugal (Yicai Global) Rated: A

Zheng Yansen, the controller of peer-to-peer lender Guangzhou Leader Internet Financial Information Service has disappeared, the firm announced yesterday.

It also acknowledged that ‘some of its projects are delayed’ and said it will set up a work group as soon as possible to inventory its assets and businesses, request borrowers to repay loans earlier than scheduled, and liquidate collateral as quickly as possible.

European Union

FinLeap Partners With Fabrick to Launch Financial Management Startup for Small Businesses (Crowdfund Insider) Rated: AAA

FinLeap, the fintech start-up platform behind Germany’s SolarisBank, announced on Monday it has teamed up with Italian open banking platform Fabrick to launch a new financial management startup specifically for small businesses. According to FinLeap, the startup, called Beesy, will simplify accounting, tax and banking services for micro-enterprises and freelancers.

As soon as Beesy is launched, FinLeap added it will provide more details about the services and how they work.

Rabobank’s novel approach to protecting customer data (American Banker) Rated: A

Take Dutch-based Rabobank, for example, which now converts customer data to the Latin names of flowers and animals in order to comply with the General Data Protection Regulation that sensitive client information be disguised.

At the heart of all these regulations is the mandate that companies must make sure no one can access customer data who shouldn’t, and that every effort is made to protect that data from breaches. Storing customer data in the clear — not encrypted, anonymized, or pseudonymized — is not acceptable, to regulators or anyone else.

Source: American Banker
International

MoneyGram And Visa Team To Deliver Real-Time Global P2P (PYMNTS) Rated: A

MoneyGram and Visa announced today (July 24) that they have partnered to deliver real-time digital disbursements to MoneyGram customers using Visa’s push payments platform, Visa Direct.

Launching in October in two key markets, Mexico and the Philippines, MoneyGram will expand its options in which receivers from those markets may receive and use funds instantly  via their bank-issued Visa-branded debit card or Visa-branded prepaid card  and senders may choose the option by which to send those funds. The partnership leverages the trust that consumers globally have in the MoneyGram and Visa brands, as well as the ability for receivers to access funds 24/7/365 without having to visit an agent location to pick up cash.

Australia

Property Connect enters technology agreement with Clearmatch to market new lending products (Small Caps) Rated: A

Realty services group Property Connect Holdings (ASX: PCH) has entered into a minimum five-year licence agreement to use a technology platform powered by marketplace treasury company Clearmatch, in the development and marketing of its own lending products designed to ease property market transactions.

The binding heads of agreement allows Property Connect to use the SocietyOne platform owned by Clearmatch to develop products focused on the emerging project development finance and residential mortgage sectors within the private peer-to-peer lending market.

India

P2P lending platform Monexo partners with Cube Wealth for new-clientele (Business Standard) Rated: B

Peer-to-Peer (P2P) lender, has partnered with to provide clients with an alternative avenue for investments. The app-based firm’s user-base of 350,000 customers will have an option of placing a portion of their investments onto Monexo’s platform.

The market space is only three years old and until last October operated without any regulatory oversight. While there are 3,000 lenders in China with a total lending book of $500 million, the Reserve Bank of India (RBI) is said to have approved licenses to around eight firms.

Authors:

George Popescu
Allen Taylor

Review of Indian Regulation on P2P market

india p2p lending regulation

Today, there are approximately 60 million small businesses in India looking for funding, out of which only 33 percent are able to access any kind of institutional credit. The situation is similarly dire in the case of individuals. Almost 80% of MSMEs self-finance themselves, 32% rely on their friends and relatives for credit, and an additional 12% […]

india p2p lending regulation

Today, there are approximately 60 million small businesses in India looking for funding, out of which only 33 percent are able to access any kind of institutional credit. The situation is similarly dire in the case of individuals. Almost 80% of MSMEs self-finance themselves, 32% rely on their friends and relatives for credit, and an additional 12% try raising funds from informal banking networks. All these numbers highlight the extent of shortcomings in the Indian lending system and the mega “bottom of the pyramid” opportunity for the young P2P sector.

P2P Market overview

The P2P lending market in India originated around 2012 when Shankar Vaddadi and his team launched the first social peer-to-peer lending platform, i-Lend. Lack of proper regulation governing the P2P ecosystem has proven to be the biggest stumbling block in the growth of this industry, but having said that, it is widely expected that the P2P lending space will grow into a $4-$5 billion industry by 2023.

The Indian P2P lending industry has approximately 63 players including Faircent, Lendbox, LenDen Club, Monexo, LoanBaba, CapZest, i2ifunding, and many more, all of which have been carving their own niche in the lending industry by serving a diversified customer base.

P2P Regulations in India

Rules and regulations in India with respect to lending have always been stringent making it difficult for new players to enter the market. India’s central bank, Reserve Bank of India (RBI), has always prioritized protecting the interests of all the stakeholders involved in the lending process (especially the borrowers). One such act, Usurious Loan Act, allows the judiciary to intervene in case the lending platform or lender is charging an unrealistically high-interest rate. The primary lenders in India, banks, are exempted from the scope of this law, but P2P lenders fall under the ambit of this regulation.

In India, even the states have the right to pass laws on regulating money lending, and 22 states have passed legislation to this effect. One such recent example is Maharashtra Money Lending Act of 2014. As per the guidelines prescribed in the Act, it is mandatory for all lenders to register and acquire a license before they start operating. Furthermore, this act can restrict the operation of money lenders to a specific district and empowers state government to decide the rate of interest to be charged.

In reality, the Indian P2P sector also benefited from a lack of government policies as it allowed them to experiment and launch multiple products without considering any repercussions of the law. This changed in 2016 when RBI released a consultation paper on P2P lending. This paper has been used as a yardstick by RBI to frame regulation to govern the P2P lending market.

The Reason Behind RBI Regulations

Although the P2P market helps in financial inclusion of the economically disenfranchised sections of the society, multi-billion dollar Ponzi schemes like Ezubao in China are too big of a risk to ignore. The main reason cited behind the Ezubao scam was “lack of enforceable regulations.” With the industry starting to spread its wings in the country, RBI stepped up its regulatory efforts in a bid to avoid such a scam in the country.

RBI initiated P2P regulations with the main motive to bring in a new age of economic reform and financial inclusion in India wherein every individual can have access to credit with better terms and transparency without risking the hard earned money of the lender on the platform.

P2P Lending: A Throw Down on RBI Regulations

RBI consultation paper clearly outlined the risk of money laundering attached with P2P lending and will also try to cap the interest rates charged at P2P platforms. The new framework will incorporate the following norms:

  • Recognition as NBFCs – All P2P lending platforms will come under the review of RBI and will be compulsorily registered as a Non-Banking Financial Corporation (NBFC).
  • Permitted Activity – P2P lenders will be permitted to serve only as mediators who would be responsible for matching and originating loan deals between lenders and borrowers. Besides that, all online portals must specify the adequate regulatory framework governing that portal and are further prohibited from giving any assured returns. To reduce the risk of money laundering, the funds must be transferred directly from the lender´s account to the borrower´s account. Under the guidelines of Foreign Exchange Management Act (FEMA), a law has been imposed on P2P lenders that strictly prohibit them from entering into cross-border transactions.
  • Prudential Regulations – RBI has mandated a capital requirement of $312,000 (INR 20 Million) for all P2P lenders. In order to avoid indiscriminate expansion, RBI will prescribe a leverage ratio and also put a limit on the contribution made by a single lender towards a particular loan.
  • Government Regulations – It was reported that RBI has made it mandatory for all P2P lending portals to adopt a company structure. As a result, this notification will render all the services provided by other organizational structures such as sole proprietorship, partnership, or LLP (Limited Liability Partnership) as non-compliant.
  • Business Continuity Plan (BCP) – In order to ensure smooth flow of operations, the platforms are required to integrate efficient risk management systems and proper backup processes. Moreover, to ensure that operations do not cease due to any event, companies should prepare a Business Continuity Plan (BCP).
  • Customer Interface – All P2P platforms must give top most priority in ensuring confidentiality of customer data and to offer complete transparency in its operations. Also, platforms must install a proper grievance handling mechanism to address complaints of lenders and borrowers.
  • Reporting Requirements – All online P2P platforms are required to submit a regular report on their financial position, loan arrangement deals, and summary of complaints, if any, filed by borrowers or lenders with RBI.

Impact of RBI Regulations

Guidelines and regulations proposed by RBI are expected to impact the P2P lending space in the following ways:

  • More at Stake for P2P Lending Platforms – The new $312,000 (approx) capital requirement will lead to small players shutting shop. This will allow serious players to emerge and restrict operations of fly-by-night operators looking to dupe the general public.
  • Opportunities for Growth – RBI guidelines would help minimize the risk of money laundering, and moreover, would help stabilize the industry by introducing streamlined and standard procedures for loan origination. Investors in such platforms would not need to worry if they are compliant with the law.
  • Higher Quality of Credit – RBI has made it compulsory for lenders to maintain a database of loan deals originated and a proper record of borrowers who failed to meet their financial commitments. This database is the first step in controlling fraud. It will also help in reducing loan stacking, a common problem plaguing the P2P industry all over the world.
  • Greater Transparency and Accountability – Platforms would need to report to RBI on a regular basis. Anyone found non-compliant would risk RBI snatching its license or face heavy penalties. This would ensure greater transparency and accountability for the entire ecosystem.

Conclusion

What once used to be a relatively small part of the fintech industry has turned into a viable option for Indian lenders as well as borrowers. The fact that RBI has framed regulations for P2P lending goes to show that the industry is ready to move to the next level of market adoption. Regulations will surely help all the stake holders involved but the biggest winner will be the underserved Indian population who can finally step on the credit ladder.

Author:

Written by Heena Dhir.

Monday June 5 2017, Daily News Digest

ratesetter alfi

In the June 1 issue of Lending-Times, we highlighted a TransUnion report on how to identify and fight online fraud. A typo suggested we didn’t recommend report, however, we highly recommend it and you can download it here. News Comments Today’s main news: After buying George Banco RateSetter will not lend to its customers. Amartha receives regulatory […]

ratesetter alfi

In the June 1 issue of Lending-Times, we highlighted a TransUnion report on how to identify and fight online fraud. A typo suggested we didn’t recommend report, however, we highly recommend it and you can download it here.

News Comments

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United States

Latest PeerIQ Loan Performance Monitor (PeerIQ), Rated: AAA

The US economy generated a seasonally adjusted 138 K jobs last month (vs. expectation of 185K) bringing the jobless rate to 4.2% and another step closer to full employment. As inflation risks emerge, the Fed is widely expected to increase rates another 25 bps at the upcoming FOMC meeting on June 14th.

On the regulatory front, the US House will vote on a bill sponsored by Jeb Hensarling (R-TX) to reform and repeal portions of the landmark Dodd-Frank financial reform bill.

On the securitization front, student lending originator CommonBond priced its $232 Mn private student loan ABS. Goldman Sachs was the structuring lead, and co-leads include Barclays and Citi. Also, AB Alert reports that Lending Club is preparing a multi-seller deal which includes collateral from multiple originators including potentially loans from Lending Club’s own balance sheet. As PeerIQ noted in the summer of last year, we believe marketplace lenders that can offer whole loan investors a reliable path to liquidity and low-cost permanent financing can generate a competitive advantage.

PeerIQ is pleased to present the PeerIQ Loan Performance Monitor. The monitor tracks interest rates, delinquency, and charge-off rates for both platforms across vintages and grades.

Source: PeerIQ MPL Loan Performance Monitor June 2017

Global Debt Registry Appoints Charlie Moore as President (PR.com), Rated: A

Global Debt Registry (GDR), the asset certainty company known for its loan validation expertise, today announced Charlie Moore, the firm’s Chief Commercial Officer, has been named President as former Chairman and CEO Mark Parsells returns to his FinTech consultancy practice.

As President, Moore will be focused on the continued delivery of loan level diligence services to the investment community, leading the daily operations of the company. Moore previously led the firm’s commercial operations including business development, partnerships and marketing and has over 20 years of experience building financial services technology businesses in the U.S. and Europe.

Investing in Real Estate: Single Family Homes or Multi-Family? (Crowdfund Insider), Rated: A

“Institutional multifamily” typically means dozens, if not hundreds, of distinct units within a single property, managed by a seasoned professional management firm. These properties have many different tenants, with a diversity of employment situations and lease structures. If one tenant leaves abruptly, many others will remain in place, and overall rental income will suffer only marginally. Multifamily managers can further mitigate vacancy risk by structuring leases to end on a rolling basis. Single family investments don’t carry the same benefit – a tenant living in a single-family home constitutes 100% economic loss for as long as the property remains vacant.

Investing through online crowdfunding platforms gives individual investors the opportunity to invest in a small piece of large multifamily projects that are institutional grade and have passed the underwriting of well-established lenders and co-investors who often have decades and billions of dollars of investing under their belt. The same can’t be said of most single-family investments.

While these benefits are most apparent for direct owners of (investors in) property, this benefit of multifamily investing should be passed along to individuals who co-invest via an online (crowdfunding) platform.

GTCR Announces Acquisition of Sage Payment Solutions (Guru Focus), Rated: A

GTCR, a leading private equity firm, announced today that it has entered into a definitive agreement to acquire Sage Payment Solutions, Inc. (“SPS” or the “Company”) for $260 million. SPS, headquartered in Reston, Virginia, is a leading provider of payment processing and merchant acquiring solutions in North America. GTCR is acquiring SPS from The Sage Group plc (LSE: SGE) (“Sage”), a global provider of integrated accounting, payroll and payment solutions headquartered in the UK. GTCR is partnering with SPS management to pursue organic growth initiatives and fund future acquisitions in the payment processing industry. To support this strategy, GTCR has committed up to $350 million of equity capital to the platform. The transaction is expected to close in the third quarter following receipt of regulatory approvals and other consents.

SPS provides credit card, ACH, check, gift and loyalty card processing services to small and medium-sized businesses (“SMBs”) in the United States and Canada.

Where Incumbents Are Making Investments In Wealth Tech (CB Insights), Rated: A

Deals to wealth tech startups hit a record of 30 investments in Q1’17 amid a number of new early-stage entrants globally. In particular, robo-advisors have been gaining prominence and taking on incumbents in nearly 20 countries around the world.

Key takeaways:

  • Since 2012, several banks and wealth management firms have made co-invests in wealth tech. For instance, Goldman Sachs and JP Morgan Chase are co-investors in Motif, Northwestern Mutual and Citi Ventures are co-invested in Betterment, and UBS and Santander InnoVentures are co-investors in SigFig.
  • Incumbents have made the most investments to companies that fall into our robo-advisors category, including BettermentMotifPersonal CapitalWealthNaviFolioForwardLane, and SigFig
  • Blackrock invested in Personal Capital, the second most well-funded wealth tech company with approximately $207M in funding.
  • LearnVest is the only featured company on our map to have exited.

AUTOGRAVITY CAR FINANCING APP NOW AVAILABLE ACROSS NEW JERSEY (AutoGravity), Rated: A

AutoGravity, a FinTech pioneer revolutionizing car shopping and financing with the power of the smartphone, has unveiled an innovative mobile application to help car buyers in the Garden State finance any new or used car in minutes in just four easy steps.

With its unique platform, the AutoGravity app guides car buyers through an intuitive four-step process:

  1. Choose a car – Select any make, model and trim of any new or used car.
  2. Find a dealer – Choose from AutoGravity’s proprietary national dealership database; geolocation helps quickly identify nearby dealers that sell the car the selected.
  3. Search for financing – Car buyers can scan their driver’s license and connect to social media to quickly pre-fill the finance application.
  4. Select a lender – Receive up to four binding finance offers in minutes, then select a loan or lease offer and head to the dealership to complete the purchase.

FRB Governor: Data Aggregators Impact Bank Safety, Soundness as Part of the “Fintech Stack” (JD Supra), Rated: A

In a recent speech at the Northwestern Kellogg Public-Private Interface Conference, Federal Reserve Board Governor Lael Brainard indicated that the relationships between banks and data aggregators within the “fintech stack” may present safety and soundness concerns that warrant oversight by the FRB (and perhaps other prudential regulators).

Governor Brainard indicated that banks will need to apply significant resources to update their data infrastructure to allow access to real-time data for third-party developers.

Governor Brainard explained that because banks are more tightly regulated than the average fintech company, consumer protection and safety and soundness considerations should supersede experimental innovation.

While some banks may elect to give access to data aggregators, Governor Brainard observed that other banks may be unwilling or unable to provide permissioned access to third parties due to fears about compliance with laws and regulations and the ability to monitor and control the use and access to data. She then noted that the Fed’s supervisory role should focus on ensuring that financial institutions subject to its supervision operate safely and follow applicable law. At the same time, she stated that the Fed has “a strong interest in permitting socially beneficial innovations to flourish, while ensuring the risks that they may present are appropriately managed, consistent with the legal requirements.”

PeerStreet’s Jessica Murray Named One of HousingWire’s 2017 Rising Stars (BusinessWire), Rated: B

PeerStreet, a marketplace for investing in real estate backed loans, is honored to announce that its VP of Strategy, Jessica Murray, has been named to HousingWire’s 2017 Rising Stars list of young leaders to watch in the housing industry. HousingWire’s 2017 Rising Stars list recognizes talent that demonstrate leadership and innovation, inspiring not only those within their company, but also their communities and the industry at large.

In her time at PeerStreet, Murray established the company voice through social media, content marketing, customer communications and placed media while serving as the Head of Communications. In her current role, Murray maintains many strategic and operational responsibilities, which also include managing PeerStreet’s capital markets and hiring.

Roostify Names Sandeep Aji as Vice President of Products (BusinessWire), Rated: B

Roostify, a provider of automated mortgage transaction technology, today announced it has named Sandeep Aji as Vice President of Products. Aji will be responsible for overseeing the continued development of Roostify’s mortgage technology platform – from enabling more API-driven capabilities to improving user experience for lenders and consumers.

Prior to Roostify, Aji was Co-Founder and CEO of Impartus, a cloud-based, SaaS platform for higher education.

How To Get A Second Chance With Your Bank (NASDAQ), Rated: B

Despite a higher cost of capital, an online loan may be necessary for a small business. The reason: There has been a continued downtrend in lending from banks to small businesses. “Together, 10 of the largest banks issuing small loans to business lent $44.7 billion in 2014, down 38% from a peak of $72.5 billion in 2006,” reports The Wall Street Journal. Meanwhile, nonbank lenders have seized the opportunity and captured 26% market share up from 10%.

United Kingdom

RateSetter decides not to lend to George Banco’s customers (P2P Finance News), Rated: AAA

RATESETTER has announced that it has decided not to lend directly to George Banco’s customers as there are “better uses of our development resources”.

The ‘big three’ peer-to-peer lender bought a stake in the guarantor loan provider, which was a former wholesale lending partner, last month. It had also agreed to lend directly to its 10,000 customers, with George Banco acting as introducer.

The business and consumer lender will keep its equity stake in the firm and its co-founder Peter Behrens will remain as a non-executive director on George Banco’s board.

P2P platforms facing hybrid dilemma (P2P Finance News), Rated: A

THE PEER-TO-PEER finance industry could be on its way to becoming a polarised market, where the biggest firms stick to their core P2P lending activities and the rest are forced to evolve into hybrid models.

A wide range of industry onlookers have told Peer2Peer Finance News that it will be impossible for smaller firms to achieve profitability without either expanding into balance sheet lending, merging with direct lenders or morphing into a business model closer to that of a collective investment scheme.

“It’s incredibly difficult to build a straightforward P2P business to the size where it becomes profitable,” said Andy Davis, author of a report that pointed to hybrid models as an inevitable evolution in the sector.

“It’s intrinsically more profitable to arrange and lend rather than only arrange. We’re going to start seeing hybrid loans emerge.”

P2P is ultimately just a subset of direct non-bank lending, he argued, but with different technology in place and different market access. When a direct lender sets up a P2P platform, its return on capital goes up exponentially and it can immediately recycle those returns to originate more lending.

“Hybrid lending from some providers will increasingly be the chosen solution. This is not an issue or a problem for investors in and of itself, ” added 4th Way analyst Neil Faulkner.

Safety in banking (SilverSeek), Rated: A

It was probably with sound money and sound banking in mind that Goldmoney recently announced a tie-up with a British-based and regulated peer-to-peer lender, which enables owners of gold and silver bullion to use it as collateral to raise funds.ii The purpose of this article is to explain how honest banking worked before fractional reserve banking was devised. This is the logic behind the recently announced collaboration between Goldmoney and Lend & Borrow Trust Company Ltd.

On 23rd May, Goldmoney announced an investment and collaboration in and with the UK-based peer-to-peer lending platform, Lend & Borrow Trust Company Ltd. LBT is unique, being the only peer-to-peer facility in Western financial markets that allows businesses and individuals to use their investment-grade physical bullion as collateral against loans, without the loan obligations and collateral being comingled with other customer business.

At no time is LBT a principal in the transaction, so lenders and borrowers can agree an interest rate without having to take LBT’s creditworthiness into account, based solely on physical gold or silver as collateral.

The logic of a collaboration between Goldmoney and LBT is obvious, in that it enables customers to raise finance using bullion. But there is an underlying sound-money logic as well. Between them, Goldmoney and LBT are the template for sound-money banking as it existed before fractional reserve banking became the standard banking model, after Britain’s Bank Charter Act of 1844.

Peer-to-peer lending promised 6%, but I’ve been left red-faced and in the red (The Guardian), Rated: A

When James Patterson invested £1,000 in the peer-to-peer (P2P) lender Funding Circle back in 2015, his hope was that his money would grow a bit faster than the pitiful rates of interest offered by his bank. At the time, the relatively new lender was promising returns of 5-6% a year – 10 times more than his bank.

However, almost a year and a half on, his investment is now worth just £988 – a loss of £12. It’s because one of the firms that 10% of his money was lent to defaulted, leaving his account £128 in the red – a sum that his other investments at the platform have struggled to make up.

It has delivered some impressive returns to savers in recent years but, Patterson says, after his experience, he will not be investing anymore.

James Meekings, co-founder and managing director of Funding Circle, says Patterson will be back in the black in the next couple of months as the firm expects to recover some of his losses which, in turn, will be passed on to him.

Assetz Capital Review – 30 Days Access Account with 4.75% Target Rate (P2P-Banking), Rated: A

Recently I opened an account at p2p lending marketplace Assetz Capital to gain some first hand experiences. Assetz Capital offers secured business loans to small and medium British SMEs. I decided to start with the 30 days access account as it is mostly hands off and deposited a tiny amount, which was credited within an hour.

Assetz Capital has a minimum investment amount of 1 GBP. Assetz is open to international investors, but a UK bank account is required.

Assetz also offers a quick access account with 3.75% target rate, designed to provide immediate access to cash, in normal market conditions, for investors. Currently 19 million GBP are invested in this account. Further account types are the ‘Great British Business Account’ (GBBA) with 7% target rate, the ‘Green Energy Income Account’ (GEIA) with 7% target rate and the ‘Manual Loan Investment Account’ (MLIA) with 5.5% to 18% gross rate. See comparison of Assetz accounts. Assetz also features a secondary market without fees providing liquidity.

Assetz Capital adds ex-bank specialist to regional director team (P2P Finance News), Rated: B

ASSETZ CAPITAL has hired former bank finance specialist Samantha Williamson to boost its team of regional relationship directors.

Williamson will supervise the peer-to-peer lending platform’s activities in the South Manchester region.

She previously worked as business development manager at financial independent broker Positive Commercial Finance, helping firms grow through non-traditional finance avenues.

Prior to that, she served as senior real estate manager at Barclays and commercial lending manager at Santander, both posts located in the Manchester area.

From beach to boardroom: Iced coffee king surfing to success (London Loves Business), Rated: B

Who’s bankrolling you? 

We are. And so is Funding Circle. The banks have been completely useless.

What advice would you give other entrepreneurs trying to secure that kind of finance?

It depends on how much you’re looking for and how long you’ve been trading, but if you need money, I’d go crowd funding, 100 per cent. If you are well under the table with trading, I’d take a look at funding circle.

China

WeiyangX Fintech Review (Crowdfund Insider), Rated: AAA

Search engine giant Baidu Inc. is to quit crowdfunding market and pay more attention on artificial intelligence”]. Users will not see the “Baidu Crowdfunding” channel when they log in their Baidu Finance account, but will still be able to check the crowdfunding history.

On May 25, China Rapid Finance Limited, a leading online consumer lending marketplace in China, reported its unaudited financial results for the quarter ended March 31, 2017.

2017

2016

Growth rate

Transaction and service fees

USD16.8 million

USD14.8 million

13.1%

Consumption loans

USD6.7 million

USD1.5 million

336.8%

Maintenance loans

USD10.1 million

USD13.3 million

24.4%

Operating aspect:

  1. Number of new borrowers added in the first quarter of 2017 was approximately 545,000. As of March 31, 2017, the Company had reached approximately 2 million unique borrowers on its marketplace since inception, and the total number of loans facilitated on the Company’s platform grew to approximately 15 million.
  2. Total loan volume facilitated on the Company’s marketplace in the first quarter of 2017 increased to USD485 million, primarily driven by the rapid expansion of consumption loans, which accounted for USD405 million of the total loan volume.
  3. Total number of consumption loans facilitated in the first quarter of 2017 was 4 million, while total number of maintenance loans facilitated was 6,000.

Ant Financial, the financial arm of Chinese e-commerce giant Alibaba, became the latest player in Hong Kong’s competitive mobile payments market after it announced the launch of its mobile wallet for Hong Kong users on May 24.

On May 25, Ant Financial announced to launch the car insurance rating mechanism for the insurance industry to improve the risk management capability.

Three primary reasons for the boosting Cash Loan in China (Xing Ping She Email), Rated: AAA

By Dr. Yang Li

From 2017, the number of cash loan companies have increased tremendously in China. Various kinds of cash loan firms have mushroomed, including CashBus, MagicCash, GoldBar of JingDong, Ants Borrow of Alibaba, WeiliDai of Tencent, etc. So far, there are already thousands of small cash loan platforms exists in China, and many of them have received fund financing from top VC investors such as Sequoia Capital, Innovation Works, and ZhenFund.

Why cash loan growth explosively in a short period? The following three reasons may explain.

Reason 1: The lower threshold of credit system by Big data method.
In the past, credit system was mainly referred to Central bank credit system, however, it could not cover most people. The information of vast majority of low-income, unregistered social groups have not been collected in the credit system, but they have extensive borrowing needs.

As big data technology developing fast these years, many data companies are growing rapidly, and they acquired data for business use. Owing to the big data credit system, cash loan platforms are able to evaluate the borrower’s credit situation from multi-dimensions: traits of character, consumption habits, loan demand, repayment willingness, etc. In this way, the problem of information asymmetry between the investors and borrowers is eliminated, making the cash loan business prosper in the broadest social group.

Reason 2: Vertical specialization of cash loan industry provides more business opportunities
The division of the cash loan industry is now divided into receipt, audit, lending and collection, each process are served by independent and professional companies or teams. With the booming of cash loans, an ecological chain around the industry has been derived, including data processing companies, business consulting companies, law office specialized in collection, etc.

The vertical specialization of the industry made cash loan platforms extremely convenient in obtaining customers, audit management and collection, so that the platforms can save more costs and gain more business opportunities.

Reason 3: Changing of the public consumption concept stimulated loan demands
With the improvement of people’s living standards and the popularization of deficit spending concept, the public consumption concept has been changing a lot.

Consumer demand is beginning to diversify. There are not only the need for food and clothing, but also spiritual needs of learning, fitness and travel, etc. And the consumers’ attitudes are gradually transforming from rational consumption to perceptual advanced consumption. Spending “future money” at “the present” is becoming a common social spending habit, for example, more and more people choose to purchase cars, houses and 3C electronic products on installment. The growing advanced consumption has stimulated the loan demand across society.

European Union

Fintech is King of Lithuania’s Tech Revolution (Red Herring), Rated: A

Under Soviet rule Lithuania became known as a center for laser technology and bioscience, the latter of which now accounts for 1% of GDP and is growing at almost 25% annually. Last year businessmen, scientists and the government signed an agreement to make Lithuania the European hub for health and biotech innovation by 2020.

But it is fintech that has taken the strongest grip on the country’s tech scene. TransferGo, WoraPay, Blender, Simplex and IBS are just a few of a small but growing clique of firms taking advantage of strong local talent, low wages and public pledges.

Lithuania is the only jurisdiction in the EU to have a special-purpose banking license, allowing the foundation of a bank with registered capital of just €1m ($1.1m).

Vaidas Adomauskas first imagined WoraPay, a payment platform, while waiting to pay for food at a restaurant. Now it is backed with almost $1m in funding and is headquartered in London–which many believe to be Europe’s fintech capital.

Capitalizing on the Lithuanian fintech craze, Rise, the Barclays-backed Rise coworking franchise, opened a location in capital city Vilnius last year. It has 50 working spaces, an auditorium and conferencing facilities for entrepreneurs trying to get a foothold in financial tech.

International

Marketplace Lending News Roundup – June 3 (Lend Academy), Rated: AAA

Behind the Scenes at Orchard Platform, a Struggle to Innovate from The New York Times – The long and winding road of Orchard’s plans for a secondary loan market.

Peer-to-peer lender RateSetter raises £13m, Woodford and Artemis lead from AltFi – In the UK RateSetter has closed another £13M equity round as they get closer to full FCA approval.

SoFi and JetBlue Help Customers Managing Student Loans Earn Reward Travel from PR Newswire – This week SoFi announced that you can earn up to 50,000 JetBlue reward points by refinancing a student loan.

Did someone cancel the fintech revolution? from Finextra – The promise of fintech has not yet been released says Accenture in a new report.

Kind of Blue from FinTech Junkie – The latest from Frank Rotman comparing startups to jazz and what to do when you hit a wrong note.

Are Small Business Borrowers Bank-Loyal to a Fault? from deBanked – Despite low approval rates banks are still the top choice for entrepreneurs looking for a loan.

The impact of the latest adjustments in peer-to-peer/marketplace lending from AltFi – Good summary of the latest developments at the big four marketplace lenders in the UK.

The impact of the latest adjustments in peer-to-peer/marketplace lending (AltFi), Rated: AAA

Funding Circle ditches property

Leading small business loans marketplace Funding Circle announced that it would be winding up its property-secured lending in April, with a view to stopping entirely by mid-2018.

AltFi Data’s analytics engine shows that only one quarterly cohort of Funding Circle’s property-backed lending resulted in any bad debt. This came in the third quarter of 2015. Bad debts for this cohort have reached 4.67 per cent – but it’s important to note that recoveries may still be made, and that this is just one of 17 quarterly cohorts. The size of this cohort is about £34m.

RateSetter stops wholesale lending

AltFi Data told us in March that RateSetter had originated £273m loans to lending businesses, equating to 15.6 per cent of its £1.748bn cumulative lending total at the time.

The firm has now lent a little over £1.9bn in loans, of which 15.4 per cent are wholesale. As can be seen in the chart below, the overall trend is down.

More capacity at MarketInvoice?

MarketInvoice announced the launch of a new longer-term product (MarketInvoice Pro) in February. This allows businesses to draw an open funding line, secured against their outstanding invoices.

Well, since unveiling the new product in February, MarketInvoice has posted back-to-back monthly origination records (versus all previous months in its existence), with £42m in March and £35m in April.

But this isn’t yet feeding through in terms of outstanding principal per month, which is hovering at around £25m per month, versus an all-time high of £35m.

Investors are falling over themselves for Zopa loans, but should they be?

The net returns delivered to Zopa investors has been fairly consistent at between 4.5 and 5.0 per cent for the past two and a half years. But the rate being paid by its borrowers is climbing.

Zopa’s average gross interest rate has steadily increased from 5.3 per cent at the outset of 2015 to 8.4 per cent in April 2017. The reason for this is simply that a higher proportion of Zopa’s loans are now being made to “riskier” borrowers. But the returns being offered by the platform haven’t yet adjusted to reflect this.

Crowdfunding, millennial buyers and higher mortgage rule real estate in 2017 (International Business Times), Rated: A

Interestingly, real estate crowdfunding is not limited to the US market. It is actually one of the hottest trends in the overall global realty market today. Realty crowdfunding platforms are continuously being launched in the UAE, Asia and even Egypt. In fact, a leading Singapore-based realty crowdfunding platform recently raised around S$1 million (AU$0.98 million) in the first funding round for a company.

If crowdfunding is the signature trend of real estate in 2017, the rise of millennial home buyers is a close second. The oldest millennials are now in their mid-30s and are planning to have their own houses. Marriage is on the cards for most of them, further creating the urgency for a new home. Most jobs have been designed for the 25 to 34 age bracket, with wages happily rising. Overall, it is a highly favourable situation for millennials to think of a new house this year.

On the other hand, the recent Brexit fallout has had a major impact in the contemporary real estate scene. With UK realty currently going through an uncertain phase, the US real estate scene is fast hogging the limelight in the global property market. The Chinese market, too, is currently moving along a slow tide, which presents an advantage for US developers. The American commercial real estate is to benefit in particular, and speculations are on the rise about steady foreign investments in the country.

Crowdsurfer adds Zopa data (Finextra), Rated: A

Zopa, the world’s first and one of the largest peer-to-peer (P2P) lenders, has lent in excess of £2.3 billion to customers in the UK, and the addition of its data set will deepen Crowdsurfer’s insight into the global alternative finance market.

Cambridge-based Crowdsurfer analyses data from more than 900 different alternative finance platforms, including equity, bonds, SME debt, P2P and more, and has mapped more than ten million transactions to provide the most in-depth take on global trends and patterns in alternative finance.

How robo advice fees compare to multi-asset funds (AltFi), Rated: A

Will robo advice spark a price war? We crunched the numbers looking at how much platforms charge compared to a typical multi asset fund.

Vanguard, a U.S. based passive fund manager, is planning to sell its index funds directly to UK consumers, charging just 0.23 per cent annually. Previously, individuals had to invest in funds through an intermediary or, more recently, via robo advisor to get access to the company’s funds.

Taking a look at the top UK robo advice platforms, we found that an investment of £10,000 would cost an average of £6.79 a month in both management, platform, and fund fees.

A £10,000 investment in 2015 held in the average fund in the IA’s 20-60% Shares sector would have cost an average £9.83 per month for a mixed fund, while the average fund in the IA’s 40-85% Shares sector would cost £10.25, according to data on the average ongoing charges figure from the Investment Association.

Putting this all together, for the average robo advice platform a £10,000 portfolio amounts to approximately 0.81 per cent fees, or £81 over a year. In comparison, the average multi-asset fund charges between 1.18 per cent and 1.23 per cent over the course of the year, with IA’s 40-85% Shares sector the higher of the two. This amounts to £118-£123 on £10,000, or approximately £40 more than the average robo advice portfolio.

Pre-RDR fees would have cost £15.42 and £14.92 on a £10,000 investment.

Moneyfarm, a robo advisor based in the UK and Italy, stands out because it doesn’t charge a management fee for any investments under £10,000, just the fund fee. Investments over £10,000 are charged 0.6 per cent.

Insurtech App Trov Connects with AXA Insurance & Celebrates UK Launch (Crowdfund Insider), Rated: A

Trov has launched its on­-demand insurance platform in the UK, in partnership with AXA Insurance. Users are provided with a personalized quote and can quickly turn insurance on (or off) for an item without the need for any interaction with a traditional insurance agent.

Australia

FinTech Australia Announces New Board of Directors (Crowdfund Insider), Rated: A

FinTech Australia has announced the election of its new Board of Directors. The new Board is said to align with constitutional changes regarding gender diversity and representation from a broad number of states.

The new board members are:

  • David Ball – CEO and co-founder of HyperBank (Queensland representative)
  • Natalie Dinsdale – Director of Marketing at Tyro (NSW representative)
  • Luke Howes – Co-founder and CEO of Proviso (South Australian representative)
  • Lucy Liu – Chief Operating Officer of Airwallex (Victorian representative)
  • Alan Tsen – CEO of The Week in Bitcoin (Victorian representative)
  • Emma Weston – Co-founder and CEO of AgriDigital (NSW representative)

India

Monexo: Trying to fill the void (Free Press Journal), Rated: A

Our business structure focuses on P2P lending to three segments of borrowers – salaried individuals, practising professionals, and small and medium enterprise (SME). Right now, however, we focus only on the salaried individual segment.

Our typical borrower profile is salaried, aged 25-30 years, with an average salary of Rs 25, 000 for which the average borrowing works out upto Rs 1.50 lakh. Such a working population today is much more independent and amenable to migration. This in turn brings a lot of minor expenses and there such loans are very useful. Such borrowers are often under the under the banks’ lending radar who offer them Rs 8-10 lakh loans to start with but we create options for them (based on the amount requirement). The borrowers that we target are usually digitally savvy and appreciates the benefits that we bring to the table.

What are the benefits offered to borrowers?

First and foremost is time-saving. The borrower is made known in a minute if the loan is available or not.

Another benefit of Monexo is that it is active in the entire activity chain of P2P lending – origination, screening, profile-grading, pricing of each application, disbursement, client servicing and lastly debt collection. This is right now a key differentiator among our contemporaries.

Describe the business structure and how it would attract lenders?

Our fees are taken out of repayments made to lender (2.5 per cent) based on their actual EMI receipts.

Borrowers are graded in categories from M1 down to M8. They get an automatic upgrade when they create a repayment track record. One key criteria is that debt should not be more than 60 per cent of the borrowers’ income.

Our typical business process is approval of only 25 per cent of the applications submitted. This is because most of the 75 per cent are already defaulters somewhere.

Fintech Firm Pinjam Gears Up for Growth Spurt This Year (Jakarta Globe), Rated: A

Fintech company Gadai Pinjam Indonesia is gearing up for a growth spurt this year in a mission to expand the reach of financial services to unbanked small and medium enterprises.

The company, which provides pawnshop services and micro-loans through its online platform Pinjam.co.id, eyes to disburse between Rp 100 billion ($7.52 million) and Rp 200 billion this year, increasing up to 10 times its loan outstanding.

Pinjam will cooperate with state-owned post Pos Indonesia as well as some gold shops, to increase the number of outlets where their customers can pawn their goods. It plans to have more than 100 points in Jakarta by the end of this year.

Asia

P2P Lender Amartha Receives Regulatory Approval from Indonesian Financial Services Authority (Crowdfund Insider), Rated: AAA

Jakarta based Amartha (PT Amartha Micro Fintek) a peer to peer lending platform launched in 2010, is now officially registered with the Directorate of Institutional and Product IKNB (Financial Industry Non Bank) Financial Services Authority ( FSA).

Amartha said the approval by the financial regulators will boost public confidence in the platform and investing. Currently Amartha claims to have successfully financed over 34,000 micro businesses in parts of Indonesia to more than 10,000 registered investors, with total funds distributed to 87 billion rupiah (USD $6.5M).

Why Your Financial Planner Should Be a Robot (Knowledge.insead.edu), Rated: A

In 2015 the Singapore-based bank, DBS, surveyed 600 local mothers in their 30s about retirement. The results were revealing. Three-quarters had not started planning for their retirement. Only 25 percent thought they would have sufficient funds to retire on. The average Singaporean household, headed by a 45-year-old, spends US$3,800 per month. However, 69 per cent believe they would be able to retire on less than US$2,200 a month, while 38 per cent believe it would be less than US$1,500.

According to a 2015 Nielsen survey, six out of 10 Singaporeans only start saving for their retirement once they reach 45. They believe they will just need to double their current savings to retire comfortably with peace of mind.

In China, the social pension is the primary source of retirement income. However, 43 percent of respondents in a survey conducted by the Society of Actuaries in 2016 believe the government or their company will cut their benefits in the future. With an estimated 329 million Chinese turning 65 by 2050, it is projected there will be a US$118 trillion pension deficit.

At 55, the average male has US$98,000 and female has US$85,000, bringing the total household retirement assets at around US$183,000. However the couple now has only 12 years until retirement.

In Singapore, fintech boom is missing the ‘tech’ (Southeast Asia Globe), Rated: B

Big banks are putting a lot of effort in to improve their customer experience. WeChat Pay might not be big right now, but Alibaba bought Lazada, so Alipay’s coming. That’s going to change a lot of things. Banks are trying hard to capture their customers’ attention and build strong ties. Small-to-medium enterprise lending and security is big, particularly in Singapore. How do you protect your data? Singapore is a very strong private banking hub: a lot of money is parked here from very strange people. You don’t want to have this information leaked, so the regulation techspace is being upgraded.

Africa

Some options if you want advice from a robot (IOL), Rated: A

Jaco van Tonder, the director of advisory services at Investec Asset Management, says robo-advisers are useful to clients who cannot afford to pay for face-to-face professional financial advice.

Personal Finance looks at three offerings in the South African market:

1. Sygnia RoboAdvisor. The service was launched last year by listed asset manager Sygnia. Depending on your investment requirement and risk appetite, RoboAdvisor will expose you to unit trusts, exchange traded funds (ETFs), money market funds or cash.

• Minimum investment amounts: lump sum of R10 000 or a monthly debit order of R500.

• Management fees: 0.5% a year including VAT.

2. iTransactGo. This service is operated by Johannesburg-based exchange traded product investment platform iTransact. The company was established in 2010, and it launched its robo-adviser service last month.

• Minimum investment: lump sum of R5 000 or a minimum monthly contribution of R300.

• Investment term: there is a minimum term of one year.

• Management fees: not more than 1.14% a year including VAT, depending on the size of the investment.

3. Bizank. The company is independently owned and has appointed Anchor Capital as the asset manager of its robo-adviser. The robo-adviser, which was launched last year, creates a portfolio to meet your investment goal (for example, retirement or buying a house) based on your responses to its questions.

• Minimum investment: a lump sum of R10 000 or a monthly debit order of R1 000.

• Management fees: between 1% and 1.5% excluding VAT.

Authors:

George Popescu
Allen Taylor

Thursday March 2 2017, Daily News Digest

alternative lending

News Comments Today’s main news: Funding Circle raises $100M . Upstart Raises $32.5M. Lendio offers MPL franchise program. Proplend gains FCA approval.  Monexo to start 1 min loan approval process. Today’s main analysis: FT Partners’ CEO Monthly Alt Lending Market Analysis. Today’s thought-provoking articles: International P2p lending statistics. China to regulate P2P lending platforms. United States FC receives extra $100M from […]

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News Summary

United States

Funding Circle Receives Additional $ 100 Million From CIM Through U.S. Business Multi-Year Agreement (Crowdfund Insider), Rated: AAA

SME lender Funding Circle announced on Wednesday that Community Investment Management (CIM), an investment firm focused on marketplace lending, will finance an additional $100 million in loans to businesses originated through Funding Circle in the U.S. According to the online lending platform, the multi-year agreement will allow it to provide further injection of capital into the country’s small business sector.

Since its launch in 2010, investors on Funding Circle, which includes 60,000 individuals, financial institutions, government, and the listed Funding Circle SME Income Fund, have helped more than 25,000 businesses globally access $3 billion in transparent and affordable financing.

Lendio Announces First-of-Its-Kind Marketplace Lending Franchise Program (Benzinga), Rated: AAA

Lendio, the nation’s leading marketplace for small business loans, today announced it is expanding the reach and availability of its small business lending options with the launch of a new franchise program.

The Lendio franchise program complements the company’s core value of helping small business owners fuel the American Dream. Through this program, franchise owners across the country can ease the financial hurdles for small businesses in their local community. Lendio franchisees get access to Lendio’s marketplace and technology, comprehensive training, branded marketing tools and national advertising, partnerships, and access to Lendio’s franchise support team to help coach small business owners through the lending process.

Lendio currently has franchisees in five territories, with significant interest in many others. Partners Kyle Bohrer and Bryan Gealy, in Erie, Pennsylvania, joined Lendio as the first franchise owners. Bohrer has been in the small/mid-sized business marketplace for over 10 years. Located in the Great Lakes region, Bohrer has been working on saving Erie small business owners money on their shipping.

FT Partners’ CEO Monthly Alternative Lending Market Analysis (March ’17) (FT Partners), Rated: AAA

Earlier this week, FT Partners announced one of the largest deals in 2017, Prosper’s $5 billion loan purchasing agreement with a consortium of investors that includes affiliates of Third Point, New Residential Investment and Soros, among others. This highly strategic transaction for Prosper aligns investor interest by including an equity structure tied to loan purchasing volumes. The transaction highlights FT Partners’ continued strong track record in advising on the most significant and complex deals across the FinTech ecosystem.

Introducing the First SaaS Lending Platform (Upstart Email), Rated: AAA

by Jeff Keltner, Head of Business Development, Upstart

Those that know my history at Google will understand why I’m excited to tell you about Powered by Upstart, a Software-as-a-Service offering derived from Upstart’s top-rated consumer lending platform. From rate requests through servicing and collections, this new service brings modern technology and data science to the entire lending lifecycle.

Our beginnings

Anna, Paul, and I founded Upstart to bring the best of Google to consumer lending. Upstart was the first platform to leverage modern data science and technology to power credit decisions, automate verification, and deliver a superior borrower experience. In 2014, we were first to launch next-day funding . As of today, more than 20% of our loans are fully automated and we expect this percentage to increase significantly through 2017. With more than 50,000 Upstart loans originated, we have the highest consumer ratings in the industry and have delivered industry-leading returns to loan investors. With Net Promoter Scores (NPS) in excess of 80, we’re excited about the impact we’re having.

Technology partner

FinTech is disrupting all areas of financial services. As a leading tech platform in marketplace lending, Upstart aims to partner with financial institutions rather than compete with them. Given the pace of change in lending, technology partnerships will be critical in the years to come, and Upstart aims to be a partner the industry can rely on.

But Powered by Upstart is not just software – it’s a turnkey solution that provides all necessary document review, verification phone calls, fraud analysis, and (optionally) customer service, loan servicing and collections.

Software-as-a-Service in lending

SaaS has grown exponentially in the last decade because of its obvious virtues: rather than buying, installing, configuring, hosting, and supporting software yourself, the software is delivered over the cloud. It’s more reliable and always up to date. Delivering cloud software can be challenging in any industry. Usability, reliability, and performance are the minimum to play, and effective change management is critical to success. As the team that delivered Google’s SaaS platform before it was called cloud, we understand these challenges.

Of course, the regulatory environment in lending raises the bar even higher. We’ve long demonstrated our commitment to trustful and compliant lending, and we’re likewise committed to delivering robust and compliant lending software. We’ll be at the LendIt show in New York City next week, so please come visit our booth to learn more about Powered by Upstart!

Klarna: Financing Better Customer Experiences (PYMNTS.com), Rated: A

Swedish payment processor Klarna has recently made news when it expanded the options and the channels that it makes its point of sale financing options available to.

Billingsley explained that in the case of GhostBed, the revolving credit product provided by Klarna helps turn a one-time mattress sale to its customers into a customer who comes back to purchase accessories.

According to Billingsley, that’s possible because it enables eligible consumers to make additional purchases with that same retailer without having to sign up for another loan or go through the financing process all over again for each subsequent transaction made.

Either the new purchases can be added to their existing credit account or they can simply use a different form of payment for the transaction.

Billingsley noted that the financing solution also works without any redirect to an external URL, so the consumer remains on the merchant site and within the brand experience when signing up.

Depending on the customer segment and even the merchant itself, utilizing Klarna’s full checkout solution isn’t exactly what they need. Which is why, Billingsley noted, the company is pushing its payment APIs, which allow merchants to add Klarna’s proprietary payment solutions directly into their existing checkout.

As for Klarna’s power users, the two biggest consumer populations are millennials and females in their mid-30s who are usually in charge of their family’s purchases.

Billingsley pointed out that many millennials today either don’t have a credit card or don’t like using one — their affinity for credit card brands and status is much different from previous generations. This makes millennials much more willing to use a payment option that allows them to break up payments over time for major purchases.

In the case of the young mother who manages her household’s income, also known as the Household CFO, she typically sees it as more convenient to make payments over time on a big purchase rather than putting a transaction on her debit or credit card.

Upstart Raises $ 32.5M (Upstart Email), Rated: A

It’s been three years since we launched the Upstart lending platform, and today we’re pleased to announce we’ve raised $32.5M to take our business to the next level. The funding round was lead by Rakuten, a global leader in internet services and global innovation headquartered in Japan, and by a large US-based asset manager. Existing investors Third Point Ventures, Khosla Ventures, and First Round Capital also participated. We’re particularly excited to have Oskar Mielczarek de la Miel, Oskar Miel, Managing Partner of the Rakuten FinTech Fund join Upstart’s Board of Directors.

With more than 50,000 loans originated, Upstart has the highest consumer ratings in the industry, has Net Promoter Scores (NPS) in excess of 80, and has delivered industry-leading returns to loan investors.

Prominent Fintech Investor & Prosper President Ron Suber Invests in Money360, Joins as Strategic Advisor (Crowdfund Insider), Rated: A

Ron Suber, Prosper Marketplace President and prominent Fintech investor, has taken a stake in Money360 – a fast growing real estate investment marketplace.  Suber will also play an active role as a Strategic Advisor to Money360 to help boost platform growth.

Suber explained;

“I have been investing in the loans from Money 360 for my personal family office for many months. I have enjoyed the risk-adjusted returns, investment structure and liquidity options. Upon completing additional due diligence, I have decided to personally buy equity in the company and become a strategic advisor to the management team/Board of Directors. 

Labor Dept proposes delaying new rule for financial advisers (Reuters), Rated: A

The U.S. Labor Department has taken a first step toward possible derailment or dilution of its controversial rule on retirement advice as it begins to re-examine it at the directive of President Donald Trump, according to a notice made public on Wednesday.

The department proposed a 60-day delay of the fiduciary rule, which requires retirement advisers to put the interests of clients ahead of their own. It was slated to take effect on April 10, but Trump asked the department to review the rule one more time for its impact on investors.

The proposed delay should have a “calming” effect on the marketplace, which had been “hanging in limbo” ahead of the April 10 effective date, said Denise Valentine, a senior analyst with Aite Group, which advises the financial services industry on regulatory issues.

California Hedge Fund Association (CHFA) Announces Rebrand to California Alternative Investments Association (CalALTs) (PRWeb), Rated: A

The California Hedge Fund Association (CHFA) announced that it has adopted CalALTs as its new brand name. The 1,200 member organization, which focuses on fostering growth and advancing the development of California’s alternative investment community, rebranded in response to the strong demand from a broader group of alternative investment managers and a new focus on bringing together and serving a wide range of alternative investment managers across the state of California and beyond.

The alternative investment community in California currently includes over 1,000 firms with approximately $1 trillion in assets under management.

Monroe Capital Selected as the 2016 Lower Mid-Market Lender of the Year by Private Debt Investor (BusinessWire), Rated: B

Monroe Capital LLC was selected as the recipient of the 2016 Lower Mid-Market Lender of the Year Award in the Americas region by Private Debt Investor, a global independent publication based in London covering the private debt and private equity industries. This is the fourth consecutive year that Monroe has been recognized by the Private Debt Investor Awards as a leader in the Lower Mid-Market, Unitranche and Senior Lender categories.

Monroe Capital provides “one-stop” financing solutions for buyout, recapitalization, growth, and refinance transactions in the form of senior and junior loans and equity co-investments, supporting both private equity sponsored and non-sponsored transactions and privately owned businesses. The Private Debt Investor Awards recognize firms in three geographic regions: the Americas; Europe, Middle East and Africa; and Asia-Pacific. Winners were selected by eligible voters among the private debt, private equity and institutional investor communities.

United Kingdom

Proplend gains FCA approval (P2P Finance News), Rated: AAA

COMMERCIAL property peer-to-peer lender Proplend is the latest platform to receive full authorisation from the Financial Conduct Authority (FCA).

Brian Bartaby, chief executive of Proplend, said the firm would now apply for ISA manager status from HMRC but said it was unlikely to have an Innovative Finance ISA (IFISA) ready this tax year.

The lowest risk is tranche A at zero to 50 per cent LTV, tranche B is 51 to 65 per cent LTV and tranche C is 66 to 75 per cent LTV.

Returns on the platform  currently range from five to 12 per cent and borrowers can access loans of between £250,000 to £5,000,000 for up to five years on an interest-only basis. The platform has funded £11.5m of loans so far and has recorded zero defaults.

LandBay, Proplend, & FundingSecure Named Top Three UK Property P2P Lending Platforms (Crowdfund Insider), Rated: AAA

On Tuesday, 4thWay writer, Matthew Howard released his very own assessment on the top three property P2P lending platforms are in the UK. The three he selected were LandBay, Proplend, and FundingSecure.

In his selection, Howard ranked the lenders based on their features and opportunities each platform can provide. He selected LandBay as his first pick because the lender has done over £10 million in P2P loans.

Proplend was selected as Howard’s second pick. He chose the lender due to the lender’s interest rates are even in the lowest-risk “tranche A” range from 5.5% to 7%; more than £10 million has been lent through Proplend; and users may easily identify loans that are for just 50% or less of the property valuation.

FundingSecure was Howard’s third pick. His selection was based on the lender’s record of doing around £100 million in P2P lending, more than half being property loans; offers bridging and property development loans; uses the current valuation, even on development loans; interest rate lenders earn is 12% on all these loans; the minimum that may be lent on each loan is £25.

Fintech startup Yielders becomes first to receive Sharia Compliance Certification in UK (EconoTimes), Rated: A

UK-based fintech startup Yielders announced that it has successfully completed independent Sharia Certification that was conducted by UKIFC and overseen by prominent scholars in the fintech sector.

Britain wants you to be banker, but are you ready for the risk? (The Memo), Rated: A

Plans to bring the risk and returns of peer-to-peer lending into one of Britain’s most popular investment products might provide some welcome relief for entrepreneurs … and some sleepless nights for those taking the plunge.

Following up on a Budget pledge, the government has now published a consultation on including peer-to-peer lending in individual savings accounts (ISAs).

Some 23m people in the UK have ISAs, which make the return from your savings and investments completely (or mainly) tax-free. But 16m people opt to hold just the safer version, cash ISAs, which are tax-free savings accounts with banks, building societies and National Savings & Investments.

Meanwhile, UK households, who hold around 60% of their financial wealth in cash, have borne the brunt of the Bank of England’s low-interest-rate policy. Before the financial crisis, in mid-2007, you could get a return of over 6% a year from a best-buy cash ISA. Today, the best is little over 2%.

However, peer-to-peer lending is more risky than putting your savings in a bank.

This is borne out by a recent poll. peer-to-peer firm Wellesley found that 47% of people surveyed said they would increase their investment in peer-to-peer lending if it could be included in an ISA and 44% if it offered better interest rates than traditional banks.

Another survey, by Opinium in 2012, found 49% of the population would be open to peer-to-peer lending as an alternative to traditional banking.

Advisers’ Robo Face Off (FT Adviser), Rated: B

So last week’s revelation that almost 6,000 people have used LV’s full automated financial advice service since it was launched in summer 2015, maybe shouldn’t be greeted with too much concern by advisers.

Also LV said it was “unable” to reveal how many of the 6,000 customers who paid the £199 for a full statement of advice went on to pay £499 to execute the statement of advice.

That is as maybe, but if our trip to the world of Back to the Future is anything to go by, human beings will – unless they become robotic themselves – still need face-to-face advice.

European Union

International P2P Lending Statistics February 2017 (P2P Banking), Rated: AAA

Funding Circle continues to lead ahead of Zopa and Ratesetter. The total volume for the reported marketplaces adds up to 408 million Euro.

  • Funding Circle reaches 2 billion GBP in originations since launch
  • Fellow Finance crosses 100 million EUR since inception
  • Geldvoorelkaar hits 100 million EUR since inception

China

China looks to better regulate online P2P lending platforms (Technode), Rated: AAA

To help regulate the online P2P lending industry plagued by fraud and embezzlement, the China Banking Regulatory Commission published the Guidelines on Depositing and Managing Online Lending Capital (in Chinese, Guidelines for short) on February 24. In January this year, 1.8 million registered users were unable to withdraw their funds from platform operated by Qiyuan (short for 北京起源财富网络科技有限公司 or “Beijing Qiyuan Wealth Online Technology Limited” in English). The owner of the company, Fang Fan, embezzled the funds invested in the company’s eight different online lending platforms.

The Guidelines is the latest effort by the government to regulate the online P2P lending market which handled RMB 204 billion worth of transactions this February alone. It sets out three major basic principles regarding the safekeeping of the capital gained from P2P lending platforms. The first is that funds invested into the platforms by users must be deposited into commercial banks. The second stipulates that any transaction and reconciliation of the invested funds must be expressly approved and verified by both the debtor and creditor. Lastly, banks and online lending companies must carry out daily reconciliations and keep clear records of the transactions.

India

P2P market place Monexo to start 1 min loan approval process (India times), Rated: AAA

Lending marketplace Monexo has become the first peer-to-peer lending company in India to introduce a 1-minute loan approval process.

The company will leverage its proprietary, self-learning analytics platform as well as its tie-up with CRIF to access credit scores and other relevant financial data to aid in the loan disbursement decision making process, Monexo said in a release.

The borrowers can avail a loan of Rs 50,000 to Rs 5 lakh for tenure of 6 months to 60 months. There is no origination fee or prepayment fee. But the borrower must just pay a success fee of 2.5 per cent if the loan to him is approved and he decides to avail it.

The potential of blockchain technology to eliminate physical currency by ushering in virtual currencies like Bitcoin might be overstated, said Reserve Bank of India (RBI) deputy governor R. Gandhi.

While speaking about currencies, the central banker pointed out that to be effective, a currency needs to uphold concepts of confidence and anonymity at all times. However, after the initial rounds of usage, these concepts cannot be sustained in virtual currencies.

Talking about another major innovation in the financial technology space, marketplace lending or crowdfunding, the central banker noted that after the first few rounds of funding and successes, as a larger number of people get attracted to the concept, the system is likely to collapse. This makes marketplace lending unsustainable for a large number of people or amounts.

Asia

Tera Funding loans grow to top 100 bln won in 2 yrs (Yonhap News Agency), Rated: AAA

The chief of Tera Funding, a peer-to-peer (P2P) property financial service provider, said Thursday that the company’s accumulated loans have surpassed 100 billion won (US$87.6 million) since its launch two years ago.

Authors:

George Popescu
Allen Taylor

Tuesday February 14 2017, Daily News Digest

Tuesday February 14 2017, Daily News Digest

News Comments Today’s main news: New York looks to further regulate FinTech lenders. BofA testing employee-less digital bank branches. Today’s main analysis: PeerIQ’s interpretation for Marketplace Lending of Trump’s Trump’s Executive Order on Core Principles for Regulation the United States Financial System Today’s thought-provoking articles: Banks look to replace ATM cards with cellphones. When will Innovative Finance Isas […]

Tuesday February 14 2017, Daily News Digest

News Comments

United States

United Kingdom

European Union

India

  • Monexo to rope in strategic partner. GP:” I personally don’t believe in news that state getting close to signing a partnership. I would recommend announcing it after it’s signed. There are so many ways for these partnerships not to happen.”

Asia

 

United States

NEW YORK LOOKS TO FURTHER REGULATE FINTECH LENDERS (Goodwin Law), Rated: AAA

Tucked away in the Transportation, Economic Development and Environmental Conservation Bill portion of the New York State 2018 Executive Budget is a proposed amendment to New York’s Licensed Lender Law that would “[a]llow the Department of Financial Services . . . to better regulate the business practices of online lenders.”

The Bill would make three significant changes to the Licensed Lender Law:

1.  Licensing would be required for making consumer loans of $25,000 or less and business loans of $50,000 or less at any interest rate.

2.  Potentially Implicate Licensing for Marketplace Lending Platforms Using a Bank Partnership Model. In a bank partnership model, platform companies may both solicit loans made by the bank partner and later purchase some of the platform loans.

3.  Potentially Cover Merchant Cash Advances and Invoice Factoring. The Bill would also expand the meaning of “engaging in the business of making loans in New York” to a person that “solicits [covered] loans . . . and, in connection with such solicitation . . . purchases or . . . acquires . . . other forms of financing.”

If the bill is passed by the legislature and signed by the governor, these changes would take effect January 1, 2018.

Bank of America is testing employee-less branches to serve digital-first customers (Tradestreaming), Rated: AAA

Enter the stripped-down, employee-less branch with just an ATM and a meeting room for video conferences with bank employees. The yet-to-be-named mini-branches are part of a Bank of America pilot program, with two located in Denver and one in Minneapolis. After a senior executive mentioned the concept at an investor conference last week, rumors proliferated as to whether this was a sign that the bank branch may be going the route of the bricks-and-mortar bookstore, the CD shop or the mall. The Washington Post even suggested bank branches may become what it calls “robo-banks” – automated and impersonal.

To ensure everything goes smoothly, the bank deploys “digital ambassadors,” or customer service agents who answer customers’ questions about the technology. Pace said that the digital ambassador – a role that’s only been around for a year – is focused on making sure customers are comfortable with the technology and can use the mobile app.

Weekly Industry Update: February 12, 2017 (PeerIQ Email), Rated: AAA

Federal Reserve Governor, Daniel Tarullo, announced his plan to resign in the spring, providing Trump with a clear path to accelerate his deregulatory agenda.

Jeb Hensarling (R-TX), introduced plans to relieve banks from annual stress tests and remove key powers from the CFPB.

U.S. Representatives Ed Royce (R-CA)., Kyrsten Sinema (D-AZ)., and Terri Sewell (D-Al). reintroduced the Credit Score Competition Act. The bill seeks to end the “government-backed monopoly in credit scoring” by enabling GSEs to use competitive scoring models to FICO when underwriting mortgage loans.

Potential Impact of Trump’s Executive Order on Financial Regulation

Trump’s Executive Order on Core Principles for Regulation the United States Financial System was issued on February 3rd.

We highlight Principle (c) in the Executive Order–concerning market failures, systematic risk, and information asymmetries–whose concerns are consistent with the spirit of several Dodd-Frank regulations.

Ram Ahluwalia of PeerIQ Shares the Future of Online Lending (Crowdfund Insider), Rated: A

As online lending has morphed from a novelty to the future of debt, PeerIQ has been there chronicling the growth with its deep dive analysis of securitization and portfolio monitoring.

Ram Ahluwalia: Last year highlighted that securing access to a diverse mix of low-cost capital is necessary to compete and win. Lenders that could tap many channels saw little to no slowdown in origination growth and maintained a healthy differentiation in funding cost and access to capital from their peers.

The effects we’ve seen has been tremendous. ABS issuances grew 60% in 2016 versus prior year, and virtually every major platform has established a securitization program and a bank partnership.

Ram Ahluwalia: The decline in originations is overstated and misunderstood.  The third quarter saw some origination decline, particularly for a couple of originators who encountered funding crunches, but year over year originations are still up across the industry.

Ram Ahluwalia: We project securitization to continue to be a favored funding channel, with total ABS issuance volumes growing 50% in 2017. 

Further, as consumer credit trends remain positive, there is a lot of demand for this ABS paper; the majority of deals remain oversubscribed.

Ram Ahluwalia: The OCC Charter is not a panacea. It does not address other financing and liquidity challenges for the industry. As a result, we believe partner funding banks such as WebBank and Cross River Bank will continue to have an important role to play.

Ram Ahluwalia: Scaling up origination operations that can compete with online lenders (who have established brands now) requires significant investment in marketing, technology, servicing, and risk management.

While there is a large opportunity here for traditional financiers (with their noted cost of capital advantages), on balance, we predict most banks will try to partner with nimble lending platforms, acquiring benefits from the partnerships, while minimizing risks associated with such a major strategic push.

Banks Look to Cellphones to Replace A.T.M. Cards (The New York Times), Rated: A

Customers who don’t want to fumble around in their wallet for their A.T.M. card — or who have misplaced it for the umpteenth time — will soon be able to unlock cash dispensers’ coffers by using their phone.

JPMorgan Chase, which has more A.T.M.s in the United States — 18,000 — than any other bank, has activated this technology on a few hundred machines in four test cities, including Miami and San Francisco. Six thousand more are already upgraded and ready to go.

For decades banks have battled “skimming,” in which criminals sabotage A.T.M.s to steal the information off a card and use it to clear out people’s accounts. The replacement of magnetic stripe cards with chip cards significantly reduced that problem, but mobile access brings in new worries.

One Chase customer recently had $2,900 stolen from her account through the bank’s new cardless system — which she had never used.

At Bank of America, customers with compatible phones and a digital wallet app can tap their phone on the cash machine’s wireless pad to authenticate their identity. From there, customers enter their personal identification numbers and carry out transactions in the usual way.

Some banks have gone further and let customers ditch even their phones. With biometrics, a unique body part is enough to unlock cash.

At Banco Bradesco, one of Brazil’s largest banks, customers can gain access to an A.T.M. by tapping their palm on a scanner, which reads the pattern of their veins. (The system handled more than 700 million transactions without any reported fraud, according to Fujitsu, which built the technology.) Banks in Japan, India and elsewhere have used fingerprints for authentication.

A compromised bank card can be reissued. If a hacker figures out how to imitate someone’s eyeball — which has been done in laboratory settings — it can’t be replaced.

About 2.5 percent of the 425,000 A.T.M.s in the country are currently set up for cardless access, according to an estimate from Crone Consulting, which researches the payments industry. By the fall, it expects that number to rise to 25 percent.

Venmo, the digital payment system of choice for many millennials, is owned by PayPal. Giving PayPal and Venmo customers direct access to their money through A.T.M.s is not currently in the works, but it “isn’t something I would rule out,” said Chris Gardner, the product head for PayPal’s mobile wallet software.

31 FinTech Companies Transforming Institutional Investments and Trading (Let’s Talk Payments), Rated: A

DarcMatter is an online investment platform that provides transparent institutional-level access to private investment opportunities such as venture capital, private equity, hedge funds and commercial debt products.

DealMarket is a global online platform enabling Private Equity buyers, sellers, and advisors to maximize opportunities around the world – a one‐stop-shop for Private Equity professionals. DealMarket counts more than 15,000 users, over 3,000 deals and service providers listed on the platform.

EquityZen is a marketplace for private secondary investments in companies worth more than $50 million.

ForwardLane is a cloud-based investment advisory platform that enables investors to invest in particular hedge funds using machine intelligence software.

Orchard provides products and services for institutional investors to understand, execute and manage marketplace lending investments.

PeerIQ provides a credit risk analytics platform that helps institutional investors analyze, access and manage consumer credit risk. It aggregates P2P lending marketplace players and provides high-end analytical analysis of the player’s loan portfolio.

Quantopian is a crowdsourced hedge

RealtyShares describes itself as the Lending Club for real estate. They have created a marketplace for real estate investing through which individual and institutional investors can purchase shares in pre-vetted residential and commercial real estate properties for as little as $5,000 from the convenience of a laptop or tablet. fund that provides the world’s first browser-based algorithmic trading platform.

Venovate Marketplace is an online platform that matches investment advisors, qualified purchasers, accredited investors, institutions and investing companies with a curated selection of alternative assets.

A US online lender keeps its millennial customers by helping them find jobs (and friends and life partners) (Quartz), Rated: A

When Joanna Mathews was laid off from her job as an advertising strategist in Dallas, Texas, she called her online lender to get forbearance on her credit consolidation loan. The lender agreed, but only one condition: It would have to let it help her find a new job.

Mathews, 31, and the counselor provided by SoFi, a US online finance company, spoke at least once a week as she looked for work. She also took advantage of SoFi webinars on how to write resumes and interview. Her conversations with her coach focused on job-search strategies and, eventually, salary negotiation. With her coach’s help, she landed 15 interviews. After three months of searching, she found a position at another firm in Seattle, a city where she once lived and where was eager to return.

How Investors Can Earn 7% Returns In A 2.5% World (Forbes), Rated: B

A new asset class that offers investors market-beating returns is Peer-to-Peer (P2P) Lending. The P2P sector has grown rapidly in recent years and is an excellent new source of fixed income.

In 2016, P2P investors earned net annualized returns north of 7%. Even those who took the most conservative approach saw returns of 5%. That’s more than double the average S&P 500 yield.

Although the industry started out as peer-to-peer, the likes of Citibank and Morgan Stanley now fund around two-thirds of P2P loans.

Avoiding loans in Oroville flood zone (zip code 959xx) (LendingCalc), Rated: B

On Sunday evening, February 12, authorities issued evacuation orders below Oroville Dam because of a hazardous situation involving the northern California dam’s emergency spillway.

In the meantime, we would obviously avoid exposure to any loans in zip codes starting with 959. Investors without access to personal identifiable information (PII) typically view only the first 3-digits of borrowers’ zip code. Drilling down further, the 5-digit zip codes are: 95965, 95966, 95917, 95948.

United Kingdom

When will Innovative Finance Isas actually be available? (BT), Rated: AAA

Recently published figures from the Peer-to-Peer Finance Association (P2PFA) show that its eight members, including the UK’s three biggest providers, collectively lent £843.9 million in the final quarter of last year, with a total of almost £3 billion lent across the whole of 2016.

We spoke to Neil Faulkner, managing director of 4thWay, a comparison and information site devoted to peer-to-peer.

“They’re coming, they really are,” he says. “There are currently four platforms offering them: Abundance, Crowd2Fund, Crowdstacker and LandlordInvest; and there are two more coming very soon, both Lending Works and Landbay have their approval.”

Neil predicts that over the next year or so we’re likely to see a new platform a month announcing it is ready to offer Innovative Finance Isas.

Interestingly, Neil hypothesises that the reason none of the ‘big three’ P2P platforms – Zopa, RateSetter and Funding Circle – have yet been approved is that the regulator will wait until they are all ready for approval so as not to give one a competitive advantage.

Investors sneeze at P2P trust’s ‘seasoning’ (Citywire), Rated: A

P2P Global Investments (P2P +) has pinned some of the blame for its poor performance on the maturing or ‘seasoning’ of its £840 million loan portfolio.

P2P, the largest of the alternative lending investment trusts on the London Stock Exchange, saw its share price plunge 20.7% last year. This was bad news for shareholders, including star fund managers Mark Barnett and Neil Woodford, who in the previous two years pumped over £700 million into the fund, which invests in loans from peer-to-peer lending platforms.

Even including its quarterly dividends the total loss to P2P shareholders in 2016 was just over 16%.

The performance of the underlying portfolio was much better, but with a total return of just 4.1% from its assets falling short of its 6-8% dividend target, investors grew disillusioned and de-rated the shares, which now trade at a 20% discount below net asset value.

P2P’s run of sub-par monthly returns saw it make a return of only 0.67% in the last quarter of 2017.

The increase in defaults in the last three months of 2016 was largely in US consumer loans, which makes up 56% of the portfolio.

European Union

Interview with Eduards Lapkovskis, CEO of VIAINVEST (P2P-Banking), Rated: A

What are the three main advantages for investors?

VIAINVEST is a truly customer-oriented company, and we strive to provide the most satisfying investing experience possible. Great deal of investors’ concerns are related to investment safety, so all loans listed on VIAINVEST are secured with a Buyback Guarantee. Also, to guarantee that one investor will never be 100% committed to particular loan, originators keep 5% “skin in the game” for each loan.

What ROI can investors expect?

Currently investors can choose to invest in loans originated in the Czech Republic with 12% annual ROI and Spain – up to 12,2% annual ROI depending on the loan.

VIA SMS Group is active in more countries than in Spain and the Czech Republic. Will loans from other countries be listed on the VIAINVEST marketplace soon?

This is actually the next update planned for VIAINVEST – in following weeks we will publish loans originated in Poland and Latvia, Sweden will also follow in the nearest future.

Is VIAINVEST open to international investors?

VIAINVEST is open to any investors holding a bank account within the European Union or other country to which the requirements arising from European Union legislation on the prevention of money laundering and terrorism financing apply. Currently there is no legislation in Latvia regulating operations of peer-to-peer lending platforms, but it may be developed in 2017, so VIAINVEST is already implementing existing regulations.

Equator Celebrates 2016 Successes Highlighted by New Products and Customers (Yahoo! Finance), Rated: B

Equator, a leading provider of default software solutions for many of the country’s top servicers (including four of the top five largest servicers and a leading GSE), real estate agents and vendors, today released its end-of-year performance metrics. Equator’s REO, short sale and loss mitigation modules have now processed transactions totaling more than $315 billion since its inception with more than 2.2 million distressed properties sold to date.

India

Peer-to-peer lender Monexo to rope in strategic partner to fund growth (BusinessLine), Rated: AAA

Monexo — an online peer-to-peer lending marketplace — is close to roping in a “local strategic partner” to fund its growth in the Indian market, Mukesh Bubna, its Founder-CEO, has said.

In its journey so far, Monexo India has, through its high-end digital platform, processed loans worth ₹24 crore with most of the applicants being salaried 25-30-year-olds.

Going forward, the Chennai-headquartered Monexo plans to start offering small and medium enterprise (SME) loans from the third quarter (July-September).

Bubna said Monexo was not looking at foreign venture capital or a foreign private equity fund, but was closing a conversation with a domestic investor.

Asia

BetaSmartz Automated Investment Launches in Asia (Yahoo! Finance), Rated: A

BetaSmartz, the B2B automated investment platform for all sizes of investors, from institutional to retail, today announced it had opened offices in Hong Kong.

BetaSmartz offers ‘hybrid ‘ digital investment or ‘robo’ advice that combines automated and face-to-face financial advice. Newly appointed Managing Director Asia, Zak Allom, said this model had been well received since its launch in 2015, with several clients now live including two in the U.S.

BetaSmartz will run sales and service from the Hong Kong office, complementing its headquarters in Singapore.

Authors:

George Popescu
Allen Taylor

Monday November 14 2016, Daily News Digest

lc marketplace loan originations

News Comments Today’s main news: Orchard weekly online lending snapshot. U.S. Small business borrowing falls while delinquencies rise Today’s main analysis : LC loan volume stabilizes. AltFi Data sees equity crowdfunding market shrinking. Today’s thought-provoking articles: OCC considers FinTech charters. Singapore hosts world’s largest FinTech event. Future of FinTech. United States Orchard Weekly Online Lending Snapshot. AT: “Note the […]

lc marketplace loan originations

News Comments

United States

United Kingdom

European Union

Australia

China

India

Singapore

Africa

Israel

International

News Summary

United States

Orchard Weekly Online Lending Snapshot (Orchard Platform), Rated: AAA

This year saw the launch of the first online lending-focused, registered closed-end funds (or ’40 Act funds) in the U.S. It is a significant step that further legitimizes the industry to U.S. investors by providing a way to gain exposure to the loans of multiple originators via professionally managed, SEC-registered investment vehicles. RiverNorth Capital Management, LLC, the investment manager that launched the

LendingClub Loan Volume Stabilizes (The Wall Street Journal), Ratd: A

LendingClub Corp. said its loan volume stabilized after the surprise ouster of its chief executive six months ago, sending shares climbing 15% to their biggest one-day percentage gain ever.

The San Francisco-based loan-marketplace operator reported Monday third-quarter revenue and adjusted per-share earnings that exceeded analysts’ expectations, in addition to a large, new loan-sale arrangement with a unit of one of Canada’s largest banks.

Third Quarter 2016 Results (Lending Club)





Fundrise Launches RSE Capital as Stand-Alone Company (Multi-Housing News), Rated: AAA
Crowdfunding real estate platform Fundrise is spinning off its real estate investment branch, RSE Capital Partners, into a stand-alone company. The new firm will focus on origination, underwriting, investment and management for the company’s eREIT platform. RSE will collaborate with top brokers and real estate firms nationwide, focusing on institutional-level assets, primarily multifamily acquisitions,multifamily development and infill bridge lending.

RSE has already closed several deals, including three with one its first partners, Arlington-basedInsight Property Group. The two companies aim to invest $200 million in D.C. real estate annually.

Five Issues to Watch as OCC Mulls Fintech Charters (Bloomberg BNA), Rated: AAA

The Office of the Comptroller of the Currency could soon decide whether to offer national charters to financial technology companies, and as a Magic 8 Ball might say, “Signs point to yes.”

More concrete signals come from a couple of arcane regulatory moves by the agency in September: A Sept. 13 proposed rule that deals with receiverships for insured national banks, and a Sept. 28 revision of its charters booklet for the Comptroller’s Licensing Manual that addresses possible trust and special-purpose charters for charter-holders lacking deposit insurance.

If and when the OCC unveils its proposal for a fintech charter, here are five things to look for:

One: Who Will Be Covered?
The OCC exercises charter-granting authority for ventures that engage in at least one of the typical banking functions of taking deposits, lending money or paying checks. The lending criterion would take in online platform lenders, for example, but how wide is the “paying checks” qualification?

Two: Capital Requirements
It remains to be seen how the OCC will set capital and liquidity requirements for companies to receive a fintech charter.

Three: Leveling the Playing Field
Banks are worried that fintech companies may gain an advantage if they’re not held to the same standards as the banks.

Four: Application Process
How long will it take to apply for and receive a charter?

Five: Partnerships With Banks
The OCC will be looking to strike a balance between its primary duty to preserve the safety and soundness of the national banks it supervises and its stated intention to promote what it calls responsible innovation.

Will They Use It?
Some fintech companies look to national charters as a way to simplify their operations by, for example, pre-empting the patchwork of state laws that govern lending. But others are skeptical, viewing the concept as just another layer of government regulation.

Marketplace Lending as a Service Startup Blackmoon Secures $ 2.5 Million in Equity Funding (Fintech Finance), Rated: A

Blackmoon Financial Group has secured $2.5 million in an equity funding round that includes Target Global, A&NN Group, Flint Capital, and several private investors. The valuation of the company and the structure of the investment are not disclosed.

Blackmoon will use the funds for the further development of its technological platform and front-end solutions, and for further expanding its presence in the U.S. market, which will be a key growth area in the next year and a half.

Blackmoon makes money by charging investors for getting access to the unique supply of loans that can not be found on other platforms. According to its own data, monthly transaction volume has grown by a multiple of 2.5 since June 2016 and exceeded $5 million in September 2016.

Four Lessons as Rating Firms Look at Marketplace Lenders (American Banker), Rated: A

Whether we like it or not, independent oversight and regulations exist in financial services for a reason: to protect borrowers, lenders and society’s greater economic health. In other words, they help make industries viable. Therefore, as the marketplace lending industry continues to mature, it needs the oversight equivalent of Standard & Poor’s, Moody’s Investor Services and Fitch Ratings.

In 2008, the credit ratings agencies had clear profit incentives. The agencies were paid by the companies issuing debt — a revenue model that often resulted in ratings agencies bending standards in order to gain business. As we contemplate rating agencies for marketplace lenders, we must avoid repeating this past mistake. Marketplace lenders should not pay the agencies in any way.

Rating agencies for marketplace lender-originated loans need IT solutions that calculate and recalculate, automatically and continuously, consumer and small-business loan ratings. At any moment in time, these ratings should take into account all available information on particular loans and bundles of loans in order to deliver the most accurate risk assessments based on real-time market conditions.

While ratings agencies are very valuable, investors should not over-rely on them, as they often did in 2008.

U.S. small business borrowing falls, delinquencies rise (Reuters), Rated: AAA

Nov 1 Borrowing by small U.S. firms slipped in September, and the percentage of firms late on repaying existing loans rose to its highest in nearly four years, data released on Tuesday showed.

The Thomson Reuters/PayNet Small Business Lending Index fell to 128.9 from a downwardly revised 132.8 in August. Measured from a year earlier, it was the fourth straight monthly decline, with the index at its lowest point since January.

Credible Expands Student Loan Marketplace & Announces Partnership With Massachusetts Educational Financing Authority (Crowdfund Insider), Rated: A

Student loan marketplace Credible announced on Wednesday it has formed a partnership with the Massachusetts Educational Financing Authority (MEFA).  The organization will now be offering student loan refinancing to borrowers nationwide through Credible’s multi-lender platform.

Credible users may now be able to access student loan refinancing options provided by six lenders, which are Citizens Bank, College Ave, CommonBond, iHELP, MEFA, and the Rhode Island Student Loan Authority (RISLA).

Fintech’s Most Powerful Dealmakers of 2016 (Institutional Investor), Rated: A

General Atlantic also stressed partnership in leading a $325 million Series E funding late last year for marketplace lending platform Avant, with Korngold joining the company’s board.

Although there is, by definition, a collaborative element in any investment or advisory relationship, the sector that has come to be known as fintech has special needs. The culture of a start-up is very different from that of an established financial institution; even if the latter wishes to be more nimble and embrace new ideas and technologies, its procurement and compliance bureaucracy can get in the way. Hence the emergence of ecosystems designed to lower such barriers. Eighteen-year-old FTV Capital (<a href=” Bernstein and Richard Garman</a>, No. 7) pioneered in this regard with its Global Partner Network, which includes major financial companies that invest in FTV funds and thereby gain insight into new developments.

Citi Opens APIs to Third-Party Fintech Developers (American Banker), Rated: A

The API Developer Hub was launched Thursday to foster collaboration and partnerships between fintech companies and consumer brands. Such portals allow developers to build their own financial services applications and client solutions that easily connect to Citi. Mastercard, Virgin Money and others are already leveraging Citi APIs to create customer solutions.

There are four APIs currently available to developers: one that allows Citi customers to access their account summaries; an authorization API that gives customers secure access to their account data for more streamlined transactions; one that approves access to shared Citi customer profile information for deeper engagement; and the Pay with Points API, which allows an app to accept a customer’s Citi rewards points to pay for their purchases.

10 reasons fintech startups fail (Banking Exchange), Rated: A

My employer, William Mills Agency, has represented hundreds of fintech companies. We’ve seen startups with (in our opinion) marginally acceptable products or services thrive. And we’ve also witnessed companies with (again, in our opinion) incredible ideas fail—miserably.

Here are 10 deadly mistakes fintech startups make, as well as some simple solutions to avoid them.

  1. Mistake 1. Underfunding the startup. Solution: Before I start any do-it-myself project I’ve learned (the hard way) that it’s going to cost me twice as much and take three times as long.
  2. Mistake 2. Underestimating the length of the sales cycle. Solution: If you’re selling fintech to any financial institution— be it small community or money center bank—expect a long, arduous sales cycle with multiple setbacks and delays.
  3. Mistake 3. Not understanding the market. Solution: Too many startups are blinded by their own arrogance. They’ve sold themselves into believing their solution will completely change the way the financial world operates, and that they don’t need to work within existing parameters.
  4. Mistake 4. Failing to devise a sound sales strategy.
  5. Mistake 5. Don’t put all your sales chips on “Bob.”
  6. Mistake 6. Don’t blow your shot with a poor start. Solution: If your organization is still trying to figure out what it is and to whom you’re selling, don’t make it up on the fly.

Read the rest at Banking Exchange.

Nead.co to Release Open Fintech Platform for Investment Banking (Eries News Now), Rated: A

Nead.co, provider of middle market finance and technology consulting solutions will soon be launching a dedicated fintech platform for mergers, acquisitions and investment banking. In preparation for the launch, the company is inviting independent software developers with a keen interest in financial technology engineering to join the company’s ever-growing ecosystem.

Fintech developers are encouraged to join by submitting detailed information regarding the types of applications they intend on building into the platform. If accepted, Nead & Co. management will open up the firm’s API tools for access by engineers who wish to develop into a growing ecosystem of expert financial and technology experts.

The War Between Fintech And Traditional Finance Reaches A Crossroads (News BTC), Rated: A

To put this into perspective, the financial sector has an annual revenue of roughly US$5tn. As is always the case, they want that number to keep growing. To do so, they partner with fintech startups to realise new ideas and improve existing infrastructure. Combining the US$5tn market with a US$20bn fintech industry can lead to exciting developments.

Change is inevitable at this stage. The sooner banks and financial institutions realise this inconvenient truth, the better for everybody. Fintech should not be ignored, and various subsectors of this industry are making waves. Blockchain, Bitcoin, robo advising, and AI are just a few examples of what the future holds. Exciting times are ahead of us, even though we are all cogs in the global financial war machine.

Kabbage Hires Chief Technology Officer and Chief Data Officer (PRWeb), Rated: B

Kabbage®, a pioneering financial services technology and data platform, today announced Amala Duggirala has been appointed Chief Technology Officer, and Rama Rao has joined Kabbage as Chief Data Officer.

Amala Duggirala is highly accomplished in building large-scale, high-performing systems with a keen eye toward exponential business growth. Bringing nearly two decades of experience to Kabbage, she is responsible for advancing the automation and growth of the Kabbage Platform and for implementing strategic information technology and product initiatives to power financial services for organizations worldwide.

NYU Stern Hosts Inaugural FinTech Conference Featuring President and CEO of PayPal (BusinessWire), Rated: B

New York University’s Stern School of Business, the first business school to establish aFinTech specialization for MBA students, held its inaugural FinTech Conference on November 9, 2016. Featuring keynote speaker Dan Schulman (MBA ‘86), president and CEO of PayPal, the conference addressed many critical issues in the industry, ranging from regulation to public policy, equity crowdfunding, marketplace investing and blockchain technologies

81% OF NONPRIME AMERICANS DO NOT OVERSPEND: STUDY FROM ELEVATE’S CENTER FOR THE NEW MIDDLE CLASS (Elevate Email), Rated: A

In the wake of last week’s seismic election, Elevate’s Center for the New Middle Class today issued new research on how underserved Americans maintain their financial health, showing that 81% of nonprime Americans – those with credit scores lower than 700 – spend only what they earn, or less on everyday expenses.

Elevate’s Center for the New Middle Class is a research-focused body that engages and educates the public about the growing needs of individuals who do not have access to traditional credit options. In this study, the Center outlines how nonprime Americans are financially savvy in a number of ways, especially in comparison to their prime counterparts. Additional key findings from the study include:

  • Nonprime Americans check their bank account balances 50% more often than prime
  • Nonprime consumers check their credit scores 40% more often than prime
  • Two-thirds of this group plan for major expenses
  • 67% consider themselves “careful spenders”
  • 72% say they know how to create a budget

“Our research shows the narrative about the New Middle Class being less engaged in their finances is just not the case. In fact, it’s the opposite in many situations,” said Jonathan Walker, executive director of the Center. “Because they have fewer financial options, the New Middle Class clearly recognizes and appreciates the need to be fully aware of their financial position at any given moment.”

“Although most nonprimes spend what they earn or less, little room is left for unexpected expenses. When you are one car repair away from a significant financial problem, you have every incentive to know exactly where you stand financially,” concluded Walker.

United Kingdom

AltFi Data sees UK equity crowdfunding market shrinking in 2016 for first time (SMN Weekly), Rated: AAA

The UK equity crowdfunding market is set to close 2016 with more than £130 million new equity issuance, posting a slowdown in momentum for the first time, according to a report of financial markets analytics provider AltFi Data. The segment is expected to facilitate young companies in the UK raise more than £130 million growth capital in 2016.

The report includes data for all equity crowdfunding in the UK from 2011 (when when the industry was started), covering a total of 955 equity crowdfunding rounds and 751 companies. The data refers to six platforms that offer equity crowdfunding services – Crowdcube, Seedrs, SyndicateRoom, Venture Founders, Code Investing(previously CrowdBnk), and Angels Den, the last one of which was new addition for 2016.

Following are details about the funded volume for first nine months of 2016 (and 2015) of the six UK equity crowdfuning platforms included in the report:

Financial Stability Board: Fintech Firms Not Posing a Risk to Financial System (Crowdfund Insider), Rated: AAA

Secretary General of the Financial Stability Board (FSB) Svein Andresen announced at a Chatham House conference in London earlier this month that Fintech firms looking to disrupt traditional banking and financial systems are not yet posing an immediate threat, according to Reuters.

The FSB’s mission is to promote global financial stability, conduct outreach to non-member countries, and monitor implementation of agreed policies.  Members include the G20 countries and key financial centers — Hong Kong, Singapore, Spain, and Switzerland.

UK FinTech Bridge to China (Finextra), Rated: AAA

Today it is another significant milestone for the UK FinTech ecosystem as the Financial Conduct Authority (FCA) signed the Co-operation Agreement with the People’s Bank of China.

The purpose of this agreement is to provide a framework for co-operation between the parties with respect to promoting innovation in financial services. The Agreement sets out how the parties plan to share and use information to promote innovation in their respective markets.

Bank of England: We Set Up the Fintech Accelerator to Develop Our Practical Experience of Fintech (Crowdfund Insider), Rated: A

In a speech this past week by Charlotte Hogg, Chief Operating Office of the Bank of England, she welcomed the launch of the Bank’s Fintech Accelerator while explaining their mission.

The Bank of England is currently working with the following Fintech firms:

  • BMLL: This machine learning platform provides access to historic full depth limit order book data. The BMLL platform aims to facilitate analysis and anomaly detection. We have agreed to test their alpha version for this Proof of Concept.
  • Threat intelligence: As part of the Bank’s wider information security and threat intelligence work we have partnered with two firms – Anomali and ThreatConnect– that provide innovative technologies to collect, correlate, categorise and integrate security threat data. For this project, we have asked them to offer a solution to consolidate threat intelligence into a searchable repository that can optimise information collation, enrichment and sharing in support of a proactive intelligence-led defence strategy.
  • Enforcd: In this proof of concept, we are using an analytic platform designed specifically to assess and draw out trends on regulatory enforcement action using publicly available information.

UK’s FCA fully licenses crowdfunding platform UK Bond Network (SMN Weekly), Rated: A

Bond crowdfunding platform UK Bond Network said on Wednesday it has obtained a license from the UK Financial Conduct Authority (FCA). Prior to getting fully licensed, the platform operated under an Appointed Representative temporary authorization.

The platform seeks to grow its business and expand its investment solutions. It considers launching new offering investments which would qualify for the Innovative Finance ISA (IFISA), a program for tax-free peer-to-peer (P2P) lending.

Investor Views: “Peer-to-Peer Lending Boosts my Income” (Morningstar), Rated: A

Harman, who lives in West Sussex with his wife, has built up a portfolio of using pension and ISA wrappers over a number of years. More recently he has also invested in peer-to-peer lending.

Harman says: “It certainly isn’t for everyone but I am comfortable with the risks. I get a steady income stream from the money I’ve lent out, currently around 5 to 6% a year.”

Crowdfunding might make you money but it’s not an alternative to savings (Herald Scotland), Rated: A

For one thing, investors have so far not received any return on their capital and, with BrewDog’s exit route not yet articulated, it is unclear when they will.

For Adam Tavener, chair of both Clifton Asset Management and funding platform Alternative Business Finance, it is for this reason that equity crowdfunding should never be seen as an alternative savings vehicle.

European Union

Fintech Golem’s ‘Airbnb’ For Computing Crowdsale Scores $ 8.6M In Minutes (Forbes), Rated: AAA

Golem Network, the first decentralized global market for computing power, raised more than $8.6 million (m) in just 29 minutes on Friday for its Golem Network Token (GNT) and in so doing became the third largest platform ICO (Initial Coin Offering) ever.

Acting and dubbed as an ‘Airbnb for computers’, Polish-based Golem Network is a peer-to-peer (P2P) network with no central server that allows both application owners and individual users (‘requestors’) to rent the resources of other users’ (‘providers’) machines, and be paid in cryptocurrency.

As the third largest ICO for a platform behind Ethereum, a public blockchain-based distributed computing platform ($18m in 42 days) and Waves, a blockchain-powered tokens platform ($16m in 30 days), Golem claims it “substantially lowers” the price of computations to make applications more accessible to everyone.

Denmark establishes FinTech hub (FS Tech), Rated: A

The Financial Services Union Denmark, the City of Copenhagen and the Danish Bankers Association have collaborated to form Copenhagen FinTech – a new association that will develop an ecosystem for FinTech entrepreneurs in the city.

Copenhagen is currently home to a range of FinTech companies, but many believe it needs investment if the city is to establish itself as a hub for innovation. The City of Copenhagen hopes to see growth and jobs as a result of the new efforts – following a study which showed that FinTech has the potential to create 10,000 new jobs in Denmark.

The association is launching, amongst other things, a co-working space under the name Copenhagen FinTech Lab, where entrepreneurs take lodgings and become part of a FinTech environment with sparring from established companies and other entrepreneurs.

Australia

Australian Treasurer Promotes the Benefits of Fintech & Regtech (Crowdfund Insider), Rated: A

At the inaugural Fintech Australia Summit this month, Scott Morrison MP, the Treasurer of Australia, delivered a speech that addressed this “collision” between Regtech and financial innovation.

Regtech, in Morrison’s opinion, can seamlessly integrate into financial firms creating a “compliance by design” environment where risks can be mitigated as everything is monitored in real-time.

Applying Regtech to Fintech  may ease the burden of the highly regulated industry;

“…we cannot allow our financial regulatory framework to act as a handbrake to this innovation. Excessively stringent rules and obligations result in less business, less competition and ultimately worse outcomes for consumers. RegTech can equip us to avoid these outcomes.”

China

Two banks trialling biometric technology under Hong Kong fintech ‘sandbox’ (Reuters), Rated: A

Hong Kong’s banking regulator received applications from two banks to test emerging biometric technologies under a new regulatory regime, Hong Kong Monetary Authority Chief Executive Norman Chan said on Friday.

The banks have applied to test the use of biometric authentication of securities trading, Chan said at the regulator’s first ever financial technology or “fintech” day on Friday.

India

Authors:

George Popescu
Allen Taylor

Wednesday November 2 2016, Daily News Digest

zopa loan originations

News Comments Today’s main news: Online lenders join to fight scammers and stackers. UK banks are required to refer SMEs to alt lenders. Today’s main analysis : Why bank/FinTech partnerships are proliferating. Why Zopa’s interest rates are falling. Today’s thought-provoking articles: Half the world’s banking customers are now using a FinTech firm. HSBC launches a FinTech lab in […]

zopa loan originations

News Comments

United States

  • Online lenders strike back at scammers and loan stackers. AT: “There is a clear difference between fraudsters and people who get in over their heads. The challenge for online lenders is to identify the latter before they destroy their own lives and impact the profitability of the lenders.” GP : ” I find it interesting that originators went through the effor to build this themselves when there are so many credit bureaus where they could have reported this data instead. Why did they do that ? Is it a price ? A differentiator ? Can anybody join ID Analytics ? What is the cost ? Conditions ?”
  • Taking the peer out of P2P lending. GP : ” It is difficult to find billions of dollars from retail investors when companies like Lending Club and SoFi originate billions per quarter. I understand why they have gone after instutions where a few months of work for a few people can get you billions of dollar to lend. But I continue to believe that the p2p aspect provides billions of dollars worth of marketing and good will which was the main reason why Lending Club was able to be cheaper then a bank. Eventually the banks will catch up on the cost of underwriting and application as there is no real barrier and the good will in p2p will be the only thing left.”
  • Ripple gets a new CEO. GP : ” For context from their website, Ripple works with banks to transform how they send money around the world — a necessary step to compete in today’s growing economy. Our vision is to enable the Internet of Value so the world can move value the way it moves information today. This is relevant to lenders if they need to do a lot of disbursements around the word for cheap.”
  • What’s really happening at Wealthfront? GP : ” Betterment is pulling ahead of Wealthfront. When this happens investors get nervous and they replace the founder CEO. For entrepreneurs: interest are aligned with your interest as long as things go well. Once they don’t, your interest diverge. When the VCs take over it could go in 2 directions: either very well or very bad, rarely does it stay the same. Lets see how this will go.”

International

United Kingdom

European Union

Canada

China

India

Asia

  • Ant Financial moves into Thailand. GP: ” It is important not to underestimate Jack Ma and Ant Financial. One day it will enter the US when it is ready. For most of humanities’ history China was #1 in GDP and in nearly every metric.  “

Africa

News Summary

United States

Online Lenders Band Together to Strike Back at Scammers, Stackers (American Banker), Rated: AAA

Online lenders’ struggle with fraud is driving them to join new networks designed to find links between fraudulent loan applications and signs of loan stacking.

Lending Club, Prosper Marketplace, Marlette Funding and Avant are among those that have joined such a group in the past month.

ID Analytics formed its Online Lending Network in late October and has recruited about a dozen online lender members, including Lending Club, Prosper Marketplace and Marlette Funding. It’s focused mainly on loan stacking.

The vendor’s technology is meant to thwart online application fraud of any kind, including credit cards or deposit accounts. Many of its clients are wireless providers, marketplace lenders and traditional online lenders.

ID Analytics also tracks soft hits – consumer-initiated credit pulls that don’t show up on the credit report. Lenders are not allowed to see this activity, per the Fair Credit Reporting Act. But because ID Analytics’ tech platform was designed to solve fraud, the Gramm-Leach-Bliley Act allows it to collect that information and notify lenders of consumers who are receiving multiple offers, so they can slow down their decision-making process and prevent the consumer from getting three or four loans in seconds. ID Analytics also compares applicants against a repository of information about bad actors.

TransUnion announced a similar fraud prevention network, Fraud Prevention Exchange, in early October that includes Lending Club and Avant. The effort is run by Pat Phelan, a senior vice president in the innovative solutions group at TransUnion, who founded an online identity verification company called Trustev that TransUnion acquired last December.

Funds Are Taking The Peer Out Of Peer-To-Peer Lending (Financial Advisor Mag), Rated: A

Less than a decade ago, individual investors piled into the peer-to-peer lending industry with an idealistic belief that Silicon Valley could form a better banking model than Wall Street. In recent years, that picture has changed substantially.

Money from large investment firms account for the lion’s share of online financing—so much so that people operating within the space increasingly refer to this industry as marketplace lending rather than peer-to-peer lending. The biggest online marketplaces, including LendingClub and Prosper, are increasingly focused on compliance and lending standards rather than just user-friendly interfaces, according to Peter Renton, publisher of Lend Academy.

Now this evolving online lending landscape is reaching back out to individuals, only with a Wall Street twist by providing them access to funds that use leverage and charge relatively big fees. After all, it turns out that many moms and pops aren’t much interested in investing directly in these loans or brokering them among one another.

The latest example of this effort to make it easier for anyone to slip into this industry is a new closed-end fund that may start trading soon. The Van Eck Overland Online Finance Trust “may invest in a broad range of online-sourced loans,” including consumer, small business, student, real estate and other loans, according to a prospectus dated September 28.

The creation of this fund shows how big firms are trying to get individuals to pour their money into a field that’s going through some growing pains after years of rapid growth.

Ex-AOL, Yahoo executive appointed Ripple CEO (Reuters), Rated: B

U.S.-based financial technology start-up Ripple announced on Tuesday its Chief Executive Officer Chris Larsen has decided to step down and will become the company’s executive chair.

Larsen said Brad Garlinghouse, the firm’s current chief operating officer, will become the new CEO effective Jan. 1.

What’s really behind the leadership change at Wealthfront (Investment News), Rated: A

Wealthfront’s growth being surpassed by its competition may have led the robo-adviser to cut chief executive Adam Nash from daily management of the company, outside fintech experts said.

The digital advice platform announced Monday that venture capitalist and founder Andy Rachleff was reclaiming the top title at the company, while Mr. Nash would remain a member of Wealthfront’s board of directors.

Wealthfront also is slipping further behind its original robo-rival Betterment, which has branched out to serve non-retail clients, such as financial advisers. Wealthfront has said it only plans to provide digital financial advice to investors.

Financial technology expert Bill Winterberg said the change at the top could be a result of any of these factors: the firm’s slowing growth, increased competition or its delays in platform updates.

Tim Welsh, president and founder of Nexus Strategy, said Wealthfront’s failure to expand its technology for new clients, like Betterment has done with advisers and the 401(k) market, is adding to its troubles.

International

Here’s Why More Banks Are Expected to Team With Fintech Companies (The Street), Rated: AAA

Global financial technology investments are expected to continue, propelled partly by financial services companies that want in on the trend, according to consulting firm Accenture.

During the first quarter, global investments in fintech companies soared 67% from a year earlier to $5.3 billion, with more than 60% of investments going toward fintech companies in Asia and Europe.

There have been many deals in the sector, indicating that the fintech industry is maturing.
Last year alone, there were nearly 100 fintech deals that exceed $50 million, which includes mega-deals such as SoftBank’s $1 billion bet on Social Finance. Last year, Social Finance received $1 billion of primary capital in a funding, which was led by SoftBank.
The total transaction value in the fintech sector is expected to grow to $1.57 trillion by 2020, according to Statista.

The expected number total users of personal finance, business finance and small to medium enterprises is more than 400 million, worldwide, by 2020. In the fintech sector, the more users there are, the higher the potential revenue.


It makes more sense for banks to collaborate or acquire a fintech company, rather than spending money and building a fintech platform.

10-Year FinTech Landscape (Infographic) (ValueWalk), Rated: A

With the rapid growth of the financial tech industry it’s important to keep-up-to-date with everything that’s happening in the industry. We have created an infographic that highlights the growth of this sector over the last 10 years, ranging from accounting to personal finance.

Detailing the growth in the area over the last ten years (and covering some of the major FinTech companies from before that, like SagePay and Xoom, both founded in 2001), it splits the developing companies across their different specialisations – including:

  •        Accounting, like New Zealand software-as-a-service company Xero
  •        Crowdfunding giants such as Kickstarter and Patreon
  •        Investment gurus like Nutmeg and Xoom – among others
  •        Personal finance pioneers, covering non-traditional data sources (Moven) and savings assistance (Squirrel)

Half of Banking Customers Globally Now Using FinTech Firms Finds World FinTech Report 2017 (EconoTimes), Rated: A

Half of banking customers across the globe are using the products or services of at least one FinTech firm1, according to the first World FinTech Report (WFTR) from Capgemini and LinkedIn, in collaboration with Efma. The inaugural report quantifies and tracks customer response to the rise of FinTechs, includes the views of financial services industry executives at both FinTech firms and traditional financial institutions2, and summarizes how innovation is key in the emerging industry landscape.

United Kingdom

UK Banks Now Required To Refer SMEs To Alt-Lenders (PYMNTS), Rated: AAA

The U.K.’s bank referral scheme has officially kicked off.

Reports by Financial Times on Tuesday (Nov. 1) said the program that requires traditional banks to refer small businesses to alternative lenders if they’re rejected for a loan has begun.

The initiative was first proposed in 2014 as a way to make up for the nearly $4.9 billion in loans that SMEs cannot access each year because they are rejected for traditional bank financing. According to the U.K. Treasury, last year, 26 percent of the 324,000 SMEs that applied for a bank loan saw their initial applications turned down. Just 3 percent of those denied said they turned to alternative options to access the finance.

Further, according to reports, 80 percent of small business loans are provided by the Big Four banks — RBS, Lloyds, Barclays and HSBC.

The bank referral scheme was developed to inject competition into the SME lending market and to fill the gap of billions of dollars that small businesses cannot access via traditional lending methods.

The numbers behind Zopa’s interest rate cuts (altfi), Rated: AAA

Last week saw leading consumer lending platform Zopa drop interest rates across all lender portfolios – Access, Classic and Plus – by 0.2 per cent. It was the second time in as many months that the platform had dropped rates by that margin, and each time representatives cited increased competition within the broader consumer credit space as the key driver.

As a Zopa lender, the rationale makes sense. Consumer lenders both old and new are busily adjusting to the Bank of England’s recent decision to cut interest rates to an all-time low of 0.25 per cent. And while Zopa may claim not to be as connected to shifts in the base rate as the banks, the company has nonetheless conceded to at least a level of correlation. Ergo, Zopa has been forced to lower gross interest rates in order to ensure that it remains an attractive option for creditworthy borrowers. Lower gross interest rates correspond to lower investor returns; it doesn’t take a “lending genius” (in the immortal words of Lord Adair Turner) to work that out.

What we see is that average gross interest rates either fell or were flat for all of Zopa’s risk bands in September. This fits with the fall in lender rates.

However, rather surprisingly, the average gross interest rate across all bands rose by 31bps. How can this be?

Answer: the average gross interest rate chart is weighted by origination, and the composition of Zopa’s origination from August to September changed significantly. A* loans accounted for 25 per cent of originations in September, down from 33 per cent in August. Meanwhile, volume as a percentage of monthly origination grew in every other risk band – with D loans exhibiting the greatest growth, from 7 per cent of monthly origination in August to 10 per cent in September.

Bottom line: Zopa is telling investors that returns are falling because gross interest rates are having to be lowered in the context of a more competitive consumer credit space. That looks to be true.

Fintech Trends: Challenger Banking (Finleap), Rated: AAA

According to Burnmark’s October case study, Challenger Banks are “a new breed of technology-driven and customer-centric financial institutions”. Those banks split into three categories: Embryonic Challengers who are using mainly mobile apps to form partnerships with other banks; Real Challengers who have obtained a banking license in the last five years; and Pseudo Challengers who are the digital partners and startups of existing banks, using both branch and digital channels.[1] On the other hand, a report by KPMG divides Challengers into Large (longer established), Small (from the past ten years), and Large Retailers (retailers who have entered the financial services market).[2] Thus, the categories of Challenger Banking are not concrete. Most, however, agree that those banks offer cheaper, faster, customer-oriented financial products that have helped disrupt the industry.
Challenger Banks have come in and shown that banking can be truly digital. Many of them rely purely on apps while others provide API-based services. All, however, attempt to simplify the financial world.[3] Those new banks have a larger return on equity compared to large banks, more flexibility when it comes to lending, lower operational costs and an increase of profits by £194 million compared to a decrease of £5.6 billion for UK’s largest five banks.[2] Some examples of Challenger Banks include Atom Bank – founded in 2014, it is a UK digital challenger bank; Moven – founded in 2011 as a neo-bank; Tandem Bank – founded in 2013 as the second challenger bank to be granted a baking license in the UK. Germany also plays a huge part in the Challenger Banking movement by including Fidor Bank, N26, and of course FinLeap’s solarisBank – a tech company with a banking license that enables digital companies to create solutions to their financial needs.[4]

Pinsent Masons calls for clearer regulatory guidance on robo-advice (Finextra), Rated: A

Despite initiatives from the Financial Conduct Authority (FCA), including the establishment of a regulatory sandbox scheme to allow businesses to test new ideas outside of the usual regulatory constraints, and a new ‘advice unit’ dedicated to supporting firms looking to develop low-cost, automated advice, there is still a need for greater support and clearer guidance in financial decision-making.

There needs to be a shift in the debate from advice versus guidance, and should instead move towards clear information for users of robo advice tools so that they understand the risks of using them and any limitations that the tools have.

Funding Circle smashes its own UK monthly origination record (altfi), Rated: A

Funding Circle, the world’s largest marketplace lender for small businesses, has broken its own UK record for monthly origination volume. Funding Circle lent £95,086,880 in October, besting the previous watermark – which was set in September – by approximately £20m.

Funding Circle has now lent a cumulative total of around £1.62bn across 23,719 loans, according to AltFi Data. 1,187 new loans were issued by the platform in October, ranging from £5k to £572k in size.

How to put crowdfunding investments into your Isa (Financial Times), Rated: A

The Innovative Finance Isa has so far proven to be something of a damp squib, but from this week it expands to include a whole new asset class — crowd bonds.

Until now, this tax-free individual savings account has only been able to hold peer-to-peer loans.

VPC Specialty Lending Investments Updates on Challenging Conditions (Crowdfund Insider), Rated: B

As part of their Q3 review, VPC Specialty Lending Investments (LSE:VSL) announced it was shifting away from purchasing whole loans to balance sheet investments in the online lending sector.  VPC said continued softness in certain whole loans in their portfolio were offset by a one time revenue item related to a single platform. The overall situation was exacerbated by downward pressure on the British pound requiring  the company to post collateral and thus reducing available cash to invest. The conversion rate between the pound/dollar has dropped from 1.47 at the end of 2015 to 1.30 at the end of September 2016. The impact on the company’s liquidity was said to be “dramatic” having settled £64.5 million as required margin to counterparties.

World-leading UK FinTech firms discuss sector plans at roundtable (Gov.uk), Rated: A

Today (01 November 2016), some of Britain’s cutting-edge FinTech companies met with Simon Kirby, the Economic Secretary to the Treasury, to discuss how the UK’s world-leading FinTech sector can build on its previous success and take advantage of the opportunities ahead.

The meeting was the first of 2 roundtables with the sector, taking place over 2 days, at which the government is listening to the issues affecting the sector and the plans it has to grow and develop.

Attendees included chief executives from across the FinTech industry, financial regulators and Eileen Burbidge, HM Treasury’s FinTech envoy. Robin Walker, a Minister for the Department for Exiting the European Union, and Mark Garnier, the Parliamentary Under Secretary of State at the Department for International Trade, will also represent the government.

European Union

Creamfinance to Offer Loans From Denmark Through P2P Lender Mintos (Crowdfund Insider), Rated: A

On Monday, Latvia’s peer-to-peer lending marketplace Mintos announced it would be hosting Creamfinance loans, which are currently averaging from €50 to €1,000 with a repayment deadline of 5 to 30 days. Mintos revealed that the non-bank credit lender would offer short-term, unsecured consumer loans issued in Denmark through its marketplace.

Creamfinance added short-term, unsecured consumer loans issued in the Czech Republic to the Mintos platform. Mintos noted that the annual return to investors is expected to reach 11%. Recently, Mintos announced that since its launch a year and a half ago it has seen investors funding over €50 million in loans to both private individuals, along with small and medium-sized businesses.

Canada

Ontario Securities Commission Creates Fintech Advisory Committee (Crowdfund Insider), Rated: A

The Ontario Securities Commission (OSC) is joining a growing roster of global securities regulators to acknowledge the shifting environment of finance and the need to better understand Fintech innovation. The OSC is now seeking applications for a Fintech Advisory Commmittee (FAC) that will advise staff on the OSC Launchpad – a sandbox type environment that was announced in a speach by OSC Chair Maureen Jensen in September. Jensen said at that time that it was important not to prevent promising business models from coming to market. The OSC Launchpad will attempt to allow innovation to occur without being overwhelmed by regulatory mandates in an environment that is secure.

The FAC will meet four times a year and will be chaired by head of the OSC Launchpad Pat Chaukos.  Members will be selected based on the following criteria and experience;

  • Digital platforms (e.g. crowdfunding portals, online advisers);
  • Cryptocurrency or distributed ledger technology (e.g. blockchain);
  • Venture capital, financial services and/or securities, with a focus on the fintech or technology sector;
  • Data science and/or AI (artificial intelligence); or
  • Fintech or technology entrepreneurship.
China

HSBC Launches New R&D Lab For Fintech In Hong Kong (Wealthx), Rated: AAA

HSBC and the Hong Kong Applied Science and Technology Research Institute (ASTRI) launched a research and development innovation laboratory on Monday, the latest in a series of initiatives to boost the development of financial technology (fintech) in the city.

The hope is that collaboration between HSBC and ASTRI will develop solutions to real problems that affect the bank and its customers. These include development of advanced authentication technologies, cyber security protection and behavioral biometrics using artificial intelligence technologies.

India

Monexo ties up with WantedNote for easy access to credit for chemists (Economic Times, India Times), Rated: A

Peer to peer lending platform Monexo has tied up with online pharma aggregation platform WantedNote, to create an on demand credit facility for distributors and chemists operating in the pharma sector in India. The collaboration is set to address the working capital needs of distributors and chemists.

WantedNote, which has over 150 distributions and over 10,000 chemists registered with it, sees nearly 3,000 transactions per day on its platform. Monexo will be using this information for Monexo’s data driven P2P lending platform which can run its analytics engine and compute the credit and interest rate for a distributor or a chemist very fast.

Asia

Jack Ma’s Ant Financial starts global foray with Thai expansion (Business Standard), Rated: A

Billionaire Jack Ma’s is taking initial strides abroad after becoming China’s largest provider of internet financial services. On Tuesday, it confirmed an investment in Thailand’s Ascend Money, an arm of the agriculture-to-telecoms conglomerate Charoen Pokphand Group. The company is now looking for similar partners to spearhead overseas ventures, including developed countries, said Douglas Feagin, who heads operations.

will help Ascend build an insurance service, initially targeting motorbike riders. It will also create a business modelled on Alibaba’s Koubei, which offers local-area dining reviews and grocery deliveries, he said. Through partners like Ascend and India’s Paytm, the Chinese online finance giant hopes to serve two billion users globally within 10 years.

Apart from following its Chinese users overseas, expects to drive more local users to the digital wallets of its partners. Ascend now operates True Money for online payments and Ascend Nano for lending, and has digital wallet licenses in countries including Thailand, Indonesia, the Philippines and Vietnam. In Myanmar and Cambodia, it works through local banks and is applying for an online payments license.

Ant plans to share its cloud computing and cybersecurity technology with Ascend. It also wants to help its partners connect, building a platform where Indian users can buy goods through Ascend’s network in Thailand, and vice versa. That’s an overseas initiative it’s already rolling out for Alipay’s 450 million users when they travel.

Ant’s partnership with Ascend will expand over time.

Africa

Wealth Migrate Real Estate Crowdfunding Platform Adopts Distributed Ledger Tech (News BTC), Rated: AAA

Wealth Migrate, the South Africa-based crowdfunding property platform has announced the inclusion of blockchain technology into its online investment marketplace. With the inclusion of distributed ledger technology, the platform now offers enhanced security and privacy protections to its global investors.

Started in 2009, Wealth Migrate became the first online platform to allow people directly invest in both residential and commercial properties across the world. Now listed among the top United States Real Estate Crowdfunding Platforms, Wealth Migrate intends to tackle the rising issue of investment frauds, especially across borders with blockchain technology. The company’s adoption of digital currency technology comes at the time when leading banking and financial institutions are researching into various use cases of blockchain technology in their day-to-day operations.

With the implementation of distributed ledger technology, Wealth Migrate aims to successfully tackle multiple challenges involving personal information protection, enhanced compliance with respective laws of the regions it operates in, an inclusion of smart contracts for investments and decentralized confirmation of transactions over the blockchain. The immutable feature of blockchain technology makes it one of the most reliable and secure information storage method.  With the implementation, the company has gone a step forward and integrated an additional layer of security in the form of one-way hash code.

Blockchain technology is revolutionizing lots of industries. The use of such technology in crowdfunding and crowdinvesting makes the whole process much more reliable and transparent.

Authors:

George Popescu
Allen Taylor