Monday September 18 2017, Daily News Digest

LendingClub

News Comments Today’s main news: 400K UK consumers may have been affected by Equifax breach. Independent Community Bankers of America letter opposing ILCs. RateSetter launches consumer hire-purchase product. Klarna partners with Wacom. Google enters digital payments in India. Payday type loans come to e-tailers in India. Today’s main analysis: Analysis of SoFi deal SCLP 2017-5 and Lending Club deal CLUB 2017-P1. […]

LendingClub

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Africa

News Summary

United States

Independent Community Bankers of America Letter (ICBA), Rated: AAA

As you may be aware, ICBA recently filed a comment letter with the FDIC objecting to the deposit insurance application of SoFi Bank, an industrial loan corporation to be chartered by the state of Utah. In our letter, we urged FDIC, for safety and soundness reasons and to maintain the separation of banking and commerce, to not only deny SoFi Bank’s application but also impose a moratorium on ILC deposit insurance applications. Furthermore, we said that Congress should close the ILC loophole because it not only threatens the financial system but creates an uneven playing field for community banks.

The news that Square also intends to apply to the FDIC for deposit insurance as an industrial loan corporation has significantly increased our concerns and made it even more urgent that the FDIC immediately impose a moratorium on approving deposit insurance applications for ILCs. As we noted in our SoFi Bank letter, the ILC charter is nothing more than a loophole in the law to circumvent the legal prohibitions and restrictions under the Bank Holding Company Act.

SoFi Bank and Square are applying as ILCs and not as commercial banks because their parent companies and their affiliates do not want to be subject to the legal restrictions and supervision attendant to the BHCA. Square, for instance, already owns a point-of-sale hardware appliance business and a food delivery service and therefore could not own a commercial bank without divesting its commercial activities. For safety and soundness 2 reasons and to maintain the separation of banking and commerce, the FDIC should deny SoFi Bank’s application and impose a moratorium for at least two years on future ILC deposit insurance applications, including any application by Square. 

Read the entire letter here.

Did Lending Just Change for Good? (Crowdfund Insider), Rated: AAA

Bank lending regulations have rarely been thought of as dynamic or exciting but last night’s ruling by the Consumer Financial Protection Bureau (CFPB) to allow a lender to begin using alternative data in their underwriting could herald the beginning of a new era in lending and how banks work.

Why is this significant?

US banks have traditionally been guided by three key pieces of legislation, the Truth in Lending Act of 1968, the Equal Credit Opportunity Act of 1974 and the Community Reinvestment Act of 1977.  These three acts were created before the era of personal computers yet still guide bank lending today.  Since the rise of marketplace lending, which began in 2006, where borrowers go through a platform and investors fund those loans, it is becoming increasingly apparent that many of these regulations are in need of updating.

In an overly simplistic interpretation (and I am not an attorney), the regulator is giving an online consumer lender the right to underwrite loans using ‘alternative data’ which before was not in line with how the Equal Opportunity Act is interpreted by lenders.  It is not clear what data will be allowed but in a CNBC interview, Upstart co-founder Paul Gu suggested that SAT scores, college grades and even college majors are data points which are helpful in predicting loan defaults. 

So assuming the change stands, what is next?

As alternative lenders have more scope to use alternative data, machine learning complex data analysis is opening up an entirely new space for investors.  Gone are the days where banks only competed against each other with marketplace lenders now allowing investors to allocate capital in a similar way to banks, choosing loans to fund based on their own ideas and risk profile.   For now, this is mostly impacting consumer credit, but in the years to come, look for marketplace lending to impact all areas of lending as investors get more comfortable investing in this space regulations start to adapt.

Scandal costs Sofi chance to become a bank, says ex-SEC head (Financial Times), Rated: AAA

SoFi’s application to become a bank has almost no chance of approval in the wake of a sex scandal that forced out its chief executive, says a close adviser and former chairman of the Securities and Exchange Commission.

But last week’s departure of Mike Cagney, the co-founder, chairman and chief executive, has effectively killed the application, said Arthur Levitt, a former chairman of the SEC, who began advising the company two years ago.

“This departure of Mike makes that a very questionable attainment,” Mr Levitt said, referring to the charter.

He noted that the FDIC had turned down this type of application “many times” before.

Equity podcast: SoFi loses its CEO, big rounds for unicorns, and will this VC buy the iPhone X? (TechCrunch), Rated: A

We turned first to SoFi, a consumer-finance unicorn that has raised more than a billion in equity, and over $2 billion in total. The company is now down a CEO after allegations of misconduct brought censure upon its CEO, Michael Cagney, and the company’s culture.

Listen to the podcast here.

Fat cat frat boys ape the worst of banking and tech (Financial Times), Rated: A

The article also described employee concerns about lending practices and alleged that investors had been misled over a 2012 financing.

SoFi complained in a public blog about “inaccuracies” in the Times report, but focused on defending its lending practices.

If the allegations are true, SoFi and LendingClub have many of banking’s worst attributes with Silicon Valley’s warts layered on top.

Meanwhile, the allegations of doctored loans and conflicts of interest at LendingClub were reminiscent of some of the excesses of the bankers who fed the subprime mortgage market.

Goldman Sachs thinks fintech has as much potential as trading (Quartz), Rated: AAA

Goldman Sachs has been pilloried for lackluster results from its trading division (paywall), so this week the bank gave investors a peek into its plans (pdf) for making more money. Surprisingly, the Wall Street powerhouse thinks it can generate as much revenue from online consumer loans—a market targeted by many fintech startups—as from buying and selling securities.

Specifically, Goldman thinks it can make $1 billion in extra revenue from its consumer lending business over the next three years, as much as it expects for its trading operations. Combined with new lending for the wealthy and companies, the bank expects to bring in $2 billion in additional sales from loans. Goldman co-chief operating officer Harvey Schwartz said it’s one of the fastest-growing lending platforms ever launched, even though he says the bank is taking its time with the nascent business. The bank’s digital consumer-lending arm called Marcus is expected to have lent out $2 billion by the end of the year.

Meanwhile, big banks have access to cheaper funds than peer-to-peer lenders like Lending Club or Zopa. With consumer deposits and the billions of dollars they routinely borrow in credit markets, banks can undercut the loan rates offered by smaller companies.

That said, Schwartz acknowledged that consumer lending isn’t immune to economic downturns, and analysts cited by Bloomberg were skeptical about Goldman jumping into a market outside its core expertise.

Source: Quartz

The Bank of Google or Amazon? Don’t count on it (American Banker), Rated: AAA

It might seem like it is only a matter of time before the tech giants knock on banking’s door. In fact, a recent World Economic Forum report posited that big tech companies present a greater challenge to banks than fintech startups. The report notes that regulators will accept a more “oligopolistic distribution of financial services products by tech firms.” Already, the fintech providers Social Finance and Square have applied for FDIC-insured banking charters, just as the Office of the Comptroller of the Currency continues work to develop its limited-purpose fintech charter. Are the largest tech firms next in line?

Incumbents still hold the upper hand. The risk of an Amazon or Google or Apple dominating the traditional banking sector is nowhere near a slam dunk.

In every scenario, the tech giants would need to persuade regulators to grant them some kind of charter access in order to effectively compete and level the playing field on funding costs. This would involve easing traditional limits on commercial firms owning banks, and potentially navigating opposition from members of Congress.

But more fundamentally, tech giants have had mixed experiences in rolling out financial services such as Google Wallet and Apple Pay. And despite the reported consumer skepticism of legacy institutions, banks still continue to maintain a high volume of customer relationships.

SoFi CEO Resigns; Goldman & Mosaic Ink Deal; SoFi & Lending Club Deal Analysis (PeerIQ), Rated: AAA

In the fallout of the Equifax breach, the leading credit bureaus are dealing with an overwhelming volume of credit freeze requests from consumers. While it is still too early to tell, it seems that the genie is out of the bottle. The breach is sparking additional focus on FinTech innovation to protect consumers (e.g., digital identity verification, disposable card numbers, etc.).

Beyond the headlines, SoFi’s growth engine continues. In Q2 2017 alone, SoFi funded $3.1 Bn in loans with $134 Mn in revenue and $61.6 Mn in adjusted EBITDA. Revenue and adjusted EBITDA were up 67% and 60% year over year respectively.  The news of Cagney’s resignation coincided with SoFi marketing its latest personal loan deal which priced this Friday. Interest in SCLP 2017-5 was initially strong, however the bond priced somewhat wider than guidance.

SoFi’s Latest Consumer Lending Deal: SCLP 2017-5

After Mike Cagney’s resignation on Friday, the lead underwriter re-launched SCLP 2017-5. Since guidance was released before the critical NY Times article on Tuesday, we have a close (but imperfect) control to study the consequences of management upheaval on deal execution.

ABS investors reacted negatively to the news; the bonds priced 10 to 15 bps wider than guidance on Monday.

Source: PeerIQ, Company Filings, S&P, Kroll Bond Rating Agency

LendingClub’s Self-Sponsored Prime Consumer Deal: CLUB 2017-P1

This is the second self-sponsored deal from LendingClub, and it follows the success of CLUB 2017-NP1. LendingClub expects to alternate between prime and near-prime securitizations at least once a year going forward. Of the $363 Mn outstanding, approximately $100 Mn came from LendingClub’s balance sheet (a shift from prior management’s business practice); the remaining loans were contributed from investors.

The CLUB 2017-NP1 and CLUB 2017-P1 deals total to approximately $628 Mn in loans, yet LendingClub has facilitated almost $29 Bn in loans on its platform as of Q2 2017 making it a small part of LendingClub by dollars loaned but a meaningful portion of EBITDA.

Source: PeerIQ, Company Filings, Kroll Bond Ratings Agency

The FinTech Investor Podcast Series: Interview With Ron Suber (SoundCloud), Rated: A

DiversyFund Sells Pre-IPO Shares in Accredited Offer (Crowdfund Insider), Rated: A

DiversyFund, a real estate crowdfunding marketplace, is selling pre-IPO shares in a Series A crowdfunding round through a Reg D 506(c) offering.

The Form D filed with the Securities and Exchange Commission (SEC) indicated that Diversyfund had sold $200,000 of a $6 million funding round as of August 31st. Minimum investments of $100,000 are being accepted from accredited investors only.

Misha Esipov of Nova Credit (Lend Academy), Rated: A

In this podcast you will learn:

  • How talking with international students at Stanford led to the idea for Nova Credit.
  • The big problem that Nova Credit is trying to solve.
  • How they began their journey in trying to solve this problem.
  • Details of their Credit Passport product, the international credit report.
  • How they were able to convince international credit bureaus to share their data.
  • Why the big three U.S. credit bureaus have not developed an international credit report.
  • How Nova Credit is able to standardize data from very different countries.
  • Nova Credit’s business model and their similarity to a traditional credit bureau.
  • How they can report back credit data to international bureaus.
  • The other vertical they focus on beyond lending.
  • The kinds of lending platforms they are working with today.
  • The progress they have made since LendIt USA 2017.
  • When they first started making revenue.
  • Who has been backing Nova Credit.
  • What is on their road map for the next 6-12 months.
  • How they view expanding into new markets to help immigrants other countries.

The SoFi Sex Scandal Highlights How Hard It Is For Women In Fintech (Fast Company), Rated: A

Fintech has become a major force over the decade since the financial crisis, with $12.8 billion in venture capital flowing into the sector in 2016 alone. But of the nearly 500 deals that took place in the U.S. last year, less than a dozen went to companies founded by women.

“It’s lonely to be a woman in fintech, especially as a CEO,” says Rachel Mayer, cofounder and CEO of Trigger, an automated tool for investing alerts.

At Anthemis, based in London, 56% of employees are women, a remarkably equitable gender breakdown that is consistent at every level.

Former banking executive Sallie Krawcheck is following a similar playbook with her female-focused investing service, Ellevest. Since founding the company three years ago she has raised over $50 million in venture funding.

A survey of U.K.-based fintech firms published last week revealed that women represented just 3 in 10 employees. Of fintech board directors globally, just 8% are women.

Good news for fintech seen in CFPB’s ‘no-action’ move (American Banker), Rated: A

In an interview Friday, Upstart co-founder and CEO Dave Girouard explained why the fintech applied for the letter and how it works.

Is it fair to think of a no-action letter as a stay-out-of-jail-free card?

DAVE GIROUARD: We’re careful about not trying to interpret it in any way that is different than what the CFPB says it is. The letter makes it clear that they have reviewed what we do and how we do what we do and that they don’t find issue with it.

How do you feel about the agreement?

We’re pleased that the CFPB recognized the consumer advantage of alternative data and machine learning, the fact that it could make affordable credit more broadly available to more people.

So it’s not just about Upstart for sure — it’s the acceptance of these more modern techniques because they can and will benefit consumers broadly over time.

Sharestates Appoints New Chief Operating Officer, Adds SOC 2 Type 2 Certification (Crowdfund Insider), Rated: A

Sharestates, an online real estate crowdfunding marketplace, has announced that Nicole Joseph has joined the executive team as the new Chief Operating Officer.

The new hire is accompanied by the completion of the company’s SOC 2 Type 2 Certification, which affirms that Sharestates now meets the security requirements and parameters for storing information on the cloud as laid out by The American Institute of CPAs (AICPA).

ReliaMax Announces New Whole Loan Portfolio Placement Service (BusinessWire), Rated: A

ReliaMax®, the complete private student lending solutions provider for banks, credit unions and alternative lenders, today announced at the 23rd Annual ABS East 2017 Conference a new whole loan trading service, ReliaMax Portfolio Placement, as an extension of its existing capital markets and liquidity programs. The ReliaMax Portfolio Placement service will facilitate qualified existing private student whole loan portfolios for sellers and buyers.

The ReliaMax Portfolio Placement service provides unique value to the private student lending marketplace in multiple ways including insurance, default prevention, credit analysis, and servicing. Some benefits include:

  • State-of-the-art servicing through ReliaMax helps buyers maximize the value of their portfolio, providing compliance and regulatory support and staffing to manage student loan-specific servicing requirements.
  • Loan insurance through ReliaMax Surety Company covers 100% principal and interest and mitigates risks, reduces defaults, and provides better cash flow.
  • Portfolio review and credit analysis provides guidance around the price at which the portfolio might transact.

ReliaMax has been involved in many third-party portfolio transactions. For example, in December 2106, MetaBank acquired a $151 million student loan portfolio which ReliaMax Surety Company now insures. The transaction also included the conversion of the portfolio servicing onto the ReliaMax Platform. Over the last three years, ReliaMax has provided insurance and/or servicing on 12 portfolio placement transactions.

The Top Small Business Funders By Revenue (deBanked), Rated: A

Square $1,700,000,000 $1,267,000,000 Went public November 2015
OnDeck $291,300,000 $254,700,000 Went public December 2014
Kabbage $171,800,000 $97,500,000 Received $1.25B+ valuation in Aug 2017

Lendio Partners with Ocrolus to Automate Bank Statement Analysis (PR Newswire), Rated: A

Lendio, the nation’s leading marketplace for small business loans,today announced a partnership with Ocrolus, the emerging leader in bank statement review automation. The PerfectAudit API, powered by Ocrolus, analyzes uploaded bank statements with 99+% accuracy, replacing manual review with automation. Ocrolus technology allows lenders, for the first time, to review every potential borrower’s bank statement data automatically, regardless of whether or not the borrower provides sensitive bank login credentials.

In April, Lendio became the first lending marketplace to integrate with Ocrolus, whose clients include banks, alternative lenders, accounting firms, law firms, and government entities. The PerfectAudit API gives Lendio the ability to systematically combat bank statement fraud and conduct a hyper-accurate review for every potential borrower.

Outsiders and Insiders Are Behind the Fintech Revolution (JD Supra), Rated: A

From peer-to-peer lending to online banking, the fintech industry is a rapidly growing area for technology investment. In the first quarter of 2017 alone, U.S. venture capital-backed fintech start-ups raised $1.1 billion across 90 deals, according to CBInsights Global Fintech Report. The only region to outdo the U.S. during this same period was Asia, which reported for the same group investment of $2.7 billion across 226 deals.

There exists a wide range of technologies that fall under the definition of fintech, and each is seeing significant growth. One such technology is artificial intelligence, which, according to the PricewaterhouseCoopers 2017 Global Fintech Report, 30 percent of large financial institutions are investing in. For example, another factoid from a separate PricewaterhouseCoopers report, projects that, by 2020, AI will automate a considerable amount of underwriting.

Mobile payments are another rapidly growing area of fintech, with TechCrunch reporting that there will be an estimated $60 billion worth of payments made on mobile platforms in 2017. The site also predicts that, by 2020, 90 percent of smartphone users will have made a mobile payment, which serves to underscore just how commonplace this fintech will be within a very short time.

AON: ALTERNATIVE RISK PREMIA VIABLE FOR MANY (AllAboutAlpha), Rated: A

A new report from Aon discusses the contemporary market for alternative risk premia: where it is, how it got here; where it may be headed.

The authors, Matthew Towsey and Chris Walvoord, begin with some very basic considerations of what ‘risk premia’ are. They are, on the one hand, the payments one receives for taking on a risk that others do not wish to hold (providing insurance), or they are on the other the winnings one pockets on strategies that take advantage of market anomalies.

A Q&A With NerdWallet CEO Tim Chen: ‘We’re Making An Impact’ (Benzinga), Rated: B

How does NerdWallet create its content and recommendations? Do data and algorithms play a role in your platform? I’m curious about the company from a fintech perspective.

It’s actually a mixture of both — algorithms and incredibly smart, financially savvy humans power our recommendations, reviews and expert advice.

The company seems to simplify financial information for everyday consumers. Do you think NerdWallet has helped to democratize the space?

That’s the goal! I truly believe that a person that has spent no time at all thinking about personal finance and can’t afford a financial advisor, should be able to make the same quality of choice as the most financially savvy person in the country

SDIRA TV Offers New Strategies Amidst Massive Equifax Hack (PR Web), Rated: A

Experts deliver new alternative investment advice and resources for individuals being impacted by the giant 2017 Equifax data breach. This includes all new episodes of SDIRA TV with national finance experts and investment advisors, as well as a side by side comparison white paper on retirement investing options.

Deeper concerns have surfaced as it was discovered three Equifax executives sold off substantial amounts of personally held stock before making the breach known.

20 Places You Can Raise Funding for Your Business (TechBullion), Rated: B

  1. Crowdfunding

There are several platforms where you can create your crowdfunding campaign. Examples include KickstarterIndiegogoand Go Get Funding.

  1. Peer-to-Peer Lending

Peer-to-peer lending involves a group of people coming together to lend money to each other. You can look for an entrepreneur peer who is willing to fund ideas similar to yours.

  1. Online Lending

There are several online lending service providers. Good examples are Kabbageand OnDeck.These online lenders will process your application within hours as opposed to traditional lenders.

 

My Take On Real Estate Crowdfunding (ValueWalk), Rated: B

Many of these platforms seem to market to investors, showcasing high dividend yields in the 8% – 10%/year range.

I read the following two articles in my research:

In general, those are new untested platforms, which may or may not do well for you over time. These investments have not been time tested during a recession. In addition, I do not understand very well how investment assets are segregated in those platforms, and how things would work out if a project you invested in fails miserably.

As Financial Processes Go Digital, Detroit Looks To Siphon Talent From New York, Chicago (Benzinga), Rated: B

He’s talking about fintech, which has leveled the playing field for non-New Yorks to flourish in financial services. Inspired by emerging tech trends, Raznick and Benzinga are taking stakes in Michigan’s future by spearheading the new Detroit Fintech Association.

The nonprofit trade organization will enhance the community’s exposure, connect startups with national leaders and mentors, support talent recruitment and magnify the Detroit voice in U.S. regulatory discussions. The DFA also aims to improve financial literacy in the city through work with Detroit high schools and higher education institutions.

FHA Loan Originations Expected to Generate Servicing Portfolio Growth Leading to Servicers Taking on Greater Non-Performing Loans and REO (Marketwired), Rated: A

Altisource Portfolio Solutions S.A. (“Altisource”) (NASDAQ: ASPS), a provider of real estate, mortgage and technology services, today issued the results of its inaugural Default Servicing Survey, a survey of over 200 mortgage default servicing professionals. According to the study, nearly three-quarters (71 percent) of servicing professionals surveyed predicted FHA/VA loan volumes would increase within their organizations in the next 12 to 24 months; 41 percent believed FHA loans will offer their organizations the most portfolio growth over the same time period.

According to the U.S. Department for Housing and Urban Development, FHA loans accounted for over 17 percent of newly originated mortgages in 20161 and currently constitute 35 percent of all loans delinquent for 30 or more days2. As the issuance of FHA loans grows, so does the potential increase in volume of default assets. Thus, it is not surprising that 93 percent of servicing professionals surveyed stated that foreclosure/trustee and Claims Without Conveyance of Title (CWCOT) capabilities are important factors to consider when evaluating a vendor to manage growing default portfolios.

Servicing Professionals Cite Challenges Stemming from Costs of FHA Conveyance and Managing CWCOT Programs

Servicing professionals (29 percent) cited remitting fees, costs and financial obligations associated with FHA conveyance as the greatest challenge for effective CWCOT programs. For servicing professionals working with third-party vendors to manage CWCOT portfolios, 15 percent said overall vendor management is a challenge associated with managing CWCOT programs while another 15 percent pointed to timeline delays and increased costs due to attorney oversight; 11 percent cited not having enough in-house personnel on staff to effectively manage the program.

Third-Party Expertise and Central Coordination are Critical to Successful CWCOT Program Administration

In order to overcome the financial, regulatory and oversight challenges associated with their vendors’ CWCOT programs, servicers must carefully evaluate their third-party vendor strategy to ensure vendors possess the right expertise and resources to execute the program. Most servicing professionals surveyed (97 percent) said they are exploring options including a single-vendor approach to help achieve their objectives; 91 percent identified FHA asset management experience as an important criterion for vendors. When specifically evaluating single vendors, 72 percent of servicing professionals surveyed said consistency and efficiency in managing REO properties is a very important consideration; 69 percent also pointed to compliance management.

United Kingdom

Equifax says as many as 400,000 UK consumers may be affected by data breach (Financial Times), Rated: AAA

Equifax, the US credit-reporting company at the heart of a cyber-security scandal, has admitted that as many as 400,000 UK consumers may have had their personal information stolen.

The company said that while its UK systems were not affected by the massive cyber raid that targeted information for as many as 143m Americans, UK customer data “may potentially have been accessed”, because it was stored on US systems between 2011 and 2016.

If Equifax’s forecast is borne out, the data breach will be the biggest in UK cyber history, bypassing that of payday lender Wonga, which affected more than 250,000 customers.

RateSetter launches consumer hire-purchase product (P2P Finance News), Rated: AAA

RATESETTER has launched a hire-purchase (HP) product for individuals looking to buy vehicles.

Consumers will be able to borrow up to £25,000, but the peer-to-peer lender expects the agreements typically to be around £6,000. The terms range between 12 and 60 months, with APRs going from 19.9 per cent to 49.9 per cent depending on the customer’s creditworthiness.

Assetz Capital Reports “Development Funding Boom” with 175% Increase (Crowdfund Insider), Rated: A

Peer to peer lender Assetz Capital is reporting it has seen a year-on-year increase of 175% in the number of property development projects funded around the UK. The online lender says this rise comes following sustained growth in the funding pool for property developments, as investors hunt for a piece of the development market.

There are two new types of Isa – should you switch to them? (The Telegraph), Rated: A

But as new types of Isa have emerged and new rules have been introduced, the situation has become more complicated.

And some Isa features – notably “flexibility”, which allows account holders to make withdrawals and then pay the money back in during the same tax year while keeping the tax benefits – have not been introduced by all providers, which has further muddied the waters.

A Help to Buy Isa, a type of cash Isa, is also an option. First-time buyers can deposit £1,200 in the first month and £200 a month thereafter to put towards a home purchase. The Government then tops up savers’ money by 25pc.

However, you can’t pay into a normal cash Isa and Help to Buy Isa in the same year, unless you choose a provider that allows you to split the cash. Nationwide and Aldermore both offer this option; they pay 2pc and 1.75pc respectively.

Lifetime Isas 

The Lifetime Isa is the newest addition to the Isa family.

Consumers between the ages of 18 and 40 can use the accounts to save towards their first home or retirement. Up to £4,000 can be put away each year into either a cash Lisa or a stocks and shares version. Eligible savers can continue to contribute until the age of 50.

Hargreaves Lansdown, Britain’s biggest fund shop, and rivals including AJ Bell, The Share Centre and Nutmeg, an online wealth manager, offer investment Lisas.

Innovative Finance Isas 

These Isas shield peer-to-peer investments, which allow consumers to offer unsecured loans to individuals and businesses through online platforms such as Zopa and Ratesetter, and certain “crowdfunding” investments, from tax.

Lending Works was the first to offer the new Isa, paying the same return as the firm’s existing accounts.

Zopa allows existing customers to sell their loans and buy them back within the Isa. They can also transfer their Isas with other providers to Zopa.

Networks are the new corporations (Inside Bitcoins), Rated: A

There are a lot more people in the world that can collectively lend micro loans on a regular basis than there are corporations that can regularly distribute loans above the value of a thousand dollars.

“A network of independent lenders committed to distributing micro loans could potentially rival long established financial organisations in terms of the combined value of peer to peer loans serviced to borrowers on a world wide scale” says Richard Ochieze, Managing Director at Ledgermark, LTD.

The case for Digital Collateral

The internet makes non repayment of loans a marvellously simple task for borrowers and as such; organisations like the Funding Circle, a peer to peer lending firm, are left wide open to have the profits of their retail investors depleted due to this lingering risk.

Traditional financial institutions have been able to maintain a fortress of checks and balances such as strict collateral requirements for both business and personal loans in order to provide themselves with a means of recourse should a borrower fail to repay his debt.

In this digital age in which peer to peer transactions are becoming the norm, this same form of protection must be made available to the average individual who wishes to loan his money out to borrowers in return for profit.

However, the question must be asked: how can a borrower pledge his house or farm as collateral via an online loans application?

Prior to the invention of the Blockchain such an asset did not exist and now that it does, the door has been opened to allow individuals based anywhere in the world to distribute and/or become the recipient of a secured micro-loan.

Can a robot help you invest for retirement? (AOL), Rated: A

Robo-adviser Wealth Wizards, for example, typically charges £65 for advice on investments of up to £30,000, and 0.30%, or £300, for guidance on what to do with a £100,000 retirement savings pot.

A typical financial adviser, meanwhile, charges about £580 for telling you how to invest a £200-a-month pension contribution, or between £1,000 and £2,000 for at-retirement advice on your £100,000 pot, according to figures from UK adviser network Unbiased.

JustGiving targeted by criminals for money laundering (BBC), Rated: B

Fundraising website JustGiving has said criminals are attempting to use its site to launder money.

The website told the BBC it had shut down nearly 100 of its appeal pages in the past 18 months because it believed they were fraudulent.

When discovered, no payments were processed, he said.

China

China will step up supervision of overseas investment risks – insurance regulator (Reuters), Rated: A

China will strengthen its supervision of overseas investment risks and capital flows from insurance funds, the insurance regulator said on Monday, adding that it will urge companies to improve their risk monitoring systems.

The China Insurance Regulatory Commission (CIRC) will step up supervision over the use of insurance funds, with focus on “chaos” such as irrational stock market fundraising and overseas acquisitions, said Guo Jing, vice head of the finance and accounting department of the CIRC.

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

Shanghai-based BTCC is the largest and first domestic bitcoin exchange in China. On September 14th, BTCC announced that it would immediately stop new user registration and close operation in China on September 30th.

The 2nd China Fintech Conference (2017) will be held on September 17th, 2017 in Beijing.
IDC Financial Insights announced the 2017 Fintech Rankings and Real Results at Finovate Fall New York 2017. This year, 4 Chinese companies won the honor to be named in the 2017 IDC Fintech Rankings. They are Ping An Technology (38), Hundsun Technologies Inc. (54), Pactera Technology International, Ltd. (55) and ECCOM Network System, Ltd. (64).
Last week, China’s financial and educational regulators announced to ban online lenders from offering loans to college students, and encouraged commercial banks to offer micro-credit products for the campus market. As a response to the call, Industrial and Commercial Bank of China (ICBC) has launched its own student loan product Rong e Loan this week.
European Union

Order not going to “Pending” with Klarna (Drupal), Rated: A

Project:  SOFORT Banking for Ubercart
Version:  7.x-3.1

Sofort has been bought by Klarna. Although everything should function as normal according to Klarna, since the switch the order is not going into “pending” after checkout — order status is “in checkout”.

commented 

This is a good place trying to get this sorted. My questions are:

  • Is this a new shop or one that runs for a while and worked OK before?
  • From the screenshot it looks like Sofort sends notifications pretty often, is that true?
  • The expectation is that the first of those notifications should switch the status to pending and confirming that to Sofort so that they know you got it and then they wouldn’t notify you again, right?

commented 

That’s exactly why this is failing. The Ubercart payment module wants to write into its table the value Aus sofort-Überweisung wird Klarna into the field method.

You should notify Sofort AG about this problem and I will do the same.

International

Klarna partners with global technology company Wacom (Klarna), Rated: AAA

Today we are proud to announce a new partnership with global technology company Wacom® that further accelerates Klarna’s expansion in the U.S. Wacom is now bringing our simple retail financing solution to the world of creative interface technology and software.

Financing a purchase over time has historically been optimized for brick and mortar stores. But the online equivalent can often be an ordeal, with redirects, lengthy forms and unclear information. Our process only requires a few fields of information, and lets consumers know instantly if they qualify for the financing solution.

How Incumbents Can Take on FinTech Challengers (LendIt), Rated: A

Digital technology has changed financial services. It has facilitated innovation, increased competition and made the mobile customer experience the key differentiator.

This embodies a strategic threat with McKinsey estimating that legacy financial institutions will see profits decline by up to 60% by 2025 if they fail to evolve, a figure which should be motivating incumbents to look outside of traditional practices for growth and sustainability.

Millennials and digital natives have turned away from traditional banks in search of mobile alternatives. They are drawn to the best products and experience, and banks with the right level of service can win over this large market. Mobile-only banks like N26 are leading the way.

SME lending also offers a significant opportunity for growth. The European Commission’s SME Performance Review estimated just under 23 million small and medium enterprises generated €3.9 trillion in value add and employed 90 million people in 2016-2016, and McKinsey has identified a $350 billion untapped lending opportunity within this sector.

One path is acquisition, which banks like BBVA have followed by acquiring companies like Finland’s Holvi and neobank Simple. This is an expensive option complicated by having to find a company with the right fit for the business.

Given the technology available, a cleaner option would be to build a digital banking spinoff which can operate like a FinTech.

Meridian Proposes to Bring Peer to Peer Lending into the Age of the Blockchain (Crypto Insider), Rated: A

The far reaching nature of the internet has allowed the myriad of local economies that exist in the world to become merged into one, global, interwoven marketplace.

Despite this, it is still incredibly difficult for people to get a loan from an international organisation – without offering some form of collateral and/or proving credit worthiness.

The average size of deposit needed to get a mortgage is 62% of annual income, and in London, it’s 131%.

As a result, only 20% of 25-year-olds own their home today compared with 46% 20 years ago – less than half.

If you have a bad (or no) credit history, it is virtually impossible to borrow from a mainstream lender.

Banks and building societies advertise temptingly low rates, but they only need to apply to 51% of successful applicants, so almost half of all borrowers pay a different rate – probably higher.

Director of Ledgermark LTD, Richard Ochieze, explains:

An alternative should be offered to people who are being let down by the traditional banking system. We believe that the Meridian system can do a lot to alleviate some of the problems that exist in today’s online lending market.

The Meridian service offers users the opportunity to procure a loan of up to one Bitcoin at a time.

To qualify for a loan users must pledge a certain amount of Meridian tokens as collateral.

Meridian tokens can be purchased during the ICO on 12 October 2017 and will then become tradable on all alternative currency exchanges.

India

Google gets into digital payments fray in India (Banking Technology), Rated: AAA

Google is expected to launch a mobile payments app in India next week, according to several news reports. Google Tez, which means “fast” in Hindi is the anticipated name of the payments service, which Indian news outlet The Ken says is “largely fashioned on the company’s global product – Android Pay“.

As TechCrunch notes, “this is a big deal because Google hasn’t made a big push into payments outside of the US.”

ICICI plans payday-type loans in pact with e-tailers (India Times), Rated: AAA

In a first of its kind for India, ICICI Bank will partner with e-commercefirms to provide automated payday loan-type credit to customers at the bottom of the digital pyramid. Unlike other software-based loans, the digital credit planned by the bank will be available to non-customers and new-to-credit borrowers.

Speaking to TOI, Anup Bagchi, executive director, ICICI Bank, said that the bank would price these loans similar to credit card advances. In the West, payday loans are advances that fund the low-income individuals to make up for cash shortfalls until their salary. The difference in the ICICI Bank loan is that for the first month, the buyer will get free credit for up to 45 days. It is only if they do not pay on the due date that borrowers will be charged interest at close to credit card rates.

The bank will lend to new-to-credit customers based on their track record with the e-commerce provider.

Here’s why RBI wants to regulate online P2P lending (VC Circle), Rated: A

“The RBI is concerned that this can go big and get out of control,” says Harish.

Faircent—which is backed by financial institutions like JM Financial, venture fund Aarin Capital and Mohandas Pai-promoted 3one4 Capital—is seen as the largest online P2P lender in India. Other names include Lendbox, Rupaiya Exchange and LenDen Club.

There are typically three models through which such lenders operate, says Aditya Kumar, founder and chief executive officer at Qbera.com, an online lender that began operations in February this year and claims to have a Rs 10 crore loan book. “While there are at least 30-40 P2P players, who connect lenders to borrowers, 15-20 do marketplace lending (where money is raised from banks and other financial institutions) and then there are loan aggregators who have been around for longer,” says Kumar.

While Kumar says the total P2P lending market size would be around Rs 25 crore, Rajat Gandhi, founder and CEO at Faircent, puts the figure at Rs 50-70 crore on an annualised basis.

Figures available with Peer2Peer Finance Association (P2PFA) suggest that the global P2P lending market saw cumulative lending of £8.5 billion during the first quarter of 2017, against £5.8 billion three quarters before. In the same period, the number of lenders grew by a fifth from 1.5 lakh to just over 1.8 lakh.

How to boost your retirement income with P2P Lending (India Times), Rated: A

The discourse around P2P lending has always been centered around what it means for borrowers and the advantages they can derive. However, what gets missed is that P2P lending has the potential to be a great source of investment for the lenders contributing to their retirement fund.

P2P lending is an investment delivering multiple benefits when building a retirement plan:

1. Add Lending to your Portfolio Mix: The adage that talks of not putting all your eggs in one basket still holds true. An investor should not limit his portfolio to only a few asset class, but focus on investing across investment opportunities so that market fluctuations do not have a huge negative impact on their retirement funds.

2. Steady and high returns not Linked to Stock Markets: P2P lending adds to building such a diversified investment portfolio while delivering returns that are not merely comparable, but often preferable to returns from other investment instruments such as mutual funds, stocks, and SIPs.

Lenders on Faircent.com are earning gross returns to the tune of 18% to 24% per annum on an average by building a diversified loans portfolio.

3. Income Generation & Power of Compounding: Another reason that P2P investment does well is because investors can compound their earnings. Lenders are earning back part of their investment, both principal and return, every month.

Asia

Get Me My Wedding Present: How We Run a Micro-Lending Business in Cambodia (Cointelegraph), Rated: AAA

MicroMoney co-founder and CEO Anton Dzyatkovsky on attracting new customers, recruitment issues and risks in greenfield countries.

Now that we’ve opened new offices in Myanmar, Thailand and Sri-Lanka, our decision to start with Cambodia can be seen as a definitive step which enabled us to embrace the largest community of unbanked people in the region, bringing the advantages of Blockchain as the key technology for global financial inclusion.

Cambodia is all about banks

For us as Europeans, the first surprise was the population’s absolute trust in local banks.

The US dollar is as used in Cambodia as the local currency is, and the exchange rate has remained stable for over 20 years. State regulators do not exercise particular pressure on the financial industry, and by the time we stepped into the game, 50 organizations had been involved in the consumer loan industry, each with an average capital of $1.5 mln and an ARPU of $5,000.

30-day overdue loans in Cambodia account for only 0.9 percent of the total, so the PAR ratio (portfolio at risk) is quite profitable (according to the local Central Bank).

Our Cambodian lessons

  • A growing share of the middle class due to the growth of GDP. For instance, Cambodian GDP grew six percent in 2016.
  • A market capable of generating cheap leads. We discovered all Cambodians belonging to the target audience have at least one active Facebook account, and for them Facebook often equals Internet in general: every national mobile operator provides free access to Facebook.
  • Dormant or non-existent competition. in Cambodia there were no paperless lending services without an escrow of land or real estate property.
  • Eager audience in need of a product. when we were checking out the market, we found only five percent of the population had a credit record. According to McKinsey, the number of ‘unbanked’ people in Asian region overall ranges from 65 to 80 percent of the adult population.
  • Collaboration at the local level. It helped us understand local customers and comply with local regulations (in this case you must be ready to assign 51 percent of your newly established company to a local partner).

Peer lending for small businesses (The Star), Rated: A

Funding Societies, which started in Singapore in 2015, is one of the first peer-to-peer (P2P) financing companies to open its doors here in Malaysia in February this year. It is also present in Indonesia.

Wong, who learned about alternative financing while studying at Harvard Business School, says P2P is well-suited for the Malaysian and South-East Asian markets where there is a big gap in SME financing. He estimates financing needs for small businesses in Malaysia to be at RM80bil.

According to Research and Markets, the global P2P lending market was valued at US$26bil in 2015 and is projected to reach US$460bil by 2022, growing at a compound annual growth rate of 51.5% from 2016 to 2022.

Funding Societies has made it to the Fintech 250 list, which is recognised and regulated by Securities Commission Malaysia, to provide financing to SMEs. The company also provides flexible investment opportunities with rigorous risk assessment and returns of up to 14% per year for investors, says Wong.

So far, the company has done more than 800 deals and disbursed more than RM180mil in financing to SMEs in Malaysia, Singapore and Indonesia.

Default rate in the region is low at about 2%.

Bank approves online accounts in foreign currencies (Taipei Times), Rated: A

Taiwanese could soon be able to open bank accounts denominated in foreign currencies on the Internet after the central bank on Thursday gave its go-ahead to the plan.

Local banks could seek approval for the new accounts by the end of this year, or 60 days after the introduction of the new regulations, the central bank said in a statement.

Taishin, the banking arm of Taishin Financial Holding Co (台新金控) and the nation’s largest online lender by the number of accounts, told reporters that it aims to be the first applicant when the notification period begins.

Africa

Outsurance buys CoreShares stake as it launches robo-adviser (BusinessDay), Rated: AAA

Outsurance is to acquire a 25% stake in passive investment manager CoreShares, as the insurance company’s robo-adviser, Outvest, goes live.

The acquisition complemented Outvest, an online, automated advice business, the companies said in a statement on Monday.

In SA, financial advisers, to more effectively service their clients, are predominantly using these platforms, although there are platforms available to retail investors.

 

Authors:

George Popescu
Allen Taylor

Thursday July 27 2017, Daily News Digest

fintech adoption millennials

News Comments Today’s main news: Betterment expands financial advice to all users. Lendio originates $500M in business loans. UK fintech funding jumps 37%. Linked Finance secures more than 1M Euro for Waterford businesses. Fintech adoption in Canada doubles in 18 months. Today’s main analysis: Marketing fintech solutions to millennials. Today’s thought-provoking articles: The SEC investigative report that will put […]

fintech adoption millennials

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Middle East

Africa

Canada

News Summary

United States

After raising $ 70M, Betterment expands financial advice to all users (TechCrunch), Rated: AAA

On the heels of announcing a fresh $70 million in funding led by Swedish investment firm Kinnevik AB, Betterment is launching a new messaging feature that will allow users to ask questions and get answers from its team of financial advisors.

With its new messaging product, Betterment is offering up personalized financial advice to a larger portion of its user base — that is, anyone with an account. Customers can send secure messages through the Betterment app to ask for financial advice and get a response within one business day from one of the company’s experts.

Lendio Surpasses $ 500 Million in Business Loans Originated Through Its Online Marketplace (PR Newswire), Rated: AAA

Lendio, the nation’s leading marketplace for small business loans, today announced that it has helped facilitate more than $500 million in financing to over 21,000 small businesses across the U.S. Lendio helps fuel the American Dream through its marketplace of over 75 small business lenders in all 50 states and parts of Canada. The growth milestone comes after a 141 percent increase in loans originated through the Lendio platform in the last fiscal year.

Small business lending indices show that small business borrowing is at its highest level in nearly a year. According to Thomson Reuters/PayNet, business owners are investing to meet customer demand, which is driving the economy. Data from Lendio’s platform is telling a similar story, and it’s not just businesses on the nation’s coastlines that are thriving. A heat map of Lendio’s top states for small business loans, based on loan volume, shows small business growth is booming in America’s heartland, the southern states and beyond.

The average loan size among Lendio’s small business customers is $26,873. The top five industries funded on Lendio’s marketplace include construction, restaurants, retail, healthcare, and manufacturing. Lendio also helps small businesses get loans fast, with 70 percent of businesses getting funding within five days of submitting an application.

MARKETING FINTECH SOLUTIONS TO MILLENNIALS (Envisionit), Rated: A

One of the key factors that set millennials apart from other generations is their adaptation of technology into their everyday lives. They are hyper-connected: disproportionately drawn to mobile and wearable devices for their day-to-day needs; far more likely to make purchases on them instead of computers or in person; and constant users of social media.

Source: Pew Research Center, Social Media Survey, April 2016

Not only are millennials more likely than Gen X’ers and Baby Boomers to use fintech products now, they are expected to use them even more in the future.

  • 68% say that in 5 years, the way we access our money will be totally different
  • 70% say that in 5 years, the way we pay for things will be totally different
  • 73% would be more excited about a new offering in financial services from Google, Amazon, Apple, Paypal or Square than from their own nationwide bank
  • 33% believe they won’t need a bank at all in 5 years
Source: EY, EY Fintech Adoption Index, 2016

Although awareness and lead generation campaigns can still be effective, millennials also look for reviews, comments, and other content that will help them trust the brand.

  • 33% say they read blogs before making a purchase
  • 62% say that if a brand engages with them on a social network, they are more likely to become a loyal customer
Source: Google/Millward Brown Digital, B2B Path to Purchase Study, 2014

Here is the SEC Investigative Report on ICOs that Will Squelch Emerging ICO Market (Crowdfund Insider), Rated: AAA

The Securities and Exchange Commission (SEC) issued an investigate report on the fast growing Initial Coin Offering (ICO) market that will squelch the ICO market, at least in the US. This investigation compelled the SEC to determine that DAO Tokens represented securities as defined under the Securities Act of 1933 and the Securities Exchange Act of 1934.

Get the full report now.

The New Breed of Small Business Lenders: Amazon, Paypal and Square (Lend Academy), Rated: A

If asked where to get a small business loan most people would state their local banks or even some of the bigger traditional banks. Those aware of the online lending space may mention the likes of KabbageOnDeckFunding Circle or maybe even some of the new online initiatives of big banks like Wells Fargo’s FastFlex product. However there is another, often overlooked segment of small business lenders and they are names you have heard of: AmazonPaypal and Square.

Since Amazon is a marketplace for sellers they have an incredible amount of data on the cash flow of businesses that operate on the platform. They also have a significant pool of borrowers, resulting in virtually no customer acquisition costs.

Not only can Amazon select the borrowers they want to lend to but lending also helps grow the sales on Amazon.com. Pajitnov initially borrowed $1,000 dollars but eventually borrowed $19,000 to buy out a competitor.

Square is able to efficiently underwrite small businesses and have repayment be based on sales. Square’s average loan size is just $6,000. According to Square’s Q1 2017 earnings release Square Capital facilitated over 40,000 business loans totaling $251 million in the first quarter of 2017, up 64% year over year. The company is reportedly looking to lend to consumers as well.

Digital or doomed? What credit unions need to be top of wallet (Credit Union Journal), Rated: A

Outstanding service on its own isn’t enough for credit unions to get top-of-wallet status with members.

This past quarter, Clark noted, Venmo processed $6.8 billion in total payment volume, double the amount from the same quarter one year prior. These companies are not just processing payments, he said, they are capturing information that can be used to improve the customer experience and build brand loyalty.

Clark pointed to online personal finance company SoFi, which, by leveraging digital, has turned the concept of “scale” on its head. The company has funded $19 billion in loans to 300,000 members, and has resulted in $1.45 billion in member savings.

Clark said credit union management must focus on delivering via digital channels, because payments are now the leading indicator of PFI status, and offering speed, agility and a frictionless experience are critical to growing PFI.

How Real Estate Investing Is Spurring Millennial Home Ownership (Forbes), Rated: A

Millennials are the largest group of home buyers for the fourth consecutive year, according to the National Association of Realtors 2017 Home Buyers and Sellers Generational Trends Report. Nearly 40% of home buyers were under 36 years old.

But most importantly, in a joint Real Estate Investment Survey with Harris Interactive, RealtyShares found that 55% of millennials are enthusiastic about home ownership as an investment, and over half would invest in property other than their primary residence.

In fact, 70% of all Americans think investing in real estate is more difficult than investing in other asset classes. Few are aware of the options towards home ownership, such as borrowing from retirement, real estate crowdfunding or house hacking.

Not surprisingly, millennials believe technology makes the real estate investment process easier.

Realtor.com analyzed the top 10 cities where millennials want to live and (of the 60 largest U.S. cities) found the top were: Salt Lake City, Miami, Orlando, Seattle, Houston, Los Angeles, Buffalo, Albany, San Francisco, and San Jose. Millennials also want homes over 2,375 sq. ft. on average and nearly half surveyed in the March 2016 National Association of Home Builders study said they wanted at least four bedrooms, an outdoor space (deck, patio and front porch), shower and tub in the master bath and hardwood floors on the main level of the home.

CFTC Grants First Authorization to LedgerX to Operate as Clearing House for Digital Currency Derivatives (Crowdfund Insider), Rated: A

LedgerX, has received regulatory approval from the US Commodities and Futures Trading Commission (CFTC) to operate as a clearing platform for derivatives in contracts clearing in digital currencies such as Bitcoin.

This fund offers a more diversified way to dip your toes into alternative waters (The Globe and Mail), Rated: A

So-called “alternative investments” have long been the preserve of pension funds and well-heeled accredited investors, providing access to non-traditional asset classes such as private equity, infrastructure, hedge funds, emerging-market debt and limited partnerships.

Enter mutual-fund giant Mackenzie Financial Corp., which of late has been scooping up $30-million a month in a mutual fund designed to complement an old-fashioned balanced fund and the usual 60/40 asset mix. The Mackenzie Diversified Alternative Fund (“MDAF,” Series A and Series F) has a standard minimum investment of $500, in reach of any investor with a financial adviser. Launched two years ago, it has $350-million in assets, says Allan Seychuk, Mackenzie’s senior investment director of asset allocation.

Household Credit and Local Economic Uncertainty (USC Lusk), Rated: A

This paper investigates the impact of uncertainty on consumer credit outcomes. Individual-level data on credit-card balances and mortgages reveal strong borrower-specific heterogeneity in response to changes in an equity-based measure of county-level economic uncertainty. Low-risk borrowers reduce their credit-card balances and use of mortgage credit in response to increased localized uncertainty, while lenders expand the availability of credit to these borrowers. The opposite is obtained for high-risk borrowers. The economic magnitudes are especially large during the recent financial crisis. This evidence suggests that localized uncertainty about economic conditions might independently affect aggregate economic activity through consumer credit markets.

Source: Household Credit and Local Economic Uncertainty (USC Lusk)

Read the full white paper here.

Why Enova’s tech recruiters look beyond the languages on your resume (Built in Chicago), Rated: A

An early adopter of the Ruby on Rails framework, Enova is one of the city’s biggest Rails shops. But for developers looking to get a job with the online lender, prior Ruby experience is by no means a prerequisite. Enova hires for aptitude and personality, rather than resume bullet points.

What is the most interesting technological challenge to making that happen?

Caprio: Scale. Each year, we process as many loans as a small bank does — but we do it with orders of magnitude fewer people. The only way you can do that is with technology, analytics and massive amounts of efficiencies.

We also have to navigate a globally regulated environment. Each country has different rules and regulations. Some of our teams interact with five different regulating bodies in three different countries. It’s not easy to keep all of those in balance while still having upward of 60 software releases a week.

And then you need to adapt when those rules and regulations change.

Caprio: Recently, the laws in one state changed in a way that required a custom product. We were able to segment it, size it, spec it out and build it in about five weeks. You can’t even get a loan from a bank in four weeks, so the fact that we could actually create a completely new lending product in that time is a testament to what we’re capable of.

Why do you think other companies don’t offer opportunities like that?

Caprio: Our interview process is probably only 30 percent technical, and the rest is behavioral, problem solving and cultural add. We want to see what kind of partner you’re going to be, and what kind of co-worker you’re going to be.

Lahari Manam, technology manager: We also have something called fellowships. If someone has an exciting idea that requires more than a few days for research and prototyping, they can apply for a fellowship to work on it for three or four weeks instead of doing their normal day-to-day work.

Banks may have new foe in cellphone companies (American Banker), Rated: A

Banks have increasingly turned to cellphone devices in helping them to reach customers. But cellphone companies may soon be trying to offer financial services of their own.

In recent years, the country’s largest cellphone carriers have begun to experiment with new financing options for smartphones and other devices.

Easy to raise 28 million US dollars C round financing IDG capital growth fund leader (01Caijing), Rated: A

July 26 news, the domestic mobilization platform was easy to raise in early 2017 to complete the 28 million US dollars C round of financing, the current round of investment for IDG Capital’s growth fund leader, Tencent, IDG, Germany with capital, fellow capital Old shareholders with the vote.

Up to now, easy chip has a total of about $ 65 million financing. The company’s existing investors include Tencent, IDG Capital, Germany with capital, fellow capital, IDG capital growth fund.

Using Peer-to-Peer Lending As A Method For Startup Growth (Forbes), Rated: B

Typically, you can’t borrow more than $35,000, but for many small businesses or startups, that amount (or less) is just the infusion of cash they need.

Some of the immediate benefits of a P2P loan is that no collateral is required. Lower interest rates tend to be available, depending on your credit score, loan amount and loan term, because the peer-to-peer lenders operate with low overhead. You can repay the loan early and not have to contend with any prepayment penalties. Since it is an online lending environment, you’ll also enjoy faster approval and no paperwork except for a few online forms and a digital signature.

First, think about your current credit score to see if you qualify. These P2P lenders are not just giving out loans and want to see how fiscally responsible you are with loans. If you have a low credit score, you may have to work on improving it before this option becomes available.

United Kingdom

UK fintech funding jumps 37% led by Funding Circle, Zopa, Monzo (AltFi), Rated: AAA

The United Kingdom attracted £432m ($564m) of new venture capital investment in the first six months of 2017 representing an uptick of 37 per cent compared to the same period in 2016, according to research from Innovate Finance.

Alternative lending, challenger banks and wealth management  were the top three investment verticals for UK fintech investments with notably large cash raises from Atom Bank, Funding Circle and Monzo.

UK fintech investment smashes pre-Brexit levels so far this year (Independent), Rated: AAA

UK-based fintech startups pulled in $564m (£433m) of venture capital investment in the first six months of the year, more than half of which came from outside Britain.

The latest figures paint a promising picture, with investment up almost 50 per cent on the second half of last year in the aftermath of the Brexit vote.

That still lags 2015, when a record $676m was invested in the first half of the year and over $1.3bn for the entire year. But from July 1 to July 23, the sector has already raised another $155m.

Funding Circle Teams Up With Just Eat to Offer Discounted Business Loans to Takeaway Restaurants (Crowdfund Insider), Rated: A

Peer-to-peer lender Funding Circle has reportedly joined forces with UK-based Just Eat to provide takeaway restaurants with discounted business loans. Funding Circle will now offer nearly 30,000 restaurants that use Just Eat the discounted loans. The takeaway businesses will now be able to borrow up to £60,000 from the online lender.

Salamanca Group Completes Series A Funding for P2P Lender Proplend (Crowdfund Insider), Rated: A

Salamanca Group, a London-based Merchant Bank, announced on Wednesday it recently completed a Series A funding round for peer-to-peer lending platform, Proplend. The company states it facilitated the fundraising through its proprietary network and has also acquired a stake in the online lender.

Identifying the risks of crowdfunding (City A.M.), Rated: A

With the market recently hitting £10bn, crowdfunding is no longer a small fish in the big finance pond. But as the sector expands, it’s also becoming more complex.

In equity crowdfunding, for example, you may buy a small stake in an exciting new business, investing early in the hope of making maybe 10 times your money. The majority of new businesses will fail, so investors should create a broad portfolio on the assumption that over time a few big successes outweigh the failures.

In contrast, lending to more established businesses may not have the potential to make tenfold returns, but consequently the risk of losing your capital is typically lower. This is perhaps why 97 per cent of the £10bn crowdfunding market is in debt-based alternative finance.

Lending Works offers bonus of up to £200 to new and existing investors (P2P Finance News), Rated: B

LENDING Works is offering cash bonuses of up to £200 to new and existing investors for a limited time period.

The peer-to-peer consumer lender said that from Monday 24 July, investors will receive a £50 bonus for every £5,000 they invest. The offer expires on Sunday 20 August, meaning that customers could potentially earn up to £200, if they invest at least £5,000 in each of the four weeks.

Fintech startup Cleo secures £2 million in new round of funding (Tech.eu), Rated: A

Financial management app Cleo has raised £2 million led by Local Globe’s Robin Klein with participation from Atomico CEO Niklas Zennström and Albion founder Jason Goodman.

Launched in January, Cleo uses AI to monitor your bank accounts and manage your money. According to the company, it’s currently managing £400 million in assets where it handles user queries about balances, spending, savings, and bills. Insights are delivered through Facebook Messenger. Its key demographic is under-30s.

‘Leeds has phenomenal potential to become fintech hub’ (Yorkshire Post), Rated: B

YORKSHIRE has phenomenal potential to become a hub for financial technology – or fintech – companies because it is starting to attract fast-growing firms that have moved from London, according to a leading entrepreneur.

Daniel Rajkumar, the owner of investUP, which is based in the Leeds Digital Hub, believes that the region’s traditional financial services sector can join forces with technology firms to secure jobs and investment.

The peer-to- peer lending industry is growing at a rate of around 30 per cent a year.

Mr Rajkumar believes there is great scope to grow the region’s fintech sector, and initiatives like the Leeds Digital Hub are helping to promote collaboration.

Prodigy Finance Takes MBA From McKinsey In India To The UK’s Top-Ranked Business School (Business Because), Rated: B

Close to postponing her enrollment, Vinni was introduced to alternative student loans provider Prodigy Finance, a financial technology – fintech – company, founded by MBAs, for MBAs.

While banks are reluctant to lend internationally, Prodigy Finance’s borderless, peer-to-peer lending model gives international MBA and master’s students – from 150 countries worldwide – access to the loans they need to study abroad.

China

Moderate Regulation Necessary for ICO Projects: PBoC Advisor (Cryptocoins News), Rated: AAA

A senior aide and advisor to China’s central bank has called for the regulation of ICO (initial coin offering) projects while urging investors to show caution.

In an interview with prominent Chinese financial publication Yicai, Sheng Songcheng – a counselor to the People’s Bank of China (PBoC), claimed moderate regulation was necessary for ICOs.

Sheng believes the government should warn investors of the risks whilst ensuring that regulatory moves don’t trample on innovation.

European Union

Irish P2P Lender Linked Finance Secures More Than €1 Million for Waterford-Based Businesses (Crowdfund Insider), Rated: AAA

Irish peer-to-peer lending platform Linked Finance has successfully secured more than €1 million for Waterford-based businesses. According to the Muster Express, over 30 businesses in Waterford have raised funds through the lending platform to facilitate their business growth.

Zinsbaustein Crowdfunds Real Estate Project in Munich (Crowdfund Insider), Rated: A

Zinsbaustein is partnering with well-known development group Demos Wohnbau GmbH, a company with 50 years of expertise in Munich and the surrounding area. The investment crowdfunding platform is giving investors the opportunity to participate in a subordinated loan with as little as €500 at an interest rate of 5.25% per year. The project includes 95 apartments and associated parking spaces. Reportedly, 40% of the apartments have already been sold are have been reserved.

NEW REPORT: Shutting Down PSD2’s New Security Threat (PYMNTS), Rated: A

The July PYMNTS Digital Identity Tracker™, powered by Socure, features news on how security technology providers are using new technology, including biometrics and two-factor authentication, to protect customer data and comply with new regulations surrounding data security.

In fact, according to one recent study, 60 percent of transactions conducted by the start of the next decade will be authenticated and completed using biometric technology.

International

TECHNOLOGICAL LEAPFROGGING: WHY RICH COUNTRIES LAG BEHIND IN FINTECH ADOPTION (Meshed Society), Rated: AAA

The results of a study recently published by the consulting firm EY revealed that China and India have the highest adoption of FinTech services among its online population out of 20 countries. 69 percent of China’s and 52 percent of India’s digitally active citizens have used at least 2 FinTech services over the past 6 months.

In many developed countries on the other hand, where people have over many years learned to associate the Internet with the PC, smartphones still often are being considered a secondary device for many digital tasks; a device that people use only when they are not near a PC. This narrative has naturally been accepted even by the commercial players, which prevented a dynamic advancement of FinTech services similar to the the one which, for example, can be witnessed in China right now.

Source: Meshed Society

Global VC fintech investment attracts $ 6.5 Billion in H1 2017 (Finextra), Rated: AAA

Global VC investment for FinTech in H1 2017 attracted $6.5 billion of VC investment with 787 deals, a 45% decrease year on year, according to statistics compiled through Pitchbook by Innovate Finance, the not-for-profit membership association for global FinTech.

The US attracted the most investment both in deal value, which topped $3.3 billion, and deal volume, with 357 investments in total. Overall, the US experienced a 7.7% increase on H1 2016 deal value, but an 18.5% decrease in deal volume. Last year this quarter, the US secured 438 deals.

The top three global FinTech deals came from the US and China, with American firm SoFi raising the largest round globally at $453 million.

Atom Bank ($102 million), Funding Circle ($101 million), Zopa ($41 million), Monzo ($27 million) and Currency Cloud ($25 million) led the top 5 top UK deals. Collectively the firms attracted $296 million in funding.

Australia

Anna Bligh on open bank data (Innovation AUS), Rated: A

Speaking at the National Press Club on Wednesday afternoon, the former Queensland premier described the various technological changes that the banking sector is facing, singling out open data as the biggest on the horizon that will benefit consumers.

An open banking regime would force banks to share product and customer data with their customers and other third parties with consent.

Ms Bligh said Australian banks would welcome this new open data regime if a focus is placed on security and data safety.

India

How CoinTribe is eyeing disbursal of Rs 600 Cr to small businesses by 2019 (Your Story), Rated: AAA

Conceived in May 2015, their enterprise, CoinTribe, is a loan marketplace focused sharply on Micro-Small Medium Enterprises (MSMEs). The model facilitates not just loan or lead generation for banks, but also assesses a customer’s credit risk through proprietary underwriting engines and provides suitable suggestions.

The startup looks at mainly providing standardised business loans. The company’s website does mention personal loans, but that’s not a focus area.

Including all costs of operations, predictive NPAs (non-performing assets) and margins, CoinTribe gives unsecured business loans at interest rates ranging from 16 to 21 percent. But the average interest rate by portfolio is 19 percent.

Money Laundering And A $ 7.6 Bn Scam: A Grim Look At The Dark Side Of P2P Lending (Inc42), Rated: AAA

News of Ezubao bilking 900,000 investors out of more than $7.6 Bn surfaced soon afterwards. What followed was a country-wide hysteria as part of what is now considered the largest financial scam in Chinese as well as global history.

As per reports by The New York Times, more than 95% of Ezubao’s investment products turned out to be fake.

In April 2016, reports surfaced that Lending Club’s then-CEO Renaud Laplanchemade alterations in loan application documents in order to hasten the transaction process. Laplanche eventually stepped down amidst reports of employee embezzlement, scam and conflict of interest. Following the controversy, Lending Club, which was once valued at $8 Bn, saw a markdown to around $1.7 Bn.

To thwart competition, many companies tend to project lower delinquency rates than the actual numbers. Between 2007 and 2008, for instance, Prosper reported a loss rate of 26.1%. According to third-party verification, however, the company’s default rate during that period was actually around 36.1%.

In the UK, Quakle ceased operations in 2011, as a result of a near-100% default rate.

Known for lending money to individuals with a less-than-stellar credit score, Estonia-based Bondora reportedly has a loan default rate of more than 70%.

All the above factors bring us to the general lack of transparency that continues to plague the P2P lending market, more than 10 years after the world’s first peer-to-peer lending platform Zopa cropped up in the UK.

During the financial crisis of 2007-08, subprime lending was often supported by very little verifiable documentation and credit checks. The originators of the subprime mortgages served only intermediaries that, like the P2P lending platforms, did not have any “skin in the game”. Lenders, on the other hand, had to rely on third-party credit ratings and assessment that were at times unreliable. The lack of transparency was actually one of the major contributing factors behind the housing market scam in 2008.

The average ticket size of peer-to-peer investments in India ranges between $2,330 (INR 1.5 Lakhs) and $3,107 (INR 2 Lakhs). Since interest rates are not fixed, they can be below 10% but, at times, can also reach 30%-40%.

According to a report by Reuters, unsecured personal loans currently constitute 4% of all loans in India. In March 2016 alone, $47.4 Bn (INR 2,96,800 Cr) was issued as personal loans to the country’s 1.31 Bn population.

FinTech Firms Alibaba and Paytm in Talks over India’s Leading Online Grocer (Cryptocoin News), Rated: A

Asia

China, India deals lift Asian venture capital fintech financing to US$ 2.7b (SCMP), Rated: AAA

That was up from US$1.6 billion generated across 55 transactions in the same period last year, and marked the highest number of fintech deal activity in Asia for the past five quarters, according to a new report from venture capital research firm CB Insights.

Overall funding raised by venture capital-backed fintech start-ups in Asia last year hit a record US$5.4 billion across 165 transactions, compared with US$4.8 billion over 162 transactions in 2015.

The region’s latest quarterly fintech tally surpassed the US$2 billion raised in North America and about US$500 million in Europe during the same period. The global total was US$5.2 billion over 251 deals.

Asia’s top-ranked fintech deal, however, was the US$1.4 billion investment made in May by Japanese telecommunications and internet conglomerate SoftBank Group Corp for a minority stake in One97 Communications, the parent of Indian digital payments giant Paytm.

That was followed by the US$292 million Series D, or fourth round, fundraising by mainland peer-to-peer lending platform operator Tuandaiwang in the same month.

From Porn Filter to Credit Rater (Forbes), Rated: A

Remark has managed to collect data from almost every social media site on Earth: 1.3 billion active user profiles, 10 billion images, 15 billion posts and 50 billion comments are gathered from Tencent, Alibaba, Facebook, Twitter and others. Remark’s intelligence platform, KanKan, was assembled to analyze data and build facial-recognition algorithms to help live-streaming companies filter out pornography.

Now the New York-born Tao, 40, has decided that credit rating in China has a more stimulating future.

The company, with $59 million in revenues in 2016, claims to have signed up one of China’s largest banks for KanKan.

Middle East

Islamic crowdfunding: Spotlight on real estate (Gulf Times), Rated: A

MercyCrowd offers for the first time to the people in Qatar opportunities for international real estate purchases through crowdfunding. Not only that, the platform puts an emphasis on socially responsible investments, which means it offers international premium property to as many people as possible and not just the wealthy upper bracket, and also obeys ethical financing and actively promotes donations.

Via its platform, people can either become investors in lettable real estate with minimum investments as little as £50 and projected returns of between 4% and 10% annually plus a potential capital appreciation when the property is sold, or sponsors looking to fund their property through crowdfunding.

Africa

Uganda on the Fintech curve (IT News Africa), Rated: AAA

Fintech today has many variations, one of the most widespread being payments in the form of mobile payments, mobile wallets and payment apps. In Uganda, “mobile money” is the most ubiquitous of these.

Another category is investment management through the use of robo-advisors (machine learning and artificial intelligence) for wealth and retirement planning. We see Fintech in fundraising through equity and non-equity crowd funding platforms for access to private and alternative investment opportunities and online lending platforms. Fintech is also making its presence felt in deposits and lending, especially peer-to-peer or marketplace lending. Digital currencies such as Bitcoin have emerged and are growing in significance and popularity.

Fintech is an intersection of finance and technology and, in Uganda’s case, there is lack of clarity as to the main regulator. Should Fintech be regulated as Finance or as Technology?

Canada

FinTech adoption rate more than doubles in 18 months (Insurance-Journal), Rated: AAA

Canada’s FinTech adoption rate has more than doubled in the past 18 months, going from 8 per cent to 18 per cent since 2015, says EY’s 2017 Fintech Adoption Index released July 25.

 

Authors:

George Popescu
Allen Taylor

Monday April 10 2017, Daily News Digest

orchard platform key indicators

News Comments Today’s main news: FICO launches cloud-based origination solution for mid-market lenders. Monzo granted full banking license. FC SME Income Fund nearly doubles in size. Orca launches P2P comparison site. Supporting America’s Innovators Act passes. Today’s main analysis: Liberum/AltFi Financial Disruptors Index up 8.86% MoM, Yirendai down 16.06%. Today’s thought-provoking articles: How fintech is serving subprime lenders. Time to buy […]

orchard platform key indicators

News Comments

United States

United Kingdom

European Union

China

India

Asia

 

News Summary

United States

FICO Launches Cloud-Based Origination Solution to Help Mid-Market Lenders Automate Small Business Lending Decisions (Yahoo! Finance), Rated: AAA

FICO has launched FICO® Origination Manager Essentials to help smaller financial institutions make faster, smarter small business lending decisions. Delivered as a cloud service, the easy-to-use loan origination system streamlines and automates the decision process and gives smaller institutions access to the same powerful analytics in risk assessment for which FICO is known. Lenders using the solution can process small business loan applications in as little as 60 seconds, as opposed to days, which is still the average processing time for many lenders today when dealing with small business credit.

Currently, small banks and credit unions are challenged by nimble lenders who operate online and can give auto-approvals for loans in minutes. Origination Manager Essentials, delivers banks the same technical advantage so they can compete on experience and relationships rather than technology.

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

Source: Orchard Platform

How fintech is serving subprime lenders—inside Elevate Credit’s IPO (SRN News), Rated: AAA

 

 

Should Elevate Credit IPO Worry Other Online Lenders? (NASDAQ), Rated: A

Texas-based lending company, Elevate Credit, Inc. went public on New York Stock Exchange, priced at $6.50 per share. This was the company’s second attempt to be listed after postponing its IPO in Jan 2016 due to unfavorable market conditions.

On the first day of trading, Elevate Credit’s shares increased 10.9% versus LendingClub’s gain of 1.7% and On Deck Capital’s closing at the price it opened with. But this outperformance in terms of price might not be an indication of threat for the peers.

The model of lending and customer examination used by the company have not been experienced at times of recession and the changing interest rate environment, making it a risky investment as of now. Moreover, it reported high net charge-off rates in the last few years. Hence, other lending companies might appear more lucrative to investors at present compared to Elevate Credit.

5 Metrics to Help Advisors Master Online Commercial Real Estate Investing (Think Advisor), Rated: A

According to a recent study conducted by Accenture, 90% of advisors say clients are more educated about investing than they were five years ago.

However, even in this DIY-friendly arena, financial advisors still play a pivotal role in analyzing single-asset investment opportunities and providing expert guidance. In order to do so, they must educate themselves on the following five metrics:

  1. Capitalization Rates.
  2. Cash Flow.
  3. Capital Improvements.
  4. Occupancy and Lease Rates.
  5. Leverage.

US lending agents make inroads into peer-to-peer space (Global Investor Magazine), Rated: A

Major US lending agents are continuing to move into the peer-to-peer space, bypassing traditional lines of intermediation to connect clients with end borrowers.

The growing interest in peer-to-peer, or direct lending, has been spurred by the constraints being felt by typical intermediaries, including broker-dealers, which have limited capacity to service market activity to the levels they once did.

However, this non-traditional activity appears to be growing within the framework of the traditional banking system. Banks may not act as a credit intermediary, but their infrastructure and technology is sought after.

States Oppose OCC’s proposed Fintech Charter (JD Supra), Rated: A

Because of their opposition, the states are likely to mount legal challenges to any final rule. For instance, there is a significant open question about whether OCC’s enabling statute, dating back to 1863, even conveys authority to grant such charters. States might also argue that the charter represents a violation of state sovereignty. Absent a distinct shift in Supreme Court precedent, however, this position seems dubious because such companies are almost always engaged in interstate commerce and because the benefits of state regulation are easily outweighed by the access created by a unified federal system.

Investors want a blend of digital and traditional financial advice (Investment Executive), Rated: A

A slight majority of investors don’t want to deal with either upstart robo-advisors or established, traditional financial advisors. Instead, they want a hybrid scenario that marries the best of both worlds, according to a new report from global consulting firm Accenture LLP.

Specifically, 51% of investors in the U.S. and Canada across a range of asset classes who were surveyed for the report prefer combination of face-to-face, personalized advice and access to low-cost digital tools, rather than retaining only a dedicated advisor or relying on a robo-advisory service.

That sentiment is also shared among high net-worth investors with investible assets of between $1.5 million and $10 million as 56% of them say they need more than just traditional advice.

Cohn said to support Glass-Steagall (American Banker), Rated: A

Gary Cohn, the former president of Goldman Sachs and current director of the White House National Economic Council, told federal lawmakers in a private meeting that he could support legislation to reinstate the Glass-Steagall Act, which separated commercial from investment banking. According to the Wall Street Journal, Cohn said he “could support a simple policy completely separating the two businesses” and “expressed an openness to working with” Sen. Elizabeth Warren, D-Mass., an ardent critic of big banks, on the issue.

Supporting America’s Innovators Act Passes the House of Representatives (Crowdfund Insider), Rated: A

The US House of Representatives passed the Supporting America’s Innovators Act (HR 1219) today. The bill received solid backing with a vote of 417 for and 3 against. The bill now moves to the Senate for review.

The Act amends an exemption under the Investment Company Act of 1940 increasing the investor limitation from 100 to 250 people for qualifying venture capital funds. The bill would also eliminate a significant barrier facing small businesses and startups by incentivizing venture capital funds to grow their investments in rural-state entrepreneurs, helping local economies grow and thrive.

NYCUA and SimplyCredit agree to new business partnership (CU Insight), Rated: A

A new partnership between the New York Credit Union Association and San Francisco-based fintech company, SimplyCredit, aims to help New York’s credit unions combat online disruption and accelerate lending growth. Through the partnership, SimplyCredit will enable consumers to refinance high-APR credit card balances with participating New York credit unions using a seamless mobile and web interface.

SimplyCredit’s online tools enable members to not only apply for personal lines, but to also enroll credit cards and schedule balance transfers and line payments. As a result, many members are saving $2,000 or more in interest payments a year. Combined with this service are sophisticated analytics and marketing support that have achieved application rates of nearly 6% on marketing campaigns.

United Kingdom

Monzo, a UK digital-only challenger bank, granted full banking license (TechCrunch), Rated: AAA

Monzo, one of a number of so-called “challenger” banks in the U.K. aiming to re-invent the current account, has had the “restrictions” on its banking license lifted and says it will begin rolling out full current accounts to its pre-paid card and beta app users.

This can also include being able to lend those deposits out at some point in the future, which, like rival Starling and traditional banks, forms the basis of the company’s initial business model.

Funding Circle SME Income Fund Near Doubles In Size With Placing (ALLISS) (Morningstar), Rated: AAA

Funding Circle SME Income Fund Ltd on Friday said it has raised GBP142 million in a placing of 142 million C Shares at 100 pence, nearly doubling the fund’s size.

Shares in Funding Circle SME were up 0.4% at 103.25 pence Friday.

Orca launches peer-to-peer comparison site (Bridging&Commercial), Rated: AAA

Orca – a data, research and analysis provider to the UK P2P lending market – has announced the launch of its new platform, which offers unique standardised metrics to compare P2P investments.

The platform allows users to perform in-depth due diligence on P2P investments and benchmark them in a similar manner to a traditional asset class so that they can make risk-adjusted, informed investment decisions or recommendations.

The Orca platform will also offer market data on items such as interest rates, default rates, bad debt rates and a platform’s financial standing.

Forget about banks buying fintechs — this deal happened the other way around (Yahoo! News), Rated: A

StatPro, a fintech company long before fintech was even a term, on Friday announced a deal to buy UBS’ Delta platform for €13 million (£11.1 million).

Shares in AIM-listed StatPro jumped 10% on news of the deal, which both the company and house broker Panmure Gordon called “transformational.”

Industry urges for standard default definition (P2P Finance News), Rated: A

Peer-to-peer lenders are backing calls for a standardised definition of defaults in the sector.

Although actual default rates are low, the definition of when a loan has failed is not consistent across all platforms, making it harder for investors to compare.

Members of the Peer-to-Peer Finance Association (P2PFA), such as Zopa and RateSetter, define a loan as being in arrears if repayments haven’t been met for more than 45 days. A loan is then declared as being in default, and recoveries started, if the amount owed becomes 120 days late.

MoneyThing founder Ed Pearce says the business lending platform defines a default as when a borrower fails to repay for two consecutive months.

Property lender Kuflink declares a default at three missed payments at any point in the loan period. Meanwhile, an asset-backed loan from Lendy, formerly known as Saving Stream, is in default if the amount owed is not paid within 180 days, which the platform calls a tolerance period.

Despite the differences, the P2P rules are actually slightly more definitive than those in the mainstream banking sector.

There’s a simple reason why no sector is immune from becoming obsolete (City A.M.), Rated: A

Financial institutions exist to reduce transactions costs. Without them, somebody saving money for a rainy day or for their pension would have to seek out and assess the credit worthiness of a vast number of individuals or companies before lending them money. And, without securities markets and banks providing on-demand deposits, the cost of individuals realising their investments at convenient times would be huge.

Airbnb can thrive because the internet means that those who wish to rent out rooms temporarily don’t have to group them altogether in one building in a permanent business.

Peer-to-peer lending radically simplifies the “middle-man” in credit transactions; and other innovations are on their way in finance. In China, 2,000 platforms intermediate £100bn of peer-to-peer lending. And a combination of the development of drones, the internet and modern computerised logistics means that Amazon provides services from a warehouse in Dundee to people who have never heard of Dundee.

If you want to predict major developments in business and commerce, you should look at how technology will change transactions costs.

RateSetter’s Peter Behrens joins George Banco board (P2P Finance News), Rated: B

RATESETTER’s co-founder and chief operating officer Peter Behrens has joined the directors’ board of guarantor loan provider George Banco.

The specialist lender, which provides finance to borrowers with poor or no credit history by involving a third person who can step in if the former run into repayment issues, is looking to increase its penetration into the broader consumer finance market.

European Union

4finance Group Ensures Compliance with New Anti-Money Laundering Requirements Using Cloud Solution (PR Newswire), Rated: A

Silicon Valley analytic software firm FICO today announced that consumer online lender 4finance Group is using the FICO® TONBELLER® Siron® Anti-Financial Crime Solutions to ensure anti-money laundering regulatory compliance across its global network. Supported by the FICO® Analytic Cloud and Amazon Web Services (AWS), the FICO solution has been deployed by 4finance Group in nine EU countries and in Georgia in six months, and is being rolled out across the rest of the lender’s global network.

Headquartered in Latvia, 4finance Group uses the FICO modules Siron®AML (Anti-Money Laundering) to monitor customer activity, and Siron® KYC (know your customer) to do customer due diligence, including PEP (politically exposed persons) sanctions, and known criminals screening.

Kreditech Appoints Senior Global Consumer Bankers to its Advisory Board (Kreditech), Rated: B

Consumer finance technology company Kreditech has appointed two new independent Board Members to further strengthen its Advisory Board: Michael Lenora joined as Independent Chairman, Andy Golding as Independent Board Member. These recognized experts from the consumer finance industry will support Kreditech further in its mission to provide access to credit for the underbanked.

China

The Best Low P/E Chinese Stocks to Buy in April (Madison.com), Rated: AAA

Chinese tech stocks have a reputation for being pricey and volatile stocks. But if we look closer at this market, we’ll notice that several high-growth plays are still trading at surprisingly low multiples.

YY Is a Chinese social network, powered by family of apps, which enables users to share photos and stream live videos. Revenue from YY’s live streaming business rose 42% annually to 2.22 billion yuan ($319.5 million) last quarter, which accounted for 89% of its top line.

Yirendai is basically China’s version of LendingClub (NYSE: LC), a peer-to-peer (P2P) lender which directly connects investors to lenders while cutting banks out of the loop. This is a very hot market — research firm Yingcan estimated that China’s P2P industry brokered about 982 billion yuan ($142 billion) in loans in 2015 — nearly quadruple the amount brokered in 2014.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

On March 31, Ant Financial, the finance arm of Alibaba Group Holdings, revealed its new payment service for virtual reality shopping at the Shenzhen Innovation Week.

On March 28, Shanghai Insurance Exchange (SHIE) and nine insurance institutions announced that they had successfully verified the feasibility towards applying blockchain technology to their insurance exchange.

Omni Prime, a consumer finance provider, announced that it had completed the asset-backed securitization of RMB 500 million of notes in a transaction that closed on March 28. The asset-backed securitization was carried out as a joint effort of JD Finance, Hony Capital and Omni Prime. The consumer loans, which were rated as A notes and B notes, were purchased by JD Finance and Hony Capital, and Omni Prime.

On March 28, Ant Financial and China Construction Bank signed a strategic cooperation agreement to develop a QR code payment business.

On March 27the National Internet Finance Association of China held the Third Member Conference and announced to establish the P2P Finance Association. The association would be led by the People’s Bank of China, in conjunction with China Banking Regulatory Commission, China Securities Regulatory Commission, and China Insurance Regulatory Commission etc.

On March 28, Credit Intelligence Company Yongqianbao closed on RMB 466 million ($67 million) in Series C funding led by Golden Brick Capital and CICC Alpha. Other participants in the round included Cash Capital, Source Code Capital, WeWork and GX Capital.

On April 1, Chinese online finance and lending company China Rapid Finance announced it would file for an IPO on the New York Stock Exchange with a fund-raising target of US$100 million. Morgan Stanley, Credit Suisse and Jefferies will be the underwriters.

India

FinTech Tracker: Lendbox Joins The P2P Lending Club (Bloomberg Quint), Rated: AAA

Peer-to-peer (P2P) lending was among the first forms of fintech that Indian consumers were exposed to. In a country where access to formal credit has always been a problem, and loans from friends and family are common, P2P lending seemed like a no-brainer. And it didn’t disappoint.

Early entrants into the market like Faircent saw a strong response to their P2P lending platforms, which, in turn, has attracted newer entrants like Lendbox which launched P2P lending operations in November 2015.

At Lendbox, business has been growing at an average of 20 percent month-on-month over the past year, Bhuvan Rustagi, one of the three co-founders of Lendbox told BloombergQuint in a phone conversation. The platform currently has outstanding loans of Rs 20 crore, Rustagi said. BloombergQuint could not independently verify these claims since Lendbox is a private company.

State Bank of India to Enter Digital Fintech Era With New Brand Identity (BW Disrupt), Rated: A

State Bank of India, the nation’s largest banking and financial services provider, unveiled on 7th April, 2017, its new brand identity, designed to position SBI as a modern, progressive bank, ready to meet the financial needs of all Indians.

While the legendary SBI monogram has been the de-facto symbol of State Bank of India, combining it with the abbreviated SBI word mark was pivotal to the new identity. It made the brand more concise, modern and approachable, infusing new energy, while retaining its core values.

Asia

Here are 5 future trends that would disrupt Singapore’s real estate industry (Singapore Business Review), Rated: A

Wang said e-commerce and changing consumer habits render shopping malls obsolete.

The second trend is the utilisation of data analytics. Wang said big data and advanced analytics allows for richer insights into all types of transaction data.

There is also a growing trend in terms of green and sustainable buildings.

Wang also cited crowdfunding as a major driver, saying real estate crowdfunding brings a greater variety of quality real estate assets with lower barriers of access.

Lastly, Wang said that the most important trend that would be unfolding is towards education, where the next generation of real estate professionals must be prepared for the evolutionary challenges that technology will bring. –

Authors:

George Popescu
Allen Taylor