Thursday September 19 2019, Weekly News Digest

MAS Singapore

News Comments Today’s main news: SoFi to get its name on a football stadium. Petal raises $300M. Funding Circle closing in on 1-year anniversary of float. Zopa sends warning of imitation scams. Cumulative UK alt lending hits 11.3B GBP. Companies to get social credit in China. Today’s main analysis: Student loan refinancing rates are down. […]

The post Thursday September 19 2019, Weekly News Digest appeared first on Lending Times.

MAS Singapore

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United States

United Kingdom

China/Hong Kong

International

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News Summary

United States

Sundays at SoFi: NFL Stadium in Inglewood Lands a Corporate Name (Commercial Observer), Rated: AAA

Online lender SoFi Lending Corp. has secured the naming rights and a 20-year deal with the Rams and Chargers, according to the Los Angeles Business Journal. The firm agreed to pay around $20 million per year, reports say.

SoFi Stadium, which will be the largest in the NFL, is the centerpiece to the much larger $5-billion Hollywood Park project developed by Rams Owner/Chairman E. Stanley Kroenke. Construction is 75 percent complete, and the stadium is expected to open next summer for other events before the NFL preseason begins in August.

Taylor Swift to Open SoFi Stadium Next Summer (KFI AM 640), Rated: B

The opening of the $2.6 billion SoFi Stadium will happen next summer on July 25th. However it’s not for a Rams or Chargers game. Swift announced that she will play two shows (July 25th and July 26th) at the stadium as a part in her much-anticipated 2020 world tour.

Economy is Top Concern for Small Businesses Ahead of 2020 Election (OnDeck), Rated: AAA

Key Findings from the OnDeck Small Business Survey:

  • Economic concerns arise in several dimensions, including tax policy, job growth, support for small businesses, government spending and the overall economic climate. These issues were cited as the top concerns of more than 33% of those surveyed;
  • Immigration was an issue of interest for 11.3% of small business owners surveyed, ranking second behind the economy as a concern.
  • 57% of small businesses surveyed said they were either ”Very Optimistic” or ”Somewhat Optimistic” about the economic outlook for their businesses;
  • 93% of those surveyed said they plan to vote in the 2020 election.
  • 60% of small business owners surveyed said they already know who they plan to vote for in the 2020 presidential election.

President Donald Trump was the choice of 37% of small businesses surveyed, followed by Joe Biden at 18%. When combined, the top five Democratic candidates were the preference of 44% of respondents.

Student Loan Refinancing Rates Down Sharply (Credible), Rated: AAA

During August:

  • Rates on 10-year fixed-rate loans averaged 4.70%, down 22% from a July 2018 peak of 6.05%
  • Rates on 5-year variable-rate loans averaged 4.03%, down 14% from September

A borrower repaying the average graduate school debt of $84,300 over 10 years at 6.36% interest — the average rate for grad school loans in recent years — could save:

  • $20,927 by refinancing into a 5-year variable rate loan
  • $8,327 by refinancing into a 10-year fixed-rate loan

Credit card start-up Petal raises $ 300 million debt round from Jefferies (CNBC), Rated: AAA

The New York City-based company announced a $300 million debt round from Jefferies on Tuesday, adding to existing venture capital investments from names like Peter Thiel’s Valar Ventures.

Plaid adds credit card data to Liabilities product (Tearsheet), Rated: A

In July, Plaid launched its Liabilities product that gives developers access to real time information about what consumers owe. Expanding beyond student loan data, the company has added support for credit card information, so firms can build better debt management solutions.

GoCardless launches US debit payments solution and opens San Francisco office (TechCrunch), Rated: A

GoCardless, the London fintech that aims to become the one-stop shop globally for businesses that want to let customers pay via recurring bank payments, has launched a U.S. debit solution.

Specifically, GoCardless’  new U.S. product supports debit payments on the ACH (Automated Clearing House) network.

The company has also opened an office across the pond in San Francisco’s financial district, headed up by Andrew Gilboy, general manager, North America, who was previously the company’s chief revenue officer.

Nav Launches New Feature to Help Business Owners Boost Business Credit (PR Newswire), Rated: A

Today Nav, a fintech company that matches business owners with their best financing options for free, announced new offerings to help small business owners boost their business credit scores, giving an easy solution to developing a strong business credit profile that alternative and traditional lenders can trust and finance.

Why would HUD gut its own disparate impact rule? (The Times Weekly), Rated: AAA

Since 2013, the disparate impact rule has objectively examined the effects of business practices with lenders, landlords, insurers, and real estate professionals against the provisions of the 1968 Fair Housing Act. The rule required that first a plaintiff must establish a discriminatory effect in policies and/or practices, before the defendant(s) would bear the responsibility of proving their own practices were nondiscriminatory.

During delivery of Capitol Hill testimony earlier this spring, Nikitra Bailey, an EVP with the Center for Responsible Lending (CRL) also underscored the importance of disparate impact in fair housing.

“Disparate impact analysis encourages creative approaches that both increase effectiveness and inclusion,” testified Bailey. “This process and the value of disparate impact analysis was recently pointed out and endorsed by the largest personal loan company in the country, Lending Club.”

BlueVine Appoints Dosh & PayPal Vet Brad Brodigan As New Chief Commercial Officer (Crowdfund Insider), Rated: A

Online lender BlueVine announced on Wednesday it has appointed Brad Brodigan as its new Chief Commercial Officer. BlueVine reported that through this role, Brodigan will be responsible for overseeing revenue-generating functions including sales, customer service, and partner management.

Money360 Closes $ 170 Million in Commercial Real Estate Loans in July and August (GlobeNewswire), Rated: A

Money360, a technology-enabled direct lender specializing in commercial real estate (CRE) loans, announced today it closed approximately $170 million in loans during July and August. This benchmark brings Money360 close to $500 million in loans closed this year.

Groundfloor Now Allows Real Estate Developers to Gain Pre Approval on Loans (Crowdfund Insider), Rated: A

Groundfloor, a real estate lending and investing platform that allows anyone to participate directly in real estate investments, has launched a new product to make the lending process more easier for real estate investors. Groundfloor now allows certain developers to gain pre-approval on loans with a new program called “QC Maxx.”

ABS East; Stripe’s Lending Arm; Madden Decision (PeerIQ), Rated: A

In financing news, student loan fintech “College Ave” locked down a $300MM securitization and a AAA rating this week. The securitization was co-led by both Barclays and Goldman Sachs. Affirm, led by Max Levchin, is reportedly close to wrapping up a $1.5 Bn debt and equity financing with Thrive Capital and Spark Capital leading.

Stripe is mirroring other payments companies that have since built lending capabilities – notably, Square and PayPal. Stripe believes it can compete in an already crowded small business lending market (OnDeck, Kabbage, Fundera, Funding Circle, etc.) due to its data & channel advantages stemming from its payments business.

Fintech Firm OppLoans Announces Its First Bank-Led Credit Facility (GlobeNewswire), Rated: A

OppLoans, a growing fintech and top rated direct-to-consumer online lending platform, announced today that it has secured its first bank-led asset-backed revolving credit facility. This facility structure will enable OppLoans to further its mission by broadening access to online personal lending products for more middle-income consumers with credit challenges.

Aura Completes Three Social Bond Issuances Totaling 5 million Over Last 4 Months (Yahoo! Finance), Rated: A

M&G Investments and Community Capital Management, a mutual fund that specializes in impact and Community Reinvestment Act (CRA) related investments, have joined with U.S. and international banks to invest $145 million in Aura’s social bonds to finance the origination of affordable, small dollar installment loans to working families in the United States.

Challenger banks insist they’re equal to the task of lending (American Banker), Rated: A

Almost all U.S. challenger banks offer no-fee checking, savings accounts and enhanced personal financial management tools. Now some of the most popular have taken, or are poised to take, their next step: making loans.

Personal loans and credit cards are lucrative but inherently risky, and these young companies — like MoneyLion, Varo and others — will have to prove to regulators, investors and the public that they have the wherewithal to weather downturns in the credit cycle.

Cash-flow data shows promise as predictor of credit risk (American Banker), Rated: A

Melissa Koide, co-founder and CEO of FinRegLab, analyzed loan data from six lenders that use cash-flow data in their underwriting. She shares what she found.

Prevu Raises $ 2 Million in Seed Funding to Grow its Digital Home Buying Platform (Digital Journal), Rated: A

Prevu, a customer-focused digital home buying platform delivering industry-leading efficiency and savings, announced today the closing of its $2 million seed funding round. The round was led by Corigin Ventures, a prominent seed-stage venture capital firm with expertise in the real estate technology and consumer industries as well as a history of backing startups disrupting residential brokerage business models.

Embattled Prodigy Network CEO Rodrigo Niño to step down (The Real Deal), Rated: A

Prodigy Network founder Rodrigo Niño is stepping down from his position as CEO amid mounting financial and legal issues, The Real Deal has learned.

Prodigy, a real estate crowdfunding platform, has faced criticism from investors in recent months over underperforming investment properties and unpaid distributions. On Monday, an investor in one of Prodigy’s newest projects — the 13-story Standard Hotel in Chicago — filed a lawsuit alleging the firm was “insolvent” and had used investments “for purposes other than those relating to the project.”

EquityMultiple Provides Investors with Options to Take Advantage of Unique Tax Benefits (Crowdfund Insider), Rated: A

Opportunity Zones are new, tax-advantaged vehicles for investors to earn more on their money. Created by the Tax Cuts and Jobs Act of 2017, the first qualified opportunity zones (QOZs) first hit the market in early 2018. Designated by state authorities, there are now thousands of QOZs in the US designed to boost development in selected communities. Investors receive a break on capital gains taxes which can be significant. Local officials can spur economic development which leads to more jobs. Online investment platforms immediately saw the opportunity intrinsic to QOZs with multiple platforms now offering investments in developments that benefit from these tax breaks.

Why are your Opportunity Zone Offerings better than some others available on competing investment platforms?

Soren Godbersen: There are a number of firms out there now marketing Opportunity Zone offerings to investors. We’re proud of what we have been able to offer to our investor network and there are a few things about our Opportunity Zone investments that are unique:

How to Recession-Proof Your Investments (U.S. News), Rated: A

AFTER A DECADE OF steady growth, the economic cycle is due for a reversal, with concerns of a recession.

  • Consider other types of investments outside of stocks and bonds.
  • Know that timing the market is difficult.

What to Invest in During a Recession?

Other less correlated assets include the real estate niche. With real estate crowdfunding, hypermarket segmentation is available. Investors can choose their property type and geographic region when investing in real estate. Two real estate crowdfunding platforms for accredited investors are CrowdFund and EquityMultiple. Fundrise and Groundfloor open targeted real estate investing to nonaccredited investors as well.

Litecoin Non-Profit to Hold Undisclosed Treasury Sum with Crypto Lender (CoinDesk), Rated: A

The Litecoin Foundation is putting its capital to work, lending at interest through another cryptocurrency program.

The Foundation has tapped the Celsius Network, a blockchain-based crypto lending program, to become its preferred crypto wallet, Celsius Network CEO Alex Mashinsky told CoinDesk.

As part of the deal, the Foundation will allocate an undisclosed portion of its treasury to the Network. LTC holders can receive up to 10.53% annually back on their crypto holdings and dollar loans as low as 4.95 percent as well.

Fintechs give small business more choice for credit than just banks (PaymentsSource), Rated: AAA

It’s no secret working capital is the lifeblood of all small businesses. It’s the fuel that keeps them running, helps them grow and take on new opportunities.

And yet, so many small businesses struggle with cash flow. In fact, according to a recent study from Intuit QuickBooks, 61% of small businesses have had cash flow issues in the past year.

Source: FIS

Walmart’s New Credit Cards Have One Big Goal: Boost E-Commerce (Bloomberg), Rated: A

In a sign of how much Walmart Inc. is betting on e-commerce, the retailer’s revamped credit-card program with Capital One Financial Corp. offers better rewards for online shopping and checking out with its mobile app.

The new options, which become available Sept. 24 and use Mastercard Inc.’s network, offer 5% cash back for purchases made at Walmart’s website, including groceries. At the chain’s physical stores, shoppers only get that rate for a year and have to check out with Walmart Pay at the cashier. Otherwise, store customers get 2% back.

Finicity Releases New Verification of Income and Employment Solution for Lenders (PR Web), Rated: B

Finicity, a provider of real-time financial data access and insights, announced today the release of its new Verification of Income and Employment (VOIE) solution using patent-pending TXVerify technology that will speed up borrower verifications and further advance the industry shift toward a fully digital experience.

The Finicity VOIE solution digitally extracts a borrower’s pay statement data from the paystub and then cross-verifies that key data with their income transactions from their financial institutions. Enabled by its TXVerify technology, this detailed vetting process creates a real-time picture of an applicant’s income and employment for fast, accurate reports. The solution does this by leveraging the highest value data – direct from banks – along with a scan, photo or PDF of a borrower’s paystubs. This process significantly shifts the current paradigm from a mostly manual process to one that is fully digital, all while reducing fraud and increasing confidence in the underwriting process.

Sallie Krawcheck: Why ‘don’t buy daily coffee’ is terrible advice (CNBC), Rated: B

“Don’t buy daily coffee” is the go-to financial advice. Co-founder and CEO of Ellevest, Sallie Krawcheck, says that advice is misleading and just enjoy your latte.

Ethereum Development Studio ConsenSys Announces Codefi, A New DeFi Software Suite (Crowdfund Insider), Rated: A

ConsenSys founder Joseph Lubin announced at the Ethereal Tel Aviv press conference (on September 15) that his New York-based venture studio is launching a new product, Codefi, for the emerging decentralized finance (DeFi) ecosystem.

Despite not having invested in emerging DeFi platforms, Lubin described P2P lending systems such as Uniswap and MakerDAO as some of the blockchain industry’s most promising projects.

ApplePie Capital Partners with LSQ Funding on A/R Franchise Financing (Monitor Daily), Rated: B

Online lender ApplePie Capital entered into a new strategic partnership with LSQ Funding Group, a technology-enabled provider of accounts receivable financing for small and mid-sized businesses.

United Kingdom

Funding Circle nears one-year anniversary of London float (P2P Finance News), Rated: AAA

The peer-to-peer business lender began conditional dealings on the London Stock Exchange on 28 September before being officially admitted to the bourse on 3 October. It launched with an offer price of 440p per share, giving the firm a valuation of £1.5bn.

However, its market capitalisation as of 17 September has since dropped to £348.7m, with its shares now trading at just over 100p.

Zopa warns over imitation scam firms (P2P Finance News), Rated: AAA

ZOPA has warned over a growing number of scam operators targeting UK customers using the peer-to-peer lender’s name to dupe investors.

They include: asking customers directly for their Zopa login details; claiming to work with companies investing money in Bitcoin or other cryptocurrencies; or working with companies who would ask them to take out a Zopa loan to fund an investment.

Record numbers of investors and borrowers as cumulative lending hits £11.3bn (P2P Finance News), Rated: AAA

MORE than 150,000 lenders were invested in 321,483 loans facilitated by Peer-to-Peer Finance Association (P2PFA) platforms at the end of the second quarter, which the trade body deemed “a record level of involvement in the sector”.

Funding Circle is the largest P2P lender among the P2PFA platform members, having lent out a cumulative total of £5.4bn as of the end of the second quarter. It is followed by Zopa at £4.5bn, with ThinCats in third place with just over £491m.

£814m of new loans were made in the second quarter, compared to £866m in the first three months of 2019.

Monzo halts cash referrals as it hits three million users (AltFi), Rated: A

Monzo has ended its cash incentivised referral system as the firm continues to grow users at a rapid pace.

Monzo now has passed the 3 million ‘users’ number, hitting the milestone late on yesterday and is now onboarding 55,000 people to Monzo every week.

Transferwise Books Its Third Consecutive Year of Profits (Lendit), Rated: A

European fintech company Transferwise has recorded its third year in a row of profits; the company reported its net profit after tax climbed to £10.3 million in the fiscal year ending March 2019, up 66% from the previous year on revenue of £179 million;

Payment provider Klarna appearing at London Fashion Week has everybody talking (MyLondon), Rated: A

UK fashion Designer Henry Holland decided to take things up a notch in Saturdays catwalk show with a T Shirt design in collaboration with Klarna.

Klarna expands partnership with Mothercare (The Paypers), Rated: B

Klarna and Mothercare have announced an extension to their partnership, which will see Klarna’s Pay later, Pay in 3, and Slice it products available online and in-store across the UK.

OakNorth Bank provides £3.7m loan to Clearview Developments (London Loves Property), Rated: A

OakNorth Bank the UK bank powered by OakNorth has provided a £3.7m loan to Clearview Developments for a new residential development in Royal Tunbridge Wells.

Smarterly and OakNorth Bank partner to offer new Notice Cash ISA range to Smarterly customers (Fintech Finance), Rated: B

The product range includes five Cash ISA Notice accounts, exclusive to Smarterly, ranging from 35 days at 1.05% to one year at 1.25%; Customers will not be able to apply for these products with OakNorth directly;

These five Cash ISAs Notice Accounts are:

  • 35 days – 1.05%
  • Three months – 1.10%
  • Six months – 1.15%
  • Nine months – 1.20%
  • One year – 1.25%
China/Hong Kong

Coming Soon: ‘Social Credit’ for Companies, Too (WSJ), Rated: AAA

A key target of China’s coming “social credit” system, which among Westerners usually triggers visions of “1984”-style monitoring of people, is actually misbehaving businesses.

Corporate America needs to prepare.

About 80% of information on the main data-sharing platform relates to companies rather than individuals, according to China consulting…

Hexindai Reports Unaudited First Quarter of Fiscal Year 2020 Financial Results (PR Newswire), Rated: A

First Quarter of Fiscal Year 2020 Operational Highlights

  • Total loan volume facilitated[1] was US$ 28.2 million (RMB192.3 million) during the first quarter of fiscal year 2020, a decrease of 93.5% from the first quarter of fiscal year 2019.
  • Gross billing amount (net of VAT)[2] was US$4.7 million during the first quarter of fiscal year 2020, a decrease of 90.7% from the first quarter of fiscal year 2019.
  • Gross billing ratio (net of VAT)[3] for credit loans was 16.7% during the first quarter of fiscal year 2020, an increase from 11.7% during the first quarter of fiscal year 2019.
  • Number of borrowers[4] was 18,546 during the first quarter of fiscal year 2020, a decrease of 36.0% from the first quarter of fiscal year 2019.
  • Number of investors[5] was 9,534 during the first quarter of fiscal year 2020, a decrease of 85.9% from the first quarter of fiscal year 2019.

First Quarter of Fiscal Year 2020 Unaudited Financial Highlights

  • Net revenue was US$4.9 million during the first quarter of fiscal year 2020, a decrease of 90.5% from the first quarter of fiscal year 2019.
  • Operating costs and expenses were US$12.6 million during the first quarter of fiscal year 2020, a decrease of 18.9% from the first quarter of fiscal year 2019.
  • Net loss was US$7.2 million during the first quarter of fiscal year 2020, compared to net income of US$29.7 million in first quarter of fiscal year 2019.
  • Basic loss per ordinary shares in the first quarter of fiscal year 2020 was US$0.15, compared to basic earnings per ordinary shares (“EPS”) of US$0.62 in first quarter of fiscal year 2019.
  • Diluted loss per ordinary shares in the first quarter of fiscal year 2020 was US$0.15, compared to diluted EPS of US$0.56 in first quarter of fiscal year 2019.
  • Adjusted net loss attributable to Hexindai Inc.’s shareholders (Non-GAAP) in the first quarter of fiscal year 2020 was US$7.0 million, compared to adjusted net income attributable to Hexindai Inc.’s shareholders (Non-GAAP) of US$29.9 million in the first quarter of fiscal year 2019.
  • Adjusted EBIT (Non-GAAP) in the first quarter of fiscal year 2020 was (US$5.8) million, compared to US$36.6 million in the first quarter of fiscal year 2019.

Zhang Yue, senior vice president at CreditEase, discusses the demand for credit in China, write downs in her portfolio, P2P lending, their wealth management business and their expansion plans.

Securing privacy concerns in FinTech in Hong Kong (Lexology), Rated: A

Hong Kong has built a strong environment for fostering innovation and financial technology or FinTech. With its large financial sector and its strategic role with Mainland China and gateway to the rest of Asia and the world, Hong Kong has the potential to take on an important role in being a leader in FinTech. In March 2019, for example, Hong Kong issued its first virtual banking licences, which will likely increase adoption of FinTech in the financial services sector.

Emerging technologies used in Fintech services and operations come in different forms, and include:

  • data analytics that support the operations of financial institutions (for example, credit scoring, loan processing);
  • peer-to-peer (P2P) financing (such as P2P lending and crowdfunding platforms);
  • distributed ledger technology, such as cryptocurrency, bitcoin transactions and smart contract applications, as well as blockchain services to help reduce fraud by keeping provenance data on the blockchain; and
  • financial investments, such as stock trading apps, robo-advisors and algorithmic trading and budgeting apps.
European Union

Binance Announces Phase Five of Crypto Lending Featuring Privacy Coins XMR, ZEC, and DASH (Crypto-Economy), Rated: AAA

Leading cryptocurrency exchange Binance has announced its launch of the fifth phase of its cryptocurrency lending product in which it customers subscribe to an allocation to lend other users their funds for interest rates as high as 15% Apr.

the 15% interest rate was only available to Binance’s native coin lenders in the first phase. On Tuesday, the exchange revealed three coins that will be included in the crypto lending product including only privacy-centric coins Monero [XMR], Zcash [ZEC] and Dash [DASH]. Their annualized interest rates will be a constant 3.5% but the lending period is only two weeks starting from this Friday September 20th through October 4th.

P2P Lender creditshelf to Acquire SME Finance Provider Valendo (Crowdfund Insider), Rated: A

creditshelf Aktiengesellschaft has signed a purchase agreement for the acquisition of all shares in Valendo – part of the finleap Fintech ecosystem.

According to a company release, the purchase price was in the “low seven-digit amount.” Payment will take place in two separate tranches. creditshelf has the option of settling both tranches in the course of two capital increases via a contribution in kind.

International

How MAS propelled Singapore to the top of the class (Euromoney), Rated: AAA

Today, Singapore sits proudly atop the Euromoney Country Risk (ECR) rankings. Based on ECR’s blend of financial and economic data, combined with the views of leading economists, no country in the world today has a stronger financial position.

When MAS said in July 2019 that it planned to issue five new digital banking licences, analysts soon spotted that three of them were wholesale licences, open to banks and non-banks alike.

Winners will be encouraged to lend, using digital means, to small and medium-sized enterprises and other non-retail segments – further evidence that corporate banking will be the next segment to feel the hot breath of disruption on its neck.

Source: Euromoney County Risk

Goldman Leads Trulioo’s $ 70M Raise To Expand Global Digital ID (PYMNTS), Rated: A

Trulioo, the global identity verification provider, has raised $70 million in new funding, eyeing growth in its core digital identification efforts, the company announced Tuesday (Sept. 17).

The company said in a release that the funding includes $60 million in a Series C round that was led by Goldman Sachs Growth Equity. Other participants included Citi VenturesSantander InnoVentures and existing investor American Express Ventures. The remaining $10 million came as unannounced follow-on financing from early investors, including BDC Capital and Blumberg Capital.

Equifax Continues Leadership In Alternative Data With Worldwide Urjanet Partnership (PR Newswire), Rated: A

Equifax Inc. (NYSE: EFX) and Urjanet today announced a global partnership that empowers consumers and businesses to share their payment data from thousands of utility, telecom and cable providers worldwide for a more complete picture of individual payment history, easier identity verification and the potential for better access to credit. This partnership builds on Equifax’s leadership in alternative data, using the Urjanet Utility Data Platform to incorporate consumer-permissioned data into the Equifax differentiated data approach.

5 Reasons Investors Should Consider Tokenized Assets (Benzinga), Rated: A

According to Deloitte, we shouldn’t view DLT as just a new type of “database ” but rather as a new way to organize the security value chain from issuance to custody. But what exactly can be transmitted through this chain?

Fractional ownership – take as much as you want

Digitizing shares makes them highly divisible, meaning that investors can buy very small percentages of tokenized assets.

So long, intermediaries! 

Security tokens have a simpler investment structure and lower fees.

On the way to maximum liquidity

Cherry on top

A security token is basically a digital signature connected with a smart contract responsible for facilitation and verification of ownership rights transactions.

India

Ribbit leads Series B funding in online investment platform Groww (VC Circle), Rated: AAA

Groww, an online investment platform that sells mutual fund products, has raised $21.4 million (Rs 152.5 crore at current exchange rate) in a Series B funding round led by Silicon Valley-based venture capital firm Ribbit Capital.

Groww said existing investors Sequoia India and Y Combinator also participated in the funding round.

RBI looking at how NBFCs, HFCs set their lending rates (livemint), Rated: AAA

The Reserve Bank of India (RBI) is studying how non-bank lenders and home financiers price their loans, close on the heels of directing commercial banks to link their loan rates to external benchmarks.

Source: livemint

RBI restricts access to credit data of consumers (Economic Times), Rated: A

The Reserve Bank of India has ordered commercial banks and non-banking lenders to stop providing unregulated entities access to consumer data held by credit bureaus, dealing a blow to scores of fintech startups that have based their business models on such information.

Source: India Times

RBI not in favour of ‘teaser’ loans, examines rate-setting mechanism of NBFCs, HFCs (CNBCTV18), Rated: B

The banking regulator is not in favour of hybrid loan products or ‘teaser loans’, a senior Reserve Bank of India (RBI) official today clarified. The remark gains significance in the light of State Bank of India chairman Rajnish Kumar’s recent comment that SBI would seek the regulator’s view on whether banks can introduce fixed-cum-floating rate products.

No dearth of demand on credit side, disbursed credit worth INR 5 billion: Flexiloans Co-founder (IBS Intelligence), Rated: A

FlexiLoans.com, an online lender for MSMEs in India, said that it has crossed a milestone number of disbursing over INR 5 billion of unsecured business loans across the country with its unique digital-only model. The Mumbai-based company, which has disbursed over 16000 loans across 1000 cities and towns in the country, says that there is no dearth of demand on the credit side. The company caters primarily to micro, small and medium-sized businesses.

How has the online lending market shaped up in the last few years?

Digital Lending market is currently at about USD 2 billion, up from about USD 1 billion in 2016. Significant traction and market niches discovered by various FinTech startups across the country have made this space very exciting, holistic and game-changing.

Online SME lender Cash Suvidha plans to raise upto $ 10 million (IBS Intelligence), Rated: B

The online lender for business and personal loans, Cash Suvidha, is planning to raise $5 million -$10 million equity funds in the next six months.

Asia

Terafunding Closes US$ 18M Series B Financing Round (FINSMES), Rated: AAA

Terafunding, a Seoul, South Korea-based Peer-to-Peer (P2P) lending platform, raised US$18M in Series B funding.

Backers included KB Investment, Hana Ventures, IBK Industrial Bank and Woomi Construction.

Julo raises $ 10M to expand its P2P lending platform (TechCrunch), Rated: A

Julo, a peer-to-peer lending platform in Indonesia, said on Wednesday it has extended its $5 million Series A raise to $15 million as it looks to scale its business in the key Southeast Asian market.

The $10 million Series A2 round for the Jakarta-headquartered startup was led by Quona Capital,  with Skystar, East Ventures,  Provident, Gobi Partners and Convergence participating.

Chinese P2P Firms Seeks Business in Vietnamese Market (W7 News), Rated: A

The declining demand for peer-to-peer (P2P) lending in China has prompted firms to find business elsewhere. LearnBonds report that Chinese P2P companies are eyeing Vietnam, which alarmed local lending companies.

MENA

Now Money offers alternative for Gulf’s unbanked expats (Financial Times), Rated: AAA

About 70 per cent of the population in the Middle East and north Africa do not have access to banking services, says Ian Dillon, co-founder of Now Money, a Dubai-based financial technology group.

The GCC recorded outbound remittances of $120bn in 2017, according to World Bank data. However, Gulf banks tend to exclude workers earning less than $1,400 a month, leaving most of them reliant on exchange houses to remit cash home.

Authors:

George Popescu
Allen Taylor

The post Thursday September 19 2019, Weekly News Digest appeared first on Lending Times.

Thursday December 6 2018, Daily News Digest

Consumer Spending

News Comments Today’s main news: Zopa gets banking license. SoFi cuts mortgage business jobs. KBRA assigns preliminary ratings to CLUB Credit Trust 2018-P3. Money360 surpasses $1B in loan originations and closings. SoftBank is biggest startup story in 2018. Today’s main analysis: Rate hikes pause in 2019. LendingTree Debt Report November 2019. Today’s thought-provoking articles: LendingTree Debt Report November 2019. October was biggest […]

Consumer Spending

News Comments

United States

United Kingdom

International

Southeast Asia

Other

News Summary

United States

SoFi Cutting Jobs in Their Mortgage Business (Lend Academy), Rated: AAA

Late Friday Bloomberg reported that SoFi was cutting 7% of its staff, or around 100 jobs, in the company’s mortgage department. This is due to a change in strategy as to how they underwrite mortgage loans. Rather than underwrite loans themselves, as they have done since launching their mortgage business back in 2014, they will outsource the underwriting to a partner.

KBRA Assigns Preliminary Ratings to Consumer Loan Underlying Bond (CLUB) Credit Trust 2018-P3 (AP News), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Consumer Loan Underlying Bond (CLUB) Credit Trust 2018-P3 (“CLUB 2018-P3”). This is a $272.40 million consumer loan ABS transaction that is expected to close December 13, 2018.

The transaction has initial credit enhancement levels of 30.87%, 22.80% and 9.70% for the Class A, Class B, and Class C notes, respectively. Credit enhancement is comprised of overcollateralization, subordination of the junior note classes, a cash reserve account and excess spread.

This transaction is LendingClub Corporation’s eighth rated sponsored securitization, fourth of 2018 and the fifth sponsored securitization consisting of prime unsecured consumer loans facilitated by LendingClub’s proprietary technology platform supporting an online marketplace that connects borrowers and investors by offering a variety of loan products originated by issuing banks through the platform, www.lendingclub.com.

Money360 Milestone: Surpasses $ 1 billion in Loans Originated & Closed (Crowdfund Insider), Rated: AAA

Real estate marketplace lender Money360 announced on Monday it has surpassed $1 billion in loans originated and closed since inception. The announcement comes just 11 months after the lending platform revealed it had hit $500 million.

Rate Hikes Pause in 2019; Performance of Credit Card Borrowers with Personal Loans (PeerIQ), Rated: AAA

US Q3 GDP showed 3.5% annualized growth, well above potential growth of 2%. Growth slowed from the blistering 4.2% pace in Q2 due to rising inventories and lower consumer spending:

Source: WSJ, PeerIQ
Source: VantageScore, PeerIQ

LendingTree Debt Report November 2018 (LendingTree), Rated: AAA

Nine months into 2018, Americans had a cumulative $3.93 trillion in non-mortgage debt. About a quarter of that debt is credit cards and other revolving debt, while the remainder is for car payments, student loans and other fixed-rate loans such as personal loans.

In just five years, Americans will have increased their debt by $1 trillion. Consumer debt eclipsed the $3 trillion mark in 2013. By comparison, the previous $1 trillion milestone — from $2 trillion to $3 trillion of consumer debt — took more than 10 years.

43.5% of Purchase Borrowers Received Mortgage Rates Under 5% Last Week (LendingTree), Rated: A

For the week ending Dec. 2, 2018, the share of borrowers with rates under 5% was the highest in two months, which may lend some support to a weakening housing market.

Source: LendingTree
Source: LendingTree

LendingTree’s State Migration Study Finds Americans Are Moving South (GuruFocus), Rated: A

LendingTree today released its State Migration Study on where Americans are interested in moving. The study looked at where people moving out of state are going and discovered that of the 12.1 percent of homebuyers across the country who change states, most plan to head south.

Florida is the No. 1 destination. Florida was the top new destination for 15 of the 50 states.

Texas residents love the Lone Star State. Texas had the highest percentage of residents looking to move within state lines — 93.4 percent of purchase mortgage requests from individuals in Texas were for properties in the same state.

Source: LendingTree

October was Biggest Month for Reg CF Since May 2016 (Crowdfund Insider), Rated: AAA

October was a big month for Reg CF campaigns, according to the StartEngine Index. In fact, October booked the most money raised using the crowdfunding exemption since the rule became actionable in May of 2016.

According to StartEngine, $10.9 million in funding was raised. Until October came along, this past July held the top spot at $10.7 million. The Index indicates that Reg CF has now raised $151.7 million since inception. The Food & Beverage industry remains the most popular sector to use Reg CF followed by Tech.

Source: Crowdfund Insider

Fintechs’ Take On Installment Payments Explodes Online (Forbes), Rated: AAA

Installment payments have been around for seemingly forever but a new crop of fintechs are offering it with a twist: the ability to pay off smaller purchases in installment payments that in many cases are interest-free.

And it appears to be resonating with scores of U.S. consumers judging from the brisk business installment payment services like QuadPay.com enjoyed during the kick off to holiday shopping season this past Thanksgiving weekend. David Sykes, chief operating officer at QuadPay.com said 35% of online Black Friday sales for one large merchant customer came via QuadPay. On average Sykes said its service accounts for around 20% of all the online transaction from its roughly 500 e-commerce partners.

QuadPay.com makes money via the merchant, getting a cut of the sales generated by its service. That enables it to offer interest-free loans to consumers wanting to purchase everything from Uggs to underwear. Sykes said the average value of the orders on the platform is $150. QuadPay takes 25% of that on day one and then spreads out the remaining payments every two weeks. Because the average installment payment is around $37 there isn’t too much risk of customers defaulting on the loan.  To prevent default it won’t let a customer use the service again if they were ever late with a payment. The executive noted QuadPay approves 92% of all applicants.

How the largest US financial institutions rank on offering the mobile banking features customers value most (Business Insider), Rated: A

In Business Insider Intelligence’s second annual Mobile Banking Competitive Edge study, 64% of mobile banking users said that they would research a bank’s mobile banking capabilities before opening an account with them. And 61% said that they would switch banks if their bank offered a poor mobile banking experience.

Source: Business Insider

Why Wealthfront is offering free financial planning (Financial Planning), Rated: A

Wealthfront is offering its planning services for free, effectively unbundling its software, and giving millions of Americans access to a financial roadmap.

The second largest independent robo is betting the firm can steer users into fee-based accounts after they interact with its software to come up with a financial plan. The freemium software uses the firm’s automated advice engine, Path, according to the firm.

Credit Karma’s Kenneth Lin on building a billion dollar brand (Tearsheet), Rated: A

Building a great service is hard but not impossible. But building a great service and making it available for free — that’s really hard.

Credit Karma seems to have figured out a way to do both. The company, with 85 million members in the U.S. and Canada, continues to roll out free, innovative financial products to its user base. It all began 11 years ago with a simple premise: to provide users with free access to their credit scores. From there, the company has rolled out a bunch of new products, including ID monitoring, tax preparation, a financial chatbot, auto finance, and unclaimed money.

Betterment launches tool to optimize cash savings (Tearsheet), Rated: A

Automated investment advisor, Betterment is rolling out “Two-Way Sweep”, a tool that can automatically “sweep” excess money from customers’ bank accounts into a Betterment account optimized to provide better returns for cash.

What’s behind this new product: Studies show that only one in three millennials is investing in the stock market. That means they’re holding a high percentage of cash. In fact, Betterment sees 30 percent of customers with cash balances of $20,000 on average. This excess in savings earns little to no interest. Betterment’s Two-Way Sweep is intended to take the hesitation out of deploying more money into investments by automating the process.

CommonBond Acquires NextGenVest to Help Reach Generation Z (Lend Academy), Rated: A

CommonBond, best known as a leading provider of online student loans, has made its second acquisition, NextGenVest, an artificial intelligence powered advice platform for Generation Z. NextGenVest helps high school and college students in New York, Chicago and Philadelphia with their college financial needs through a combination of human “money mentors” and AI-powered suggestions delivered entirely through text messages.

OppLoans Named a Best Workplace by Glassdoor for the Second Year in a Row (GlobeNewswire), Rated: A

Chicago-based fintech firm OppLoans has been honored with a Glassdoor Employees’ Choice Award, recognizing the best places to work in 2019. This marks the second year in a row that the personal lender has been named to this prestigious list in the Small & Medium Business category. The Employees’ Choice Awards program, now in its 11th year, is based solely on the input of employees, who elect to provide feedback on their jobs, work environments and companies on Glassdoor, one of the world’s largest job and recruiting sites.

Backstage Capital-Backed CapWay Moves to Atlanta As It Expands Its Digital Banking Offerings (Hypepotamus), Rated: A

According to 2017 statistics from the FDIC, 16 percent of households in Mississippi are unbanked, choosing instead to use “predatory services” like corner store check cashing in their neighborhoods.

Allen founded her first startup, an app development shop, while still in college. After moving to Silicon Valley, Allen realized it wasn’t just rural communities that were underserved by banks. Inner city areas across the country, most of which are home to majority Hispanic and African-American populations, are also affected. An FDIC survey found that more than 15 million adults in the U.S. go unbanked.

In 2016, Allen founded CapWay with co-founder and fellow Mississippian Timothy Lampkin. The mobile-first platform is aimed at younger generations (think older millennials and Gen Z) in those unbanked communities to help them break out of the predatory economy cycle.

Finicity Announces Partnership with Princeton Mortgage for Effortless Digital Mortgage Origination (Benzinga), Rated: B

Finicity, a provider of real-time financial data aggregation and insights, announced today it is working with mortgage banker Princeton Mortgage to automate borrower asset verification for lenders. The agreement will provide Princeton Mortgage loan officers and borrowers with a faster, simpler loan origination experience that reduces both paper chase and headache.

NBKC Bank fintech accelerator participant wins $ 1M (Biz Journals), Rated: B

Onward Financial Inc., a member of the first cohort in NBKC Bank’s Fountain City Fintech accelerator program, won a $1 million award from the Communities Thrive Challenge, which is put on by The Rockefeller Foundation and the Chan Zuckerberg Initiative.

United Kingdom

P2P Lender Zopa Granted a Banking License in the UK (LendIt Fintech), Rated: AAA

Back in 2005 Zopa quietly launched their P2P lending platform in the UK, the world’s first. It was the start of a lending revolution that has moved on to all corners of the globe. Today, a new chapter begins as the company announced that regulators have approved Zopa’s banking license. With that Zopa achieves another first: becoming the world’s first combined peer to peer lending platform and digital bank.

Zopa Says it Will Redefine Banking (Crowdfund Insider), Rated: AAA

Zopa explained that this is called the “mobilisation’ phase” as regulators put some restrictions in place. A full licence will be granted once it meets the conditions set by the regulators.

Zopa said it will begin its new service next year. The digital bank will include options such as a fixed term savings product protected by the Financial Services Compensation Scheme (FSCS), credit card and a money management app.

Pointing to a statement by the FCA that just “40% of UK adults have confidence in the financial services industry,” Zopa sees opportunity in becoming a digital bank unencumbered by green-screen legacy tech and unnecessary brick and mortar branches.

Zopa explained it would redefine banking with the following services:

  • Giving customers a fair deal as standard – with no catches like sign-up offers that aren’t available to existing customers or hidden fees and charges.
  • Making sure money management is simple and a real person is available to discuss
  • Going beyond ‘good enough’

Zopa: Bank launch won’t impact P2P rates (P2P Finance News), Rated: A

ZOPA has insisted its peer-to-peer lending rates will not be dictated by the savings products on offer when its bank launched.

It currently offers target returns of 4.5 per cent on its Zopa Core product and 5.2 per cent on Zopa Plus.

Thomas Cook to slip out of FTSE 250 index in quarterly review (The Guardian), Rated: A

Other companies expected to be promoted to the FTSE 250 are peer-to-peer lending platform Funding Circle, the retirement housebuilder McCarthy & Stone and the investment trusts Smithson and Woodford Patient Capital.

Funding the future of the UK PLC (Business Leader), Rated: A

Looking at 2017, we saw some encouraging trends and one of them is in terms of diversity and choice. We saw peer-to-peer lending grow at over 50%. It’s obviously coming from a smaller base as it’s a reasonably new form of lending, but 50% growth is a very strong outcome.

Tandem’s Journey Card strives to better users’ credit scores (Alt Fi), Rated: A

Tandem Bank has announced its Journey Card has assisted nearly three-quarters (72 per cent) of its users to first-time credit or is helping individuals with poor credit history get back on track.

Due to the higher risk users it targets, the credit card carries a reasonably expensive representative APR of 24.9 per cent.

Tandem says it hopes to help the 43 per cent of Journey Card holders who have poor credit history, some of whom have defaulted with other providers.

CrowdProperty Provides Performance Metrics Disclosing Lending Returns Using Brismo Methodolgy (Crowfund Insider), Rated: A

Peer to peer property lender CrowdProperty is now disclosing their performance metrics using Brismo’s (formerly known as AltFi) standardized reporting methodology. CrowdPropert states that it is the first property development platform to incorporate the Brismo process which is described as an independent standard.

UK housebuilders back new online property listing start-up (Financial Times), Rated: A

Some of the UK’s largest housebuilders are backing a new property portal that will launch next year in the latest attempt to challenge the two dominant market leaders, Rightmove and Zoopla.

Barratt Developments, Bovis, Persimmon and Redrow have signed up to list their homes with the start-up Rummage4Property, as have Countrywide and about 30 other estate agency groups.

ARBUTHNOT BACKS MBI TEAM WITH £2 MILLION FACILITY (Arbuthnot Latham), Rated: A

Arbuthnot Commercial Asset Based Lending (ABL) has supported a highly experienced Management Buy In (MBI) team, led by Paul Hampton, with a £2m invoice discounting facility to support Premier House Investment’s acquisition of Ralph Coleman International Ltd (RCI) and provide ongoing working capital, paving the way for the company’s exciting expansion plans.

KAMBO expands its reach with two native apps (Life Pulse Health), Rated: A

KAMBO is expanding beyond desktops to become accessible on our most coveted devices, our smartphones. With the introduction of two native apps, KAMBO’s lending platform will become one of the most flexible and diverse of its kind.

The KAMBO app is now available on iOS and Android, making it the first crypto-lending platform to have an app in the App store.

LendInvest Joins Ingard’s Buy to Let Panel (Crowdfund Insider), Rated: B

Ingard, a compliance network, brokerage, and lending packager specialist, announced on Tuesday online lending platform LendInvest has joined its buy to let panel. According to Ingard, members may now access the lender’s buy to let range direct by registering through LendInvest’s online portal

China

Ping An GammaLab Wins Global AI Machine Reading Comprehension Competition (Markets Insider), Rated: AAA

Ping An Insurance (Group) Company of China, Ltd. (hereafter “Ping An” or the “Group”) is pleased to announce that OneConnect, a subsidiary of the Group, ranked first in one of the world’s most authoritative machine-reading comprehension challenges — the Stanford Question Answering Dataset 2.0 (SQuAD). GammaLab Institute of Artificial Intelligence (GammaLab), owned by OneConnect, scored 83.435, close to the human performance level of 86.831, way ahead of other companies in the challenge.

Another scenario is internet arbitration in universal financial inclusion. Small loan companies tend to turn to online arbitration, which is expensive and takes time to resolve, under the current peer-to-peer lending market. With the reading comprehension skill of GammaLab, the arbitrator will finish a case quicker, reducing the cost for arbitration.

International

International P2P Lending Volumes November 2018 (P2P Banking), Rated: AAA

Mintosleads ahead of Zopa and Ratesetter. The total volume for the reported marketplaces in the table adds up to 473 million Euro.

I removed Unilend, as the platform has closed and the company has gone into receivership.

Source: P2P Banking

CORELOGIC LAUNCHES NEW AUTOMATED VALUATION SOLUTION TO HELP STREAMLINE MORTGAGE LOAN ORIGINATIONS (CoreLogic), Rated: A

CoreLogic, a global property information, analytics and data-enabled solutions provider, announced today the introduction of its Total Home Value for Originations AVM solution.

The new Total Home Value for Originations solution is specifically calibrated and packaged to improve efficiencies when performing property valuations during the purchase and refinance loan underwriting process.

Becoming a Digital Leader: 5 Customized Fintech Strategies That Work (Cutomer Think), Rated: A

According to EY study, fintech startups have raised $41.7 billion in the first half of 2018 across the globe. So, what fintech strategies need to be implemented to transform the consumer experience on the market?

  • Consumers first
  • Rebuilding trust
  • Lack of credibility
  • Partnership instead of competition
  • Improving the quality of lives

Nasdaq buys Canadian alternative data provider Quandl (Finextra), Rated: B

Nasdaq has acquired Quandl, a Toronto-based provider of alternative and core financial data. Terms of the deal were not disclosed.

Australia

Crypto Lending Services Coming to Australian Markets (NewsBTC), Rated: AAA

Helio Lending is the first independent crypto lending company to launch on Australian shores according to reports.

The company claims to be in the position to offer 50% more spending power to clients than they would have by holding on to their crypto assets.

Lakeba Invests in Lodex to Become Latest Capital Equity Partner (CryptoTechNews), Rated: A

Lodex, Australia’s first auction-style loans and deposits marketplace leader, today announced it has secured capital investment from Lakeba Group, an established Australian technology innovator.

India

India catches up with China, records 2nd highest fintech adoption rate: Here’s all you need to know (Financial Express), Rated: AAA

India is finally catching up with its neighbour and biggest competitor China. The country now has the second highest fintech adoption rate of 52%, only behind China’s 69%, which also throws a huge opportunity for India to not only make best out of financial services sector but also to disrupt it.

Southeast Asia

How Japan’s SoftBank and Its $ 100 Billion Vision Fund Became the Biggest Startup Story of 2018 (Inc.), Rated: AAA

UberWeWorkSaudi Arabia. The biggest startup stories in 2018 shared one long and influential thread: Japanese conglomerate SoftBank, its $100 billion tech investment fund, and founder Masayoshi Son.

The Vision Fund is backed by several prominent investors, including Apple and the government of Abu Dhabi, but its largest financial partner is Saudi Arabia’s sovereign wealth fund. The country’s government, under crown prince and de facto ruler Mohammed bin Salman, contributed 45 percent of the $100 billion, and in October announced plans to put another $45 billion into a second Vision Fund.

P2P lending can plug Southeast Asia’s US$ 175B business finance gap (Yahoo! News), Rated: AAA

Peer-to-peer (P2P) lending has emerged as a popular alternative financing option for small and medium enterprises (SMEs) in Southeast Asia. In 2016, P2P lending generated US$115.01 million, which accounted for more than half of total market share of Southeast Asia’s alternative financing market. In an evolving financing landscape, P2P lending complements the services banks provide and support the region in realising its growth and development potential. The very fact that investment in the region’s startups tripled from US$2.52 billion in 2016 to US$7.86 billion in 2017 is a testament of the vast potential in Southeast Asia’s FinTech startups.

Businesses, largely SMEs, benefited from such platforms too. According to a Deloitte report, SMEs contribute to 40% of Southeast Asia’s gross domestic product (GDP) and hiring 70% of the region’s workforce. Despite the importance of SMEs regionally, support is generally lacking, especially in terms of financing. This is due to strict banking regulations imposed after the 2008 global financial crisis, which have made banks and most financial institutions increasingly risk-averse. This is evidenced by McKinsey Global Institute’s report stating that 39 million Southeast Asian SMEs (or 51%) lack access to credit.

Malaysia may issue more equity crowdfunding, P2P lending licences in 2019 (Asia Asset Management), Rated: AAA

Malaysia’s securities regulator may license more operators of equity crowdfunding (ECF) and peer-to-peer (P2P) lending platforms next year, after current operators raised more than 200 million ringgit (US$48.25 million) for small firms since the industry was legislated in 2015, according to its chairman.

Singapore’s Milieu Insight raises US$ 730K to enhance market research platforms (e27), Rated: A

Singapore- and Thailand-based marketing software startup Milieu Insight has announced that it has raised S$1 million (US$730,000) from a group of private investors including former Rippledot Capital Director, Ravi Ravulaparthi.

Korean Fintech Startup HonestFund Attracts $ 12 Million Series B Investment (PR Newswire), Rated: A

HonestFund (CEO: Sanghoon Seo) has announced that the company, one of the largest marketplace lending players in South Korea, has successfully raised $12 million Series B investment.

Investment was led by Korea’s leading VCs and investment companies, such as Dunamu & Partners, MurexPartners, KB Investment, TL Asset Management, Bass Investment and HB Investment. This brings HonestFund’s total investment to $21 million, making it one of the most valuable Fintech companies in South Korea.

Canada

How experimental tech drives TD Bank’s mobile app (American Banker), Rated: AAA

While many banks have sought to employ experimental technologies when dealing with customers, including predictive virtual assistants, geolocation and advanced data analytics, few have brought all those pieces together to the degree used by TD Bank.

The bank has used such technologies live in production and won significant customer adoption, with its mobile app becoming No. 1 in the finance category in Canada for both iOS and Android. Mobile customers use the app 17 times a month on average, a figure that is growing.

OnDeck to merge Canadian operations with Evolocity Financial Group (Seeking Alpha), Rated: A

OnDeck (NYSE:ONDK) will combine its Canadian lending operations with Evolocity Financial Group, a private, Montreal-based online small business lender, to create OnDeck Canada.

Africa

Peer-to-Peer Lending as a Means of Propelling Startup Growth (Modern Ghana), Rated: AAA

Capital is the livewire of any business, especially for startups and established small businesses. Hence, they are always seeking for some additional funding that is too small for an angel investor to get a return for their effort. Banks also think it’s not worth their time. That’s where peer-to-peer (P2P) lending is working to fill that lending gap. This model may be a solution for many small businesses that are struggling with just tapping smaller funding amounts.

Authors:

George Popescu
Allen Taylor

Wednesday June 13 2018, Daily News Digest

Financial Strain by category

News Comments Today’s main news: Money360 surpasses $750M in commercial real estate loans closed. Attorneys defend $16M LendingClub fee. Funding Circle lending unlocked 75K jobs in 2017. Westpac ends Prospa relationship. Today’s main analysis: Should financial advice be tailored along credit and gender lines? Today’s thought-provoking articles: GreenSky look fairly valued, but there are competitive risks. 4 companies driving […]

Financial Strain by category

News Comments

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News Summary

United States

Money360 Surpasses $ 750 Million in Commercial Real Estate Loans Closed (Globe Newswire), Rated: AAA

Money360, a technology-enabled direct lender specializing in commercial real estate loans, today announced it has surpassed $750 million in loans closed since inception. This includes $82.5 million in loans closed in May 2018.

Notable loans closed in 2018 include:

  • A $26 million bridge loan for a specialty retail center in Punta Gorda, FL, brought to Money360 by Mark Reichter at Q10 / Triad Capital Advisors, Inc.
  • A $15.6 million bridge loan for an office building in Houston, TX, brought to Money360 by Rich Perry at Churchill Commercial Capital
  • A $17.25 million bridge loan for a medical office in Newport Beach, CA, brought to Money360 by Scott Monroe at NorthMarq Capital, Inc.
  • A $7.9 million bridge loan for Raytheon’s industrial space in Albuquerque, NM, brought to Money360 by Jake Clopton at Clopton Capital
  • A $9.2 million bridge loan for a neighborhood center in Tulsa, OK, brought to Money360 by Mark Reichter at Q10 / Triad Capital Advisors, Inc.
  • A $5 million bridge loan for an office park property in South Bend, IN, brought to Money360 by Dean Giannakopoulos at Marcus & Millichap Capital Corp.
  • A $5 million bridge loan for a manufactured housing property and park in West Sacramento, CA, brought to Money360 by Jake Clopton at Clopton Capital
  • A $3 million bridge loan for a mid/high rise multifamily building in Detroit, MI, brought to Money360 by Robert Krupka at Gelt Financial
  • A $2.3 million bridge loan to a self-storage building in Panama City Beach, FL, brought to Money360 by Doug Brooks at Marcus & Millichap Capital Corporation
  • A $1.6 million bridge loan to a multifamily building in Macon, GA, brought to Money360 by Naveed Khan

Attys Defend $ 16M LendingClub Fee Bid That ‘Shocked’ Judge (Law360) Rated: AAA

Attorneys seeking $16 million for representing LendingClub Corp. investors in securities class actions against the peer-to-peer lending company defended their fee bid Monday to a California federal judge who previously said the amount “shocked” him, saying their work produced an “outstanding result under any measure.”

The 28-page motion filed by attorneys for Robbins Geller Rudman & Dowd LLP, lead counsel for the lead plaintiff, argues that the requested 13.1 percent cut of the $125 million settlement is reasonable in light of the results achieved, the risks…

GreenSky Looks Fairly Valued, But Competitive Risks Remain (Forbes) Rated: AAA

GreenSky followed through with its plans to go public within weeks of confidentially filing with the SEC last month – making it the largest fintech IPO in the country since LendingClub and OnDeck went public nearly four years ago. The company offered 38 million shares at $23 per share to raise $874 million (with the actual proceeds being $830 million after underwriting fees). The company’s shares have largely traded around this level since then. This points to a valuation of $4.4 billion for GreenSky – around the figure .

GreenSky’s role as an intermediary between lenders and potential borrowers with strong credit histories makes its overall business model a risk-averse one, as it bears negligible credit risk. At the same time, the relationships it has built with banks, home improvement companies and healthcare providers promise to drive growth at a steady pace over the foreseeable future, even as the company explores other growth segments.

Four companies driving the bank tech discussion, with only one a FAANG (American Banker) Rated: AAA

Facebook, Apple, Amazon, Netflix and Google garner so much attention that they have their own collective shorthand, FAANG. But at American Banker’s Digital Banking conference this week, a mostly different set of companies were top of mind: Call them SASA, or Starbucks, Amazon, Sears and Acorns.

More than 40% of the 55 million U.S. smartphone users will have made an in-store mobile payment through Starbucks’s app, and that just over 23 million consumers over the age of 14 will use the Starbucks app to make a point-of-sale purchase at least once every six months, according to Gavin Michael, head of technology for Citigroup’s Global Consumer Bank, citing data from research firm eMarketer.

Should financial advice be tailored along credit and gender lines? (American Banker) Rated: AAA

Women with credit scores below 700, according to an analysis conducted by Elevate’s Center for the New Middle Class, an independent research arm of the online lender.

Source: American Banker/Elevate

Fifty-six percent of women with subprime scores say their finances cause them significant stress. About 45% of men with subprime credit scores say the same, as well as only 23% of women with prime ratings and 16% of men with prime ratings.

Seventy percent of women with subprime credit scores work full time, versus 62% of women with prime scores.

The woman with subprime credit is 41% more likely to have children in her home than a prime woman. She is also 79% more likely to have an elderly parent living with her.

Only 39% of Non-Prime Women Believe They Have the Skills to Manage Their Finances (SC Now) Rated: A

Most surprisingly, only 39% of this group believe they have the skills to manage their finances, despite the fact that ongoing research from myriad sources have found women to be the primary financial stewards of their households.

Key findings in the research include:

  • Two-thirds of non-prime women live paycheck to paycheck.
  • They are 3x more likely to have lost a job in the last year compared to prime women
  • Only 34% of non-prime women hold salaried jobs
  • They are 4x more likely to have trouble predicting next month’s income compared to prime women
  • More than 4 out of 5 non-prime women admit to running out of money at least once a year
  • More than one quarter admit to running out of money every month
  • They are 24% more likely to say their finances cause them stress compared to non-prime men
  • Only 13% of non-prime women would have money on-hand to cover an emergency of $1200
  • Non-prime women are 6x more likely to have used a payday loan

But another myth persists: Seasonal businesses suffer most of all. SBA’s data doesn’t bear this out, showing companies across varied industries tend to follow similar patterns in terms of failure. Manufacturing-based businesses, for example, are no more protected from failure than seasonally driven businesses like restaurants and retail stores, meaning other factors determine companies’ likelihood of long-term success.

An Ohio State University study indicated that  of restaurants don’t make it past the first year. Another 2005 study amended that, saying that the 60 percent figure applied to the first three years.

With CB Insights finding that  of small business failures can be attributed to cash flow problems, it’s imperative that seasonal business owners find ways to “spread the wealth.”

Kabbage, for example, ties its line of credit to a small business’s live data, allowing the company to adjust lines of credit in real time to match a business’s seasonal needs.

Why Digital Lenders Are Tightening Their Lending Criteria (PYMNTS) Rated: AAA

In the early days of online lending, the big appeal was access to funds for potential borrowers with few, if any, options for securing capital.

According to recent reports, some of the largest marketplace lending players in the field — SoFi, LendingClub, AvantProsper — are being pushed by their investors to batten down their credit hatches and demand better credit scores from their borrowers, as well as shorter maturities so they can make more attractive offerings to investors as they look to repackage those loans into asset-backed securities.

According to KBRA, the weighted average of FICO credit scores of Prosper’s loans, packaged in ABS, increased to 717 in a March 2018 deal from 704 in a sale two years earlier. And they weren’t the only lender to see its average score go up — SoFi, increased the weighted average of its FICO credit scores to 744 in a sale earlier this year from 732 in a deal at the start of last year.

Overlooked Millionaires: Finding A Home In The Democratized Family Office Model Of Financial Advice (Forbes) Rated: A

Over the last 20 years, the number of American investors with between $2 million and $20 million in investible assets has grown remarkably. According to 

Optimal Blue, Finastra partner for pricing integration (Mortgage Professional America) Rated: B

Optimal Blue and Finastra have announced an expansion of their relationship under which Optimal Blue will be integrated Finastra’s Fusion MortgagebotPOS product.

The new integration enables banks and credit unions to provide mortgage applicants with Optimal Blue’s live pricing searches via any point-of-sale channel. Fusion MortgagebotPOS is a web-based platform that allows lenders to receive applications through every point-of-sale channel: consumer-direct via the internet, in the branch or call center, or through professional loan officers.

Direct 1031 Exchange Launches New Online Platform for Accredited Investors (Sys-Con Media) Rated: A

A new online platform is now available for accredited investors seeking direct access to Section 1031 exchange investment opportunities with the launch of real estate investment sponsor Direct 1031 Exchange. The company provides Section 1031 exchange offerings directly to investors using the Delaware statutory trust structure under SEC Rule 506(c).

Through Direct 1031 Exchange’s online investment portal, accredited investors can participate in 506(c) DST offerings sponsored by the firm with no upfront load or commission paid by the investor.

LendStreet and Its Unique Approach to the Debt Settlement Space (Lend Academy) Rated: A

LendStreet is a lender that works with consumers who are experiencing financial difficulties. These are people who have taken on too much debt and find themselves in a hole, unable to pay it all back. But rather than declaring bankruptcy, these people want to work things out and reduce their debt through a debt settlement.

This is the point when the debt settlement companies come in. LendStreet lends only to customers whose debt is being or will be negotiated by a debt settlement company. Most of LendStreet’s customers are already enrolled with debt settlement companies before getting to LendStreet. Those who come directly to LendStreet are paired with a debt settlement company to negotiate down their debt, which will be funded by a LendStreet loan.

Chris Sugden of Edison Partners (Lend Academy) Rated: A

Chris Sugden is the Managing Partner of Edison Partners, a growth equity firm based in Princeton, New Jersey. They provide growth capital for small business doing $5 million to $20 million in annual revenue, typically based on the east coast between DC and Boston. They have never invested in a Silicon Valley startup.

In this podcast you will learn:

  • The history of Edison Partners and their unique New Jersey location.
  • The difference between East Coast and West Coast entrepreneurs.
  • The three different verticals they cover.
  • The impact that Marcus will have on the broader fintech space.
  • The shift Chris has seen with the banks as they embrace fintech.
  • The interesting fintech trends Chris is focused on right now.

Radius in Boston working with fintech firm on online business checking platform (American Banker) Rated: A

Radius Bank in Boston has lined up its next fintech project.

The $1.2 billion-asset online bank is working with a Treasury Prime, a San Francisco startup, to create a business checking account. The Tailored Checking Account will allow business owners around the country to quickly open accounts online.

SME smartphone lending set to take off (P2P Finance News), Rated: A

Fintech platform Kabbage predicts that 20 per cent of US dollars lent to SMEs will be via smartphone apps by the end of 2018.

Kabbage analysed nearly 150,000 US small businesses and found an increasing trend towards lending organised via mobile devices, with the number of loans increasing more than 300 per cent.

Online Lender Accused Of Using Tribe To Shield Illegal Loans (Law 360) Rated: A

An internet lending company and others have engaged in a plot to charge illegally high interest rates on loans while attempting to use a Michigan tribe’s sovereign immunity as a shield from suit, a group of borrowers said in a proposed class action filed in California federal court Monday.

Four plaintiffs from various states claimed in their complaint that even though Big Picture Loans LLC said it was owned and operated by the Lac Vieux Desert Band of Lake Superior Chippewa Indians, loans made in Big…

Nobel laureate Kahneman says human financial advisors are still crucial (CNBC) Rated: A

Daniel Kahneman, a Nobel Prize-winning economist, said Tuesday financial advisors still play a major role in the finance world — despite recent technological disruptions in the industry — as they act as therapists for investors.

Robo-advisors are growing at a very fast rate, surpassing $200 billion in assets under management last year, according to BackEnd Benchmarking, which releases quarterly data on robo-advisors.

Lending Express Opens Shop in Silicon Valley & Adds Moshe Kazimirsky to Team (Crowdfund Insider) Rated: B

Lending Express, an AI-powered marketplace for business loans, has opened a new Silicon Valley office in San Mateo, as well as the appointment of Moshe Kazimirsky to VP of Strategic Partnerships and Business Development to support the West Coast team. The announcement comes on the heels of Lending Express’ May $2.7 million seed funding round led by Entrée Capital, iAngels, and existing investors.

PeerStreet’s CEO Brew Johnson and Leadership Team Wins Comparably’s 2018 Culture Awards in Multiple Categories (Business Wire) Rated: B

PeerStreet, a marketplace for investing in real estate backed loans, is honored to announce that it has won Comparably’s 2018 Culture Awards in the following categories:

  • Best CEOs for Diversity
  • Best CEOs for Women
  • Best Managers
  • Best Leadership Team

Robots could replace as many as 10,000 jobs at Citi’s investment bank (Business Insider) Rated: A

Robots could replace as many as 10,000 human jobs at the banking giant Citi within five years, its president told the Financial Times.

Wells Fargo bans cryptocurrency purchases on its credit cards (Payments Source) Rated: B

Wells Fargo & Co. customers hoping to use their credit cards to buy Bitcoin will have to look elsewhere.

United Kingdom

Lending through Funding Circle unlocked 75,000 jobs in 2017 (Pr Newswire) Rated: AAA

A new report published today by Oxford Economics reveals that lending through Funding Circle, the global small business loans platform, unlocked 75,000 jobs in the United States and Europe in 2017.

Peer-to-peer lender Funding Circle to create 200 UK jobs (B Daily) Rated: A

Peer-to-peer lending platform Funding Circle is creating 200 jobs in the UK.

The London-headquartered firm has this morning (June 13) confirmed plans to take on 400 new employees in 2018, half of whom will be recruited in the UK.

LendInvest’s path from adversity to opportunity (City A.M.) Rated: A

Although the online marketplace model had been proven to work – Amazon and eBay had been established over a decade earlier – LendInvest was initially both “offline” and “pretty uninteresting”. It wasn’t until 2012, with £30m investors’ capital under management, that the founders became intrigued by the role tech could play.

The path to success is littered with unforeseen obstacles, good days can follow bad, tailwinds become headwinds. LendInvest is no exception. When the company was young, raising debt finance often felt like an uphill struggle. It took many air miles and international calls, but eventually an eastern European bank offered a £2m funding line, later increased to £6m.

Ranger Direct shares end higher after bowing to activist pressure to wind up (Financial Times) Rated: A

Ranger Direct Lending operates a £128 million investment company which has faced pressure from activist investors who own almost 30% of the company.

The board proposed yesterday of winding down the company as Ares Management withdrew itself from consideration to manage the trust. Ranger’s board also suggested shareholders vote against newly nominated directors by activist investors.

Ranger Direct Lending has struggled as defaults have crept up in the sector.

Monzo launches task automation with IFTTT (Tearsheet) Rated: A

Personal finance apps offer customers insights into their budgeting and spending habits, but U.K.-based digital bank Monzo is taking that a step further by letting its customers design their own rules on how they want to interact with their money.

Monzo’s tie-up with If This Then That, rolled out in early June, lets customers automate tasks using their financial data through personalized rules. IFTTT is a web and app-based platform to help customers get apps and devices to work together. It lets users set up “if, then” rules; for example, “if I post an Instagram, post it as a native photo on Twitter,” or “if I add a new task to an Amazon Alexa to-do list, add it to the iPhone reminders app,” and so on. IFTTT’s integration with consumer financial data lets them experiment with new use cases for financial data and lets the bank learn more about customer preferences and behavior.

Collateral investors may have to join queue of creditors (Peer2Peer Finance) Rated: A

COLLATERAL investors may end up having to recoup any unpaid interest owed as a creditor of the company, the administrator of the closed peer-to-peer lending platform has revealed.

An update from BDO said its initial view was that due to section 26 of the Financial Services and Markets Act – which deems that agreements with unregulated parties are unenforceable – investors would be treated as creditors.

This means they would have to submit documentation to BDO on what they are owed and wait to see what funds can be recouped through the administration.

European Union

B2B FinTech Could Earn Index Ventures $ 2 Billion This Year (PYMNTS) Rated: A

Venture capitalist (VC) firm Index Ventures is on its way to earn $1.6 billion from its early investments in B2B FinTech, according to Forbesreports Monday (June 11). Index Ventures’ portfolio includes iZettle and Adyen, with unconfirmed reports of a Funding Circle initial public offering (IPO) that could push Index Ventures into the $2 billion mark.

LendInvest joins Luxembourg fintech hub (Finextra) Rated: B

LendInvest, the UK’s leading online marketplace platform for property finance, has become a fellow of the Luxembourg House of Financial Technology (LHoFT), the country’s leading FinTech innovation hub.

LendInvest has had a presence in Luxembourg since 2014 when it established its first Luxembourg-domiciled fund.

Fintech threatens to eclipse banks that do not adapt digitally (Financial Times) Rated: A

Writing an opinion piece for the FT BBVA Executive Chairman Francisco Gonzalez talks about the rise of fintech and big tech in banking. He explains that banks still have an advantage when it comes to security, privacy and compliance.

A new regulatory model is needed for the new era of digital banking and data. Banks need to build on what they do best and evolve to ensure they stay relevant. He believes there is a paradigm shift occurring in banking and that banks need to find a new way to support customers and build out their assets

Australia

Westpac Ends Prospa Collaboration After IPO Postponement (PYMNTS) Rated: AAA

Days after Australian alternative lending platform Prospa delayed its Initial Public Offering (IPO) indefinitely, one of its bank partners, Westpac, announced it was ending its relationship with the FinTech.

Reports in The Australian Financial Review (AFR) on Monday (June 11) said Westpac is ending its referral program that sees small business owners rejected for a bank loan linked to the Prospa platform.

Dover Financial Group calls in outstanding debts from financial planners (Australian Financial Review) Rated: A

Dover Financial Group lured financial advisers by offering to postpone payment of annual licence fees for a year or more, but the collapsed company is now calling for immediate payments of those debts, leaving planners, who are already worried about their future, furious.

India

With Rs 35 cr in disbursals, Lendbox is creating a new asset class for investors (Your Story) Rated: AAA

Basing only 20 percent of its risk assessment engine on the CIBIL score, the platform assesses a borrower’s credit-worthiness based on their social, professional, behavioural analysis, including their salary expenditure trends and limits on credit card. The founders claim that the platform takes close to 130 data points into consideration before deciding on a suitable interest rate.

The borrowers are then classified between A1 (A2 and A3) and B3, with the rate of interest ranging from 12 to 36 percent.

Ekmeet says that close to 85 percent of loan requests are denied by the platform, and only 20 percent of their total users are from Tier II towns and cities.

Asia

Kakao Bank’s chatbot will answer up to 80% of requests (Fintech Futures) Rated: A

Kakao Bank, South Korea’s largest internet-only bank, is already showing the beta version of its customer support chatbot, which is scheduled to be launched sometime this month.

The bank says that the tech will help relieve the stress on its customer services department, which receives up to 80% of requests that could be automated.

Canada

Luge Capital goes huge with $ 75m fintech funding (Fintech Futures) Rated: AAA

Initially, $50 million of the raised capital was announced in October 2017 by the Caisse de dépôt et placement du Québec (CDPQ) and Desjardins Group, two of the fund’s major investors.

Sun Life Financial, the Fonds de Solidarité FTQ and La Capitale are also “significant” participants. Luge says it may expand the fund up to $100 million in the coming months.

Real estate crowdfunding in Canada: portal insights for 2017/18 (IT Business Blog) Rated: A

Real estate online investment or crowdfunding has been a sector that has attracted significant interest in the U.S. over the last several years, with more than 100 portals launched to serve rapidly growing developer and investor interest. In fact, industry research hub crowdsourcing.org estimates that the industry will be worth more than $300 billion USD by 2025.

Latin America

Defaults the largest driver of Brazil banking spreads -cenbank (Reuters) Rated: AAA

Credit defaults have been the main factor keeping Brazilian banks from cutting interest rates to households and companies, the central bank said on Tuesday, even as benchmark rates have fallen to all-time lows.

The average cost of credit fell 1.3 percentage points in 2017 to 21.3 percent, according to a central bank report, compared with a 6.75 percentage point decline in the benchmark Selic interest rate. Spreads fell 3.8 percentage points to 18.9 percentage points.

Defaults, which reached 3.2 percent at the end of 2017 according to a widely used metric, forced banks to keep interest rates high to account for potential losses, the central bank said.

Defaults were behind an average 37.4 percent of banking spreads in 2015-2017, the largest contributor to bumping up credit costs to consumers. Other reasons were administrative expenses, taxes and financial margins, a central bank report showed.

Authors:

George Popescu
Allen Taylor

What Investors Should Know About Non-Bank Lenders

nonbank lenders

Investors looking to add private debt and private equity to their portfolios may feel overwhelmed by all the choices. From peer-to-peer lending to crowdfunding, there are countless industry players across a wide range of alternative lending and financing models, serving everyone from individual borrowers to small and medium-sized businesses. Any funding model ultimately comes down […]

nonbank lenders

Investors looking to add private debt and private equity to their portfolios may feel overwhelmed by all the choices. From peer-to-peer lending to crowdfunding, there are countless industry players across a wide range of alternative lending and financing models, serving everyone from individual borrowers to small and medium-sized businesses.

Any funding model ultimately comes down to matching the needs of those who want capital with those who can supply capital. Typically, banks or other large financial institutions would act as the intermediary between investors and borrowers or entrepreneurs. But with many banks pulling back after the financial crisis, and the internet making it easier than ever to play matchmaker, the alternative finance universe is attracting more and more capital.

However, there is still broad-based confusion among both institutional and retail investors about the differences between the various alternative funding models. This confusion is exacerbated by how often the terminology is used interchangeably in the media and the larger financial community. The truth is that each funding model has distinct nuances, rewards and challenges, and it’s important for investors and their financial advisors to understand the differences before incorporating alternative lending or financing into an investment portfolio.

In general, these models can be broken down as either debt or equity investments, with a similar risk-reward profile as any other debt or equity investment.

DEBT (lower risk, lower reward)

Peer-to-peer lending

In a peer-to-peer (P2P) lending model, an individual or business borrows from an outside source or sources – a “peer” – rather than a bank. This process is facilitated through a third party, such as an online platform, which makes it easier to aggregate enough peers to fund the loan. These loans typically come with fixed terms and set repayment schedules. Many loans will also include details about the borrower—such as their income, credit score, occupation, and risk level—to help the “peers” (or lenders) determine whether to fund the loan and at what amount. Examples of peer-to-peer loans include consumer loans, student loans, small business loans, and fix and flip loans on single family homes.

Investors can get into the peer-to-peer lending market by purchasing the whole loan, a fractional interest in a loan or building a portfolio of fractional and/or whole loans. Investors then collect the proceeds of each loan payment, with the peer-to-peer lender taking a fee to cover the costs of running the platform. While even the most creditworthy borrowers may default on their loans, investors can mitigate this risk by building a diversified portfolio that includes multiple loans across different risk spectrums. Investors should also consider if the P2P loans they are investing in are unsecured or have some form of collateral securing the loan. Consumer and student loans tend to be unsecured, while small business and fix and flip loans tend to be secured.

Marketplace lending

Marketplace lending is another term used to further describe peer-to-peer lending. While the two terms are used interchangeably, an important differentiator is the source of capital. Whereas P2P lending platforms tend to rely on a group of small retail investors or large institutional investors to fund loans, marketplace lenders prefer to first pre-fund loans and then offer them to investors.

The marketplace lending model, therefore, offers qualified borrowers a guarantee that their loan will be funded within a specific timeframe, which may be an important consideration for some borrowers. For example, while a consumer borrower may be willing to wait until his loan is assessed and funded by multiple peers, a borrower looking to finance a real estate transaction has a closing date that must be met otherwise he will lose his down payment.

Direct lending/balance sheet business lending

In contrast to marketplace or peer-to-peer lending models, a direct lender will rely on its own balance sheet or proprietary access to funds as its primary source of capital. Instead of having to find enough retail and institutional investor capital to match the needs of borrowers, a direct lender can look to its unrestricted access of funds before making a lending decision.

The advantage of this approach is that the direct lender is better positioned to survive a potential downturn since each of the loans on its balance sheet represents a piece of collateral that can be used to offset any potential losses. Investors in these loans will therefore have a better opportunity to allocate capital in all market cycles. Many direct lenders may also manage a fund for accredited investors that consists of a portfolio of some, but not all, of the loans made by the lender.

EQUITY (higher risk, higher reward)

Crowdfunding

In the crowdfunding model, investors are given the opportunity to provide seed capital in up-and-coming products and businesses. Capital is provided in several forms including equity, preferred equity, mezzanine debt and senior debt . While equity stakes are typically small—often less than 1%—even a modest upfront investment can generate a large eventual payoff if the company is successful. This is particularly true of technology start-ups, which can grow quickly if their product or service is well received among customers.

This model is also popular in the arts and entertainment industries. For example, people might choose to fund an independently produced movie, music album or play in exchange for a small piece of revenues and/or additional perks like attending rehearsals and premiere parties, meeting the artist, or receiving a memento from the set. In real estate, crowdfunding is most typically used by developers seeking to raise money to fund development or redevelopment projects.

Investors should find out if the crowdfunder is providing equity and debt on the same project. This is critical should a recovery plan need to be put in place if the project does not go as expected. Typically, equity investors want to hold on and wait for an increase in value , while debt investors want to liquidate immediately in hopes of recovering their investment. A crowdfunder that is representing both equity and debt investors in the same project will have a conflict of interest. In addition, these investments also tend to be fairly illiquid, so investors should tread carefully. While these early stage equity investments could potentially pay off handsomely, there’s always the risk that the company or project is a flop.

Initial coin offerings

An initial coin offering, or ICO, is a brand-new type of funding model that is attracting many of the same types of companies that previously relied on crowdfunding. However, instead of acquiring an equity stake in the company, investors in ICOs receive cryptocurrency coins, like Bitcoin or Ether, which are redeemable for cash on certain exchanges. The idea is that as the company grows and becomes more valuable, the coins will also become more valuable.

Since ICOs are still loosely regulated, investors should take extra precautions when evaluating a crypto-related investment opportunity. While a business idea may sound great on paper, investors should look for growth signs like recurring revenues and a large potential market.

These five models only scrape the surface of the full universe of funding options for individuals and businesses. A company or a funding model doesn’t always fit neatly into a box either, and investors should take care to understand how each funding platform generates revenue and where its capital comes from.

When choosing which segment of the market to pursue, investors and advisors should also consider their risk tolerance, which will help determine whether a debt or equity investment is most appropriate, and at what scale.

Author:

Written by Evan Gentry, CEO of Money360.

Wednesday January 24 2018, Daily News Digest

InsurTech

News Comments Today’s main news: SoFi hires Noto to be CEO. StreetShares secures $23M in equity to reach military, veteran market. Zopa fills positions for bank launch. Dianrong raises $70M. Yirendai signs onto Internet Finance Industry Credit Information Sharing Platform. Tera Funding sets Korean fundraising record. Today’s main analysis: FT Partners publishes 2017 InsurTech Almanac (a must-read). Today’s thought-provoking articles: […]

InsurTech

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Lending Times News

News Summary

United States

SoFi Names Anthony Noto Chief Executive Officer (SoFi), Rated: AAA

SoFi today announced that its Board of Directors has named Anthony Noto as chief executive officer and a director, effective March 1.

Twittter executive leaves to run SoFi (SF Gate), Rated: A

In Noto, SoFi has chosen a fast-rising executive in the tech industry. Noto, 49, was one of the most respected bankers at Goldman Sachs before becoming the chief financial officer of the National Football League and then Twitter.

Twitter dips after a key executive leaves for online lending startup SoFi (Business Insider), Rated: A

  • Shares of Twitter slid on Tuesday morning after the online lending startup SoFi announced that Anthony Noto, Twitter’s chief operating officer, will be joining the company as its new CEO, effective March 1. 
  • Twitter has suffered from several departures of key executives in the past two years as the company struggles to bring value to shareholders.
Source: Business Insider

SoFi’s Incoming CEO Brings IPO Experience to a Troubled FinTech (Bloomberg), Rated: AAA

Noto, who worked on technology, media and telecom deals at Goldman Sachs Group Inc. before joining Twitter in 2014, brings to the job a background in tech and finance. Beyond Twitter’s nascent revival, his turnaround abilities are largely untested. But given his history of taking companies public — including Twitter — a SoFi IPO is very much a possibility, according to people familiar with the situation. Furthermore, they say, it’ll be nice to have an adult in the room after all the recent turmoil.

SoFi Wealth, launched last year and harbored ambitions to quickly manage $100 million in assets, Bloomberg News reported in October. It grew slowly until last quarter, when it tripled its assets from September to $42.3 million as of Jan. 18, spokesman Jim Prosser said. The average account holds about $4,300. Other digital wealth startups have north of $10 billion under management.

FT Partners Research Publishes 2017 InsurTech Almanac (FT Partners), Rated: AAA

Highlights of the 2017 Almanac:

  • 2017 was a very active year for the InsurTech sector globally, with the most financings ever (over 200) and more than $2 billion in financing volume
  • While the total announced financing dollar volume for 2017 was lower than in the prior two years, when excluding rounds over $50 million, the volume reached a record high of approximately $1.3 billion
  • Of the four largest financings this year, two were in the Online Health Insurance space (Bright Health and Clover Health), one was in the Telematics space (Nauto) and one was in Online P&C Insurance (Lemonade)
  • 2017 also featured another wave of mid-range to larger financing rounds for InsurTech companies founded in the last several years, including Next Insurance’s $35 mm Series A, The Zebra’s $40 mm Series B, Health IQ’s $35 mm Series C, PolicyGenius’ $30 mm Series C and Trov’s $45 mm Series D
  • Europe had significant increases in financing activity, the largest out of any region this year — financing volume and deal count both grew by more than 2x; the region also recorded its largest InsurTech financing ever: BIMA’s $107 million raise led by Allianz X, which was the fifth largest financing globally in 2017
  • Among the cohort of InsurTech companies founded since 2010, this year marked two milestones:
    • First IPO: China-based ZhongAn (SEHK:6060) raised approximately $1.5 billion
    • Largest acquisition: Guidewire acquired Cyence for $275 million
Source: FT Partners

Download and read the full report here.

California Insurtech Hippo Secures $ 25 Million Through Series B Financing Round (Crowdfund Insider), Rated: A

Hippo, the California-based insurtech company that is transforming home insurance for savvy homeowners, announced on Monday it secured $25 million in Series B funding round, which was led by Comcast Ventures and Fifth Wall. The investment comes less than two weeks after Hippo announced it formed a strategic partnership with Spinnaker Insurance Company.

OnDeck Announces Date of Fourth Quarter and Full Year 2017 Earnings Conference Call (OnDeck), Rated: B

OnDeck (NYSE:ONDK), the leader in online lending for small business, will report its fourth quarter and full year 2017 financial results on Tuesday, February 13, at approximately 7:00 a.m. EST. The company will host a conference call to discuss the results at 8:00 a.m. EST that same day.

The conference call will be webcast live on the company’s Investor Relations website or listeners can access the call toll free by dialing (833) 227-5836 for calls within the U.S., or by dialing (647) 689-4063 for international calls. The Conference ID passcode is 5468078.

StreetShares Secures $ 23 Million Equity Funding to Scale for the Military and Veteran Market (StreetShares Email), Rated: AAA

StreetShares, Inc., the leading small business funding and government contract financing company serving the military and veteran market, announced today it has completed its Series B funding round, raising $23 million in fresh equity capital. The Series B round was led by a $20 million investment from Rotunda Capital Partners, LLC, and included an additional $3 million from existing investors, including veteran-focused venture firm, Stony Lonesome Group.

AutoGravity Milestone: Exceeds $ 2 Billion in Finance Amount Request in 2017 (Crowdfund Insider), Rated: A

AutoGravity, a California-based Fintech on a mission to transform car shopping and financing, announced last week it surpassed $2 billion in finance amount requested in 2017.

Central Pacific Bank adds Elevate Credit executive to board of directors (Pacific Business News), Rated: A

Honolulu-based Central Pacific Financial Corp. has appointed Christopher Lutes as director of the boards of CPF and Central Pacific Bank.

Lutes has been the chief financial officer of Elevate Credit Inc. and its predecessor company, which specializes in tech-enabled online credit solutions, since 2007.

LoanDepot to offer agent, contractor referrals to mortgage shoppers (The Orange County Register), Rated: A

Borrowers signing up for a mortgage through LoanDepot soon can get real estate agent referrals from the online lender as well.

And later this year, people getting home-improvement loans will be able to get the names of contractors, architects, roofers and other professionals.

loanDepot Expands mello Brand (PR Newswire), Rated: A

LD Holdings Group, LLC, parent company of loanDepot, the nation’s second largest non-bank consumer lender, today announced continued expansion beyond its profitable mortgage and personal loan businesses.  In Q1, a newly formed venture, mello Home, will connect pre-approved homebuyers with verified real estate agents in their local market, and help consumers find and hire home improvement and other pros.

Fintech startup wants to help advisers find and sell muni bonds (InvestmentNews), Rated: A

It’s like Zillow, but for bonds.

That’s the idea behind Bond Navigator, a cloud-based digital marketplace for advisers to find and evaluate municipal bonds, that launched Tuesday from startup 280 CapMarkets.

Amazon, PayPal to head to Vegas ABS bash (GlobalCapital), Rated: A

Amazon has already tapped the securitization markets as part of a plan to shift the risk of its business lending programme off its balance sheet.

Amazon has stated in previous quarterly reports that it intends to transfer more of the risk of its seller financing programme to third parties.

Similarly, PayPal has expressed interest in funding its credit portfolio through third parties, including bank lending, securitization, private equity and sovereign wealth funds, although the company told GlobalCapital in August that this would unlikely be a near term project.

Acorns wants to bring investing and education together (Tearsheet), Rated: A

Many financial services companies, both startups and incumbents, talk about the importance of customers’ financial education but how they integrate it into their own offerings often manifests as no more than a dedicated content marketing section or blog. Acorns itself has an online magazine called Grow that features news, financial how-tos and interviews with celebrities like Kevin Durant, Ian Kahn and Tony Robbins.

First Bank Goes Big into Peer To Peer Lending, Launches “Cent” (Business Insider), Rated: A

For personal banking customers of First Bank, the largest community bank headquartered in North Carolina, transferring money to family and friends is now as simple as hitting “Cent.”

On January 22, First Bank launched Cent, its new quick-money transfer tool, allowing personal banking users of the bank’s mobile banking application to send money to anyone, anytime, anywhere in the U.S., regardless of if the recipient banks with First Bank or not. And there are no fees.

Marketplace Lending In 2018: A DIY Mindset (mondaq), Rated: A

There is no doubt marketplace lending, by offering speed and flexibility not historically seen in traditional banking, has done its part to foster the “do it yourself” (DIY) era.

The industry’s rapid growth reflects in part the entry of more than 100 new players in the market in less than a decade.

6 Business Loan Scams and How to Spot Them (AllBusiness), Rated: A

1. The peer lending scam

Peer-to-peer lending has become one of the most important sources of online financing. Unfortunately, there are some shadowy operators out there, using Facebook Messenger and other less traditional avenues to hook in victims.

The scam works like this: You’ll be contacted out of the blue and offered peer-to-peer financing, then asked to pay an arrangement fee or fork out for background checks. You’ll never see the promised cash and you could lose quite a bit of money, as well as data that can be used for identity theft.

4. The credit repair scam

Most young businesses have an inadequate credit score. It’s a simple fact of life. However, there are plenty of predators out there who’ll be keen to convince you that they have the expertise and tools to transform your score—in return for a hefty fee, of course.

5. The loan broker scam

Loan brokers exist to identify the right products for your business, make introductions to lenders, and prepare the paperwork to ensure a smooth process. There are plenty of legitimate and professional brokers, who get paid a commission from lenders for arranging loans; unfortunately, there are also quite a few sharks, who charge upfront fees for the same service.

2018 Predictions and Pitfalls In Finance and Investing (AlleyWatch), Rated: A

Online and Alternative Investing Will Remain Strong: The amount of investors using online investing and alternative options will continue to remain strong, especially for both Baby Boomer and Millennial investors. Online investing exposes investors to a larger number of companies driving innovation, and, many online investors are starting to realize an ROI from their online investing activities. In spring 2017, the number of people who lived in a household that used an online investing/stock trading service within the last 12 months amounted to 15.79 million.

LendingTree Announces Top Customer-Rated Lenders by Loan Product for Q4 2017 (PR Newswire), Rated: B

LendingTree®, the nation’s leading online loan marketplace, today released its quarterly list of the top customer-rated lenders on its network based on actual customer reviews for the fourth quarter of 2017. The list features the top lenders in multiple loan product categories, including Mortgages, Personal Loans, Business Loans and Auto Loans, all of which are included in LendingTree’s online loan marketplace.

Mortgage Category

#1 Winner:  LenderFi, Inc.

Personal Loans Category

#1 Winner: Upgrade

Business Loans Category

#1 Winner: Seek Capital

Auto Loans Category

#1 Winner: RefiJet

Don’t Let Payday Lenders Off the Hook (Bloomberg), Rated: A

Payday lending can be a useful service. A two-week loan of $500 at 400 percent annualized interest can make sense if, say, you need to fix your truck to get to work. Unfortunately, the industry has long made much of its money by trapping customers in a series of consecutive loans that can end up costing many times the amount borrowed. A patchwork of state laws has done little to combat such practices.

CFPB Drops Investigation Into Payday Lender That Contributed To Mick Mulvaney’s Campaigns (International Business Times), Rated: A

Payday lender World Acceptance Corporation announced in a press releaseMonday that it received a letter from the CFPB stating that the financial watchdog had closed its nearly four-year investigation into the company’s marketing and lending practices. The company, which is headquartered in South Carolina, has given at least $4,500 in campaign donations to Mulvaney, who represented South Carolina in the House for six years before becoming President Donald Trump’s budget director last year.

Bye, bye, boomers — banks are looking toward millennials (Chicago Tribune), Rated: A

Sorry, boomers, but the world of banking and insurance isn’t so interested in you anymore. You’re getting too old to buy insurance and too conservative with your investments. And your time horizons are too short to be very profitable to the investment world. The financial services industry is aiming at millennials now.

–Six in 10 millennials are hesitant to discuss their situation with friends because they are embarrassed that they make less money or are ashamed of poor financial decision in their past.

–Only 12 percent of millennials feel very prepared for their financial future.

–Only one-third of millennials feel like they make enough to pay for bills and also save for the future.

Todd Ruppert Joins Money360 Board of Advisors (Business Insider), Rated: B

Money360, a technology-enabled direct lender specializing in commercial real estate loans, today announced that effective immediately, Todd Ruppert, former CEO and president of T. Rowe Price Global Investment Services, has joined the company’s Board of Advisors.

Ten Ways Young Can People Build A Strong Credit Record (Forbes), Rated: B

According to a report by WalletHub, young people struggle with low credit scores partially because they don’t have the time behind them to establish wealth and experience.

  1. Set Up Automatic Payments
  2. Get A Low-Limit Credit Card – Charging small items to a credit card and then paying it off in full every month builds credit in no time. You can find offers for these at creditcards.com and similar sites, with many offering cards with a $300 limit or so.
  3. Piggyback Off Of Others First – By becoming an authorized user on someone’s credit card, you can start building credit from their payments.
  4. Build A Credit History – It is not uncommon to get a 0% or 2% auto loan these days, and this way of building credit history is brilliant.
  5. Minimize Unsecured Debt
United Kingdom

Zopa expands executive team ahead of bank launch (Finextra), Rated: AAA

P2P lender Zopa has begun building the executive team for the launch of its new challenger bank later this year, appointing a CFO, chief risk officer and chief customer officer.

Chief financial officer Steve Hulme joins from Tandem Money where he was CFO for the last two years. Before Tandem, Hulme served as CFO for PayPal’s global credit business and as CFO for Capital One’s UK and Canadian business.

He will be joined by former TSB man Phillip Dransfield as chief risk officer. Dransfield has a 20-year track record in risk management taking in two of the counttry’s largest high street banks.

The left-field appointment of chief marketing officer goes to Clare Gambardella from health and fitness brand Virgin Active.

How UK fintech startups are preparing for open banking (ComputerWorldUK), Rated: AAA

Major banks are scrambling fast to not only comply with the regulation by opening up their APIs, but are also looking to leverage the new open landscape to separate themselves from their competitors and avoid being bitten by these fintech startups.

Take HSBC UK, which has proved itself to be an early mover when it comes to PSD2 by announcing a new beta app which will allow customers to see all of their accounts on one screen, even if they are with a rival bank.

However, UK challenger banks like Monzo and Starling, as well as some other fintech startups listed below, have been working towards the idea of open banking for some time now.

Monzo

According to a blog post by Simon Vans-Colina, an engineer at Monzo, the new API, which they are calling the AIS API, “will be made available to particular companies, that have been granted authorisation as AISPs.

Iwoca

As CEO Christoph Rieche explained to our sister site Techworld, real-time access to customers’ transactional data, which the banks have traditionally held onto for current accounts, is very valuable to his company.

Chip

“In a utopia consumers can start to grant affordability criteria to a lender, provide transaction data to a savings mechanism like Chip, or income data to a mortgage lender,” he said. “You can choose exactly which data you want which third parties to access, so it puts control into the customer’s hands.”

TrueLayer

Founder Francesco Simoneschi likes to compare TrueLayer to Twilio or Stripe, two companies that provide simple, secure and regulated access to core infrastructure (be it telco networks or payments infrastructure, respectively) through a core API.

So TrueLayer sits between the new breed of fintech companies looking to deliver value from newly opened customer financial data, and underlying banking infrastructure, charging a small fee for access to the API.

Emma

Cofounder Edoardo Moreni wrote in a blog post at the time: “Emma is currently building the banking app for millennials (iOS and Android), a mobile-only solution that helps consumers avoid overdrafts, find and cancel subscriptions, track debt and save money.

Debt tracker Emma integrates with Monzo (AltFi), Rated: A

After receiving its FCA approval last week as a Registered Account Information Services Provider (RAISP), subscriptions and debt tracking app Emma has now announced its first official integration with digital bank Monzo.

SME bosses aware of P2P lending but cautious about using it (P2P Finance News), Rated: A

Research among 200 SMEs by recruitment specialist Tindall Perry found while 74 per cent of finance directors describe their knowledge of alternative finance as average or above, only a quarter suggested that they were comfortable with accessing crowdfunding, with P2P lending also scoring less than 50 per cent.

In contrast, 85 per cent of companies said that they understood how best to access asset-based lending, while invoice finance, trade finance and venture capital all saw a positive response rate of between 55 and 75 per cent.

Top bankers warn of financial stability threats amid the calm (City A.M.), Rated: B

Speaking at the World Economic Forum, the annual gathering of the global elite in the Swiss ski resort, she said: “We have far fewer tools to deal with any event that happens.” Richards predicted an upset could occur “somewhere where none of us are looking”, and highlighted peer-to-peer lending as an example.

Current financial conditions have echoes of the pre-crisis era, according to Jes Staley, chief executive of Barclays, speaking at the same event. While he said he believes banks are much less of a threat to stability than a decade ago, he warned that current benign conditions may not last.

China

Dianrong Increases Series D Round Funding by US$ 70 Million (Business Insider), Rated: AAA

Dianrong today announced additional Series D round funding of US$70 million that was led by ORIX Asia Capital Limited, a wholly-owned investment vehicle of ORIX Corporation, and included CLSA, the overseas platform of CITIC Securities, China’s largest investment bank, which in turn is a part of CITIC Group, one of China’s largest conglomerates.

Japan’s Orix invests $ 60 mln in Chinese P2P lender Dianrong (Reuters), Rated: A

Orix Corp has invested $60 million in peer-to-peer lending platform Dianrong, in what is the Japanese financial firm’s first investment in a Chinese fintech venture as it looks to tap into the fast-expanding sector, sources said.

Yirendai Connects to NIFA’s Internet Finance Industry Credit Information Sharing Platform (PR Newswire), Rated: AAA

Yirendai Ltd. (NYSE: YRD) (“Yirendai” or the “Company”), a fintech company in China, announced today that it has connected to the Internet Finance Industry Credit Information Sharing Platform (“the Platform”) established by the National Internet Finance Association of China (“NIFA”). The Platform was established to serve as an industry wide credit data sharing database in aims of reducing credit risk, improving the credit environment and promoting the healthy development of the internet finance industry. Currently, all leading online lending platforms are required to upload their operating credit data to the Platform’s database and members can only make manual inquiries on the Platform through its webpage. Yirendai has been selected by NIFA to participate in a pilot project to enable automatic queries and the Company expects to launch an automated query function in its system shortly.

European Union

Banks and Fintechs Are Duelling In a ‘War For Talent’ (Bloomberg), Rated: AAA

Payments company GoCardless Ltd., which employs 170 people in London, will open a Paris office in February, said chief product and technology officer Carlos Gonzalez-Cadenas. Online lender LendInvest Ltd. said it will make a “concerted effort” to hire additional engineers in London this year, while Salesforce.com Inc.-backed software company Anaplan Inc. says hiring engineering talent is its current priority.

Faes said about 30 to 40 percent of its hires come from major financial institutions, adding that 100 percent of the team’s small risk and compliance team came from banks. For MarketInvoice Ltd., another British online lender, about three-quarters of its 85 employees — roughly a third of which are software engineers and data scientists — came from a large corporate in the financial services or accountancy space, said CEO and co-founder Anil Stocker.

Europe’s fintech industry, which includes challenger banks and online-only lenders, has rapidly expanded over the past 10 years. Traditional financial institutions have faced intense competition as a result, with former Barclays Plc CEO Antony Jenkins saying in July last year that banks could face obsolescence in five to 15 years.

How Adyen Became a $ 2.3bn Payments Company (Forbes), Rated: A

According to a report published in September last year by Innovate Finance and Magister Advisers, VCs poured around $8bn into fintech startups and early stage companies across the continent between 2010 and 2017 and over the course of that period, deal sizes rose significantly. In London – generally considered to be Europe’s Fintech Hub – figures published in January  by London and Partners found that the UK’s fintech sector attracted £1.24bn in 2017 alone.

Established in 2006,  the Amsterdam-based company is currently valued at around $2.3bn and has has built a portfolio of more than 4,000  clients, including Netflix, Facebook, Uber and Spotify, plus retailers such as River Island and Superdry.

International

Cross Border Funds Transfer (CBFT) using Hyperledger Fabric Blockchain (LinkedIn), Rated: AAA

Hyperledger Fabric is a permissioned blockchain platform contributed by IBM and provides plug-and-play modular blockchain components. You can see the commit history visualization of fabric project. Fabric runs chaincode which is comparable to Ethereum’s smart contracts. The consensus protocol is pluggable.

Transaction Flow Let’s see how nodes work together to execute a transaction. For now, let’s assume that the chaincode is already installed on the Peers.

  • Step 1: Transaction requests are proposed by a client. The client must be connected to the required number of peers according to the endorsement policy. A proposed Transaction is forwarded to Peers for Endorsement.
  • Step 2: Each endorsing peer simulates and validates the transaction. Peers reply with their Endorsement and certificate if they agree that the transaction is permitted.
  • Step 3: The client receives results from different Peers and can thus verify agreement among the Peers. Upon verification, the client forwards the transaction to the OS.
  • Step 4: Determining a well-ordered sequence of transactions is the task of the Ordering Service (OS). The OS generates transaction blocks containing validated transactions in the order they are deemed to have occurred, writes them to the ledger and then broadcasts them to all peers that a new set of blocks are now available on the ledger.
Source: Raj M Shimpi

The disappointing arrival of Open Banking … and the optimistic future (The Finanser), Rated: A

All well and good but, in a move that I am fairly sure was carefully orchestrated by the banking community, nearly all of the mainstream media greeted the launch of Open Banking with fear and scaremongering.

Nevertheless, the FinTech community are far more advocates of the new regime:

Note that to find the positive spin on Open Banking, I’ve had to seek out more business or niche news channels than the doomsayers of the mainstream consumer media.

Nasdaq-listed Longfin to open up Ziddu smart contracts to P2P lending (P2P Finance News), Rated: A

GLOBAL fintech group Longfin Corp is planning to make its Ziddu cryptocurrency smart contracts available for peer-to-peer lending.

Ziddu.com provides smart contracts which are available on cryptocurrency Ethereum’s blockchain and can be used as alternative finance solutions within trade finance and FX markets, without the need for a middleman or underwriter.

Building the World’s Most Inclusive Banking Service (Medium), Rated: A

Currently, there are over 2 billion people worldwide who find it difficult to access traditional banking services, often because they are new to the country or do not qualify for credit. I, too, was one of those people. When I arrived in the UK, I didn’t have a proof of address and credit history required to open a bank account, and just like many others in a similar position, I was left in a ridiculous catch-22 situation. I needed a bank account to get a job and a place to live but, in order to get a bank account, I was required to have a place to live and a job.

Monese is laying the foundation of how banks will work in the future by bringing the accessibility and convenience to levels that weren’t possible just a few short years ago. You can now bank locally in 20 different countries, in a matter of a few minutes — all you need is a mobile phone and your passport. You can literally open an account in your home country or an international IBAN in another country whilst standing in a supermarket queue.

Over 270,000 people have signed up to Monese and every day 1,000 more are joining us.

Source: Monese

$ 10 million ICO Success Karma Announces P2P Lending Access, aExchange Listing of KRM Token (The Merkle), Rated: A

Fresh from the success of a well-received ICO that raised $10 million, blockchain start up Karma has now announced open access to its peer-to-peer (P2P) lending platform via the use of its native KRM token, which also began trading on CoinLink exchange on January 11th, 2018.

India

NeoGrowth Credit secures funding of Rs300cr from LeapFrog Investments and others (Medianama), Rated: A

NeoGrowth Credit, a lending startup focused at SMEs has secured Rs 300 crore of equity funding from LeapFrog Investments, and existing investors like Aspada Investment Company and Quona Capital through Accion Frontier Inclusion Fund, reports The Economic Times. The report adds that as part of the investment, LeapFrog’s partner Michael Fernandes will join NeoGrowth’s board.

Asia

Tera Funding raised KRW 10 billion from Korean leading investors in Series A funding round (Business Insider), Rated: AAA

Tera Funding, a real estate P2P lending company in Korea, announced that it has secured KRW10bn (approx. US$9.3M) through its series A funding round from Woori Bank, Atinum Investment, SBI Investment and Premier Partners on 8 January 2018.

It is the largest single series A investment for Korean P2P lending start-ups, and this comes as a pleasant surprise for the industry as such decision to invest in Tera Funding was made after a thorough due diligence amid general public’s increasing worries about the industry with rising defaults and arrears mainly incurred by late-comers who take riskier approach.

Blockchain will force banks to change their feudal mindset (e27), Rated: A

Having said that, the advent of cutting-edge technologies is pushing banks to change the way they operate. While they have been able to survive many revolutions in the past, they cannot remain aloof to blockchain, one of 21st century’s biggest revolutions.

Lending Times News

Check out our new daily news digest and website Blockchain Times. Be sure to subscribe to our daily newsletter for the best in Blockchain news.

Authors:

George Popescu
Allen Taylor

Thursday January 4 2018 Daily News Digest

most funded fintech segments

News Comments Today’s main news: U.S. blocks Ant Financial from buying MoneyGram. Victory Park exits Prosper. Money360 closes $500M in CRE loans. Prosper appoints new marketing chief. Indian startup funding at 3-month low. LaLa World Global to launch token sale. Today’s main analysis: International P2P lending volumes for December 2017. Today’s thought-provoking articles: LendingClub to turn around in 2018. Top hedge […]

most funded fintech segments

News Comments

United States

United Kingdom

European Union

International

Australia

India

Asia

Canada

Africa

News Summary

United States

The U.S. Is Blocking a Chinese Fintech Giant from Buying MoneyGram (Technology Review), Rated: AAA

American authorities have decided that Alibaba’s digital payment firm, Ant Financial, won’t be allowed to acquire the cash transfer company Moneygram.

Money360 Passes $ 500 Million in Commercial Real Estate Loans Closed (GlobeNewswire), Rated: AAA

Money360, a technology-enabled direct lender specializing in commercial real estate (CRE) loans, today announced it has surpassed half a billion dollars in loans closed since inception. This includes $357 million in loans closed for the year 2017.  The milestone comes on the heels of other recent successes for Money360, including the initiation of a partnership with Ten-X, the nation’s leading online real estate transaction marketplace, in which Money360 works to accelerate commercial real estate transactions for buyers, sellers and brokers by offering pre-approved financing for qualified properties and buyers.

Money360 specializes in bridge and permanent loans of $1 million to $20 million. Recent loans closed during the period include:

  • A $7.8 million bridge loan for an office property in Evansville, Indiana, brought to Money360 by Benjamin Kadish at Maverick Capital
  • A $7.5 million bridge loan for a full-service hotel in Cromwell, Connecticut, brought to Money360 by Rushi Shah at Conlon Capital
  • A $6.8 million bridge loan for a nationwide portfolio of Pier 1 retail properties, brought to Money360 by Al Dannatt at Commercial Resource Capital
  • A $6.8 million bridge loan for a mixed-use center in Charleston, South Carolina, brought to Money360 by Dominick Scorzo at Ivenhoe Capital Advisors
  • A $4.4 million permanent loan for a retail center in Mount Olive, New Jersey, brought to Money360 through our partnership with Ten-X
  • A $4 million bridge loan for an office building in Amarillo, Texas, brought to Money360 by Steve States at States Mortgage
  • A $3.2 million bridge loan for a retail center in Santa Fe, New Mexico, brought to Money360 by Martin Chera at Express Mortgage

In addition to record loan generation activity and new partnerships, Money360 has taken a number of notable steps in 2017 to further position the company as a leader in commercial real estate and alternative investing, including:

  • Hired new top talent to support company growth.
  • Named a top five company in the real estate fintech industry by Deloitte based on total investment dollars received.
  • Gained backing and support from Ron Suber. Mr. Suber not only invested in Money360, but also joined the firm as a strategic advisor.

M360 Advisors surpasses $300M in Assets Under Management

Finally, Money360 announced that its affiliate, M360 Advisors (“M360”), surpassed $300 million in assets under management.

3 Turnaround Stocks to Consider in 2018 (The Motley Fool), Rated: AAA

One name that has been sold off very recently is Lending Club (NYSE:LC), the leader in the relatively new industry of FinTech personal lending.

Lending Club’s fee-based model depends on increasing volumes, so growth-oriented investors were likely scared off by the reduced targets.

However, I think the hate has gone too far. Lending Club is the largest and only publicly traded loan marketplace, which has made it the go-to for institutional investors looking for exposure to consumer loans. By tightening credit, Lending Club has demonstrated a long-term commitment to sound underwriting, which should deepen its relationships with these important investors.

And while Lending Club did reduce its near-term guidance, it still guided for roughly 20% revenue growth and increasing profitability next year, which isn’t too shabby. The market opportunity in U.S. credit card consolidation — Lending Club’s core business (though not its the only one) — is still large, at $300-$350 billion, which means Lending Club’s current $11.5 billion loans outstanding only amounts to about 3-4% of this market.

TOP HEDGE FUND INDUSTRY TRENDS FOR 2018 (All About Alpha), Rated: AAA

Despite the plethora of negative articles about the hedge fund industry, hedge fund assets have reached an all-time high 5 quarters in a row. Across the hedge fund investor landscape, we see a significant improvement in sentiment towards the industry. We forecast that industry assets will grow by 5.5% over the next 12 months.

Strategies that will gain assets include:

  • Quant
  • Asia long/short equity  – The IMF predicts that 2/3 of world growth will come from Asia over the next 5 years. Less than 5% of Hedge Fund industry assets are invested with Asia based managers.
  • Reinsurance
  • Higher turnover fixed income
  • Strategies that blur the lines between private equity and hedge funds – Most of these are private lending/specialty financing.

Strategies that will lose assets include:

  • Traditional long/short equity focusing on the developed markets.
  • High beta fixed income managers.

Arms race for Alpha

The industry is experiencing an information arms race with respect to how much information can be gathered and how quickly it can be processed.  Information advantages are often short-lived, and many managers are investing in a host of new technologies such as quantitative analytics, alternative data sources and Artificial Intelligence in an attempt to enhance their decision making and improve traditional investment processes. Information and technology are being used to increase efficiency and accuracy in sourcing information, researching ideas and executing investments.

Increase in hedge funds shutting down

The hedge fund industry remains over saturated with an estimated 15,000 funds. We believe approximately 90% of all hedge funds do not justify their fees, as evidenced by the mediocre returns of hedge fund indices. Fed-up with poor performance, investors are increasingly more likely to redeem from underperforming managers leading to an increase in fund closures.

Bullish on Cryptocurrency industry despite potentially one of the largest bubbles in capital markets history

Cryptocurrency is in its infancy stage and will continue to experience tremendous innovation, evolution and exponential growth over the next decade. There are already more than 120 hedge funds focused on cryptocurrencies and block chain technology. We expect this number to increase 2 to 3 times in 2018.

Prosper Marketplace Appoints Former Bank of America Executive Justine Metz Head of Marketing (BusinessWire), Rated: AAA

Prosper Marketplace today announced it has appointed Justine Metz as Executive Vice President of Marketing.

Metz brings more than 25 years of marketing experience and joins Prosper from SRS Acquiom, a financial firm that specializes with M&A transactions. Prior to that, Justine served as Head of Global Wealth and Investment Management Marketing and Sales Support at Bank of America, where she was responsible for driving growth, profitability and loyalty for Bank of America’s Wealth Management business, Merrill Lynch and US Trust. She has also held senior positions at Fidelity Investments, Morgan Stanley and GE Capital (GEFA).

MoneyLion Secures $ 42 Million Investment to Accelerate Growth (BusinessWire), Rated: A

MoneyLion, the digital personal finance platform for the financial middle class, announced today it has secured a $42 million Series B funding, led by Edison Partners. Existing investors FinTech Collective and Grupo SURA, as well as new investors Greenspring Associates and Danhua Capital also participated in the round. All told, MoneyLion has now raised $67 million in equity financing.

The latest investment follows rapid growth of the MoneyLion platform, which has surpassed 1.5 million users and has experienced 178% compounded growth in revenue since 2015. The company, which is cash flow positive, plans on using the growth capital to increase investment in technology and continue to expand its product line.

How Tech Sends Clients Running Back to Human FAs (Financial Advisor IQ), Rated: A

While investors have been using digital tools as an entry into financial planning, they’re simply inundated by too much data and eventually turn to human advisors for help, Cerulli Associates says, according to the publication.

Nonetheless, investors’ appetite for digital advice isn’t subsiding: digital platforms were expected to reach $220 billion in client assets by the end 2017 and more than $600 billion by the end of 2022, according to the report cited by FA magazine.

 

Celsius to replace traditional future exchanges like CME and CBOT with crypto lenders (LeapRate), Rated: A

Celsius, a blockchain powered lending and borrowing platform, just announced that it aims to replace big banks and futures exchanges, like the CME and CBOT, with crypto coin holders who will earn returns through lending. Using its platform, which will launch in Q1 2018, Celsius members can easily borrow coins at significantly reduced rates compared to traditional financial institutions, while lenders can earn automatic interest by holding coins in the Celsius Wallet.

Dubbed as “The Wallet That Pays Back”, registrants who deposit coins into the Celsius Wallet will receive up to 7% per year on loaned coins.

Celsius plans to offer a variety of powerful financial tools for crypto asset holders, including:

  • Peer-to-Peer Lending 
  • Peer-to-Peer Borrowing 
  • Crypto Shorting: Network members will be able to short crypto assets by borrowing coins from lenders almost instantaneously.
  • Global Credit 
  • Capital Protection: Celsius will provide protection for all coins, by collecting a portion of the principal interest amount from borrowers.

Crypto P2P lender Celsius readies for launch (P2P Finance News), Rated: B

CELSIUS, an Ethereum-based peer-to-peer lending platform, is set to launch during this quarter.

Lenders will receive up to seven per cent year by depositing coins into the Celsius Wallet that are lent out to the platform’s network of members, according to LeapRate.com.

2018’s Best Credit Cards & $ 7.4B in Extra Interest Following Fed Hikes (WalletHub Email), Rated: A

With millions of people making a financially themed resolution for 2018 and recent Fed rate hikes expected to cost credit card users an extra  Best For… Card Name Travel Rewards

The Mastermind Behind Chase’s Industry-Changing Sapphire Reserve Card Sets Her Sights on Banking (Bloomberg), Rated: A

Pam Codispoti had a dilemma. She’d been brought on by JPMorgan Chase & Co.to develop a credit card for affluent millennials in 2014—a time when no one thought the group wanted credit cards.

Chase’s response was the Sapphire Reserve. The $450-a-year card came with a sign-up bonus of 100,000 reward points and allowed holders to use them at a wide variety of hotels, airlines, restaurants, and more. Holders were also rewarded extra for spending in those categories, and even given a $300 annual travel credit.

CFPB 2018 outlook: More deregulation, more upheaval (American Banker), Rated: A

The first 11 months alone under former CFPB Director Richard Cordray saw a steady stream of enforcement actions and regulatory policies that by itself would make the bureau’s year more eventful than that of other agencies. That span also saw the Trump administration’s challenges to Cordray’s leadership, and the congressional repeal of the CFPB arbitration rule.

Indiana lawmaker files bill to cap payday loan interest rates at 36 percent (rtv6), Rated: A

State Sen. Greg Walker (R-Columbus) filed on Tuesday the first of its kind legislation that would cap small loan finance charges at 36 percent.

Currently, the cap for payday loans in Indiana is 391 percent, according to Walker.

Indiana ranks 44th, among the worst in the nation, when it comes to bankruptcy and Hoosiers and their communities lose about $70 million a year in payday loan fees, according to the Indiana Institute for Working Families.

If in case you have debt, keep away from this massive mistake many debtors make (Kaplan Herald), Rated: B

In June, cumulative U.S. household debt reached $12.84 trillion, a $114 billion increase from the first quarter.

Four 4 in 5 Americans are in the red, according to data from a provided exclusively to CNBC.

United Kingdom

Victory Park Capital fund exits Prosper loans (AltFi), Rated: AAA

The £336.8m VPC Specialty Lending fund has sold its total holding in Prosper marketplace loans, representing 4.1 per cent of the Company’s net asset value [NAV].

Valuing Funding Circle (Financial Times), Rated: AAA

Back in 2014, Lending Club and OnDeck were riding high. The American startups led a pack of online lending companies “disrupting” consumer and business loans respectively.

The hype reached fever-pitched as they floated within weeks of each other. Lending Club was valued at $5.4bn. OnDeck at $1.3bn.

So, hats off to Funding Circle, the British online lender that is preparing to follow in the footsteps of its struggling peers across the Atlantic.

Making the most of your money (P2P Finance News), Rated: AAA

AS INFLATION grows ahead of expectations, far too many savers are seeing the value of their hard-earned cash decline.

Recent research from the Financial Conduct Authority (FCA) found that just under a third (30 per cent) of UK adults would not be able to cope if their mortgage repayments increased by £50 a month.

With the recent 0.25 per cent rate rise, it won’t be long before these households feel the squeeze.

The rise of P2P

UK savers and investors are also willing to back British businesses. Six in 10 (63 per cent) would be willing to lend to a business. Over a quarter (26 per cent) would lend to a business that could use their assets as security. A quarter (25 per cent) would lend to an established business that has been operating for a few years and 11 per cent would lend to a start-up business.

Click here for more information on ArchOver.

Folk2Folk Announces New CEO as Giles Cross Takes Over Leadership Role P2P Lending Platform (Crowdfund Insider), Rated: A

Folk2Folk, a unique peer to peer lending platform that combines physical locations with an online platform matching investors with small business loans, has announced the appointment of Giles Cross  Chief Executive Officer (CEO).

Cross joined Folk2Folk as Chief Marketing Officer in June 2017.

 

Property Lender Financed Around 1,800 UK Homes in 2017 (Landlord News), Rated: A

LendInvest, a leading specialist property lender, lent £500m to help professional property investors, developers and landlords buy, build or renovate around 1,800 UK homes during 2017.

This marks a 33% increase on the previous year’s £375m lending record.

LendInvest has now lent a total of over £1.2 billion to property investors and developers.

High touch meets high tech (P2P Finance News), Rated: A

FAIRNESS IS pivotal to Newable Lending’s ethos when it comes to lending – and it’s not afraid to nail its colours to the mast. The peer-to-peer business lender is a member of Responsible Finance, a trade body working to increase access to fair finance.

FCA financial advice director steps down (Mortgage Strategy), Rated: B

FCA director of life insurance and financial advice Linda Woodall has stepped down from the regulator.

The regulator understands she intends to retire. A replacement has yet to be appointed.

European Union

New EU financial market rules off to smooth start: Watchdog (Khaleej Times), Rated: AAA

The rollout of new European Union securities rules on Wednesday has been glitch-free so far, though disruptions in coming days and months cannot be ruled out, the bloc’s markets watchdog said.

But given the complexity and size of the reform, Esma could not rule out glitches in coming days or weeks, Maijoor said.

Rocky start for Europe’s financial market revamp (Handelsblatt Global), Rated: A

Even after a year-long delay, precious few experts fully understand the Markets in Financial Instruments Directive II, Europe’s biggest financial markets reform in almost a decade.

Among other key changes, and in a belated nod to technological progress, telephone-based trading will be replaced with electronic platforms in bonds and off-exchange derivatives. And consumers should immediately see financial advice standards rise.

Analysts estimate that MiFid II will cost $6 billion (€5 billion) to implement in the first five years.

Exclusive Interview with Fast Invest CEO Simona Vaitkune (ChipIn), Rated: A

We recently sat down with the CEO of Fast Invest, Simona Vaitkune to have a chat with her about the project as well as finding out her thoughts and insights.

Tell us about how you came up with the idea of Fast Invest. Did you face a problem within the industry or do you think there is a gap in the market for Fast Invest to fill?

Everything started when I wanted not only to save money but to earn from my savings, to get passive income. I began to search for a platform which would fit me, but I could not find anything because I wanted to do it easily and safely without investing a lot of money.

What do you think is the biggest problem Fast Invest will solve and why is the problem important to solve?

Fast Invest is solving a problem that I mentioned before – complexity and large entry point of investment platforms. With Fast Invest, you can start investing from 1 Euro, Zloty or Pound. On top of that, you do not need to worry about your money, because we offer BuyBack and default guarantees.

International

International P2P Lending Volumes December 2017 (P2P-Banking), Rated: AAA

Mintos finished a remarkable month fueled by the cashback promotion. The total volume for the reported marketplaces adds up to 582 million Euro.

This month I added PeerBerryLook&Fin and MyTripleA.

Source: P2P-Banking

Setting the Tone for 2018 in the Most Important Charts of 2017 (Let’s Talk Payments), Rated: AAA

In 2017, lending startups around the world scored almost $4 billion in total funding, followed by $3.55 billion gathered by InsurTech startups, $3.24 billion invested in payments, and, of course, $850 million pocketed by startups building blockchain-based solutions.

Keep shoppers, the planet, and your profits happy by allowing in-store returns (Biz Report), Rated: A

Reverse-logistics firm Optoro found that nearly half (45%) of people will begin sending back unwanted items no sooner than the ripped up wrapping paper has been balled and binned. UPS recently forecast that returns would peak at 1.4 million packages on Wednesday 3 January, 2018, up 8% on last year and the fourth consecutive yearly increase. UPS said consumers returned more than 1 million packages a day to retailers last month.

According to Optoro’s report, the majority of returns (91%) will take place in-store. While total returns account for more than $351 billion in lost sales for U.S. retailers (Appriss Retail) the fact that most of those returns are happening in store is good news. More than half (57%) of shoppers who return items to a physical store make additional purchases during the process.

Could blockchains replace banks in real estate lending? (American Banker), Rated: A

The startup Propy recently sold an apartment in the Ukraine through its blockchain, and in the last week of December it began letting Californians buy and sell properties on its blockchain using bitcoin. They will be able to use U.S. dollars next year.

ShelterZoom has built an Ethereum-based platform that went live Dec. 14. RealBlocks lets people invest in housing on its blockchain with fiat or digital currency (and starting in February 2018, its own tokens). It has completed seven deals so far.

RealBlocks lets people invest in rental properties like Section 8 housing over a blockchain.

It has also partnered with SALT Lending so that after February, participants will be able to take out a loan or line of credit using the tokens they buy from RealBlocks as collateral.

A blockchain could also facilitate crowdsourced mortgages. Instead of taking out a $200,000 loan from one lender, a borrower could get $2,000 each from 1,000 investors.

18 Blockchain Predictions for 2018 (Consensy), Rated: A

Bitcoin as a digital store of value is the least interesting use of blockchain … There, I said it.

A Loan

Source: Consensys

An Initial Public Offering or Crowdfunding

Source: Consensys

10. People will take control of their online identities

We will continue to see the growing trend wherein people, companies, and machines manage their identity self-sovereignly rather then by a third party service provider like a bank, Facebook, or another internet service provider.

Interestingly, governments will increasingly find themselves as attestors to these self-sovereign identities, similar to how Zug, Switzerland is attesting to citizens identity usage with uPort, Ethereum leading self-sovereign identity solution.

11. In 2018, governments and regulatory bodies will mandate the use of blockchain to track and trace high value assets.

Major Fortune 50 companies are already demanding public chain track and trace use cases for which they are using the Viant platform to build their solutions.

18. The total market cap of blockchain-based digital assets will exceed $2 trillion U.S. dollars by January 1, 2019.

The price of ether will exceed $2,000 in 2018. Ether will continue to outperform bitcoin, and the total market cap of ether will exceed that of bitcoin in 2018.

8 fintech trends on our radar for 2018 (O’Reilly Media), Rated: B

  1. AI will be implemented across the stack
  2. New products will make advanced analytics easier
  3. Blockchain technologies will be used in financial services products
  4. Data partnerships will increase
  5. We’ll see even greater regionalization and regulation in payments – This is an area where both startups and global companies are flourishing. The technologies, protocols, and players vary by region. I’m amazed by how widely used QR codes are in China (WeChat and Alipay) and the rest of the world (GoPay in Southeast Asia, Paytm in India). For companies operating in the EU, PSD2 is a new 2018 regulation aimed at fostering innovation and competition in the payments industry.
  6. Customer experience will be increasingly mobile
  7. There will be increased pressure around privacy and security
  8. More quants will be analyzing or trading cryptocurrencies
Australia

Can a fintech lending firm disrupt the big four? (Asiamoney), Rated: AAA

As CVs for Australian bankers go, Jason Yetton’s background doesn’t quite scream ‘disruptor’. High-flyer perhaps, certainly ambitious and across trends. But helming a startup?

Two years on from Westpac and now running SocietyOne, the Sydney-based loans fintech that is one of Australia’s more prominent financial startups, the mid-career Yetton seems to bite with near evangelistic fervour the very hand of establishment banking that once nourished him.

Australian banking is backward in many critical areas, Yetton tells Asiamoney. He wants to see a tech-led democratization that would revolutionize payments and settlement, as well as lending, data and information infrastructure, while allowing customers to switch banks without penalty.

The current system preserves the status quo, Yetton says, in which the formidable foursome control 80% to 85% of Australia’s banking market and from which they earned a collective A$32 billion ($24 billion) in the 2017 financial year.

India

Funds Raised By Indian Startups Hit Three-Month Low (Bloomberg), Rated: AAA

Funds raised by Indian startups hit a three-month low, as four startups together managed to raise just around $10 million last week. That compares with $36 million raised by 10 startups the week before in angel, seed or venture capital funding.

Online lending firm Lendingkart Finance Ltd. raised around $3.7 million (Rs 25 crore) from the country’s largest public sector bank State Bank of India to grow its loan books, the company said in a statement.

Indian start-up ecosystem on a growth path in 2018 (Outlook), Rated: A

India’s start-up eco-system has been growing at a rapid pace and has all the right ingredients to support the fast paced economic growth of the country. With an addition of 1000 start-ups in the year 2017, the start-ups have played a big role in the growth of the Indian economy, making it a major source of employment, innovation and industrialisation.

i2ifunding, India’s second largest P2P lending platform plans to expand its business across the country, instead of focussing on metro cities.

Asia

LaLa World Global to Launch $ 10M Public Token Sale Jan. 5 (BusinessWire), Rated: AAA

Blockchain startup LaLa World is pleased to announce the long anticipated launch of the Lala Token sale to commence on January 5, 2018 and to run through February 5, 2018. A total of 150 Million LALA Tokens will be released in an initial coin sale (ICO) starting this Friday.

LALA World Products from their Financial Ecosystem Include:

  1. LALA Transfer – A Peer-to-Peer local and global remittance backed by crypto as well as fiat.
  2. LALA Bill Pay – Local and International bill payments for you and your family.
  3. LALA Lends – Domestic and International peer-to-peer lending via crypto and fiat, individual and small businesses.
  4. LALA Card – Crypto and Fiat card synced to your Wallet and usable at millions of PoS globally.
  5. LALA Kit – Contains a mobile phone with pre-loaded LALA Wallet, LALA Insurance, LALA Card, partners’ products, etc.

LaLa World is a wholesome financial ecosystem for the unbanked, starting with migrants and their families back home. Investors can purchase LaLa Tokens here: 

8 promising Fintech Startups in Singapore to Watch in 2018 (Fintech News), Rated: A

  1. MyCash Online is an online marketplace designed for migrant workers in Malaysia and Singapore.
  2. Instarem is a remittance startup that aims to offer fast, safe and cost effective cross border money transfer services for individuals and businesses from countries including Hong Kong, Australia and Singapore to more than 25 countries.
  3. Singapore Life is a new life insurance firm which commenced its operations in 2017 by providing insurance solutions via its online platform.
  4. soCash has developed a solution that allows people to withdraw cash at small businesses part of its “Cashpoints” network. The solution plugs into the mobile apps of banks.
  5. Bluzelle Networks is a blockchain startup that’s building a decentralized, on-demand, scalable database for decentralized applications.
  6. TenX is a cryptocurrency payment platform that consists of a wallet, physical debit card, bank account, ATM access and more.
  7. AGDelta is a Singapore headquartered fintech software company specialized in digital wealth management.
  8. Flywire, formerly peerTransfer, is a provider of international payment solutions headquartered in Boston with operations in Singapore, China, Australia, Spain and the UK.
Canada

New payday loan rules still too soft, says group (CBC.ca), Rated: A

On Monday, New Brunswick became the eighth Canadian province to introduce regulations governing the payday loan industry.

Earlier this week, the Financial and Consumer Services Commission announced a new set of regulations, including mandatory licensing for payday lenders, requiring then to display posters showing their rates, and making insurance on loans optional.

Lenders are also prohibited from issuing more than one loan at a time to the same consumer, or lending more than 30 per cent of the consumer’s net pay.

Under the new rules, the commission is able to take action against unlicensed lenders and those that fail to comply with legislation.

Africa

Kenya most lucrative market for fintech top staff in Africa (Business Daily), Rated: AAA

Kenya is the most attractive market in Africa for workers in the fintech industry with new data showing that companies pay the highest salaries in comparison to their peers on the continent.

In a recent survey, the Digital Frontiers Institute (DFI) found that executives and senior managers working for Kenyan fintech companies earn each a base monthly salary of Sh2 million (Sh24.6 million or $238,509 annually) and Sh1.2 million (Sh14.2 million or $137,303 annually), respectively.

Authors:

George Popescu
Allen Taylor

Thursday January 4 2018 Daily News Digest

most funded fintech segments

News Comments Today’s main news: U.S. blocks Ant Financial from buying MoneyGram. Victory Park exits Prosper. Money360 closes $500M in CRE loans. Prosper appoints new marketing chief. Indian startup funding at 3-month low. LaLa World Global to launch token sale. Today’s main analysis: International P2P lending volumes for December 2017. Today’s thought-provoking articles: LendingClub to turn around in 2018. Top hedge […]

most funded fintech segments

News Comments

United States

United Kingdom

European Union

International

Australia

India

Asia

Canada

Africa

News Summary

United States

The U.S. Is Blocking a Chinese Fintech Giant from Buying MoneyGram (Technology Review), Rated: AAA

American authorities have decided that Alibaba’s digital payment firm, Ant Financial, won’t be allowed to acquire the cash transfer company Moneygram.

Money360 Passes $ 500 Million in Commercial Real Estate Loans Closed (GlobeNewswire), Rated: AAA

Money360, a technology-enabled direct lender specializing in commercial real estate (CRE) loans, today announced it has surpassed half a billion dollars in loans closed since inception. This includes $357 million in loans closed for the year 2017.  The milestone comes on the heels of other recent successes for Money360, including the initiation of a partnership with Ten-X, the nation’s leading online real estate transaction marketplace, in which Money360 works to accelerate commercial real estate transactions for buyers, sellers and brokers by offering pre-approved financing for qualified properties and buyers.

Money360 specializes in bridge and permanent loans of $1 million to $20 million. Recent loans closed during the period include:

  • A $7.8 million bridge loan for an office property in Evansville, Indiana, brought to Money360 by Benjamin Kadish at Maverick Capital
  • A $7.5 million bridge loan for a full-service hotel in Cromwell, Connecticut, brought to Money360 by Rushi Shah at Conlon Capital
  • A $6.8 million bridge loan for a nationwide portfolio of Pier 1 retail properties, brought to Money360 by Al Dannatt at Commercial Resource Capital
  • A $6.8 million bridge loan for a mixed-use center in Charleston, South Carolina, brought to Money360 by Dominick Scorzo at Ivenhoe Capital Advisors
  • A $4.4 million permanent loan for a retail center in Mount Olive, New Jersey, brought to Money360 through our partnership with Ten-X
  • A $4 million bridge loan for an office building in Amarillo, Texas, brought to Money360 by Steve States at States Mortgage
  • A $3.2 million bridge loan for a retail center in Santa Fe, New Mexico, brought to Money360 by Martin Chera at Express Mortgage

In addition to record loan generation activity and new partnerships, Money360 has taken a number of notable steps in 2017 to further position the company as a leader in commercial real estate and alternative investing, including:

  • Hired new top talent to support company growth.
  • Named a top five company in the real estate fintech industry by Deloitte based on total investment dollars received.
  • Gained backing and support from Ron Suber. Mr. Suber not only invested in Money360, but also joined the firm as a strategic advisor.

M360 Advisors surpasses $300M in Assets Under Management

Finally, Money360 announced that its affiliate, M360 Advisors (“M360”), surpassed $300 million in assets under management.

3 Turnaround Stocks to Consider in 2018 (The Motley Fool), Rated: AAA

One name that has been sold off very recently is Lending Club (NYSE:LC), the leader in the relatively new industry of FinTech personal lending.

Lending Club’s fee-based model depends on increasing volumes, so growth-oriented investors were likely scared off by the reduced targets.

However, I think the hate has gone too far. Lending Club is the largest and only publicly traded loan marketplace, which has made it the go-to for institutional investors looking for exposure to consumer loans. By tightening credit, Lending Club has demonstrated a long-term commitment to sound underwriting, which should deepen its relationships with these important investors.

And while Lending Club did reduce its near-term guidance, it still guided for roughly 20% revenue growth and increasing profitability next year, which isn’t too shabby. The market opportunity in U.S. credit card consolidation — Lending Club’s core business (though not its the only one) — is still large, at $300-$350 billion, which means Lending Club’s current $11.5 billion loans outstanding only amounts to about 3-4% of this market.

TOP HEDGE FUND INDUSTRY TRENDS FOR 2018 (All About Alpha), Rated: AAA

Despite the plethora of negative articles about the hedge fund industry, hedge fund assets have reached an all-time high 5 quarters in a row. Across the hedge fund investor landscape, we see a significant improvement in sentiment towards the industry. We forecast that industry assets will grow by 5.5% over the next 12 months.

Strategies that will gain assets include:

  • Quant
  • Asia long/short equity  – The IMF predicts that 2/3 of world growth will come from Asia over the next 5 years. Less than 5% of Hedge Fund industry assets are invested with Asia based managers.
  • Reinsurance
  • Higher turnover fixed income
  • Strategies that blur the lines between private equity and hedge funds – Most of these are private lending/specialty financing.

Strategies that will lose assets include:

  • Traditional long/short equity focusing on the developed markets.
  • High beta fixed income managers.

Arms race for Alpha

The industry is experiencing an information arms race with respect to how much information can be gathered and how quickly it can be processed.  Information advantages are often short-lived, and many managers are investing in a host of new technologies such as quantitative analytics, alternative data sources and Artificial Intelligence in an attempt to enhance their decision making and improve traditional investment processes. Information and technology are being used to increase efficiency and accuracy in sourcing information, researching ideas and executing investments.

Increase in hedge funds shutting down

The hedge fund industry remains over saturated with an estimated 15,000 funds. We believe approximately 90% of all hedge funds do not justify their fees, as evidenced by the mediocre returns of hedge fund indices. Fed-up with poor performance, investors are increasingly more likely to redeem from underperforming managers leading to an increase in fund closures.

Bullish on Cryptocurrency industry despite potentially one of the largest bubbles in capital markets history

Cryptocurrency is in its infancy stage and will continue to experience tremendous innovation, evolution and exponential growth over the next decade. There are already more than 120 hedge funds focused on cryptocurrencies and block chain technology. We expect this number to increase 2 to 3 times in 2018.

Prosper Marketplace Appoints Former Bank of America Executive Justine Metz Head of Marketing (BusinessWire), Rated: AAA

Prosper Marketplace today announced it has appointed Justine Metz as Executive Vice President of Marketing.

Metz brings more than 25 years of marketing experience and joins Prosper from SRS Acquiom, a financial firm that specializes with M&A transactions. Prior to that, Justine served as Head of Global Wealth and Investment Management Marketing and Sales Support at Bank of America, where she was responsible for driving growth, profitability and loyalty for Bank of America’s Wealth Management business, Merrill Lynch and US Trust. She has also held senior positions at Fidelity Investments, Morgan Stanley and GE Capital (GEFA).

MoneyLion Secures $ 42 Million Investment to Accelerate Growth (BusinessWire), Rated: A

MoneyLion, the digital personal finance platform for the financial middle class, announced today it has secured a $42 million Series B funding, led by Edison Partners. Existing investors FinTech Collective and Grupo SURA, as well as new investors Greenspring Associates and Danhua Capital also participated in the round. All told, MoneyLion has now raised $67 million in equity financing.

The latest investment follows rapid growth of the MoneyLion platform, which has surpassed 1.5 million users and has experienced 178% compounded growth in revenue since 2015. The company, which is cash flow positive, plans on using the growth capital to increase investment in technology and continue to expand its product line.

How Tech Sends Clients Running Back to Human FAs (Financial Advisor IQ), Rated: A

While investors have been using digital tools as an entry into financial planning, they’re simply inundated by too much data and eventually turn to human advisors for help, Cerulli Associates says, according to the publication.

Nonetheless, investors’ appetite for digital advice isn’t subsiding: digital platforms were expected to reach $220 billion in client assets by the end 2017 and more than $600 billion by the end of 2022, according to the report cited by FA magazine.

 

Celsius to replace traditional future exchanges like CME and CBOT with crypto lenders (LeapRate), Rated: A

Celsius, a blockchain powered lending and borrowing platform, just announced that it aims to replace big banks and futures exchanges, like the CME and CBOT, with crypto coin holders who will earn returns through lending. Using its platform, which will launch in Q1 2018, Celsius members can easily borrow coins at significantly reduced rates compared to traditional financial institutions, while lenders can earn automatic interest by holding coins in the Celsius Wallet.

Dubbed as “The Wallet That Pays Back”, registrants who deposit coins into the Celsius Wallet will receive up to 7% per year on loaned coins.

Celsius plans to offer a variety of powerful financial tools for crypto asset holders, including:

  • Peer-to-Peer Lending 
  • Peer-to-Peer Borrowing 
  • Crypto Shorting: Network members will be able to short crypto assets by borrowing coins from lenders almost instantaneously.
  • Global Credit 
  • Capital Protection: Celsius will provide protection for all coins, by collecting a portion of the principal interest amount from borrowers.

Crypto P2P lender Celsius readies for launch (P2P Finance News), Rated: B

CELSIUS, an Ethereum-based peer-to-peer lending platform, is set to launch during this quarter.

Lenders will receive up to seven per cent year by depositing coins into the Celsius Wallet that are lent out to the platform’s network of members, according to LeapRate.com.

2018’s Best Credit Cards & $ 7.4B in Extra Interest Following Fed Hikes (WalletHub Email), Rated: A

With millions of people making a financially themed resolution for 2018 and recent Fed rate hikes expected to cost credit card users an extra  Best For… Card Name Travel Rewards

The Mastermind Behind Chase’s Industry-Changing Sapphire Reserve Card Sets Her Sights on Banking (Bloomberg), Rated: A

Pam Codispoti had a dilemma. She’d been brought on by JPMorgan Chase & Co.to develop a credit card for affluent millennials in 2014—a time when no one thought the group wanted credit cards.

Chase’s response was the Sapphire Reserve. The $450-a-year card came with a sign-up bonus of 100,000 reward points and allowed holders to use them at a wide variety of hotels, airlines, restaurants, and more. Holders were also rewarded extra for spending in those categories, and even given a $300 annual travel credit.

CFPB 2018 outlook: More deregulation, more upheaval (American Banker), Rated: A

The first 11 months alone under former CFPB Director Richard Cordray saw a steady stream of enforcement actions and regulatory policies that by itself would make the bureau’s year more eventful than that of other agencies. That span also saw the Trump administration’s challenges to Cordray’s leadership, and the congressional repeal of the CFPB arbitration rule.

Indiana lawmaker files bill to cap payday loan interest rates at 36 percent (rtv6), Rated: A

State Sen. Greg Walker (R-Columbus) filed on Tuesday the first of its kind legislation that would cap small loan finance charges at 36 percent.

Currently, the cap for payday loans in Indiana is 391 percent, according to Walker.

Indiana ranks 44th, among the worst in the nation, when it comes to bankruptcy and Hoosiers and their communities lose about $70 million a year in payday loan fees, according to the Indiana Institute for Working Families.

If in case you have debt, keep away from this massive mistake many debtors make (Kaplan Herald), Rated: B

In June, cumulative U.S. household debt reached $12.84 trillion, a $114 billion increase from the first quarter.

Four 4 in 5 Americans are in the red, according to data from a provided exclusively to CNBC.

United Kingdom

Victory Park Capital fund exits Prosper loans (AltFi), Rated: AAA

The £336.8m VPC Specialty Lending fund has sold its total holding in Prosper marketplace loans, representing 4.1 per cent of the Company’s net asset value [NAV].

Valuing Funding Circle (Financial Times), Rated: AAA

Back in 2014, Lending Club and OnDeck were riding high. The American startups led a pack of online lending companies “disrupting” consumer and business loans respectively.

The hype reached fever-pitched as they floated within weeks of each other. Lending Club was valued at $5.4bn. OnDeck at $1.3bn.

So, hats off to Funding Circle, the British online lender that is preparing to follow in the footsteps of its struggling peers across the Atlantic.

Making the most of your money (P2P Finance News), Rated: AAA

AS INFLATION grows ahead of expectations, far too many savers are seeing the value of their hard-earned cash decline.

Recent research from the Financial Conduct Authority (FCA) found that just under a third (30 per cent) of UK adults would not be able to cope if their mortgage repayments increased by £50 a month.

With the recent 0.25 per cent rate rise, it won’t be long before these households feel the squeeze.

The rise of P2P

UK savers and investors are also willing to back British businesses. Six in 10 (63 per cent) would be willing to lend to a business. Over a quarter (26 per cent) would lend to a business that could use their assets as security. A quarter (25 per cent) would lend to an established business that has been operating for a few years and 11 per cent would lend to a start-up business.

Click here for more information on ArchOver.

Folk2Folk Announces New CEO as Giles Cross Takes Over Leadership Role P2P Lending Platform (Crowdfund Insider), Rated: A

Folk2Folk, a unique peer to peer lending platform that combines physical locations with an online platform matching investors with small business loans, has announced the appointment of Giles Cross  Chief Executive Officer (CEO).

Cross joined Folk2Folk as Chief Marketing Officer in June 2017.

 

Property Lender Financed Around 1,800 UK Homes in 2017 (Landlord News), Rated: A

LendInvest, a leading specialist property lender, lent £500m to help professional property investors, developers and landlords buy, build or renovate around 1,800 UK homes during 2017.

This marks a 33% increase on the previous year’s £375m lending record.

LendInvest has now lent a total of over £1.2 billion to property investors and developers.

High touch meets high tech (P2P Finance News), Rated: A

FAIRNESS IS pivotal to Newable Lending’s ethos when it comes to lending – and it’s not afraid to nail its colours to the mast. The peer-to-peer business lender is a member of Responsible Finance, a trade body working to increase access to fair finance.

FCA financial advice director steps down (Mortgage Strategy), Rated: B

FCA director of life insurance and financial advice Linda Woodall has stepped down from the regulator.

The regulator understands she intends to retire. A replacement has yet to be appointed.

European Union

New EU financial market rules off to smooth start: Watchdog (Khaleej Times), Rated: AAA

The rollout of new European Union securities rules on Wednesday has been glitch-free so far, though disruptions in coming days and months cannot be ruled out, the bloc’s markets watchdog said.

But given the complexity and size of the reform, Esma could not rule out glitches in coming days or weeks, Maijoor said.

Rocky start for Europe’s financial market revamp (Handelsblatt Global), Rated: A

Even after a year-long delay, precious few experts fully understand the Markets in Financial Instruments Directive II, Europe’s biggest financial markets reform in almost a decade.

Among other key changes, and in a belated nod to technological progress, telephone-based trading will be replaced with electronic platforms in bonds and off-exchange derivatives. And consumers should immediately see financial advice standards rise.

Analysts estimate that MiFid II will cost $6 billion (€5 billion) to implement in the first five years.

Exclusive Interview with Fast Invest CEO Simona Vaitkune (ChipIn), Rated: A

We recently sat down with the CEO of Fast Invest, Simona Vaitkune to have a chat with her about the project as well as finding out her thoughts and insights.

Tell us about how you came up with the idea of Fast Invest. Did you face a problem within the industry or do you think there is a gap in the market for Fast Invest to fill?

Everything started when I wanted not only to save money but to earn from my savings, to get passive income. I began to search for a platform which would fit me, but I could not find anything because I wanted to do it easily and safely without investing a lot of money.

What do you think is the biggest problem Fast Invest will solve and why is the problem important to solve?

Fast Invest is solving a problem that I mentioned before – complexity and large entry point of investment platforms. With Fast Invest, you can start investing from 1 Euro, Zloty or Pound. On top of that, you do not need to worry about your money, because we offer BuyBack and default guarantees.

International

International P2P Lending Volumes December 2017 (P2P-Banking), Rated: AAA

Mintos finished a remarkable month fueled by the cashback promotion. The total volume for the reported marketplaces adds up to 582 million Euro.

This month I added PeerBerryLook&Fin and MyTripleA.

Source: P2P-Banking

Setting the Tone for 2018 in the Most Important Charts of 2017 (Let’s Talk Payments), Rated: AAA

In 2017, lending startups around the world scored almost $4 billion in total funding, followed by $3.55 billion gathered by InsurTech startups, $3.24 billion invested in payments, and, of course, $850 million pocketed by startups building blockchain-based solutions.

Keep shoppers, the planet, and your profits happy by allowing in-store returns (Biz Report), Rated: A

Reverse-logistics firm Optoro found that nearly half (45%) of people will begin sending back unwanted items no sooner than the ripped up wrapping paper has been balled and binned. UPS recently forecast that returns would peak at 1.4 million packages on Wednesday 3 January, 2018, up 8% on last year and the fourth consecutive yearly increase. UPS said consumers returned more than 1 million packages a day to retailers last month.

According to Optoro’s report, the majority of returns (91%) will take place in-store. While total returns account for more than $351 billion in lost sales for U.S. retailers (Appriss Retail) the fact that most of those returns are happening in store is good news. More than half (57%) of shoppers who return items to a physical store make additional purchases during the process.

Could blockchains replace banks in real estate lending? (American Banker), Rated: A

The startup Propy recently sold an apartment in the Ukraine through its blockchain, and in the last week of December it began letting Californians buy and sell properties on its blockchain using bitcoin. They will be able to use U.S. dollars next year.

ShelterZoom has built an Ethereum-based platform that went live Dec. 14. RealBlocks lets people invest in housing on its blockchain with fiat or digital currency (and starting in February 2018, its own tokens). It has completed seven deals so far.

RealBlocks lets people invest in rental properties like Section 8 housing over a blockchain.

It has also partnered with SALT Lending so that after February, participants will be able to take out a loan or line of credit using the tokens they buy from RealBlocks as collateral.

A blockchain could also facilitate crowdsourced mortgages. Instead of taking out a $200,000 loan from one lender, a borrower could get $2,000 each from 1,000 investors.

18 Blockchain Predictions for 2018 (Consensy), Rated: A

Bitcoin as a digital store of value is the least interesting use of blockchain … There, I said it.

A Loan

Source: Consensys

An Initial Public Offering or Crowdfunding

Source: Consensys

10. People will take control of their online identities

We will continue to see the growing trend wherein people, companies, and machines manage their identity self-sovereignly rather then by a third party service provider like a bank, Facebook, or another internet service provider.

Interestingly, governments will increasingly find themselves as attestors to these self-sovereign identities, similar to how Zug, Switzerland is attesting to citizens identity usage with uPort, Ethereum leading self-sovereign identity solution.

11. In 2018, governments and regulatory bodies will mandate the use of blockchain to track and trace high value assets.

Major Fortune 50 companies are already demanding public chain track and trace use cases for which they are using the Viant platform to build their solutions.

18. The total market cap of blockchain-based digital assets will exceed $2 trillion U.S. dollars by January 1, 2019.

The price of ether will exceed $2,000 in 2018. Ether will continue to outperform bitcoin, and the total market cap of ether will exceed that of bitcoin in 2018.

8 fintech trends on our radar for 2018 (O’Reilly Media), Rated: B

  1. AI will be implemented across the stack
  2. New products will make advanced analytics easier
  3. Blockchain technologies will be used in financial services products
  4. Data partnerships will increase
  5. We’ll see even greater regionalization and regulation in payments – This is an area where both startups and global companies are flourishing. The technologies, protocols, and players vary by region. I’m amazed by how widely used QR codes are in China (WeChat and Alipay) and the rest of the world (GoPay in Southeast Asia, Paytm in India). For companies operating in the EU, PSD2 is a new 2018 regulation aimed at fostering innovation and competition in the payments industry.
  6. Customer experience will be increasingly mobile
  7. There will be increased pressure around privacy and security
  8. More quants will be analyzing or trading cryptocurrencies
Australia

Can a fintech lending firm disrupt the big four? (Asiamoney), Rated: AAA

As CVs for Australian bankers go, Jason Yetton’s background doesn’t quite scream ‘disruptor’. High-flyer perhaps, certainly ambitious and across trends. But helming a startup?

Two years on from Westpac and now running SocietyOne, the Sydney-based loans fintech that is one of Australia’s more prominent financial startups, the mid-career Yetton seems to bite with near evangelistic fervour the very hand of establishment banking that once nourished him.

Australian banking is backward in many critical areas, Yetton tells Asiamoney. He wants to see a tech-led democratization that would revolutionize payments and settlement, as well as lending, data and information infrastructure, while allowing customers to switch banks without penalty.

The current system preserves the status quo, Yetton says, in which the formidable foursome control 80% to 85% of Australia’s banking market and from which they earned a collective A$32 billion ($24 billion) in the 2017 financial year.

India

Funds Raised By Indian Startups Hit Three-Month Low (Bloomberg), Rated: AAA

Funds raised by Indian startups hit a three-month low, as four startups together managed to raise just around $10 million last week. That compares with $36 million raised by 10 startups the week before in angel, seed or venture capital funding.

Online lending firm Lendingkart Finance Ltd. raised around $3.7 million (Rs 25 crore) from the country’s largest public sector bank State Bank of India to grow its loan books, the company said in a statement.

Indian start-up ecosystem on a growth path in 2018 (Outlook), Rated: A

India’s start-up eco-system has been growing at a rapid pace and has all the right ingredients to support the fast paced economic growth of the country. With an addition of 1000 start-ups in the year 2017, the start-ups have played a big role in the growth of the Indian economy, making it a major source of employment, innovation and industrialisation.

i2ifunding, India’s second largest P2P lending platform plans to expand its business across the country, instead of focussing on metro cities.

Asia

LaLa World Global to Launch $ 10M Public Token Sale Jan. 5 (BusinessWire), Rated: AAA

Blockchain startup LaLa World is pleased to announce the long anticipated launch of the Lala Token sale to commence on January 5, 2018 and to run through February 5, 2018. A total of 150 Million LALA Tokens will be released in an initial coin sale (ICO) starting this Friday.

LALA World Products from their Financial Ecosystem Include:

  1. LALA Transfer – A Peer-to-Peer local and global remittance backed by crypto as well as fiat.
  2. LALA Bill Pay – Local and International bill payments for you and your family.
  3. LALA Lends – Domestic and International peer-to-peer lending via crypto and fiat, individual and small businesses.
  4. LALA Card – Crypto and Fiat card synced to your Wallet and usable at millions of PoS globally.
  5. LALA Kit – Contains a mobile phone with pre-loaded LALA Wallet, LALA Insurance, LALA Card, partners’ products, etc.

LaLa World is a wholesome financial ecosystem for the unbanked, starting with migrants and their families back home. Investors can purchase LaLa Tokens here: 

8 promising Fintech Startups in Singapore to Watch in 2018 (Fintech News), Rated: A

  1. MyCash Online is an online marketplace designed for migrant workers in Malaysia and Singapore.
  2. Instarem is a remittance startup that aims to offer fast, safe and cost effective cross border money transfer services for individuals and businesses from countries including Hong Kong, Australia and Singapore to more than 25 countries.
  3. Singapore Life is a new life insurance firm which commenced its operations in 2017 by providing insurance solutions via its online platform.
  4. soCash has developed a solution that allows people to withdraw cash at small businesses part of its “Cashpoints” network. The solution plugs into the mobile apps of banks.
  5. Bluzelle Networks is a blockchain startup that’s building a decentralized, on-demand, scalable database for decentralized applications.
  6. TenX is a cryptocurrency payment platform that consists of a wallet, physical debit card, bank account, ATM access and more.
  7. AGDelta is a Singapore headquartered fintech software company specialized in digital wealth management.
  8. Flywire, formerly peerTransfer, is a provider of international payment solutions headquartered in Boston with operations in Singapore, China, Australia, Spain and the UK.
Canada

New payday loan rules still too soft, says group (CBC.ca), Rated: A

On Monday, New Brunswick became the eighth Canadian province to introduce regulations governing the payday loan industry.

Earlier this week, the Financial and Consumer Services Commission announced a new set of regulations, including mandatory licensing for payday lenders, requiring then to display posters showing their rates, and making insurance on loans optional.

Lenders are also prohibited from issuing more than one loan at a time to the same consumer, or lending more than 30 per cent of the consumer’s net pay.

Under the new rules, the commission is able to take action against unlicensed lenders and those that fail to comply with legislation.

Africa

Kenya most lucrative market for fintech top staff in Africa (Business Daily), Rated: AAA

Kenya is the most attractive market in Africa for workers in the fintech industry with new data showing that companies pay the highest salaries in comparison to their peers on the continent.

In a recent survey, the Digital Frontiers Institute (DFI) found that executives and senior managers working for Kenyan fintech companies earn each a base monthly salary of Sh2 million (Sh24.6 million or $238,509 annually) and Sh1.2 million (Sh14.2 million or $137,303 annually), respectively.

Authors:

George Popescu
Allen Taylor

Asset Verification for MPL Secondary Markets and Securitizations

Equity ETFs

VeriComply, headquartered in San Francisco, California, was founded by Roger Cohen in late 2015 with the goal to improve and scale the workflow processes around the documents a lender needs to assess. The company is focused on leveraging its proprietary technology to automate the entire chain of reading, extracting, and verifying data from financial documents. […]

Equity ETFs

VeriComply, headquartered in San Francisco, California, was founded by Roger Cohen in late 2015 with the goal to improve and scale the workflow processes around the documents a lender needs to assess. The company is focused on leveraging its proprietary technology to automate the entire chain of reading, extracting, and verifying data from financial documents. Cohen has 35 years of experience in the financial services industry as a consultant, a professional attorney, and a business owner. As a lawyer, he helped five companies go through the IPO process and understands the massive inefficiencies existing in the document management space.

He founded Portford Solutions in 2000 as a document management company. Its flagship product, DocuNECT was designed to connect business users with the information locked in documents. To achieve this, DocuNECT maps the document lifecycle to capture the document, extract the appropriate data, and distribute the data/document to third party business applications, and/or workflow and data specifications. This became the backbone of VeriComply. Cohen essentially took the underlying DocuNECT system and re-engineered it exclusively for use in the financial services industry.

Company Background

VeriComply used family and friends for the initial phase of funding. But in February 2017, it managed to raise an undisclosed amount in seed funding from private investors including John Barlow, founder of Eaglewood Capital, and John Maute, CEO of Helios AMC and Situs Holdings, a global real estate diligence firm, as well as a board member of Money360, a CRE marketplace lending platform.

The company was able to add impetus to its growth story when it brought on Roger Dickerson as President. Dickerson worked as VP of financial operations at Lending Club from 2012 to 2016. He was responsible for the entire investor operations process, which included order placement, treasury, and building out capabilities to sell to institutional investors, reporting, cash custody, loan documentation, and settlements. He oversaw funding of over $23 billion in loans during his tenure. After looking at the prototype, he knew Cohen had developed a document verification product that is better than anything available in the market.

Dickerson also brought in TJ Valenzuela as national sales manager for educating the client base and driving demand. The underlying idea was to provide verification throughout the life cycle of the loan, from creating an asset at origination level and verifying at POS for warehouse lenders and custodians to providing verification in the secondary market.

The VeriComply Process

Since its primary customers are trust companies, VeriComply acts as a sub-verification agent or document custodian. Basically, on getting the loan documents, it extracts data and compares it with loan/data tapes. Outcomes are then discussed with originators and trust company partners to remove any discrepancies. The report is then sent to the client notifying approval status. Loans are verified on various parameters and cover all characteristics of a loan: term, rates, state of origination, APR, etc. It also incorporates the borrower’s information for better analysis.

Considering this is an important cog in the selling of loans in secondary markets and securitization, automating the process gives credibility as well as integrity to the entire portfolio when it sells.

The state-of-art technology used to build the platform means it can quickly configure for multiple originators, loan types, documents, and various field verifications. Fees are charged for the configuration set up, per loan process, and for monthly storage.

Cloud Flexibility: The Difference Maker

VeriComply relies on Microsoft’s cloud offering, Azure, to provide a secured user interface that enables multiple users to work with documents. On top of that, its cloud-based deployment architecture enables users to scale quickly and undertake massive volumes of loan verifications in different verticals. By providing a secure and scalable configuration system, it responds faster to the emerging demands of the market. Moreover, it also enables the holder of the documents to redact data in documents.

VeriComply is on track to provide 100% automation, which is not currently available in the market. Its peers still rely on human-dependent sampling techniques.

Most of VeriComply’s sales are executed through its reseller partners. It has many trust companies on board and works with different originators. The company was able to process 19,000 loans in less than two and half hours for an Upstart securitization, which is a new benchmark for the industry. It is also working with mortgage diligence providers and legal firms. The firm is currently focused on the MPL industry since the concept is easier to sell, documents are more precise and clear, and set up is faster. However, it plans to branch out to other verticals and asset classes, though the point of entry will remain with markpetlace lending.

Riding the Industry Tailwind

Stringent regulations in the MPL industry coupled with longer credit cycles have led to greater scrutiny of underlying loans. Buyers in the secondary market want to make sure whatever they are buying have the least risk attached to it. Thus, there is an overwhelming need for top-of-the-line document verification.

Also in terms of storage of documents, there is a change in trend. Earlier companies used Excel spreadsheets to record transactions, but now people want to use data from the primary source so that there is no chance of manipulation. This is great news for VeriComply.

VeriComply’s Future Plans

Keeping an eye on the future, the company wants to incorporate blockchain technology for publishing legacy documents. It also wants to create a system to help lawyers create customized smart contracts. Though the industry is a long way from leveraging the full power of blockchain, the growing need to transmit information at a quicker pace is forcing companies to move toward the blockchain universe.

For now, the company wants to concentrate on creating demand for its product and raise capital to execute its plans. The company’s product has garnered a good response from the market and is on track to close with over 100 prospective client companies. VeriComply can reduce the time span of the financial services sales cycle and will help further grow the marketplace lending industry by streamlining the documentation process. Strategic funding can help it become the new standard bearer for this niche industry.

Author:

Written by Heena Dhir.

Asset Verification for MPL Secondary Markets and Securitizations

VeriComply document verification

VeriComply, headquartered in San Francisco, California, was founded by Roger Cohen in late 2015 with the goal to improve and scale the workflow processes around the documents a lender needs to assess. The company is focused on leveraging its proprietary technology to automate the entire chain of reading, extracting, and verifying data from financial documents. […]

VeriComply document verification

VeriComply, headquartered in San Francisco, California, was founded by Roger Cohen in late 2015 with the goal to improve and scale the workflow processes around the documents a lender needs to assess. The company is focused on leveraging its proprietary technology to automate the entire chain of reading, extracting, and verifying data from financial documents. Cohen has 35 years of experience in the financial services industry as a consultant, a professional attorney, and a business owner. As a lawyer, he helped five companies go through the IPO process and understands the massive inefficiencies existing in the document management space.

He founded Portford Solutions in 2000 as a document management company. Its flagship product, DocuNECT was designed to connect business users with the information locked in documents. To achieve this, DocuNECT maps the document lifecycle to capture the document, extract the appropriate data, and distribute the data/document to third party business applications, and/or workflow and data specifications. This became the backbone of VeriComply. Cohen essentially took the underlying DocuNECT system and re-engineered it exclusively for use in the financial services industry.

Company Background

VeriComply used family and friends for the initial phase of funding. But in February 2017, it managed to raise an undisclosed amount in seed funding from private investors including John Barlow, founder of Eaglewood Capital, and John Maute, CEO of Helios AMC and Situs Holdings, a global real estate diligence firm, as well as a board member of Money360, a CRE marketplace lending platform.

The company was able to add impetus to its growth story when it brought on Roger Dickerson as President. Dickerson worked as VP of financial operations at Lending Club from 2012 to 2016. He was responsible for the entire investor operations process, which included order placement, treasury, and building out capabilities to sell to institutional investors, reporting, cash custody, loan documentation, and settlements. He oversaw funding of over $23 billion in loans during his tenure. After looking at the prototype, he knew Cohen had developed a document verification product that is better than anything available in the market.

Dickerson also brought in TJ Valenzuela as national sales manager for educating the client base and driving demand. The underlying idea was to provide verification throughout the life cycle of the loan, from creating an asset at origination level and verifying at POS for warehouse lenders and custodians to providing verification in the secondary market.

The VeriComply Process

Since its primary customers are trust companies, VeriComply acts as a sub-verification agent or document custodian. Basically, on getting the loan documents, it extracts data and compares it with loan/data tapes. Outcomes are then discussed with originators and trust company partners to remove any discrepancies. The report is then sent to the client notifying approval status. Loans are verified on various parameters and cover all characteristics of a loan: term, rates, state of origination, APR, etc. It also incorporates the borrower’s information for better analysis.

Considering this is an important cog in the selling of loans in secondary markets and securitization, automating the process gives credibility as well as integrity to the entire portfolio when it sells.

The state-of-art technology used to build the platform means it can quickly configure for multiple originators, loan types, documents, and various field verifications. Fees are charged for the configuration set up, per loan process, and for monthly storage.

Cloud Flexibility: The Difference Maker

VeriComply relies on Microsoft’s cloud offering, Azure, to provide a secured user interface that enables multiple users to work with documents. On top of that, its cloud-based deployment architecture enables users to scale quickly and undertake massive volumes of loan verifications in different verticals. By providing a secure and scalable configuration system, it responds faster to the emerging demands of the market. Moreover, it also enables the holder of the documents to redact data in documents.

VeriComply is on track to provide 100% automation, which is not currently available in the market. Its peers still rely on human-dependent sampling techniques.

Most of VeriComply’s sales are executed through its reseller partners. It has many trust companies on board and works with different originators. The company was able to process 19,000 loans in less than two and half hours for an Upstart securitization, which is a new benchmark for the industry. It is also working with mortgage diligence providers and legal firms. The firm is currently focused on the MPL industry since the concept is easier to sell, documents are more precise and clear, and set up is faster. However, it plans to branch out to other verticals and asset classes, though the point of entry will remain with markpetlace lending.

Riding the Industry Tailwind

Stringent regulations in the MPL industry coupled with longer credit cycles have led to greater scrutiny of underlying loans. Buyers in the secondary market want to make sure whatever they are buying have the least risk attached to it. Thus, there is an overwhelming need for top-of-the-line document verification.

Also in terms of storage of documents, there is a change in trend. Earlier companies used Excel spreadsheets to record transactions, but now people want to use data from the primary source so that there is no chance of manipulation. This is great news for VeriComply.

VeriComply’s Future Plans

Keeping an eye on the future, the company wants to incorporate blockchain technology for publishing legacy documents. It also wants to create a system to help lawyers create customized smart contracts. Though the industry is a long way from leveraging the full power of blockchain, the growing need to transmit information at a quicker pace is forcing companies to move toward the blockchain universe.

For now, the company wants to concentrate on creating demand for its product and raise capital to execute its plans. The company’s product has garnered a good response from the market and is on track to close with over 100 prospective client companies. VeriComply can reduce the time span of the financial services sales cycle and will help further grow the marketplace lending industry by streamlining the documentation process. Strategic funding can help it become the new standard bearer for this niche industry.

Author:

Written by Heena Dhir.

Monday October 10 2017, Daily News Digest

U.S. commercial banks

News Comments Today’s main news: Money360 closes more than $100M in Q3. Zopa unveils banking product offering. RateSetter to simplify withdrawal fees. First P2P exit guidelines issued in China. Moody’s upgrades 4Finance, lender tops 5B Euro in loans. SocietyOne sets lending growth record. Spotcap surpasses $180M in credit issued. Afluenta launches commercial loans platform. Today’s main analysis: Securitization market conditions remain strong. […]

U.S. commercial banks

News Comments

United States

United Kingdom

China

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International

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India

Asia

Latin America

Canada

News Summary

United States

Money360 Closes More Than $ 100 Million in Loans in Third Quarter, On Track for Record-Breaking 2017 (Marketwired), Rated: AAA

Money360, a technology-enabled direct lender specializing in commercial real estate (CRE) loans, today announced it closed more than $100 million in loans in the third quarter of 2017. This brings the company’s total loan closings to over $450 million, with a target of $600 million in transactions by year-end.

Notable loans closed in the third quarter include:

  • A $15 million bridge loan for a six-story, 310-room hotel property in Bloomingdale, Illinois.
  • A $12.5 million bridge loan for a hospitality property in Burr Ridge, Illinois.
  • A $9.9 million bridge loan for a three-story, multi-tenant office property in Fresno, California.
  • A $7.6 million bridge loan for a multi-family property in Bemidji, Minnesota.
  • A $6.9 million bridge loan for an office property in Denver, Colorado.
  • A $4.4 million permanent loan for a retail property in Mount Olive, New Jersey.
  • A $1.2 million bridge loan for a two-story apartment building in Miami, Florida.

Amazon Could Be Your Lender, Too (Bloomberg), Rated: AAA

Amazon.com Inc. has profoundly changed the way clothes and books are sold and is now targeting food shopping. Its next project may very well be taking on the heart of Wall Street.

The technology giant has had several conversations with banking regulators over the past two years on a wide range of topics, including “financial innovation,” according to lobbying disclosures reviewed by American Banker. It already has a lending operation that it started in 2011 to support merchants that sell on its marketplace. This unit has grown increasingly popular, to the point where it originated $1 billion in loans over 12 months.

Source: Bloomberg

“Amazon has very broad ambitions,” said Ram Ahluwalia, founder of PeerIQ, a startup that tracks loans originated on online systems. He attended the online lending meeting last month and noted that many people were talking about big technology firms plowing more into financial services, including regulators.

Amazon is not alone. Others, such as PayPal and Google, have also entertained banking ideas. In fact, they’ve joined forces, creating a lobbying group called “Financial Innovation” together, according to American Banker.

PeerIQ Securitization Update: Market Conditions are Strong (Crowdfund Insider), Rated: AAA

Below are some of the highlights of the Marketplace Lending Securitization Tracker for Q3:

  • This quarter saw six marketplace lending securitizations with quarterly issuance of $2.6 Bn, representing 7.6% growth in issuance over 3Q 2016. To date, cumulative issuance equals $23.8Bn across 96 deals.
  • Lending Club (NYSE:LC) issued its first deal with prime loans with borrowers having FICO scores of at least 660. The weighted average FICO score on this deal is 692, which is a shift in borrower profile as MPL lenders seek out higher quality borrowers.
  • All deals this quarter were rated.  DBRS continues to lead the rating agency league table, while Kroll dominates the unsecured consumer sub-segment. We see continued engagement from the top 3 ratings agencies like Fitch, with their rating of PMIT 2017-2A. Goldman Sachs, Deutsche Bank, and Morgan Stanley continue to top the issuance league tables with over 49% of MPL ABS transaction volume. College Avenue, a nascent MPL student loan originator, issued its first securitization CASL 2017 -A, managed by Barclays.
  • Spreads at issuance are marginally tighter in the consumer space on higher rated tranches. As priced 14bps tighter on average, while Bs and Cs priced 1-2bps wider. In the student space, As priced 51bps wider, while Bs and Cs priced 46bps and 61bps wider respectively.
  • Credit support requirements remain stable as rating agencies get more comfortable with collateral performance. We see deterioration in credit performance, but investors are well protected due to structural features and senior tranches deleverage rapidly to gain greater protection. Demand remains robust in this sector.
  • Goldman Sachs purchased $300Mn of solar loans from Mosaic. It would be interesting to see if they would participate in future Mosaic securitizations, as they have in the Marlette transactions.
    3Q17 saw a benign macro environment and low volatility. The Fed announced the beginning of its balance sheet reduction program to start in October, and prepared the market for an interest rate hike at the December meeting.
Source: PeerIQ

Download the PeerIQ Marketplace Lending Securitization Tracker Q3 here.

Equifax, TransUnion, Experian have spent decades avoiding transparency, regulation (Cleveland.com), Rated: AAA

For decades, the three major credit bureaus, along with a smaller fourth player, Innovis, have operated in the shadows of Americans’ finances.

Here’s a quick look at a timeline:

1960s: TransUnion’s original business was not compiling credit data on consumers. It bought a data collector, Credit Bureau of Cook County in 1969.

1970: Congress passed the Fair Credit Reporting Act, aimed at regulating the reporting of credit information.

Around 1970: TransUnion started using automatic tape-to-disc transfer to compile data, which was a lot faster than entering data manually. TransUnion later was the first bureau to offer banks, credit card companies and other creditors online access to data.

1988: TransUnion gains a nationwide presence. Credit reporting takes off.

1989: FICO scores as we know them were introduced.

March 2000: FICO creator Fair Isaac Corp. took legal action against an online lender, E-Loan, after E-Loan provided loan applicants with their credit scores.

September 2000: It wasn’t until this time that consumers could pay about $8 to the credit bureaus to get their own FICO credit scores, which had a top score of 850.

2003: Congress amended federal law to require the credit bureaus to give consumers a copy of their credit reports at no cost once a year.

2006: Equifax, TransUnion and Experian formed a joint venture to introduce Vantage scores, which were quite different than FICO scores.

2013: Discover, First National Bank of Omaha and a couple of other major issuers became trendsetters by providing credit card customers with their FICO credit score every month as part of their statement.

2014: The Consumer Financial Protection Bureau, a financial regulator, said it fielded 31,000 consumer complaints in 16 months. About 75 percent of the complaints concerned information in credit files that consumers said was inaccurate.

Jan. 2017: The CFPB said Equifax and TransUnion lied to consumers about the credit scores they were being sold, and ordered Equifax and TransUnion to pay $17.6 million in restitution to consumers and imposed fines of $5.5 million.

March 2017: Experian joined its counterparts and got busted by the CFPB for lying about the credit scores it peddles to consumers.

Sept. 2017: Equifax makes a bombshell disclosure that a cyber thief stole personal information, including Social Security numbers and birth dates, for 145 million people. It’s by far the biggest data breach in U.S. history.

New AutoInvest Feature Enhances Patch of Land Real Estate Investing Platform (Patch of Land), Rated: A

We’ve rolled out an automatic investment tool, AutoInvest, to help our investors more easily access investment opportunities that meet pre-selected investing criteria.

We think you’ll see several nice benefits from Patch of Land’s new AutoInvest feature:

  • Automatically participate in first-lien real estate loans based on pre-selected investing criteria
  • A new lower minimum investment amount ($1,000 per opportunity) versus the $5,000 minimum for manual investing, to help facilitate better portfolio diversification
  • Priority access to opportunities before they are publicly available on Patch of Land’s platform

RealtyShares Finances Several Texas Commercial Properties (BusinessWire), Rated: A

RealtyShares, a leading online marketplace for real estate investing, has deployed more than $10.1 million for a pair of commercial real estate transactions in Texas, collaborating with two different sponsors to provide fast and flexible financing for their projects.

RealtyShares secured a $2.4 million equity investment for a 302-room, full-service Sheraton hotel in Irving, Texas.

The hospitality equity transaction was sponsored by The Buccini/Pollin Group, a real estate acquisition, development and management company with four offices across the U.S. and more than $1 billion under management. Along with its hotel management affiliate, PM Hotel Group, Buccini/Pollin has acquired and developed 40 hotel properties, and possesses experience managing all aspects of project acquisition, finance, development, construction, leasing, operations and dispositions.

Global Debt Registry Raises the Bar on Lending Ecosystem Information Security (AltFi), Rated: A

Global Debt Registry (GDR), the asset certainty company known for its loan validation expertise, today announced the successful completion of its Service Organization Control [SOC] 1 Type II and SOC 2 Type II attestation reports. Performed by KirkpatrickPrice, the independent audit confirms GDR’s internal security controls meet the American Institute of Certified Public Accountants’ (AICPA) applicable Trust Services Principles and Criteria. These latest verifications reaffirm GDR’s position as a leader in the online lending space for security and operational integrity in providing asset certainty and validation through its suite of digital due diligence solutions.

The SOC 1 Type II audit assessed GDR’s consistent application of internal controls and processes to protect consumer data, maintain operational integrity and comply with industry regulations over a six-month period. The SOC 2 Type II review compared the strength of those internal policies and controls with the AICPA’s own Trust Services Principles of security, availability, confidentiality and processing integrity. The SOC 2 Type II attestation provides a comprehensive and integrated assessment of an organization’s data security and integrity control framework to industry stakeholders — and is missing from organizations which choose to obtain a SOC 1 Type II exclusively and point to their cloud provider’s or vendors’ SOC 2 Type II attestation reports.

What the CFPB’s New Payday Lending Rule Means for Consumers (ConsumerReports.org), Rated: A

The new regulation, announced this week, could significantly restrict lenders of short-term, very high-interest loans, known as payday loans. The practice has long been criticized by Consumers Union, the advocacy and mobilization division of Consumer Reports.

Consumers, in fact, may have better alternatives with community banks and credit unions. And experts say the CFPB’s new rule could pave the way for even more lending by these types of financial institutions.

The payday lending rule is set to take effect in July 2019, unless it is rolled back by Congress. The Congressional Review Act gives Congress 60 days from the time a new regulation is published in the Federal Register to rescind it.

Assuming the rule remains in effect, it’s unclear whether the bulk of the payday industry could adapt. Some payday lenders are changing their practices already, creating less risky, longer-term loans.

Regardless, two types of consumer lenders that are exempt from the CFPB rule—community banks and credit unions—could step into the breach to serve payday loan clients.

The nation’s nearly 6,000 community banks are another potential source for small loans. But community banks don’t actively market their small-dollar loans, explains Lilly Thomas, a senior vice president and senior regulatory counsel for Independent Community Bankers of America, based in Washington, D.C. Rather, they respond to inquiries by individual customers.

But, she added, the CFPB rule changes could change that.

CFPB Has Spoken: Payday Lending Regs Drop (PYMNTS), Rated: A

By the CFPB’s own estimates, the regulations as written will cut the number of short-term loans in the U.S. by more than half, and industry estimates put that figure closer to 80 percent. Other than perhaps the very largest players in the game, most loan lenders can’t soak that kind of volume loss, since payday lending (contrary to public opinion) is not a high-margin business to start with. The average storefront lender clears about $37,000 in profit – and under the new regulations, that annual profit would become a $28,000 loss, according to an economic study paid for by an industry trade association.

Payday Lending (And Its New Rules At A Glance)

Payday lending is a big segment in the U.S., as storefront short-term loan lenders outnumber McDonald’s locations, and collectively lend out about $46 billion per year in loans to about 12 million borrowers.

The typical payday lending customer, according to the Pew Charitable Trusts, is a white woman aged 25 to 44.

Roughly 22 percent of borrowers renewed their loans at least six times, leading to total fees that amounted to more than the size of the initial loan.

Payday lenders do in fact collect a lot of money in fees – about $7 billion as of last year. Default rates are estimated at 20 percent on the low end, while at a mainstream financial institution (FI), that rate is a lot closer to 3 percent on average.

OCC reacts to CFPB’s final payday loan rule by rescinding its deposit advance product guidance (Ballard Spahr), Rated: A

Hours after the CFPB released its final payday/auto title/high-rate installment loan rule on October 5, 2017, the OCC rescinded its guidance on deposit advance products.

How fintech will change bank M&A (Banking Exchange), Rated: A

Cannon, the firm’s global director of research and chief equity strategist, agreed. Today, KBW, traditionally focused on bank equities, also covers firms like PayPal, Square, and Green Dot. And a bit over a year ago, KBW, in cooperation with Nasdaq, launched the KBW Nasdaq Financial Technology Index, an eclectic mixture of 50 publicly traded fintech firms across multiple industry categories.

“We expect that bank M&A will shift over time to bank/fintech M&A with the largest banks looking to acquire successful fintech firms. This will be pushed by the limitations on bank acquisitions by the largest banks, and by the need of fintech firms to partner with banks to expand their operations. While regulators are looking at a new fintech bank charter, we expect that to be limited  in scope.”

Banking Exchange: What started you thinking about a bank/fintech M&A trend?

I’ve been puzzled by the lack of new start-ups since the financial crisis. Most of the discussion around this has concerned regulatory constraints. But as I dug into this, I began to think that maybe the historical entrepreneurship in finance—traditionally folks starting new banks to get their economy going—has shifted from the banking sector to Silicon Valley.

Banking Exchange: Do people just not want to invest in new bank charters anymore?

In the wake of the financial crisis, a lot of capital—such as from private equity firms—that might have gone into new charters went into recapitalizing existing banks. Postcrisis, there certainly was a regulatory element, insofar as increased regulation and FDIC’s reluctance to insure new banks. But while people talk about that, I haven’t heard about people applying for charters and getting turned down by FDIC.

Mid-sized banks are looking for creative ways to build loan books. They already have an advantage in lending to small- and mid-sized companies and in doing commercial real estate loans. But they’re starting to see those sources of assets ebb. And they, too, will be looking toward asset generation from electronic delivery through fintech-type operations.

Banking Exchange: There is also the opposite trend—some of the fintechs, such as Varo, SoFi, and Square are seeking bank or industrial bank charters. Do you see that gaining momentum?

A year or so ago, my son-in-law was refinancing his student loans. Now, remember that part of the key to SoFi’s initial, extremely rapid growth was this: They cherry pick the government program borrowers. They will give strong borrowers a 4% loan to replace the government’s 7% all day long.

Credit fintechs will wither, but small-business lending will prosper (American Banker), Rated: A

In the second half of 2016, the fintech-credit bubble began to show signs of losing air when investors and funders signaled declining confidence in fintechs by withdrawing their investments — triggering some fintech closures. In trying to scale up, some providers went outside their core markets and struggled as their credit models failed (e.g., CAN Capital). Some faltered in attempting to diversify into different loan types, while others — which are now retrenching (e.g., LendingClub) — struggled with costs far outrunning revenues.

The market is ripe for consolidation and beneficial partnerships. Indeed, the remainder of 2017 and 2018 will see more partnerships between the banks and fintechs for the following three reasons.

  1. The whole is greater than the parts
  2. Credit portfolios and models need adjustment
  3. Revenue and liquidity cushions are needed

Kabbage’s Kathryn Petralia on Improving SMB Lending (Business.com), Rated: A

The influx of technology into the alternative lending industry has drastically changed the way small businesses access financing. As the co-founder of the online alternative lending platform Kabbage, Kathryn Petralia has been helping to lead this change.

Q: What drew you to the alternative lending space? Why did you think the market would support a lender like Kabbage?

A: I’ve been in alternative lending since the late ’90s.

Q: When a space is so crowded, like yours, what can you do to differentiate yourself?

A: Additionally, we are the only lender to offer SMBs the option to apply, qualify and draw funds entirely through a mobile app. Our Kabbage card allows qualified customers to draw from their line of credit at checkout or any point of sale (POS).

Kabbage is also unique as we license our technology to global banks, providing them more reach and a better user experience to serve their small business customers in a meaningful, cost-effective way. We have bank partnerships with Santander, Scotiabank and ING.

Q: What makes alternative lending an attractive option for small businesses?

A: It’s much faster and easier than traditional processes, and the anonymity of an online application process takes some of the stress out of what is traditionally a very anxiety-ridden experience.

Women in Tech Week Launches in New York City (PR Newswire), Rated: A

CommonBond, a financial technology company that helps students, graduates and employees pay for higher education, today launches Women in Tech Week, which runs through October 15. Together with partners including Betterment, Birchbox, Duolingo and others, CommonBond spent the last several months creating Women in Tech Week to recognize the contributions of women in technology and support the next generation of women leaders.

Women in Tech Week consists of three components:

1. A whitepaper on what women want in the tech workplace: CommonBond commissioned a survey of over 600 women in tech to learn what companies can do to attract and retain women, as well as create environments where women can thrive. The research found women want to see their companies implement the following changes, in order:

  • More women in leadership roles.
  • Better long-term career planning processes.
  • Additional training and professional development opportunities.

2. A social media campaign to support the next generation of women in tech: CommonBond has partnered with Girls Who Code to help fund the next generation of women technologists. CommonBond will donate to Girls Who Code for each social media post that:

  • Answers the question “Why are you proud to be a woman in tech?” or “Why are you proud to support women in tech?”
  • Includes hashtag #2017WITW.

3. A female founders event to encourage and inspire women in tech: On Ada Lovelace Day, a holiday on October 10 that celebrates the achievements of women in STEM, the co-founders of companies such as The Muse, PolicyGenius and WayUp will share their stories with students and professionals pursuing technology careers at an event in New York City.

Highlights from the Most Powerful Women gala (American Banker), Rated: A

Mary Navarro of Huntington and Linda Verba of TD Bank accepted Lifetime Achievement awards, and both shared some of the most important lessons they learned along the way about team-building.

Ohio Loophole Could Hold Back New Payday Lending Rules (WOSU.org), Rated: A

New rules issued this past week by the federal Consumer Financial Protection Bureau are meant to rein in payday and auto title lenders. The rules require enhanced credit checks for some loans and cooling off periods after three loans in a row to a single borrower.

“In Ohio, payday and auto title lenders are not operating under the intended statute,” Horowitz says. “They’re using a loophole that lets them operate as loan brokers.”

A 2008 law capped yearly interest rates at 28 percent. But the Ohio Supreme Court has upheld the loophole used by lenders.

What Works Best Onboarding Clients In The Robo Age (Investors.com), Rated: A

Led by tech innovators like Betterment, SigFig and Wealthfront, the more than 200 current U.S. robo-advisors in existence collectively boast some $53 billion in assets under management, with global robo assets poised to surpass $2.2 trillion by 2020. With such explosive growth in this space, many traditional full-service financial advisors feel compelled to beat their drums louder, when meeting prospects and onboarding new clients.

Despite the robo phenomenon, studies show that most individuals still value human interaction over technology. According to a survey conducted by online student loan marketplace LendEDU, 46.41% of millennials are working with a financial advisor, while only 24.30% have used a robo-advisor.

Furthermore, of the three-quarters of millennials who have yet to take the robo plunge, 61.58% say they’re reluctant to do so because they’ve never heard of robo-advisors, suggesting that general awareness still has a way to go. Finally, 68.92% of those polled said they believe financial advisors are more likely to yield greater returns on their investments.

Startups say this fintech ‘lab’ is giving them needed access to Wall Street and regulators (TechCrunch), Rated: A

Another program that gets high marks from founders is the Financial Solutions Lab (FinLab), an offshoot of the Center for Financial Services Innovation, a 13-year-old nonprofit focused on serving unbanked and underbanked customers.

Broadly speaking, it’s a 2.5-year-old program that aims to find and nurture fintech startups that are helping Americans save, access credit and build assets, and it is itself fueled by a $30 million, five-year grant from JPMorgan.

Among those startups it has worked with so far is Propel, a startup that helps people who receive food stamps manage their benefits.

Another company that’s currently a part of the program is Dave, an app that alerts consumers ahead of an upcoming overdraft and can advance them money.

LendingTree Partners with Jornaya To Deliver Independent TCPA Compliance on Leads (PRWeb), Rated: A

Jornaya, the fast-growing consumer journey insights platform, today announced that LendingTree®, the nation’s leading online loan marketplace, has integrated TCPA Guardian from Jornaya to manage compliance risk associated with the Telephone Consumer Protection Act (TCPA).

Jornaya’s TCPA Guardian integrated with LendingTree’s marketplace provides lenders with ability to validate that the consumer was shown necessary and approved disclosures, including monitoring the size, text, and overall visibility of the necessary TCPA disclosure. What’s more, the solution documents the proof of that consent, allowing both LendingTree and its lenders to deter and help defend the costly and rising number of TCPA complaints.

Will regtech kill bank jobs? (American Banker), Rated: A

Technology and regulation are intersecting in ways that create uncertainty in a number of areas, but for those who work in compliance, the big question is whether advanced technologies like artificial intelligence and blockchain will ultimately replace people.

When BBVA Compass recently began using robotic process automation to carry out specific pieces of compliance, such as retrieving statements, employees were worried.

Northeast Florida Real Estate Firm New Leaf Communities Offers Major Returns on New Deal Crowdsourced by RealtyeVest (PR.com), Rated: B

New Leaf Communities is seeking $4,500,000 in Preferred Equity. The sponsor is offering a 10% preferred return with 8% as a current pay and 2% accrued. RealtyeVest, who is exclusively housing the offer on their crowdfunding platform, will raise the capital in a series of Class A, B and C stocks of $1.5 million each.

It’s first come first serve as the tranches will close once the total for each is raised. Participants in the Class A tranche will receive an 80/20 waterfall participation after the 10% preferred return. The Class B tranche will receive a 70/30 waterfall participation after a 10% preferred return. Lastly, the Class C tranche will receive a 60/40 waterfall participation after a 10% preferred return.

New Payday Loan Regs: Pros and Cons (Investopedia), Rated: A

According to proponents, the new rules are a real positive for consumers. They see the following as pros.

  • Requiring lenders to ensure that borrowers can repay loans protects them from a cycle of debt.
  • While some lenders will be prohibited, consumers can still borrow from those that meet the new requirements.
  • Voters generally prefer stricter guidelines for payday lenders.
  • The new regulations will stop lenders from exploiting loopholes in the law.
  • Limiting the number of times a loan can be rolled over limits the effective APR.
  • Preventing multiple attempts to withdraw from bank accounts will stop excessive overdraft charges for consumers.

The payday lending industry, the Community Financial Services Association of America (CFSA), researchers at Pew Charitable Trusts, the banking industry and even some consumer advocates have pointed out what they see as the cons of these new rules.

  • The proposal exceeds the authority given CFPB by Congress and will be subject to expensive lawsuits.
  • The new rules still allow payday loans with interest rates of 300% or higher.
  • Banks and credit unions will be discouraged or prevented from entering the market with lower-cost loans.
  • Ultimately, the rules will inhibit consumer access to credit, driving them to far worse alternatives.
  • Many payday lenders will be forced out of business, costing jobs and creating credit “deserts” in areas where payday lending currently thrives.
  • Losing the ability to roll over loans will hurt consumers who need more time to pay off debt.

New Rule on Payday Loans to Hurt Industry, Help Banks (Newsmax), Rated: B

Revenues for the $6 billion payday loan industry will shrivel under a new U.S. rule restricting lenders’ ability to profit from high-interest, short-term loans, and much of the business could move to small banks, according to the country’s consumer financial watchdog.

Under the new rule, the industry’s revenue will plummet by two-thirds, the CFPB estimated.

Baptist advocates applaud rule to rein in abusive lending (Baptist Standard), Rated: B

A joint statement issued by the Texas Fair Lending Alliance and Texas Faith Leaders for Fair Lending noted from 2012 to 2016, Texans paid $7.5 billion in fees for high-cost loans.

Texas Appleseed, a public interest center based in Austin, noted for borrowers who do not refinance their loans, a typical $500 payday loan costs $1,351 in installments over five months.

How you can plan and enjoy vacation away from your business (NJBiz.com), Rated: B

According to a 2016 Funding Circle survey, about half of small business owners plan to take less than three days off during the entire holiday season; in fact, nearly 70 percent confess that they at least check emails on Thanksgiving Day, when most businesses nationally close.

United Kingdom

Zopa unveils banking product offering (P2P Finance News), Rated: AAA

Speaking at the LendIt conference in London, Jaidev Janardana (pictured), chief executive of Zopa, said banks have focused too much on products that help their business rather than the customer.

He revealed that Zopa Bank would offer unsecured personal loans with no early repayment charges and credit cards with no introductory offers but a flat rate as well as savings and investments that prioritise existing customers.

It will also offer auto-loans, allowing users to do a soft-search for products.

RateSetter to simplify early withdrawal fees (Bridging&Commercial), Rated: AAA

The peer-to-peer platform will be changing the current two fees for early withdrawal to a single and clear transfer fee for each market.

The transfer fee will be fixed for each market and will be a percentage of the capital being withdrawn (the fee will apply only to capital requested to be withdrawn, not interest).

Source: Bridging&Commercial

Why an effective online checkout can be the key to great customer experience (ITProPortal), Rated: AAA

Speaking to ITProPortal, Luke Griffiths, MD of Klarna UK, noted that consumer flexibility in terms of payment methods is helping change merchant habits too.

Griffiths revealed that just shy of three million customers in the UK will have used Klarna’s services in some form, with the company counting the likes of the Arcadia Group and JD Sports as clients here.

This includes a “pay after delivery” option, which allows consumers to order their goods, receive them, but only pay after either 14 or 30 days if they are fully satisfied. Targeted mainly towards the fashion online retail space, Griffiths notes that this service has seen great pick-up from both merchants and customers, with the former seeing increased conversion and a drop in returns (as buyers become more confident that they will only pay for the goods they want to keep) and the latter getting a more successful online transaction and “turning the sitting room into the fitting room”.

P2P better placed to keep up with changing borrowers (P2P Finance News), Rated: A

FUNDING Circle co-founder Samir Desai (pictured) has ruled out launching a bank as he outlined the advantages of running a peer-to-peer platform over traditional financial models.

He said banks would find it hard to keep up with emerging technology such as artificial intelligence or machine learning due to the level of regulation.

Desai cast doubts on the ability of traditional banks to move into the online small and medium sized (SME) lending lending space, claiming Germany’s Commerzbank had seen loans underperform since entering this area.

£21.39 Million Raised on ArchOver in 2017 (So Far) (Crowdfund Insider), Rated: A

Peer-to-peer business lending platform ArchOver announced on Monday it has nearly doubled its overall lending in the first nine months of 2017. The company reported that since 2017 its total lending has reached £21.39 million, bringing its cumulative total that has been lent to date to over £48 million.

Ireland’s P2P Lending Platform Linked Finance Launches Pension Investment Product (Crowdfund Insider), Rated: A

Linked Finance, Ireland-based peer-to-peer lending company, announced on Monday the launch of its new type of pension account. The account allows holders of self-managed pensions to make P2P lending to Irish SMEs part of their pension investment portfolio.

The ID Co. launches tool to assess loan applicants on verified income (Finextra), Rated: A

One of the UK’s leading financial technology specialists, The ID Co., has announced it is the first software specialist to offer lenders the capability to calculate and base lending decisions on customers’ real earnings, known as verified income.

The ID Co. has Major Clients including a Large UK Bank, Prosper, Marlette & More (Crowdfund Insider), Rated: B

UK based Fintech, The ID Co., says it is the first software specialist to offer lenders the capability to calculate and base lending decisions based on customers’ real earnings or verified income. The ID Co. has major clients in both the UK and North America including a large UK retail bank, Prosper Marketplace, Marlette Funding, OakNorth Bank, eMoneyUnion, and Fair Finance.

Ex-ECB board member Jorg Asmussen leaves Funding Circle board for advisory role (Business Insider), Rated: B

German economist and politician Jörg Asmussen has moved into an advisory role at Funding Circle, leaving the London-headquartered peer-to-peer lender’s board after a year and a half.

China

China Issued the First Exit Guidelines on P2P Lending platform (Xing Ping She), Rated: AAA

Recently, the official WeChat of Shenzhen Internet finance association issued a notice concerning the exit guide of shenzhen’s marketplace lenders (solicitation draft). It was known as the first exist guide for P2P lending platforms in China. According to the notice, this guideline was drafted to direct and standardize the P2P lending institutions to smooth out of the P2P loan industry, as well as to protect the legitimate rights and interests of lenders, borrowers and P2P institutions. Before officially released, the exposure draft of guide is soliciting opinions from the industry.

Counting Decacorns? Look To Beijing (Forbes), Rated: A

Already, China has climbed to account for 23% of the world’s total 214 unicorns (compared with the U.S. at 50% and India at 9%). China claims such highly valued companies as ride-hailing service Didi, hardware innovator Xiaomi and online lender Lu.com plus newcomers to the 2017 list: bike-sharing service MoBike, news aggregator Toutiao and e-vehicle maker Neo.

Moreover, China is getting with a new class of billion-dollar valued companies, so-called decacorns or startups with valuations past the $10 billion mark. Of 14 current decacorns, Silicon Valley has 5 and so does China — four in Beijing and one in Shenzhen, according to an analysis by GSR Ventures shared by managing director Richard Lim at the recent HYSTA conference.

How and where will the next generation of unicorns be formed? Research by GSR shows that the unicorn action is in China by Chinese returnees. There were 30 unicorns founded by Chinese in China versus 9 U.S. unicorns founded by Chinese.

European Union

Moody’s Upgrades 4Finance Credit Ratings as Online Lender Tops € 5 Billion in Loans (Crowdfund Insider), Rated: AAA

Moody’s Investor Service has upgraded 4Finance‘s credit ratings to B2 from B3. The upgrade comes as 4finance says it has passed € 5 billion in loan originations. The 4finance S.A. senior unsecured issuer rating was also upgraded to B2 from B3. The outlook on all ratings is stable.

Banks generally ready for rising rates (The News Tribune), Rated: A

The European Central Bank says banks under its jurisdiction appear well-prepared to face unexpectedly higher interest rates, but may be less ready for disruption from online banking.

The ECB’s banking supervision division released results Monday of a stress test that showed suddenly rising rates would increase net interest income, an important part of bank finances.

Netherlands Crowdfunding Award Nominees (Crowdfund Insider), Rated: A

The Netherlands Crowdfunding Association has recently announced the nominees for the annual Crowdfunding Awards.

The Assocation states that Dutch investors have contributed more than €400 million in more than 4,000 different companies.

Click here for a list of nominees.

International

Canada Embraces Cashless Economy; UK Falls Behind Sweden in Cashless Technology Uptake (ForexBonuses.org), Rated: AAA

A recent study from Forex Bonuses finds the countries among the 20 largest economies who are adapting quickest to using cashless systems like phones and contactless cards – revealing that Canada narrowly edges out Sweden for the top position.

Investigating twenty of the world’s most significant markets, the study looks into contactless card saturation, number of debit and credit cards issued per capita, usage of cashless methods, growth of these cashless payments, and the proportion of people who are aware of which mobile payment services are available.

Cashless Economies

The top position has gone to Canada, who, while only having contactless functionality in 26% of their cards (compared to 41% in the UK and 56% in China) and the lowest number of debit cards per capita included in the research (0.7), were found to have over two credit cards per person, a figure only exceeded by their neighbours in the US, who had just under 3.

Likewise, the majority of their payments were made using cashless means at 57% of transactions, outmatched only by 2% in both Sweden and France. The UK reached 52% on this scale, while China, despite the majority of cards being contactless, used cashless methods in only 10% of transactions. China were also the most educated on mobile payment services, with 77% of survey respondents claiming they were aware of the options available to them in this regard. In comparison, only 47% in the UK claimed the same.

Source: ForexBonuses.org

Global Online Lender Issues €120M In Credit Lines to SMEs (PaymentsJournal), Rated: A

In three years, online lender Spotcap has issued more than €120 million in credit lines to small and medium-sized enterprises (SMEs).

The fintech also raised an additional €22 million of equity and debt funding from its existing investor network. It has now raised €100 million of investment since its launch in September 2014.

Alternative Finance’s Popularity Won’t Break With Investors (PYMNTS), Rated: A

In this week’s B2B venture capital breakdown, alternative lending for small- and medium-sized businesses (and their employees) is the clear winner.

SalaryFinance

The company, based in the U.K., recently announced about $52.5 million by Legal & General, while Blenheim Chalcot also participated, according to reports. The funding round will need approval from the Financial Conduct Authority, reports added.

Taulia

This supply chain financing company has been mum about the funding, with reports only catching onto the investment of about $20 million (so far) through a Securities and Exchange Commission (SEC) filing. According to reports, the firm plans to raise a total of $33.29 million, though it is unclear who provided the funding or when Taulia will officially announce the raise.

Siigo

Colombia’s Siigo, which provides accounting and administrative software for small- and medium-sized businesses, raised an undisclosed sum late last week by Accel-KKR, reports said.

4 ways FinTech is changing global finance (The Next Web), Rated: A

1. Lending

One of the biggest and most profitable sectors of the financial industry is the lending sector. Most financial institutions have used the existing models to create new ones that better fit their business models and reach their profit targets.

2. Payments

Another major role played by banks is to facilitate the transfer of funds between parties. Banks have been rumored to make at least $4 billion annually just from fees obtained during funds transfers.

4. Facilitating speedy payments

For a business to thrive, its invoices should be paid on time and in a prescribed way. One of the things that make businesses go under is the accumulation of bad debt. When invoices are not paid on time, the business suffers because the business owner must find other means of paying his creditors.

Voice Sizzles, Equifax Fizzles And Social Security Numbers Get Ready For A Curtain Call (PYMNTS), Rated: B

Singapore’s OCBC Bank is integrating Siri to help conduct corporate banking across 12,000 customers. Voice commands send payments and can also inquire about account balances. Alexa is now available in India, and will soon debut in Japan later in the year.

JG Summit scales new peak with fintech (National Multimedia), Rated: B

JG Summit’s unit, Express Holdings Inc, inked an exclusive partnership with Greater China-based Oriente to create a peer-to-peer lending solution for “under-banked” consumers.

Australia

SocietyOne announces record lending growth in 2017 (Finder), Rated: AAA

Peer-to-peer (P2P) lender SocietyOne has announced three lending milestones for 2017 with the year not even over yet, showing how Australians are embracing this innovative way to borrow and invest.

This is a record for SocietyOne, as it has now originated more than twice the loans of the company’s nearest competitor and had seven successive quarters of growth.

The first three-quarters of 2017 also saw a record amount of funding made available by investor funders. The total number of funders has risen to 320 since SocietyOne’s inception and there is $61 million of committed available funding as at 30 September 2017.

Global SME lender Spotcap surpasses $ 180 million in credit issued (Finder), Rated: AAA

Online lender Spotcap has announced it has issued more than $180 million in credit lines to small- and medium-sized enterprises (SMEs) globally in just three years. The lender offers lines of credit up to $250,000 and has been operating in Australia since 2015.

Spring FG to launch its fintech platform in Australia (Proactive Investors), Rated: A

Spring FG Ltd (ASX:SFL) is planning a pre-Christmas launch of its innovative fintech platform, MyMoney247.

MyMoney247 will allow consumers to link hundreds of Australian bank, brokerage and investment accounts and retail and industry super funds.

Spring’s platform will employ customised technology from Australian fintech company, MoneyBrilliant, including advanced budgeting, cashflow management, bill management and spending analysis.

India

P2P platforms look for biz model restructuring to comply with RBI norms (Business-Standard), Rated: AAA

With the Reserve Bank of spelling out guidelines for regulating peer-to-peer (P2P) lending, many of these are looking at ways to comply with the norms by their business models. Further, companies find Rs 10 lakh cap on restrictive, given the phenomenal growth of the sector in the past couple of years.

RBI’s new P2P lending norms good for honest borrowers, but needs more clarity (Zeebiz), Rated: AAA

Banks and NBFCs usually offer personal loans to a salaried employees having minimum income salaried between Rs 1.20 lakh – to Rs 2.40 lakh with loan eligibility salaried between Rs 15 lakhs and Rs 20 lakhs.

Source: Zeebiz

 

SlicePay Adds International Investors To Its Board; Raises Mn In Series A Funding (Inc42), Rated: A

Bengaluru-based fintech startup SlicePay has raised $2 Mn as part of its ongoing Series A funding round. The investment was led by Japan-based Das Capital, Simile Ventures from Russia and few undisclosed angel investors.

Existing investor Blume Ventures also participated in the round, who earlier invested $500K in association with  Tracxn Labs in February 2016. With the raised funds, SlicePay plans to expand in three more cities, as well as make some senior-level hiring.

NBFC status to P2P places compliance burden; lending to go up (Business-Standard), Rated: A

Lending activity will gather pace on peer-to-peer (P2P) platform with the sector getting status even as the burden on them may eliminate some entities out of the market, industry players say.

Operational guidelines for P2P lending platforms and MediaNama’s take (Medianama), Rated: A

The guidelines from the RBI norms for disclosures are welcome. The disclosures on how companies are calculating credit scores are welcome to borrowers. Right now, with many companies looking to build credit scores through by looking at cash-flows and information on how the platforms collect this information is crucial. Companies such as EarlySalary are building credit profiles based on information on social media. Meanwhile, there are untested methods which profiles people psychologically on seeing if they are eligible for a loan.

Asia

Singapore’s OCBC Bank Pulls Siri Into B2B Payments (PYMNTS), Rated: A

Singapore’s OCBC Bank wants to use Siri to help corporates do their banking.

OCBC said in an announcement on Wednesday (Oct. 4) that it is integrating its Business Mobile Banking app with Apple’s voice assistant Siri for more than 120,000 corporate customers. The integration means professionals will be able to initiate B2B payments and funds transfers to other OCBC business accounts using Siri voice commands.Singapore’s OCBC Bank wants to use Siri to help corporates do their banking.

P2P lending can help curb national debt with data (The Korea Herald), Rated: A

One of South Korea’s leading P2P lending platform operator Lendit appears to have taken advantage of its maturing big data. The accumulated volume of personal loans originated from the firm doubled in six months as of early September to some 70 billion won ($61.6 million), after some 28 months of operation.

The database allows an individual lender to invest 10 million won at maximum in a “customized” package composed of possibly hundreds of bonds in different interest rates, while promising the lender a return of between 6 percent and 10 percent including tax and commission fee.

Kim, 31, believes Lendit could help mitigate the rapid growth of the national household debt, projected to have exceeded 1,400 trillion won in the third quarter. Household debt in Korea is considered a powder keg of the national economy amid looming signs of central banks ending expansionary monetary policies. Consumer loans take up nearly 20 percent of all household debt in Korea.

Latin America

Afluenta Celebrates Fifth Anniversary By Launching Commercial Loans to New Platform (Crowdfund Insider), Rated: AAA

Argentina-based peer-to-peer (P2P) lending platform Afluenta recently announced during its fifth-anniversary celebration it was launching commercial loans to the fifth version of its lending platform. According to the lender, in the latest version, it will add its own proprietary credit scoring and introduces commercial loans for people with commercial activities, which is noted to usually not served by traditional banks.

Small business lending in Mexico gets a boost (TechCrunch), Rated: A

Micro-lending and small business financing are a critical component of economic growth around the world, and the need for access to low-cost capital is especially important in developing countries.

The Catch-22 is that these countries are also the ones where the lending markets are the least developed, and where most financial institutions are reluctant to lend money to people who don’t have any credit history (what the industry calls “thin-file” customers).

The problem is especially acute in Mexico, where only 39 percent of the population has a bank account and 75 million people still have no access to the kind of financial services and lending support they would need to start micro- and small- businesses.

That’s the thinking behind Konfio, a Mexican startup that’s raised $10 million in new funding led by the International Finance Corp. (the investment arm of the development-focused World Bank) and previous investors, including QED InvestorsKaszek VenturesAccion Frontier Inclusion FundAccion Venture Lab and Jaguar Ventures.

Canada

Helping Ontarians Trapped in Payday Loans (BayStreet), Rated: A

In Ontario, the payday-loan industry offers sums of cash of less than $1,500 for short terms — less than 62 days — at very high interest rates: there are currently 657% on an annualized basis on the average 10-day term, down from 766% before the regulations took effect.

These lenders fill a unique niche in Ontario’s lending market for customers known as ALICE — an acronym for Asset-Limited, Income-Constrained, and Employed. More than two-thirds of ALICEs earn less than $50,000 per year. And while payday lenders’ reputation for being the somewhat shifty cousins of banks is not entirely undeserved, they nonetheless provide a real and needed service to people who, for a variety of reasons, can’t or don’t have the cash to meet their needs. The majority of people who take out a payday loan are doing so to avoid late charges, NSF fees, or maintain power in their digs.

 

Authors:

George Popescu
Allen Taylor