Wednesday January 3 2018, Daily News Digest

ETFs Europe

News Comments Today’s main news: GreenSky raises $4.5B in equity, becomes most valuable online lender. Funding Circle has eye on IPO at 2B GBP valuation. P2P lenders in India blame lending limit on rising costs. GN Compass wants to disrupt lending liquidity in Canada. Today’s main analysis: Can Mifid II spur growth in European ETF market? Today’s thought-provoking […]

ETFs Europe

News Comments

United States

United Kingdom

European Union

International

India

Asia

Canada

Africa

News Summary

United States

Who’s the Most Valuable Online Lender? After This Deal, It’s GreenSky (WSJ), Rated: AAA

Financial-technology firm GreenSky LLC raised new equity from Pacific Investment Management Co. in a deal that valued the digital lender at nearly $4.5 billion, said a person familiar with the matter.

It vaults GreenSky over Social Finance Inc. to become the most highly-valued online lender in the U.S. It also makes the Atlanta company the second most valuable privately held U.S. fintech company behind Stripe Inc., which processes payments for Internet businesses.

Pimco, the Newport Beach, Calif., money manager, invested at a valuation roughly 25% above the $3.6 billion GreenSky fetched in 2016.

What 2018 Will Mean For Marketplace Lenders (PYMNTS), Rated: AAA

2017 was a tough year for some of the biggest names in alternative financial services in the U.S. – Prosper, OnDeck and LendingClub, in particular.

Breslow is hyping OnDeck’s future of partnerships with mainstream baking players – in particular, calling out a renewed partnership with JPMorgan Chase in August to expand the banks’ SMB lending reach.

Prosper, perhaps unsurprisingly, is focused on remaining prosperous, as measured by profitability and further developing its new securitization platform.

LendingClub finally got investors to show them some love – and after its record low following its analyst day earnings accounting, stock jumped 15 percent in mid-December and has managed to hold relatively stable.

Marketplace Lending Predictions for 2018 (Lend Academy), Rated: AAA

First, let’s review my predictions I made exactly one year ago.

  1. 2017 will be the year of the bank partnership
    I would say I was partially right on this one.
  2. The OCC Fintech Charter will receive a positive reception
    So, while many of the fintech platforms supported the charter there was no real positive movement this year.
  3. Lending platforms will offer banking products
    While we had a couple of platforms offering credit cards for the most part this prediction failed to materialize.
  4. One large platform will be acquired
    Student lender Earnest was acquired by Navient in a deal announced in early October.
  5. There will be no new IPOs this year
    I was almost right on this one but one US lending platform did have an IPO in 2017.
  6. China will become an important source of capital outside the USA
    I got this one right.
  7. Artificial intelligence will take center stage
    I think I read more articles about AI this year than in the previous five years combined.

My 2018 Marketplace Lending Predictions

  1. Five top 25 banks will launch their own online lending platforms
    Banks have realized that if you want to provide successful loan products today you need to have an online presence.
  2. Two new pieces of legislation will be passed that will benefit the industry
  3. One of the top five (non-bank) online lending platforms will be acquired
  4. A major lending platform will get hit with a cyber attack
    Here is the one prediction where I really hope I am wrong.
  5. The tech giants consolidate their positions in online lending
    Amazon, PayPal and Square have all started to roll out various online lending offerings to their huge customer bases.
  6. 2018 is the year of product line expansion
  7. Messaging apps start to get integrated into online lending

The Top 10 Most Important Marketplace Lending Stories of 2017 (Lend Academy), Rated: A

  1. Mike Cagney is Gone as CEO of SoFi Effective Immediately
  2. The Cleveland Fed Retracts Their Report on “P2P Lending”
  3. Prosper Finally Closes Their Big $5 Billion Deal
  4. Renaud Laplanche is Back with a New Consumer Lending Platform Called Upgrade 
  5. The New Breed of Small Business Lenders: Amazon, Paypal and Square
  6. The Fastest Consumer Lenders to $1 Billion in Originations
  7. CFPB Announces No-Action Letter to Upstart
  8. The OCC Publishes Details on the Fintech Charter
  9. Bills Being Introduced to “Fix” Decision in Madden v. Midland
  10. Takeaways From LendingClub’s First Ever Investor Day

Ex-Netflix Exec Thinks This Fintech Company Has Netflix-Like Potential (The Motley Fool), Rated: AAA

Netflix has completely disrupted the entertainment industry, sending large incumbents scrambling to compete with its vast global scale.

How did Netflix pull this off? Several reasons, but one is certainly Netflix’s unique culture, outlined in its now-famous Culture Deck.

That deck was constructed by Patty McCord, who spent 14 years as Netflix’s chief talent officer.

The company McCord joined is Lending Club (NYSE:LC).

In the press release, McCord stated:

I see a lot of parallels between where Netflix was as a company 10 years ago, where LendingClub is today, and where it can go in the next 10 years. I’m attracted to LendingClub for the stellar people and the way it exemplifies the concepts of freedom and responsibility. Culture can help drive innovation in companies that are paving new ground and transforming legacy industries, like Netflix did and like LendingClub is doing today. … In our innovative world, I see marketplaces like LendingClub as the future.

Ousted SoFi CEO is back with a new startup (Axios), Rated: A

Why it matters: If 2017 was the year in which VCs began to fire controversial execs, 2018 may be the year in which they’re forced to decide on quick-turn second acts.

Affirm’s big business for 2018 is marketing (Tearsheet), Rated: A

  • Affirm isn’t just a payment method or a personal loan anymore — it’s a marketing lever for merchants

  • Affirm sees every transaction at the point of sale — who is buying, what they’re buying and where; it’s a departure from the way credit is underwritten today, where lenders have no idea why borrowers need the money or how they’ll use it

Where Does Alternative Lending Go in 2018? (Hackernoon), Rated: A

When most people think of alternative lending, they immediately think of payday loans and other abusive loan products. In the tech world, the first thing that comes to mind are online lenders: those who take loans traditionally originated in person and move them online. That was the first wave of alternative lenders — think LendingClub, Prosper, OnDeck, to name a few.

Alt investments on the rise among RIAs (InvestmentNews), Rated: A

Based on the success of the RIA industry, the trend of breakaway advisers interested in exploring the independent channel continues to gain momentum.

Propagated by wirehouse branch management to keep their top producers in their seats, this false campaign is now being revealed as its exact opposite; there are more customizable solutions for RIAs to access and deploy alternative investments for their high net worth clients than ever before.

For example, to access alternatives on their own, RIAs in the past typically would be looking at $25 million AUM minimums just to reach cost-effective scale, and many alternative managers have $10 million individual minimums themselves.

5 fintech charts that surprised us this year (Tearsheet), Rated: A

Loyalty and rewards incentives may not be enough to make consumers like mobile payments, and it could be on retailers to find what would keep people coming back to their mobile wallets. Mobile payment adoption among Apple, Android and Samsung Pay today is low. Paying with cash or card works just fine for them, customers say.

Transparency is the big sticking point when it comes to why small businesses still prefer banks to online lenders.

What Silicon Valley Misunderstands About Banking & Fintech (The Financial Brand), Rated: A

There are some relevant lessons learned about behavioral finance and digital adoption discussed in the book “FinTech Innovation.” One of the most important lessons is the distinction between digital banking winners and laggards over time.

  • Disruptive innovation is ultimately less important than sustaining innovation.
  • Digital is a ‘pull’ technology, while much of financial serves are ‘push’ market places.
  • Platforms win on digital: bundling is more important than unbundling.

The Distinction Between ‘Push’ and ‘Pull’ Marketplaces

Digital brings many benefits to streamline the processes in financial services, but front office disintermediation could easily create financial exclusion in the Western world because many households operate in a ‘push’ modality. Only the few self-directed consumers are comfortable enough to ‘pull’ financial products.

This is the reason why the growth of first mover Robo-Advisor solutions were initially very promising but then faltered, while firms like Vanguard and Charles Schwab can still grow fast on digital.

Being a ‘pull’ marketplace means using digital with a purpose, like looking for a specific product on Amazon. However, very few households would google for the next investment fund or business loan. Instead, the majority would ask a friend, a banking organization or an advisor about their recommendations.

Will tomorrow’s core banking systems run on open-source software? (American Banker), Rated: A

Banks, long committed to keeping customer data private and their own code proprietary, are now opening up to fintechs and third-party developers in new ways.

Open-source projects are underway at Deutsche Bank, which made code from its Autobahn commercial banking software publicly available this fall, and at JPMorgan Chase, whose Quorum blockchain software is available in the open-source software repository GitHub.

For fintech owned by a CUSO, will banks buy? (Banking Exchange), Rated: A

Morales, CEO of QCash Financial, a credit union service organization (CUSO) owned by WSECU (formerly Washington State Employee Credit Union), says that constraint may be lessening based on the final ruling on payday lending issued by the Consumer Financial Protection Bureau in October.

Credit unions, however, are interested in the QCash small-dollar lending platform. Morales says that nine credit unions have signed up for the product and five are currently live with it.

Fintech Predictions For 2018 (Financial Advisor), Rated: B

Identity verification will be a priority in 2018, with 60 percent of online marketplaces and other websites adopting technologies and techniques for verifying new users’ identities, the company predicts.

Bankers anxious as Trump mulls credit union regulator for CFPB (American Banker), Rated: B

The Trump administration’s consideration of J. Mark McWatters to lead the Consumer Financial Protection Bureau is stoking fears among bankers that he will show favor to credit unions once in office.

United Kingdom

UK’s Largest P2P Lender Funding Circle Said to be Planning IPO at £2 Billion Valuation (Crowdfund Insider), Rated: AAA

Funding Circle, a UK based peer to peer lender, is reportedly planning an initial public offering (IPO) for 2018. The news of the new listing is courtesy of SkyNews that reports Funding Circle will begin meeting with investment banks during Q1 of 2018 as they sign up underwriters for the deal. Shares are expected to list at some point in late 2018. If Funding Circle trades on an exchange it will become the first UK P2P lender to do so thus representing a seminal event in the online lending industry.

Urban Jungle Raises £1M in Seed Funding (FinSMEs), Rated: A

Urban Jungle, a London, UK-based insurtech startup, completed a £1m seed funding round.

Moneywise reveals top 2018 financial resolutions for UK adults (London School of Business & Finance), Rated: A

Research from financial advice website Moneywise has revealed the top financial goals of its users for 2018.

Moneywise found that cutting down on unnecessary spending was the top financial resolution for 2018, with 18 per cent citing this as their main priority.

Starting or boosting cash savings was voted the second most popular financial resolution for 2018, with this goal being set by 11 per cent of Moneywise users, whilst 10 per cent plan to start investing for the first time or boosting investments in a Stocks and Shares Isa.

When IFAs fight back against digital investment management (WhatInvestment.co.uk), Rated: A

More robo-advice platforms are on the market than ever before, and the number will grow rapidly during 2018. A joint report from the FCA and the Treasury, published last June, found that 100 robo firms are either on the market already or in active development.

IFAs may well find this frustrating – even with professional credentials and years of experience, they are subject to more distrust and scrutiny than a number of untested algorithms. Worse, these algorithms may come to represent their primary competition: they offer lower prices, they open up access to financial advice, and there is a range of options available for customers minded to use them, with more to come.

Proplend Looks Back on 2017 P2P Successes & Announces 2018 Plans (Crowdfund Insider), Rated: A

On Tuesday, online platform Proplend gave its 2017 peer-to-peer lending year in review.

  • The majority of platforms gained full Financial Conduct Authority (FCA) authorization
  • Many platforms sought ISA Manager Status to launch Innovative Finance ISA (IFISA) – with Proplend being among the early adopters.
  • LendInvest withdrew FCA approval application and stepped down from the Peer to Peer Finance Association as it moved from all P2P activity
  • RateSetter’s wholesale lending practices notably proved costly. The lender eventually withdrew from the P2PFA after breathing the association’s operating principles

The lender went on to note its plans for 2018:

  • The redesign of Lender Dashboards, Proplend.com website and the launch of our Auto-Invest product
  • Initially Proplend Auto-Invest will be a low-risk (Tranche A), three-year, Innovative Finance ISA product targeting returns of c.5% each year
  • The lender has built a “healthy” loan pipeline which will be available on the platform from early 2018, subject to due diligence, valuations, and legals.

5 alternative investments to the stock market (BM Magazine), Rated: B

  1. Real Estate
  2. Gold and other Precious Metals
  3. Backing and Staking in Poker
  4. Peer-to-Peer Lending
  5. Equity Crowdfunding

Could 2018 be a bumper year for tech IPOs? (Computer Business Review), Rated: B

After a couple of quiet years on the IPO front, the market could be ready to bounce back with Funding Circle said to be the first targeting flotation.

In January 2017 the P2P site surpassed a £1bn valuation thanks to an £82m funding round, led by the likes of Accel.

With distribution deals with the likes of the Royal Bank of Scotland and Santander, Funding Circle lent more than £1.7bn in 2017.

The London Stock Exchange revealed that 106 companies floated on its markets in 2017, raising £15bn, up 63% by number and 164% by value on 2016. These numbers mean that the LSE surpassed all European exchanges in the year by both IPO number and by money raised.

European Union

ETF providers hope Mifid II will spur European growth (Financial Times), Rated: AAA

ETF trading has since spread to 25 exchanges across Europe, but no accurate record of activity has been required by regulators. About 70 per cent of ETF trading in Europe goes unreported because it occurs via private bilateral over-the-counter transactions.

This should begin to end from Wednesday with the introduction of sweeping European rules designed to strengthen protection for investors and improve transparency across the continent’s financial markets. The package of regulations, known as Mifid II, requires comprehensive, detailed reporting of ETF trades.

Source: Financial Times

The passive investment industry, which is dominated by BlackRock, State Street and Vanguard, are betting Mifid II will set their European businesses on a growth path akin to the US, where usage has spread far more widely and deeply. Assets held in US-listed ETFs stood at $3.5tn at the end of November, compared with just $790bn across all European-listed ETFs, according to ETFGI.

Source: Financial Times
International

The FinTech outlook for 2018 (The Finanser), Rated: AAA

There are four big things for 2018 from a FinTech viewpoint that are obvious to me however, which are:

  1. Getting down to business with Artificial Intelligence (AI)
  2. Rationalising and cleansing core data structures
  3. Continuing the digital drive
  4. Distributed Ledger Technology (DLT) continues to rise

Therefore, rather than me making predictions, I thought it interesting to review the views of other commentators.

Jim also wrote another piece that nicely summarises Forrester’s predictions for 2018 which include:

  1. Banks not embracing Open Banking, but increasing partnerships with start-ups;
  2. Faster moves to embrace Digital Banking whilst losing focus on face-to-face communications; and
  3. Focus on back office transformation.

 

Saxo Bank’s Payments business sent me a press release with their top three predictions, which are:

  • The demise of traditional, slow, expensive cross border payments
  • Payment Service Providers (PSPs) will help merchants to expand internationally
  • Tech giants move into banking

Top 10 Companies of the Blockchain Industry in 2017 (Coin Telegraph), Rated: A

The total market capitalization of all the cryptocurrencies hit the $600 bln mark in December.

Source: Coin Telegraph

Coinbase is one of the top digital currency wallet and platform for exchange. Market capitalization: $2 bln (GDAX)

Ripple is a real-time gross settlement and currency exchange. Its main goal is to make an entire system devoted to money transferring. Market capitalization: $30 bln

India

P2P players blame lending limit for rising costs (Business Standard), Rated: AAA

Peer-to-peer lending (P2P) platforms have seen a rise in traffic as well as investor interest after registering themselves with the  But they argue the Rs 1-million limit placed on across all platforms is restrictive.

“With time, these limits are going to be relaxed by the  These have been imposed in order to avoid rapid growth that could lead to systemic risk,” said Ekmeet Singh, CEO, Lendbox.

Industry players want the to raise the limit for individual borrowers and remove the limit for institutional 

P2P lender AnyTimeLoan, prop-tech startup Foyr, tech firm Imanis raise funds (Deal Street Asia), Rated: A

While Spice Digital is investing up to $3.9 million in AnyTimeLoan, prop-tech startup Foyr has raised $3.8 million from JLL and others. Also, Wipro has put in an additional $2 million in US-based tech firm Imanis.

Asia

Crowdo Recaps 2017 Milestones: 3,500+ Projects Funded (Crowdfund Insider), Rated: A

Crowdo, a South East Asian online marketplace for P2P lending and crowdfunding, posted an infographic citing its 2017 milestones.

Canada

Meet GN Compass: The ICO Attempting to Disrupt Liquidity In The Lending Market (Equities.com), Rated: AAA

Collins: I left the railway, cashed out my pension and started my own lending company; Great North Capital Inc. We have successfully funded approximately 100 loans; primarily focusing on high risk clients. Based on my accumulative knowledge and experience in both banking and running Great North Capital, I started to develop the idea for a peer-to-peer lending solution where there is very limited risk to the investors (lenders) while making loans liquid. Also by having our own credit system for borrowers, they have the opportunity to improve their credit rating on the platform by making timely payments and having no delinquencies. At the same time, I was learning more about cryptocurrencies and blockchain technology. I quickly realized the huge potential of the blockchain and how it can solve the liquidity problem as well as securing an investor’s principal capital; which are the main issues of current peer-to-peer lending platforms. I got in touch with Jean Pierre Rukebesha who immediately liked the idea and decided to come on board as co-founder and CFO. Hence GN Compass (Great North Compass) was born.

Older Canadians still leery of fintech despite flood of services, RateHub finds (IT Business), Rated: A

Between last year’s official release of Android Pay, the increasing ubiquity of artificial intelligence (AI)-powered support platforms such as Sun Life’s Ella, and the ongoing digital transformation of Canada’s banks, Canadians have more opportunities than ever to integrate fintech into their lives – but according to financial comparison platform developer Ratehub.ca, the eldest among us aren’t taking advantage.

According to the company’s 2017 Digital Money Trends Report, released last month, fewer than half of baby boomers reported trusting robo-advisors, mobile payments, marketplace and peer-to-peer lenders, and rate comparison website, while in many cases millennials and generation X-ers were nearly twice as likely to do so.

Other findings from the report include:

  • Nearly twice as many millennials (44 per cent) and generation X-ers (42 per cent) reported trusting robo-advisors compared to boomers (23 per cent).
  • Nearly twice as many millennials (71 per cent) said they trust mobile payments compared to boomers (38 per cent). (62 per cent of generation X-ers said they trust mobile payments.)
  • Twice as many millennials (47 per cent) and generation X-ers (48 per cent) trust marketplace lenders compared to boomers (23 per cent).
  • 58 per cent of millennials and 53 per cent of generation X-ers trust peer-to-peer lenders, versus only 32 per cent of boomers.
  • 63 per cent of millennials and 60 per cent of generation X-ers trust rate comparison websites, versus 42 per cent of boomers.
Africa

Internet firm Opera bets on Kenyan to steer Africa Fintech (Business Daily), Rated: A

Internet browser company Opera has picked Eddie Ndichu to drive its Fintech strategy in Africa even as it prepares to set up an office in Nairobi.

Opera has said that it is investing Sh10.3 billion ($100 million) in Africa’s digital economy over the next two years and OPay is part of those investments.

In a statement Tuesday, Opera said that it had appointed Mr Ndichu as the managing director and vice president for Fintech in Africa.

Authors:

George Popescu
Allen Taylor

Wednesday January 3 2018, Daily News Digest

ETFs Europe

News Comments Today’s main news: GreenSky raises $4.5B in equity, becomes most valuable online lender. Funding Circle has eye on IPO at 2B GBP valuation. P2P lenders in India blame lending limit on rising costs. GN Compass wants to disrupt lending liquidity in Canada. Today’s main analysis: Can Mifid II spur growth in European ETF market? Today’s thought-provoking […]

ETFs Europe

News Comments

United States

United Kingdom

European Union

International

India

Asia

Canada

Africa

News Summary

United States

Who’s the Most Valuable Online Lender? After This Deal, It’s GreenSky (WSJ), Rated: AAA

Financial-technology firm GreenSky LLC raised new equity from Pacific Investment Management Co. in a deal that valued the digital lender at nearly $4.5 billion, said a person familiar with the matter.

It vaults GreenSky over Social Finance Inc. to become the most highly-valued online lender in the U.S. It also makes the Atlanta company the second most valuable privately held U.S. fintech company behind Stripe Inc., which processes payments for Internet businesses.

Pimco, the Newport Beach, Calif., money manager, invested at a valuation roughly 25% above the $3.6 billion GreenSky fetched in 2016.

What 2018 Will Mean For Marketplace Lenders (PYMNTS), Rated: AAA

2017 was a tough year for some of the biggest names in alternative financial services in the U.S. – Prosper, OnDeck and LendingClub, in particular.

Breslow is hyping OnDeck’s future of partnerships with mainstream baking players – in particular, calling out a renewed partnership with JPMorgan Chase in August to expand the banks’ SMB lending reach.

Prosper, perhaps unsurprisingly, is focused on remaining prosperous, as measured by profitability and further developing its new securitization platform.

LendingClub finally got investors to show them some love – and after its record low following its analyst day earnings accounting, stock jumped 15 percent in mid-December and has managed to hold relatively stable.

Marketplace Lending Predictions for 2018 (Lend Academy), Rated: AAA

First, let’s review my predictions I made exactly one year ago.

  1. 2017 will be the year of the bank partnership
    I would say I was partially right on this one.
  2. The OCC Fintech Charter will receive a positive reception
    So, while many of the fintech platforms supported the charter there was no real positive movement this year.
  3. Lending platforms will offer banking products
    While we had a couple of platforms offering credit cards for the most part this prediction failed to materialize.
  4. One large platform will be acquired
    Student lender Earnest was acquired by Navient in a deal announced in early October.
  5. There will be no new IPOs this year
    I was almost right on this one but one US lending platform did have an IPO in 2017.
  6. China will become an important source of capital outside the USA
    I got this one right.
  7. Artificial intelligence will take center stage
    I think I read more articles about AI this year than in the previous five years combined.

My 2018 Marketplace Lending Predictions

  1. Five top 25 banks will launch their own online lending platforms
    Banks have realized that if you want to provide successful loan products today you need to have an online presence.
  2. Two new pieces of legislation will be passed that will benefit the industry
  3. One of the top five (non-bank) online lending platforms will be acquired
  4. A major lending platform will get hit with a cyber attack
    Here is the one prediction where I really hope I am wrong.
  5. The tech giants consolidate their positions in online lending
    Amazon, PayPal and Square have all started to roll out various online lending offerings to their huge customer bases.
  6. 2018 is the year of product line expansion
  7. Messaging apps start to get integrated into online lending

The Top 10 Most Important Marketplace Lending Stories of 2017 (Lend Academy), Rated: A

  1. Mike Cagney is Gone as CEO of SoFi Effective Immediately
  2. The Cleveland Fed Retracts Their Report on “P2P Lending”
  3. Prosper Finally Closes Their Big $5 Billion Deal
  4. Renaud Laplanche is Back with a New Consumer Lending Platform Called Upgrade 
  5. The New Breed of Small Business Lenders: Amazon, Paypal and Square
  6. The Fastest Consumer Lenders to $1 Billion in Originations
  7. CFPB Announces No-Action Letter to Upstart
  8. The OCC Publishes Details on the Fintech Charter
  9. Bills Being Introduced to “Fix” Decision in Madden v. Midland
  10. Takeaways From LendingClub’s First Ever Investor Day

Ex-Netflix Exec Thinks This Fintech Company Has Netflix-Like Potential (The Motley Fool), Rated: AAA

Netflix has completely disrupted the entertainment industry, sending large incumbents scrambling to compete with its vast global scale.

How did Netflix pull this off? Several reasons, but one is certainly Netflix’s unique culture, outlined in its now-famous Culture Deck.

That deck was constructed by Patty McCord, who spent 14 years as Netflix’s chief talent officer.

The company McCord joined is Lending Club (NYSE:LC).

In the press release, McCord stated:

I see a lot of parallels between where Netflix was as a company 10 years ago, where LendingClub is today, and where it can go in the next 10 years. I’m attracted to LendingClub for the stellar people and the way it exemplifies the concepts of freedom and responsibility. Culture can help drive innovation in companies that are paving new ground and transforming legacy industries, like Netflix did and like LendingClub is doing today. … In our innovative world, I see marketplaces like LendingClub as the future.

Ousted SoFi CEO is back with a new startup (Axios), Rated: A

Why it matters: If 2017 was the year in which VCs began to fire controversial execs, 2018 may be the year in which they’re forced to decide on quick-turn second acts.

Affirm’s big business for 2018 is marketing (Tearsheet), Rated: A

  • Affirm isn’t just a payment method or a personal loan anymore — it’s a marketing lever for merchants

  • Affirm sees every transaction at the point of sale — who is buying, what they’re buying and where; it’s a departure from the way credit is underwritten today, where lenders have no idea why borrowers need the money or how they’ll use it

Where Does Alternative Lending Go in 2018? (Hackernoon), Rated: A

When most people think of alternative lending, they immediately think of payday loans and other abusive loan products. In the tech world, the first thing that comes to mind are online lenders: those who take loans traditionally originated in person and move them online. That was the first wave of alternative lenders — think LendingClub, Prosper, OnDeck, to name a few.

Alt investments on the rise among RIAs (InvestmentNews), Rated: A

Based on the success of the RIA industry, the trend of breakaway advisers interested in exploring the independent channel continues to gain momentum.

Propagated by wirehouse branch management to keep their top producers in their seats, this false campaign is now being revealed as its exact opposite; there are more customizable solutions for RIAs to access and deploy alternative investments for their high net worth clients than ever before.

For example, to access alternatives on their own, RIAs in the past typically would be looking at $25 million AUM minimums just to reach cost-effective scale, and many alternative managers have $10 million individual minimums themselves.

5 fintech charts that surprised us this year (Tearsheet), Rated: A

Loyalty and rewards incentives may not be enough to make consumers like mobile payments, and it could be on retailers to find what would keep people coming back to their mobile wallets. Mobile payment adoption among Apple, Android and Samsung Pay today is low. Paying with cash or card works just fine for them, customers say.

Transparency is the big sticking point when it comes to why small businesses still prefer banks to online lenders.

What Silicon Valley Misunderstands About Banking & Fintech (The Financial Brand), Rated: A

There are some relevant lessons learned about behavioral finance and digital adoption discussed in the book “FinTech Innovation.” One of the most important lessons is the distinction between digital banking winners and laggards over time.

  • Disruptive innovation is ultimately less important than sustaining innovation.
  • Digital is a ‘pull’ technology, while much of financial serves are ‘push’ market places.
  • Platforms win on digital: bundling is more important than unbundling.

The Distinction Between ‘Push’ and ‘Pull’ Marketplaces

Digital brings many benefits to streamline the processes in financial services, but front office disintermediation could easily create financial exclusion in the Western world because many households operate in a ‘push’ modality. Only the few self-directed consumers are comfortable enough to ‘pull’ financial products.

This is the reason why the growth of first mover Robo-Advisor solutions were initially very promising but then faltered, while firms like Vanguard and Charles Schwab can still grow fast on digital.

Being a ‘pull’ marketplace means using digital with a purpose, like looking for a specific product on Amazon. However, very few households would google for the next investment fund or business loan. Instead, the majority would ask a friend, a banking organization or an advisor about their recommendations.

Will tomorrow’s core banking systems run on open-source software? (American Banker), Rated: A

Banks, long committed to keeping customer data private and their own code proprietary, are now opening up to fintechs and third-party developers in new ways.

Open-source projects are underway at Deutsche Bank, which made code from its Autobahn commercial banking software publicly available this fall, and at JPMorgan Chase, whose Quorum blockchain software is available in the open-source software repository GitHub.

For fintech owned by a CUSO, will banks buy? (Banking Exchange), Rated: A

Morales, CEO of QCash Financial, a credit union service organization (CUSO) owned by WSECU (formerly Washington State Employee Credit Union), says that constraint may be lessening based on the final ruling on payday lending issued by the Consumer Financial Protection Bureau in October.

Credit unions, however, are interested in the QCash small-dollar lending platform. Morales says that nine credit unions have signed up for the product and five are currently live with it.

Fintech Predictions For 2018 (Financial Advisor), Rated: B

Identity verification will be a priority in 2018, with 60 percent of online marketplaces and other websites adopting technologies and techniques for verifying new users’ identities, the company predicts.

Bankers anxious as Trump mulls credit union regulator for CFPB (American Banker), Rated: B

The Trump administration’s consideration of J. Mark McWatters to lead the Consumer Financial Protection Bureau is stoking fears among bankers that he will show favor to credit unions once in office.

United Kingdom

UK’s Largest P2P Lender Funding Circle Said to be Planning IPO at £2 Billion Valuation (Crowdfund Insider), Rated: AAA

Funding Circle, a UK based peer to peer lender, is reportedly planning an initial public offering (IPO) for 2018. The news of the new listing is courtesy of SkyNews that reports Funding Circle will begin meeting with investment banks during Q1 of 2018 as they sign up underwriters for the deal. Shares are expected to list at some point in late 2018. If Funding Circle trades on an exchange it will become the first UK P2P lender to do so thus representing a seminal event in the online lending industry.

Urban Jungle Raises £1M in Seed Funding (FinSMEs), Rated: A

Urban Jungle, a London, UK-based insurtech startup, completed a £1m seed funding round.

Moneywise reveals top 2018 financial resolutions for UK adults (London School of Business & Finance), Rated: A

Research from financial advice website Moneywise has revealed the top financial goals of its users for 2018.

Moneywise found that cutting down on unnecessary spending was the top financial resolution for 2018, with 18 per cent citing this as their main priority.

Starting or boosting cash savings was voted the second most popular financial resolution for 2018, with this goal being set by 11 per cent of Moneywise users, whilst 10 per cent plan to start investing for the first time or boosting investments in a Stocks and Shares Isa.

When IFAs fight back against digital investment management (WhatInvestment.co.uk), Rated: A

More robo-advice platforms are on the market than ever before, and the number will grow rapidly during 2018. A joint report from the FCA and the Treasury, published last June, found that 100 robo firms are either on the market already or in active development.

IFAs may well find this frustrating – even with professional credentials and years of experience, they are subject to more distrust and scrutiny than a number of untested algorithms. Worse, these algorithms may come to represent their primary competition: they offer lower prices, they open up access to financial advice, and there is a range of options available for customers minded to use them, with more to come.

Proplend Looks Back on 2017 P2P Successes & Announces 2018 Plans (Crowdfund Insider), Rated: A

On Tuesday, online platform Proplend gave its 2017 peer-to-peer lending year in review.

  • The majority of platforms gained full Financial Conduct Authority (FCA) authorization
  • Many platforms sought ISA Manager Status to launch Innovative Finance ISA (IFISA) – with Proplend being among the early adopters.
  • LendInvest withdrew FCA approval application and stepped down from the Peer to Peer Finance Association as it moved from all P2P activity
  • RateSetter’s wholesale lending practices notably proved costly. The lender eventually withdrew from the P2PFA after breathing the association’s operating principles

The lender went on to note its plans for 2018:

  • The redesign of Lender Dashboards, Proplend.com website and the launch of our Auto-Invest product
  • Initially Proplend Auto-Invest will be a low-risk (Tranche A), three-year, Innovative Finance ISA product targeting returns of c.5% each year
  • The lender has built a “healthy” loan pipeline which will be available on the platform from early 2018, subject to due diligence, valuations, and legals.

5 alternative investments to the stock market (BM Magazine), Rated: B

  1. Real Estate
  2. Gold and other Precious Metals
  3. Backing and Staking in Poker
  4. Peer-to-Peer Lending
  5. Equity Crowdfunding

Could 2018 be a bumper year for tech IPOs? (Computer Business Review), Rated: B

After a couple of quiet years on the IPO front, the market could be ready to bounce back with Funding Circle said to be the first targeting flotation.

In January 2017 the P2P site surpassed a £1bn valuation thanks to an £82m funding round, led by the likes of Accel.

With distribution deals with the likes of the Royal Bank of Scotland and Santander, Funding Circle lent more than £1.7bn in 2017.

The London Stock Exchange revealed that 106 companies floated on its markets in 2017, raising £15bn, up 63% by number and 164% by value on 2016. These numbers mean that the LSE surpassed all European exchanges in the year by both IPO number and by money raised.

European Union

ETF providers hope Mifid II will spur European growth (Financial Times), Rated: AAA

ETF trading has since spread to 25 exchanges across Europe, but no accurate record of activity has been required by regulators. About 70 per cent of ETF trading in Europe goes unreported because it occurs via private bilateral over-the-counter transactions.

This should begin to end from Wednesday with the introduction of sweeping European rules designed to strengthen protection for investors and improve transparency across the continent’s financial markets. The package of regulations, known as Mifid II, requires comprehensive, detailed reporting of ETF trades.

Source: Financial Times

The passive investment industry, which is dominated by BlackRock, State Street and Vanguard, are betting Mifid II will set their European businesses on a growth path akin to the US, where usage has spread far more widely and deeply. Assets held in US-listed ETFs stood at $3.5tn at the end of November, compared with just $790bn across all European-listed ETFs, according to ETFGI.

Source: Financial Times
International

The FinTech outlook for 2018 (The Finanser), Rated: AAA

There are four big things for 2018 from a FinTech viewpoint that are obvious to me however, which are:

  1. Getting down to business with Artificial Intelligence (AI)
  2. Rationalising and cleansing core data structures
  3. Continuing the digital drive
  4. Distributed Ledger Technology (DLT) continues to rise

Therefore, rather than me making predictions, I thought it interesting to review the views of other commentators.

Jim also wrote another piece that nicely summarises Forrester’s predictions for 2018 which include:

  1. Banks not embracing Open Banking, but increasing partnerships with start-ups;
  2. Faster moves to embrace Digital Banking whilst losing focus on face-to-face communications; and
  3. Focus on back office transformation.

 

Saxo Bank’s Payments business sent me a press release with their top three predictions, which are:

  • The demise of traditional, slow, expensive cross border payments
  • Payment Service Providers (PSPs) will help merchants to expand internationally
  • Tech giants move into banking

Top 10 Companies of the Blockchain Industry in 2017 (Coin Telegraph), Rated: A

The total market capitalization of all the cryptocurrencies hit the $600 bln mark in December.

Source: Coin Telegraph

Coinbase is one of the top digital currency wallet and platform for exchange. Market capitalization: $2 bln (GDAX)

Ripple is a real-time gross settlement and currency exchange. Its main goal is to make an entire system devoted to money transferring. Market capitalization: $30 bln

India

P2P players blame lending limit for rising costs (Business Standard), Rated: AAA

Peer-to-peer lending (P2P) platforms have seen a rise in traffic as well as investor interest after registering themselves with the  But they argue the Rs 1-million limit placed on across all platforms is restrictive.

“With time, these limits are going to be relaxed by the  These have been imposed in order to avoid rapid growth that could lead to systemic risk,” said Ekmeet Singh, CEO, Lendbox.

Industry players want the to raise the limit for individual borrowers and remove the limit for institutional 

P2P lender AnyTimeLoan, prop-tech startup Foyr, tech firm Imanis raise funds (Deal Street Asia), Rated: A

While Spice Digital is investing up to $3.9 million in AnyTimeLoan, prop-tech startup Foyr has raised $3.8 million from JLL and others. Also, Wipro has put in an additional $2 million in US-based tech firm Imanis.

Asia

Crowdo Recaps 2017 Milestones: 3,500+ Projects Funded (Crowdfund Insider), Rated: A

Crowdo, a South East Asian online marketplace for P2P lending and crowdfunding, posted an infographic citing its 2017 milestones.

Canada

Meet GN Compass: The ICO Attempting to Disrupt Liquidity In The Lending Market (Equities.com), Rated: AAA

Collins: I left the railway, cashed out my pension and started my own lending company; Great North Capital Inc. We have successfully funded approximately 100 loans; primarily focusing on high risk clients. Based on my accumulative knowledge and experience in both banking and running Great North Capital, I started to develop the idea for a peer-to-peer lending solution where there is very limited risk to the investors (lenders) while making loans liquid. Also by having our own credit system for borrowers, they have the opportunity to improve their credit rating on the platform by making timely payments and having no delinquencies. At the same time, I was learning more about cryptocurrencies and blockchain technology. I quickly realized the huge potential of the blockchain and how it can solve the liquidity problem as well as securing an investor’s principal capital; which are the main issues of current peer-to-peer lending platforms. I got in touch with Jean Pierre Rukebesha who immediately liked the idea and decided to come on board as co-founder and CFO. Hence GN Compass (Great North Compass) was born.

Older Canadians still leery of fintech despite flood of services, RateHub finds (IT Business), Rated: A

Between last year’s official release of Android Pay, the increasing ubiquity of artificial intelligence (AI)-powered support platforms such as Sun Life’s Ella, and the ongoing digital transformation of Canada’s banks, Canadians have more opportunities than ever to integrate fintech into their lives – but according to financial comparison platform developer Ratehub.ca, the eldest among us aren’t taking advantage.

According to the company’s 2017 Digital Money Trends Report, released last month, fewer than half of baby boomers reported trusting robo-advisors, mobile payments, marketplace and peer-to-peer lenders, and rate comparison website, while in many cases millennials and generation X-ers were nearly twice as likely to do so.

Other findings from the report include:

  • Nearly twice as many millennials (44 per cent) and generation X-ers (42 per cent) reported trusting robo-advisors compared to boomers (23 per cent).
  • Nearly twice as many millennials (71 per cent) said they trust mobile payments compared to boomers (38 per cent). (62 per cent of generation X-ers said they trust mobile payments.)
  • Twice as many millennials (47 per cent) and generation X-ers (48 per cent) trust marketplace lenders compared to boomers (23 per cent).
  • 58 per cent of millennials and 53 per cent of generation X-ers trust peer-to-peer lenders, versus only 32 per cent of boomers.
  • 63 per cent of millennials and 60 per cent of generation X-ers trust rate comparison websites, versus 42 per cent of boomers.
Africa

Internet firm Opera bets on Kenyan to steer Africa Fintech (Business Daily), Rated: A

Internet browser company Opera has picked Eddie Ndichu to drive its Fintech strategy in Africa even as it prepares to set up an office in Nairobi.

Opera has said that it is investing Sh10.3 billion ($100 million) in Africa’s digital economy over the next two years and OPay is part of those investments.

In a statement Tuesday, Opera said that it had appointed Mr Ndichu as the managing director and vice president for Fintech in Africa.

Authors:

George Popescu
Allen Taylor

Tuesday December 26 2017, Daily News Digest

cumulative loss

News Comments Today’s main news: 3 Reg CF portals no longer FINRA-approved. Zopa launching a bank. LexinFintech completes $108M IPO. European banks prep for PSD2. Australia releases second MPL survey. Today’s main analysis: PeerIQ’s MPL Loan Performance Monitor. Today’s thought-provoking articles: 2017 was a wild ride for alternative lending. Is Congress expanding credit for the poor or enabling high-interest rates? Megatrends […]

cumulative loss

News Comments

United States

United Kingdom

China

European Union

Australia

India

Asia

News Summary

United States

The Wild Ride In Alternative Financing In 2017 (PYMNTS), Rated: AAA

But as 2017 pulled into the station, it became clear that a decade-long era in financial services was officially drawing to a close, other than this transitional year between what was and what’s next.

It became clear that Act I of digital era financial services was drawing to a close – and that Act II is getting warmed up backstage.

The CFPB

The CFPB has spent a year generating surprising questions – with even more surprising answers.

Moreover, there was some thought that the federal courts might render much of the discussion moot, by ruling the CFPB’s independent structure rendered it unconstitutional in the CFPB v. PHH case.

That ruling was thrown out by a three-judge panel of the D.C. Circuit court of appeals, and a final ruling is still awaited.

The Congressional Review Act (And The Fate Of The Old Rules)

The 20-year-old law, which had only been used once before 2017, has been used 15 times since January of last year to undo Obama-era rules.

The law was effectively used to bounce the CFPB’s arbitration rule from going into effect. That rule would have made it illegal for financial services companies to insert mandatory arbitration clauses into consumer contracts, thus forcing consumers to surrender their right to form class-action lawsuits.

A similar maneuver was attempted to block controversial rules the CFPB passed regarding the regulation of prepaid cards. The House approved the CRA resolution, but the bill was unable to garner majority support in the Senate. That means going forward, prepaid cards that offer overdraft protection will be regulated as though they are credit cards, as opposed to debit cards.

The Future Of Innovation Instead Of Regulation

Affirm, founded by PayPal’s Max Levchin, built a POS financing product dedicated to offering consumers an honest, transparent way to pay for items on installment.

Affirm’s mission to expand consumer access to honest financing will rev into high gear next year, on the heels of a $200 million capital raise on an estimated $1.6 billion valuation, and now with the ability for any consumer to take advantage of its credit option at any merchant.

LendUp wants to calibrate financial services to what it calls “the new average consumer” or the “emerging middle class.”

EVEN’s new partnership with Walmart is a new tool to help smooth the income volatility for its workers by allowing them to be paid in real time for the hours they have already worked, instead of having to wait for the traditional payday.

“This isn’t that people just don’t have the money to pay their bills in general, but that they are forced to make bad decisions because the money they have already earned by working is not available to them at the right time,” EVEN CEO Jon Schlossberg told Karen Webster. “That adds up to a $100 billion industry a year in payday loans and late fees. That’s crazy; we can fix that and we should fix that.”

So EVEN – now with Walmart as a partner – is fixing it, both by giving customers access to their funds early, but also by providing access to financial management software so they can better control their money.

What’s Next

Perhaps in 2018, they will even find ways to write studies that use terms properly and do not directly contradict the research of other regulators.

Millennials, she noted, tend to enter the credit system with a bang once they start having families.

MPL Loan Performance Monitor (PeerIQ), Rated: AAA

This week, we introduce our redesigned MPL Loan Performance Monitor where we track the delinquency rates, cumulative losses, and transition matrices on public marketplace lending data that is comprised of loans originated by LendingClub and Prosper.

Source: PeerIQ
Source: PeerIQ

Is Congress expanding credit for the poor or enabling payday lenders? (Salon), Rated: AAA

Ken Rees has made a fortune selling loans with triple-digit interest rates to borrowers with poor credit history or no credit history.

But in 2008, federal regulators ordered First Delaware to stop working with payday lenders — including ThinkCash — so Rees changed his company’s name to Think Finance and started striking deals with Native American tribes, which, as sovereign entities, are also exempt from state usury laws. Think Finance filed a still-pending lawsuit claiming Think Finance used the tribes as a front to make deceptive loans. Think Finance denies the charges and Rees started a new company, Elevate Credit, which operates from the same building in Fort Worth, Texas. Elevate deals in online installment loans, a cousin to payday loans, and partners with a Kentucky-based bank to offer lines of credit with effective annual interest rates much higher than would otherwise be allowed in some states.

Sponsors say the Protecting Consumers Access to Credit Act facilitates bank partnerships by ensuring third parties like debt buyers and rapidly growing financial technology firms can buy, and collect on, loans originated by federally regulated banks regardless of state laws governing interest rates. These partnerships can help make credit available to those left out of the traditional banking system, primarily low-income individuals, backers say.

“The bill covers every flavor of online lending,” said Adam Levitin, a consumer law professor at Georgetown University. “Some members of Congress have gotten snookered that they are fostering innovation, but a loan is just a loan whether you do it online or not.”

But now more payday-style lenders are moving online and donning the friendly face of a tech startup. Some, like LendUp, a lender charging more than 200 percent on some loans and counting Google Ventures among its investors, have attracted mainstream support. Like many high-interest online lenders, LendUp says it is “a better alternative to payday loans” because they use alternative data sources to determine interest rates but consumer advocates say the product, a high-interest loan that can quickly lead to a cycle of debt, is essentially the same thing.

Elevate said in an email it is committed to lowering rates further, and said its loan terms are more transparent and it doesn’t charge expensive fees associated with payday lenders.

Elevate’s installment loan called RISE is licensed in 17 states that don’t impose interest-rate caps and charges annual interest rates as high as 299 percent. Elevate says repeat borrowers can eventually qualify for interest rates as low as 36 percent on subsequent loans.

Fifteen states and the District of Columbia impose interest-rate caps, most around 36 percent, to protect consumers from high-interest loans.

This article originally appeared on publicintegrity.org.

Three Reg CF Crowdfunding Portals are No Longer FINRA Approved (Crowdfund Insider), Rated: AAA

Ufunding was the first to depart FINRAs list of approved platforms. In hindsight it is a wonder the platform was ever approved. The action by FINRA took place a little over a year ago as “potential for fraud” was evident on Ufunding as was “an almost complete failure to follow disclosure and filing requirements.”

DreamFunded Marketplace has hit the exit. We are not certain exactly why DreamFunded left but, if one speculates, it is most likely due to the fact real estate investing is better suited for Reg A+ and Reg D crowdfunding rules which allow issuers to raise more money.

The other former CF platform is Crowdboarders out of Texas. Crowdboarders appears to have pivoted to more of a promotional platform.

After the tech wake-up call… (Banking Exchange), Rated: A

Not long ago, Indiana’s Peoples Bank SB had a business prospect come in who had a loan with Kabbage, the online lender, at 20%. “We reviewed their credit, and we got them into the bank at close to 5%,” says Benjamin Bochnowski, president and CEO at the $914.2 million-assets bank.

With credit that was worthy of a rate like that, the bank asked the customer why it had gone to Kabbage in the first place—and been willing to pay nearly 15 percentage points more for credit. Simple, the new customer responded. Kabbage was easy to use and delivered the proceeds of the loan quickly.

Camilo Concha of LendingUSA (Lend Academy), Rated: A

In this podcast you will learn:

  • The founding story of LendingUSA.
  • The different verticals they operate in today.
  • How their point of sale lending process works.
  • The typical terms on these loans.
  • A profile of the typical borrower who uses LendingUSA.
  • How they do marketing outreach to the merchants offering their loans.
  • The different revenue streams they have.
  • The scale that LendingUSA is at today.
  • How their loan performance has been to date.
  • Why LendingUSA is not competing as much on price as other consumer lenders.
  • Their overall approval rate for loan applications.
  • How they approach fraud prevention.
  • Who is providing the capital for these loans.
  • Where they are on the path to profitability.
  • Why the marketplace lending challenges of 2016 did not impact LendingUSA that much.
  • Why their cost of customer acquisition is going down.
  • Their biggest challenge in getting their business to where it is today.
  • Camilo’s long term vision for LendingUSA.

P2Binvestor CEO Krista Morgan on Marketplace Lending: What to Expect in 2018 (Crowdfund Insider), Rated: A

P2Binvestor CEO Krista Morgan founded P2Binvestor in 2012 with a mission to help growing businesses succeed. Morgan is not only CEO of a fast growing Fintech, she is also the cohost of the podcast “Women Who Startup Radio”, an ardent mentor to other women entrepreneurs who speaks regularly on business finance, fundraising, and scaling a startup.

I recently connected with Morgan via email to learn her 2018 predictions for the Marketplace Lending sector and more specifically, her predictions for P2Binvestor. Her observations follow:

  • More focus will be placed on business models and profitability
  • Platform mergers and shut downs will occur as equity investors remain on the sidelines
  • Capital will start to look for shorter duration assets
  • The conversation about diversity will continue

When asked what PB2i has in store for 2018, Morgan targeted the platform’s growth in four areas:

  • More bank partnerships
  • Tech focused on portfolio monitoring
  • Tighter credit standards

Modo Creates A Payments Data Highway Between The World’s Largest Financial Institutions (Benzinga), Rated: A

Bruce Parker, Modo CEO: Modo creates interoperability in the payments industry by conducting the exchange of data between systems via our translation utility service. Modo allows clients to bring together capabilities from around the payments and commerce industry by directly solving for interoperability between different payment systems.

We’re doing this for some of the biggest names in the payments game: Bank of America Corp BACVeriFone Systems Inc PAY, FIS, Klarna, and Alliance Data Systems CorporationADS, and are proud to say that list is growing.

Who are your customers?

Banks, networks, payments providers and their partners.

PayPal CEO Dan Schulman talks Fintech on Capitol Hill with Georgetown’s Chris Brummer (MENAFN), Rated: A

Other topics touched on during the interview with Mr. Brummer included how fintech can and should improve financial inclusion—and the continued need to eradicate banking deserts—as well as the necessity to better coordinate and launch public-private partnerships. Despite PayPal’s notable profile and 210 million users, it operates in a $100 trillion industry with approximately 1% market share—and there are still nearly 2 billion people around the world who live outside financial mainstream.

Getting Smart About Thin File Student Grads and Their Credit Card Worth (PaymentsJournal), Rated: A

The CARD Act of 2009 disrupted student credit card marketing with a means test and parental approval for certain types of accounts.  The market, which used capture about 12% of total card consumer spend now only contributes a fraction.

The American Banker covered an interesting story about how BankMobile, a digitial only bank with 800 university partners, is attempting to build a model based on academic history and how they maintained their student bank accounts.

3 Real Estate Investing Trends That Gained Steam in 2017 (Realty Biz), Rated: A

In 2016, the real estate crowdfunding industry produced 3.5 billion dollars in a market that has largely gone unnoticed. It’s anticipated by 2025 that the industry is going to be valued at more than 300 billion. Three trends emerged in 2017 that can help the informed investor understand the best approach to this dynamic and explosive industry.

  1. Investors Move Toward Institutional Capital
  2. Non-Accredited Investors Gain Steam
  3. Consolidation allows for the emergence of new players

Can real estate crowdfunding help the homelessness crisis? (Curbed), Rated: A

In addition to commercial space and two market-rate residential lofts, the two-story Jolene’s complex will also contain an 11-room SRO, or single-room occupancy, a dorm-like living arrangement where each resident gets their own 100-square-foot bedroom and access to shared common space. Six of the room will be given to working homeless Portlanders, as part of a partnership with the Street Roots non-profit, while the other five will be rented out to the general population for $425 a month.

After seeing that 90 percent of the participants in Fair-Haired Dumbbell were from Portland, they experimented with a slightly different form of crowdfunding that allowed anybody in Oregon making $70,000 a year or more to invest $3,000 or more in the project (technically, it’s taking advantage of Rule 504 of Regulation D, qualified by the SEC and the Oregon Secretary of State).

EquityStat Brings Portfolio Management To The Cloud (Benzinga), Rated: A

What does your company do? What unique problem does it solve?

Karl Swierenga, founder: EquityStat is an online investment portfolio manager. It allows investors to track and manage their stocks, mutual funds and ETFs, online in the cloud. Many investors own a combination of stocks, bonds, mutual funds and ETFs.

Who are your customers?

Our customers are individual investors who own mutual funds, stocks, bonds and ETFs.

FindBob Closes $ 1.26M USD Seed Round (Business Insider), Rated: A

FindBob () announced today that its seed round is closed at over $1.25 million USD. Grinnell Mutual led the investment.

The capital will allow FindBob to grow its sales and marketing teams, expand into additional U.S. markets and execute on its multi-generational product roadmap.

FindBob champions better transition behavior among financial professionals and their firms in order to perpetuate and protect their most precious asset: their book of business. By allowing company principals to take control of their futures on a secure digital channel, FindBob helps them safely discover opportunities to buy, sell, merge, partner or address succession and to be confident in their plan for the business they worked so hard for.

Fintechs that flamed out or faded in 2017 (American Banker), Rated: A

Source: American Banker
Source: American Banker

Fintech Outlook For 2018: US Banks Look To AI (The National Law Review), Rated: B

With 2017 at a close, US banks have set out their 2018 FinTech new year resolutions. According to American Banker, US banks are likely to focus their FinTech investment in 4 major areas in 2018:

  • Artificial intelligence and machine learning
  • Open banking
  • Cybersecurity and biometrics
  • Commercial banking innovation

Anyone invest in p2p lending? (blind), Rated: B

Just found out that I can earn annual returns of 6-12% by investing in p2p lending platforms like lendingclub and prosper. Way more than the measly 1.3% I get from my savings account.

Lendio Announces New Franchise in Rochester, New York (Crowdfund Insider), Rated: B

Lendio, an online lending marketplace for small business loans, announced on Thursday the opening of a new Lendio franchise in the Rochester area.

LendingTree,Inc. (NASDAQ:TREE) Files An 8-K Departure of Directors or Certain Officers (Market Exclusive), Rated: B

On December 19, 2017, our Board of Directors and Nikul Patel mutually agreed to change Mr. Patel’s position to Chief Strategy Officer, effective January 1, 2018. He currently serves as Chief Product and Strategy Officer, a position he held since November 2016.

United Kingdom

Zopa to launch a bank (Monzo), Rated: AAA

It’s why we’re applying to launch our own next-generation bank. We’ve listened, and we’re confident that we can deliver the bank that will be the best place for your money.  

Leading comparison websites have removed potentially misleading information from their sites after a Moneywise investigation found peer-to-peer (P2P) investment products included in the same best buy tables as high street savings products.

Moneywise looked at the UK’s leading product comparison websites and found issues with the four sites which offer P2P comparisons – Go Compare, Love Money, Money.co.uk and MoneySuperMarket.

A helping hand for small businesses (Money Week), Rated: A

A decade after the credit crunch, too many small and medium-sized enterprises (SMEs) in the UK still feel their potential is being hampered by a lack of access to appropriate financing. The government’s Industrial Strategy report, published at the end of November, identified financing issues as a clear problem for SMEs that are looking to grow; surveys of sentiment continue to reveal frustration.

Research from Hitachi Capital Business Finance shows that two-thirds of SMEs with growth plans for the year ahead fear that their expansion plans could be derailed if they cannot secure appropriate finance. A third of SMEs applying for finance aren’t securing enough funding to underpin their investment plans, according to similar research from Close Brothers Group; a quarter of SMEs think funding is still too dear.

New rules clarify P2P business borrowers are not deposit takers (P2P Finance News), Rated: A

In an announcement titled ‘protecting the future of P2P lending’, the Treasury said that no P2P business borrower needs to be regulated as a ‘deposit taker’ – often referred to as a ‘banking licence’ – unless that is their core business.

This clarification will be added to the Financial Services and Markets Act 2000 (Carrying on Regulated Activities by Way of Business) Order 2001.

10 business trends to look out for in the coming year (inside.co.uk), Rated: B

“I think we will see a strong increase in the number of Scottish businesses sourcing peer to peer lending, which matches borrowers directly with lenders, in 2018,” Hardie said. “Companies such as the Lending Crowd are currently the business world’s best kept secret, but their ability to deliver speedy transactions with attractive terms are firmly establishing them as strong alternatives to the banks.”

“A European directive being implemented in January 2018 will ban businesses from charging customers extra for making payments using a debit or credit card in the EU,” said Lynne Walker, head of business advisory at Johnston Carmichael.

China

China’s LexinFintech Completes $ 108M Listing As Sixth Chinese Fintech IPO In US (China Money Network), Rated: AAA

LexinFintech Holdings Ltd. (NASDAQ:LX), a Chinese online lender previously known as Fenqile backed by investors including Matrix Partners and JD.com Inc., has completed a listing on the NASDAQ to raise US$108 million.

Chinese online lender LexinFintech surges in US market debut (China Economic Review), Rated: A

Chinese online lender LexinFintech Holdings Ltd’s shares surged in their US market debut on Thursday, as investors brushed aside worries about Beijing’s recent crackdown on China’s booming microlending industry.

LexinFintech’s shares jumped 53% from its IPO price, which valued the Shenzhen-based company at $4.5 billion, to reach a high of $14.88.

China IPOs In New York Rebound To 16 In 2017, Online Lender Lexin Aces Nasdaq (Forbes), Rated: A

The 16 Chinese companies in 2017 raised $3.7 billion or about 8 percent of the total $35.6 billion raised by 160 IPOs.

Chinese tech titans Tencent and Alibaba are behind some of this pick-up, as they backed recent new listers including Chinese search engine Sogou, e-book company China Literature, microlender Qudian and logistics company Best.

Squeezing in its IPO before the year, Chinese online lender LexinFintech Holdings listed on Nasdaq on Dec. 21, raising $120 million and trading upward on its opening day by 19.4 percent.

Fintech Pioneer Sees Money in the Masses (Caixin), Rated: A

China’s booming fintech sector will see growth come from small business loans, wealth management tools for the “affluent masses,” and technology that helps you sift through thousands of insurance products in minutes, according to Tang Ning, founder and CEO of financial conglomerate CreditEase.

As of September, the company’s wealth management business oversaw assets worth $20 billion for nearly 50,000 high net-worth customers in China. It also manages $1 billion through a venture fund, which is among the ten most active venture capital investors in global fintech companies, according to data provider CB Insights.

Caixin: What are the most promising fintech trends over the next decade?

Tang Ning: We see small business lending being a key area of growth. In the past 10 years, creative lending models have done a good job at serving individuals, but there is much more to be done for small businesses.

We also see the emergence of insurance tech.

How are Chinese investors’ needs changing?

We are seeing the Chinese wealth management industry go through profound changes. It is moving from fixed-income investments to equity investment, from short-term speculation to long-term investment, from China-focused investment to global opportunities, from investing into single products, single opportunity to comprehensive risk management and comprehensive asset allocation, from managing this generation’s wealth to thinking about succession planning and inheritance.

Chinese peer-to-peer lender Golden Bull sets terms for $ 9 million US IPO (NASDAQ), Rated: A

The Shanghai, China-based company plans to raise $9 million by offering 2 million shares at a price range of $4.00 to $4.50. At the midpoint of the proposed range, Golden Bull would command a market value of $64 million.

European Union

Europe’s banks brace for a huge overhaul that throws open the doors to their data (CNBC), Rated: AAA

On January 8, banks operating in the European Union will be forced to open up their customer data to third party firms — that is, when customers give consent.

Banks will be required to build application programming interfaces (APIs) — sets of code that give third parties secure access to their back-end data.

Spain’s BBVA, Denmark’s Saxo Bank, Nordic lender Nordea and Ireland’s Ulster Bank have already published open developer portals ahead of the EU legislation.

HSBC has also made early moves toward meeting the incoming rules. In October, the bank launched a beta version of an app that lets customers see all of their bank accounts — including those from competitors — on one screen.

Several small lenders set up with the aim of competing with larger institutions are hoping to take advantage of the move toward a more open data infrastructure. U.K. firms Starling and Monzo, for instance, are want to make banking more like a “marketplace,” by connecting consumers with a number of products and services — including those from other providers — within their apps.

How PSD2 will make personal lending more competitive (IT ProPortal), Rated: A

Today, banks sell few unsecured personal loans to new customers – of seven of the UKs tier one banks only two offer personal loans to new customers – instead focusing on the needs and data of their own clients. The establishing credit risk and difficulties of pricing accurately has simply made it too complex to be competitive.

Also, although many peer-to-peer lending sites now have better protection for consumers as the industry became regulated by the FCA in April 2014, it can be argued this protection is greater for savers and lenders than it is for those borrowing and that the industry is still high-risk when compared with traditional routes.

This could all be about to change with the introduction of the intertwined The Second Payment Services Directive (PSD2) and open banking regulation.

First, XS2A will significantly improve the customer experience for loan applicants.

Hive Project buzzing after ICO (Bankless Times), Rated: A

After securing $8.95 million (BTC 2,087) from 2,234 participants through an ICO in August, Hive Project has released a demo version of their platform and completed an eight-market deal.

Hive Project uses distributed ledger technology to grant every issued invoice a unique fingerprint.

“In the Russian market alone there are  5.67 million SMEs with a combined turnover of €700 billion,” Mr. Soklic said.

Australia

ASIC releases second marketplace lending survey (Lexology), Rated: AAA

ASIC has released its second survey on the marketplace lending industry, which indicates steady growth in both borrowing and lending activity in the market since the last report.

Key findings from the report are outlined below:

  • there are three new marketplace lending platforms in the industry;
  • with $300 million in loans written to consumers and SMEs, there was a doubling of activity in relation to the number of borrowers and total amount borrowed since 2015-16;
  • the average reported default rate across the respondents was 2.2%;
  • there are an additional 4,187 retail investors since 2016, representing $12 million of extra investment in the industry; and
  • loan origination fees remained the primary source of revenue for marketplace lending providers.

The True Threat to Aussie Banks (Money Morning), Rated: A

The updated code of practice brings a number of changes. Most are simple consumer protections. Making it easier to cancel credit cards online, for example, and preventing banks from soliciting customers for credit limit increases.

India

Digital payments, P2P lending among key mega-trends of the year gone by (The Hindu Business Line), Rated: AAA

It was a great year for digitalisation and digital payments in the country.

Besides reducing the merchant discount rate for debit card transactions, the Centre announced a subsidy on transactions up to ₹2,000 via debit cards to expand the digital payment ecosystem.

P2P lending boost

Also, 2017 was a milestone year for the peer-to-peer (P2P) lending industry, as the RBI issued some guidelines in October.

Other defining changes

In April 2017, five associate banks of State Bank of India and Bharatiya Mahila Bank were merged into SBI, catapulting the latter into the league of top 50 global banks.

In May, the much talked about NPA ordinance giving greater power to the RBI to handle the bad loan crisis came about.

The other key decision of the RBI this year to improve transparency in the system was the move to make it mandatory for the banks to disclose in their balance sheets the extent of divergences between the gross NPAs in their book and those determined in RBI inspection. Private sector lenders such as Axis Bank, YES Bank and ICICI Bank were found to have under-reported their bad loan assets in recent years, prompting the central bank to take this decision.

How retail lending is set to scale up in 2018 (Financial Express), Rated: A

Major factors like steady decline in lending rates, strong focus and performance on growth and credit metrics in retail lending, investor interest in the segment, P2P regulation formalising the new category, increased focus on digitisation and path-breaking initiatives towards affordable housing are helping set a strong base for retail lending. Some of the big trends I see in the New Year are:

Consumer lending

Contrary to the slowdown in credit offtake by the corporate sector, retail credit segment has registered a strong growth of around 20% this calendar year.

Mobile: India today has more than 300 million smartphone users, removing geographical constraints of access to financial products. New venture investments will drive experiments in alternate lending.

Growth in MSME lending

With around 55 million MSME units employing over 80 million people, this sector contributes about 8% to the national GDP. Around 90% of these units are classified as micro businesses.

Growth in affordable housing segment

With home loan to GDP ratio of just 9%, the Indian housing finance sector remains relatively under-penetrated when compared to its Asian peers like China (20%), Thailand (17%), and Malaysia (34%).

The P2P Lending Segment will Drive the Next Phase of Growth of the Indian Fintech industry (BW Disrupt), Rated: A

With the much-awaited legitimacy, the sector is only at growth radar and trust in the segment is developing at a much faster pace. With more and more people moving towards online payments and transactions, the P2P lending space will witness a remarkable rise in the number of borrowers as well as investors. The growth will not only arrive from the urban India but also from Tier II and Tier III cities, leading the country towards the national goal of financial inclusion.

As predicted by NASSCOM, the Indian fintech space is expected to reach $2.4 billion by 2020, 2018 will act as a major contributor towards this direction.

How can P2P lending disrupt MSME sector in India? (MENAFN), Rated: A

There are more than 5 crore MSMEs in India and their contribution to the Indian economy is quite significant. The Micro, Small and Medium Enterprises are creating massive employability i.e. up to 12 crore people which is close to 33% of Indias manufacturing output. But still MSMEs suffer from an incredible capital shortage that amounts to Rs. 32 trillion as per the International Finance Corporation.

Fintech start-ups tap small-town users (Business Standard), Rated: A

Paynear, a start-up, has more users in small towns than in the metros. The Hyderabad-based firm, which provides a platform to traders for accepting digital payments, has seen a surge in growth from small towns. Of its 50,000 merchants, two-thirds are in small towns.

Funding Galore: Indian Startup Funding Of The Week [18-23 Dec] (Inc42), Rated: B

This week 19 Indian startups raised about $41 Mn in funding altogether in the Indian startup ecosystem.

Peel-Works: The consumer focussed SaaS and big data analytics startup raised an undisclosed amount in Series B funding led by Mumbai-based Unilever Ventures and Amazon Internet Services.

Faircent: Gurugram-based P2P lending startup Faircent raised $3.9 Mn (INR 25 Cr) in a Series B round of funding.

Asia

Financial inclusion is in your hands (National Multimedia), Rated: AAA

Aside from offering new innovative financial services to their existing customers, the use of Fintech also allows banks to serve potential |customers – those considered “underbanked” and “unbanked” – who in the past did not have access to financial services due to costs, lack of credit or access. The ability for the banks to serve everyone is known as “financial inclusion.” According to the World Bank, around 2 billion people don’t use |formal financial services and over 50 per cent of adults in the poorest households are unbanked.

A report from Thailand’s Ministry of Finance in 2016 shows that 56 per cent of Thais received micro finance from special financial institutions and less than 9 per cent from commercial banks. Clearly, most Thais often turn to non-bank providers for small sums of money.

The K Plus Shop is an example of fintech for financial inclusion from KBank. It is a mobile application designed to be a one-stop solution for micro businesses such as small shops and street vendors. The app is a point of sale, sales tracking, sales reports and PR tool combined into one app that anyone can download and use free of charge on any smartphone – iOS or Android. With K Plus Shop, the vendor can receive QR payment from any customer using K Plus, other mobile banking or e-Wallet applications via the standard QR for PromptPay, as well as from WeChat Pay and Alipay.

FintruX partners with blockchain data exchange DataWallet (Cryptoninjas), Rated: A

Authors:

George Popescu
Allen Taylor

Tuesday May 16 2017, Daily News Digest

corporate bond credit spreads

News Comments Today’s main news: KBRA rates Prosper’s Series 2017-1. SoFi’s bid to become bank pulls FDIC into fintech fray. LendInvest joins Home Builders Federation. Monzo puts API dev on back burner. PBOC sets up new China fintech committee. N26 launches savings accounts with Raisin. Today’s main analysis: Asset volatility diminishing and approaching new lows. Today’s thought-provoking articles: The future […]

corporate bond credit spreads

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Canada

South America

News Summary

United States

KBRA Rates Prosper Marketplace Issuance Trust, Series 2017-1 (KBRA Email), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Prosper Marketplace Lending Issuance Trust 2017-1 (“PMIT 2017-1”). This is a $450.5 million consumer loan ABS transaction that is expected to close on May 24, 2017.

This transaction represents the sixth securitization collateralized by unsecured consumer loans originated through the online marketplace lending platform operated by Prosper Funding LLC (“Prosper” or the “Company”).

Get the full report.

Volatility in the asset markets has been steadily declining and is nearing new lows. One factor helping to suppress volatility is the lack of many surprises in the first-quarter earnings season, which passed with results generally within the range of expectations. From an economic point of view, while GDP was weak in the first quarter, it is expected to rebound in the second quarter.

Following the French presidential election and the general lessening of international tensions, corporate credit spreads have tightened and asset volatility has declined toward its lowest levels.

Source: Morningstar

The average corporate credit spread of the Morningstar Corporate Bond Index (our proxy for the investment-grade bond market) tightened 3 basis points last week to +117, a new low for the year. The last time the index was at this level was September 2014. From a longer-term perspective, the average spread of the Morningstar Corporate Bond Index has been lower less than one fourth of the time since the end of 1999. In the high-yield market, the Bank of America Merrill Lynch High Yield Master Index tightened 5 basis points to +377. The tightening was led by the energy sector, which declined 10 basis points as oil prices continued to rise. Since the end of 1999, the average spread of the high-yield index has been tighter only 17% of the time.

Source: Morningstar

The Future of Lending is Now with Latest TransUnion Prama Offerings (NASDAQ), Rated: AAA

As TransUnion (NYSE:TRU) data from the end of March 2017 suggest, the consumer credit market is as complex as ever. Mortgage delinquency rates: continuing to drop. Auto loan delinquency rates: rising. Personal loan market: growing, but slowing. Access to credit cards: highest since 2005.

Maneuvering through this ever-changing credit landscape is difficult for lenders of all sizes, ranging from credit unions to regional banks to the largest financial institutions. To help navigate through this complex maze, TransUnion today introduced the newest modules in its PramaSMenvironmentBenchmarking and Data Extract.

Prama Benchmarking provides advanced data analytics and visualization capabilities specific to the auto loan, credit card, mortgage and personal loan markets—to deliver relevant insights for each line of business. Lenders will now be able to measure their performance across numerous metrics and filters, and compare it to the industry and their peers.  This information can be used to improve how financial services companies segment, target, acquire, cross-sell and retain customers. The Data Extract module provides self-service access to query against 100 percent of TransUnion depersonalized archive credit data, allowing customers to receive faster delivery of data to support their own analytics—in their own environment with their preferred tools.

Measuring Business Performance Against Peers

Benchmarking provides performance data on metrics such as delinquencies, charge-offs, bankruptcy, average balance and utilization. It offers views of market share in terms of number of accounts, total limit or total balance. The module also lets lenders analyze depersonalized data using dimensions such as APR, origination vintage, credit tier, state or MSA region, account status and consumer credit age.

For instance, a regional bank in Western Pennsylvania interested in growing its credit card portfolio is now able to observe five years of its own data versus other similar banks in their region.

Extracting Data Faster – From a Month or More to Hours

A traditional archive request process – from customer order to product delivery – typically takes 30 days or more. This includes time spent defining and iterating on the customer’s data requirements. “With Data Extract, the process will take less than 24 hours – an enormous time savings,” said Gomez.

With Data Extract, customers gain the following advantages:

  • Self-service – On-demand, point-and-click access to query TU depersonalized archive credit data.
  • Speed – Secure overnight delivery of the dataset.
  • Confidence – Quick access to depersonalized data to support a customer’s own analytics, so they can make faster decisions with more confidence.
  • Control – Create queries according to their data requirements, avoiding the back and forth that is often typical of an archive request process.
  • Flexibility – Quickly obtain depersonalized data for use within their own analytics environment and processes.

SoFi’s bid to become an industrial bank pulls FDIC into fintech fray (American Banker), Rated: AAA

The Federal Deposit Insurance Corp. has so far managed to stay out of the growing battle over how the U.S. fintech sector should be regulated, but that appears likely to end as one of the nation’s largest online lenders announced plans to apply for a specialty banking charter soon.

Social Finance Inc., the San Francisco-based consumer lender known as SoFi, hopes to secure an industrial bank charter. That state-issued charter used to be a popular way to organize a bank, and was commonly used by companies that are not primarily in the financial services industry.

SoFi COO: We have measures in place, extra authentication for our consumers (MSN), Rated: AAA

Joanne Bradford, SoFi COO, weighs in on how companies are protecting themselves on the heels of a worldwide cyberattack, mortgages, student loans and refinancing.

Watch the video segment here.

SoFi: We Will be the First Unbank – Bank (Crowdfund Insider), Rated: AAA

SoFi Chief Operating Officer Joanne Bradford was back visiting with CNBC today. Bradford addressed several topics including the recent cyber attack that has public and private entities running for cover around the world. SoFi has not been impacted by the digital attack and Bradford was quite confident that SoFi is better prepared for any malicious attempts to infiltrate SoFi due to their single point of access (unlike traditional banks).

Asked if the Fintech industry is more, or less, vulnerable than traditional types, Bradford explained;

“We are less vulnerable. You only come to SoFi at SoFi.com. We don’t have branches which helps make it more efficient. Less points of vulnerability…but for the consumer it is more about speed and ease of use. Getting things done quickly on your mobile device.”

How to Predict If a Borrower Will Pay You Back (NY Mag), Rated: AAA

Recently, three economists—Oded Netzer and Alain Lemaire, both of Columbia, and Michal Herzenstein of the University of Delaware—looked for ways to predict the likelihood of whether a borrower would pay back a loan. The scholars used data from Prosper, a peer-to-peer lending site. Potential borrowers write a brief description of why they need a loan and why they are likely to make good on it, and potential lenders decide whether to provide them the money. Overall, about 13 percent of borrowers defaulted on their loan.

It turns out the language that potential borrowers use is a strong predictor of their probability of paying back. And it is an important indicator even if you control for other relevant information lenders were able to obtain about those potential borrowers, including credit ratings and income.

Listed below are ten phrases the researchers found that are commonly used when applying for a loan. Five of them positively correlate with paying back the loan. Five of them negatively correlate with paying back the loan. In other words, five tend to be used by people you can trust, five by people you cannot.

Here are the phrases used in loan applications by people most likely to pay them back: debt-free, lower interest rate, after-tax, minimum payment, graduate.

And here are the phrases used by those least likely to pay back their loans: God, promise, will pay, thank you, hospital.

Now, let’s consider language that suggests someone is unlikely to pay their loans. Generally, if someone tells you he will pay you back, he will not pay you back. The more assertive the promise, the more likely he will break it. If someone writes “I promise I will pay back, so help me God,” he is among the least likely to pay you back. Appealing to your mercy—explaining that he needs the money because he has a relative in the “hospital”—also means he is unlikely to pay you back. In fact, mentioning any family member—a husband, wife, son, daughter, mother or father—is a sign someone will not be paying back. Another word that indicates default is “explain,” meaning if people are trying to explain why they are going to be able to pay back a loan, they likely won’t.

Misys rolls AI strategy into trade monitoring software (Misys), Rated: A

Misys has stepped up to the artificial intelligence (AI) plate, today unveiling Misys FusionCapital Detect. The component helps financial institutions spot booking errors, anomalies and unusual activity, accelerating trade validations and reducing exceptions with machine learning.

FusionCapital Detect behaves as a smart personal assistant for validation teams, red flagging probable mistakes that are otherwise time consuming to identify. Users can catch errors that existing tools on the market let through, reducing operational risk and preventing manual mistakes that lead to decisions being made on the wrong profit and loss information and incorrect end-of-day reports.

Being able to validate transactions at T+0 has become crucial in today’s pressurised regulatory environment, including under:

  • The European Market Infrastructure Regulation (EMIR): which makes it necessary to identify errors as soon as possible in order to confirm trades within 24 to 48 hours.
  • The Fundamental Review of the Trading Book (FRTB): which requires daily risk reports – unidentified trade errors will invalidate these reports, breaching compliance.

OpenInvest Secures $ 3.25 Million in Seed Funding Led by Andreessen Horowitz (PR Newswire), Rated: A

OpenInvest (www.openinvest.co), a social impact investing platform for retail investors, announced today that it raised $3.25 million in seed funding. The round was led by Andreessen Horowitz with participation from Abstract Ventures, Wireframe Ventures and SV2. OpenInvest is an accessible online financial advisor that empowers investors to fully align their investments with their values, and then take action to more meaningfully engage companies and drive social change.

According to a recent Morgan Stanley survey, 84 percent of millennials want the companies they invest in to align with their values. OpenInvest meets this opportunity with an innovative platform that allows consumers to invest with their hearts, without having to compromise financial returns. The company’s investment screens include climate change, fossil fuels, weapons manufacturers, gender equality, LGBTQ workplace treatment, deforestation, tobacco, companies funding the Dakota Access Pipeline, and companies supporting President Trump, which can be freely mixed and matched to construct a personalized portfolio. Investors can further customize by including or excluding individual companies, while their portfolio auto-rebalances to maintain diversification and broad tracking of the market.

Lemonade sweetens U.S. insurance rollout plans with California license (Reuters), Rated: A

Lemonade Inc, a tech-driven insurance startup that promises renters and homeowners insurance in as little as 90 seconds and payment of claims in 3 minutes, has won approval from California regulators to sell policies in the state, the company said.

The insurer’s foray into California, the most populous U.S. state, comes amid the company’s push to become licensed nationwide, less than a year after launching in New York. Last month, Lemonade, which sells policies directly to consumers through its website and smartphone app, expanded into Illinois.

Green Dot Hits, OnDeck Misses, And First Data Looks Ahead (PYMNTS), Rated: A

First Data’s New Friends

First Data CEO, Frank Bisignano, noted in the wake of First Data’s earnings release this week that the company remains on track to meet its guidance for 2017 and that he is “confident that the current weakness is transitory.”

First Data will be instrumental in helping drive Alipay expansion into the U.S. market, focusing on firms that use First Data’s Clover platform.

By the numbers, First Data reported adjusted earnings per share of $0.28 and revenue of $1.7 billion.

Credit and retail processing in North America were up 1 percent, and the business, globally, gained 2 percent. Accounts on file, again for North America, grew by 7 percent.

The deal will give Alipay scale roughly equivalent to Apple Pay’s in terms of presence, at around 4.5 million U.S. sites.

OnDeck’s Falling Figures

Reflecting the changes, the company lowered its full-year net revenue outlook to a range of $342 million to $352 million. It previously had forecast $377 million to $387 million.

Annual costs are also slated for a big cut — by around $25 million. Those cuts will be achieved by lowering headcount. About 27 percent of the staff will be cut back from levels at the end of 2016.

By the numbers, losses clocked in at $0.11 per share, slightly more than the $0.10 loss analysts were looking for. Gross revenue rose 48.4 percent to $92.89 million on higher net interest income, beating analysts’ estimates of $90.38 million.

Green Dot Beats the Streets (In a Big Way)

The company posted adjusted earnings per share of $1, which was $0.16 better than analysts were forecasting. Revenue clocked in at $253 million, was up 11 percent year over year and was higher than the roughly $234 million that had been forecasted.

Guidance for the full year was also ticking up — just about in line with the magnitude of the beat, with revenue to range from $830 million to $845 million (both ends of the range were taken up by $15 million). Earnings per share are slated to come in between $1.89 and $1.94, which compares with the consensus of $1.92 as of Wednesday morning.

Green Dot is making pre-paid cards look easy, OnDeck is demonstrating how marketplace lending (or marketplace anything) is really, really hard — and First Data is greatly looking forward to next quarter, when it can report smoother sailing.

US Government Awards $ 2.25 Million to Blockchain Research Projects (Coindesk), Rated: A

The US government has awarded research contracts to three startups working with blockchain worth a total of about $2.25m.

The Department of Homeland Security (DHS) quietly revealed the grants last week as part of its Small Business Innovation Research initiative.

Who got funded: DHS said that it parceled out a total of $9.7m between 12 companies, three of which are working with the tech. According to a release, each firm got about $750,000 to fund their research.

Here are the companies that got funds for their blockchain-related initiatives:

  • BlockCypher: The startup has been awarded a grant for its “blockchain platform for multiple blockchains, applications and analytics. BlockCypher was the recipient of a $600,000 DHS grant last summer.
  • Digital Bazaar: According to DHS, the company is working on a “verifiable claims project” that utilizes “fit-for-purpose distributed ledgers”. Like BlockCypher, Digital Bazaar was given a DHS grant in 2016.
  • Evernym: This Utah-based business will use the funds to support its research into “decentralized key management using blockchain”, according to DHS.

Lendio is Now Offering Small Business Loans Within Minutes (Military-Technologies), Rated: A

The team at Lendio is pleased to announce that they are now offering small business loans within minutes.

In addition to providing small business owners loans as quickly as possible, Lendio also features a business loan marketplace that lets people find the financing tools they need to help run their business.

Oportun, Inc. (SEC), Rated: A

Opportun has filed for ABS with the SEC.

My Experience Refinancing Student Loans from Pharmacy School (Pharmacy Times), Rated: A

In 2015, I graduated with over $150,000 in student loans from pharmacy school. At the time, it felt like an insurmountable amount of money to pay back, especially considering I took a substantial pay cut to complete a 1-year residency after graduating. The monthly payments were extremely high and to make matters more confusing, I had multiple loan providers between my private and federal loans, with some in my name and some in my parent’s name. The interest rates on these loans varied from 6.5% to 8%.

After finishing my residency, I knew I had to take a close look at my financial situation and make a plan to aggressively start paying off these loans. After extensive research, I decided to refinance my student loans through Social Finance, Inc (SoFI), an institution that offers a number of different loan types through a “nontraditional” approach.

Refinancing through SoFI will save me over $15,000 in cumulative payments over a 10-year term by lowering my interest rate to 5%.

If you’re refinancing with a longer repayment period (10 to 20 years) and prefer stability, a fixed rate may be the better option. Personally, I chose a variable rate loan because the interest rate was significantly lower than the fixed rate loan, and I plan to pay off my student loans long before the end of my 10-year term.

RealtyShares Names Industry Vet to BOD (Commercial Property Executive), Rated: A

Edward Forst, the former president & CEO of Cushman & Wakefield, has become the newest member of RealtyShares’ board of directors.

With Cushman & Wakefield, Forst oversaw 16,000 real estate professionals in 60 countries.

How Can I Pay for Fertility Treatment? (LendingClub), Rated: B

To begin, you’ll want to determine how you’re going to pay for fertility treatment and related care such as medications, genetic testing and egg freezing services.

The good news is that fertility financing is available so that cost does not have to be a barrier to treatment and your dream of becoming a parent.

The flexible payment plans include:

  • One loan for comprehensive fertility care for up to three services: IVF treatment, medication, genetic testing or egg freezing
  • No upfront payments
  • Fixed rates starting as low as 3.99% APR*
  • Manageable monthly payments for a range of budgets
  • Payment sent directly to your providers in one to three business days, so you can start treatment without delay or pressure to distribute funds correctly

How to Invest in Debt (Michael Pellegrino Email), Rated: B

Get a free sample chapter. Password: debt-investor.

United Kingdom

LendInvest joins the Home Builders Federation (Property Reporter), Rated: AAA

Specialist mortgage lender, LendInvest, has announced that it has joined the Home Builders Federation, in a move aimed at supporting property developers to build more homes of every type.

The Home Builders Federation is the representative body of the private sector home building industry in England and Wales and its members are responsible for 80% of housing output each year. The organisation currently supports the LendInvest Property Development Academy, a non-profit, two-day course delivered in five key cities across the UK and intended to create a new generation of property entrepreneurs.

Monzo puts API development on the back burner (Finextra), Rated: AAA

Digital bank Monzo is putting its API developer plans on ice as it faces up to the challenge of launching current accounts for its 190,000 customers.

The news will be a blow to the 2000 people on the bank’s developer Slack channel who have invested time in building integration to the Monzo API.
In the two years since it launched its first hackathon encouraging developers to build products using the API, the bank now counts some 100 personal projects integrating with the toolkit. Despite these efforts, Monzo will not allow developers to publish their current applications.

Peer-to-peer lending rises as Moneywise users seek higher returns (Moneywise), Rated: A

Nearly half (48%) of Moneywise.co.uk readers use peer-to-peer (P2P) lending in a bid to earn higher returns on savings, our latest poll results reveal.

This is an increase from 39% of Moneywise users who said they used P2P lending in August 2016, and 33% who said the same when we asked in February 2016.

The number of Moneywise users aware of P2P has also risen. Just 4% said they’d never heard of P2P lending in our most recent poll, compared to 6% who hadn’t heard of it last August, and 9% who hadn’t heard of it last February.

Seedrs: Andy Murray Invests in Three UK Entrepreneurs, Den, Morpher & Landbay (Crowdfund Insider), Rated: A

Tennis star and Seedrs advisor Andy Murray has invested in three early-stage UK businesses. The Seedrs listed companies include Den, Morpher and Landbay. Murray’s Seedrs originated portfolio now stands at over 20 companies, according to the platform.

Landbay is back on Seedrs once again. The property rental crowdfunding platform has crowdfunded successfully multiple times on Seedrs.  Landbay was one of the very first peer-to-peer platforms to be granted full authorisation by the FCA at the end of 2016. Landbay has raised £2.3 million overfunding to 157% in the round.

Robo Advice – 5 Key Factors to Success (EValue), Rated: A

1 – Engaging the consumer

Currently, a real need exists to increase consumers’ engagement with their financial life and enable easy access to robust financial advice for all. However, for many consumers, the breadth of choice available, when it comes to making financial planning decisions, only serves to create confusion and adds to the complexity often resulting in no decisions being made at all.

2 – Realistic expectation of range and level of returns

This means that not only should the overall forecasts be realistic but each individual scenario, which makes up the forecast, should also be sensible and capable of occurring. Suggesting a potential outcome which, in reality, is impossible is obviously not particularly helpful to consumers when it comes to making investment decisions.

3 – Risk Suitability Assessment

In the UK, it is clear that robo advice needs to meet the same suitability standard as traditional advice. Therefore, any risk suitability tool must be rigorous and robust in order to ensure an accurate measurement of a consumer’s tolerance to risk and capacity for loss.

4 – Personal Advice Given

As everybody’s situation is different, in order for a robo advice proposition to be successful it must be able to provide appropriate personal advice which not only reflects a consumer’s individuality and specific objectives but is also not detrimental to their other financial needs.

5 – Fully automated with appropriate compliance reviews

By automating the advice process so that it can be delivered remotely and driven by the consumer, costs will be cut sharply as a result. At the same time, consistent quality and thorough documentation generated by the process will provide a full and reliable digital paper trail to ensure regulatory compliance.

Robo Advice market eyes pensions, insurance and mortgages (AltFi), Rated: B

The automated financial advice market is set for a decade of strong growth, according to a new report by consultancy Deloitte, which suggests the underlying disruptive technology will spread into more niches than its current wealth management segment.

To date, automated advice has been most prevalent in wealth management – called robo advice – but this is just the tip of the iceberg. In its latest research into the space, entitled The next frontier: The future of automated financial advice in the UK, Deloitte says the UK offers a rich opportunity for automated advice with up to 15 million consumers willing to pay for it.

China

PBOC sets up new committee to oversee China’s burgeoning fintech industry (SCMP), Rated: AAA

China’s central bank said on Monday it has set up a committee to oversee financial technology, reflecting an attempt to bring regulation up to speed with a fast-growing industry that could bring cross-sector financial risks.

The People’s Bank of China said on its website it will gauge the impact of fintech on monetary policy, financial markets, financial stability, payment and clearing.

It will also beef up the use of new technology, such as big data, artificial intelligence, and cloud computing to enhance its capabilities in protecting against and resolving cross-market financial risks, it said in the statement.

P2P Industry News (Xing Ping She Email), Rated: A

People’s Bank of China is going to set up FinTech Committee
Recently, People’s Bank of China (PBC) announced to set up FinTech Committee, aiming at reinforcing the planning and coordination of fintech. PBC is going to do deep research on the influence of fintech on monetary policies, financial market, finance stability, payment and settlement etc. And it also encourages finance sector to use high-tech, such as big data, AI and cloud computing, as regulatory method to improve the ability for identifying, preventing and solving financial risks.

BNP Paribas Group Investigates for Financial Innovation in Asia
On May 5th, executives from security services department of BNP Paribas visited JadeValue, China’s first fintech incubator, to investigate for financial innovation in Asian market. Xeenho Wallet, as one of the incubated enterprise of JadeValue, and a typical example of Chinese modern fintech company, communicated with the European professional financial survey team, and achieved initial intent of cooperation on exchange of P2P industry news.
Xeenho is one of the first P2P funds platforms in China. Based on big data and robo-advice, Xeenho’s risk-control management keeps the Zero Bad Debt in the industry.

European Union

N26 launches savings accounts with Raisin (TechCrunch), Rated: AAA

N26 is launching yet another feature to build a modern retail bank for European customers. This time, the company is partnering with Raisin, a German startup also known as WeltSparen. In just a few taps, you’ll be able to open a savings account for money you don’t need.

All your deposits are guaranteed up to €100,000 per bank by the National Deposit Guarantee Scheme as part of the European Union.

N26 is only launching this feature in Germany for now, but Raisin accepts customers from other countries. So you can expect to see this feature in other countries later this year. Similarly, if you don’t want to have your money stuck on a savings account, N26 will launch overnight savings later this year.

Raisin has built an API in order to facilitate the N26 integration.

Rabobank enters digital identity market (Finextra), Rated: A

Rabobank has partnered with Norway’s Signicat to provide a digital identity hub for businesses looking to onboard new customers and sign legally-binding contracts online.

The joint Digital Identity Service Provider (DISP) offers a range of online login, identity, signature and data archiving services under the banner of Rabo eBusiness. Rabobank says it will initially market the programme to energy, telecom and insurance companies, healthcare institutions and financial services providers.
International

Top 10 FinTech Companies Disrupting Banking (Disruptor Daily), Rated: A

Banking and payment financial technology have grown exponentially in just the past few years thanks to tech like blockchain, artificial intelligence, and big data. These crossovers are making for faster, safer processes and lower prices for individuals and businesses alike.

Wyre boasts transfer speeds under 6 hours internationally, significantly faster than the traditional SWIFT or bank wire transfer networks.

Xendit is a payment processing infrastructure provider that covers the southeastern Asia region. Among the services offered through Xendit are bank transfers, card processing, and escrow services.

Xero offers accounting professionals and small-to-medium businesses (SMBs) with more than 600,000 customers a cloud-based accounting software.

N26 allows UK customers to open accounts in minutes, perform withdrawals at any ATM, and pay with the N26 MasterCard.

Beyond making in-person and mobile payments more secure, Circle is also working to reduce the cost of in-person and international payments as well as the time intensity of global payments.

Simple unifies accounts under one card and splits the net interest margin from lending across all of the partner banks in its network to help simplify the customer experience.

Earnest is using data science, design, and software automation to allow their clients to manage their existing finances and debts while opening up new opportunities for well-behaved clients to see better interest rates and more options.

Featurespace has developed and deployed artificial intelligence and machine learning solutions for financial service providers in more than 180 countries.

InstaMed has changed the healthcare payments industry through the use of their easily-integrated, private cloud computing network.

India

i2iFunding plans to increase loans disbursal to Rs 200 Cr in 2 yrs (India Times), Rated: AAA

Peer to Peer (P2P) lending platform i2iFunding said today that it planned to increase the loans disbursed on its platform to Rs 200 crore over the next two years. It currently disburses loans worth Rs 60-70 lakhs a month.

Having strengthened its risk processes, the company is now keen to expand operations, he said. The company also expects business to pick up the RBI issues regulatory guidelines for the sector.

Five Points to Keep in Mind When Investing in P2P Lending (BW Disrupt), Rated: A

But while there has been a major change in the appetite for risk among Indians, P2P lending requires an investor to be thoroughly aware and educated on how to make informed choices when opting for P2P lending. P2P lending is globally growing at a CAGR of 48%. In India, the industry is expected to touch $5 billion by 2020-2021. It’s here to stay and the faster a smart investor understands, learns, and makes the most of it, higher the returns.

  1. Build a Diversified Portfolio
  2. Small Ticket-size, More Loans – One of the biggest advantage of P2P lending is that the average ticket size can be as low as Rs. 1000/-. So invest small amounts in large numbers. And by that we don’t mean putting Rs. 2,50,000/- across 10 loans of Rs. 25,000/- each but to aim for 50 loans of Rs. 5,000/- each.
  3. Compounding Benefit – P2P lending is the only, unique asset class in which investors begin to receive returns – principal as well as interest – through EMI from the very next month of making the investment.
  4. Realistic Expectations, Long-term horizon – Before investing in P2P lending, it is advisable to choose a lending platform after considering the track record of the leadership and their risk management team.
  5. Informed Choices – Before investing in P2P lending, it is advisable to choose a lending platform after considering the track record of the leadership and their risk management team.
Asia

Fintech start-up 4xLabs raises US$ 1.5m in new funding (Straits Times), Rated: AAA

Singapore fintech start-up 4xLabs has raised US$1.5 million (S$2.1 million) in its latest funding round.

The round saw follow-up investment from Dymon Asia Ventures, as well as participation from new investors such as Malaysia-based OSK Ventures International.

4xLabs aims to increase transparency in the market for travellers and money changers with its cloud-based services.

The firm, set up in 2011, offers two platforms: Get4x, a currency exchange-rate aggregator platform for travellers, and Biz4x, a platform that helps money changers better manage their businesses.

Canada

Toronto Financial Services Alliance Says Strengthening Fintech Ecosystem Must Be a Priority (Crowdfund Insider), Rated: AAA

The Toronto Financial Services Alliance (TFSA) says Canada’s financial service relevance is at risk unless the Fintech ecosystem is improved.

TFSA has published a report specifically on this subject. Entitled, “Seizing the Opportunity: Building the Toronto Region into a Global Fintech Leader,” the report states that the Toronto/Kitchener-Waterloo corridor today benefits from a strong core of financial institutions, top-tier research facilities, a strong talent base and relatively low business operating costs compared with other global Fintech ecosystems.

The report sets out six key areas to target:

  • Collaboration: Closer and more frequent engagement among Fintech startups, well-established financial institutions and the venture capital community.
  • Capital: Improved access to sophisticated seed-level and local later-stage capital for Canadian Fintechs.
  • Regulation: Reduced regulatory burden on emerging Fintech companies, and modernized regulatory frameworks to attract foreign investment and further reflect changing business models, technologies and priorities.
  • Research: Encouraged commercialization of research for financial services to further establish the region as a global leader.
  • Talent: Creation of opportunities and conditions that will attract top talent with experience growing and scaling fintech companies.
  • Awareness: Raising of the region’s profile on the global stage as a Fintech hub.

Power Financial invests C$ 50 million in ‘robo-adviser’ Wealthsimple (Reuters), Rated: A

Power Financial Corp has invested C$50 million ($37 million) in “robo-adviser” Wealthsimple, bringing its total investment in the 2-year-old financial technology company to C$100 million, they said on Thursday.

Toronto-based Wealthsimple provides automated investment advice to consumers and helps manage personalized portfolios based on responses to an online questionnaire about investment goals. It entered the U.S. market at the end of January.

The company said it now has more than 30,000 clients in Canada and the United States, up from 20,000 in late January, investing more than C$1 billion in exchange-traded funds.

South America

Goldman Sachs Sees Big Potential for Fintech in Brazil (NYT), Rated: AAA

Brazil is experiencing a wave of growth in financial technology that will most likely eat into the market share of the country’s huge and long untouchable banks, a new report from Goldman Sachs says.

Entitled “Fintech Brazil’s Moment,” the 45-page research report estimates that the more than 200 financial technology companies in Brazil should generate a potential revenue pool of about $24 billion over the next 10 years. Payments, lending and personal finance are three promising segments, as is insurance, the report found.

The Goldman Sachs economists cited what they called “an oligopolistic market structure” in Brazil where the top five banks, excluding development banks, hold 84 percent of total loans. In retail branch banking, the top five banks have 90 percent of branches. That is up from 71 percent in 2007, the report said, observing that “the market has become more concentrated since the financial crisis” of 2008.

By contrast, in the United States, the top five banks hold just about 20 percent of all branches. In India, that figure is slightly over 30 percent, and in Turkey it is just under 30 percent.

Authors:

George Popescu
Allen Taylor