Thursday March 28 2019, Weekly News Digest

structured debt

News Comments Today’s main news: Klarna launches open banking platform. SoFi re-engineers home loans. Apple’s new credit card. OakNorth secures guarantee of $133M. Qupital raises $15M to bumrush China. Today’s main analysis: Arbuthnot Banking Group audited final results for 2018. Today’s thought-provoking articles: U.S. yield curve, new fintech products. Cities with most overleveraged mortgage debtors. Household debt. Expanding access to credit […]

The post Thursday March 28 2019, Weekly News Digest appeared first on Lending Times.

structured debt

News Comments

United States

United Kingdom

International

Other

News Summary

United States

SoFi Refreshes Home Loans, Making Home Buying Painless and Paperless (PR Newswire), Rated: AAA

Today, SoFi announced the refresh of its mortgage offering as SoFi Home Loans, complete with a reengineered process that helps people buy or refinance a home with an online application, no hidden fees, or prepayment penalties.

SoFi Home Loans offer competitive rates including affordable down payments, with as little as 10% down on loans up to $3MM, with no hidden fees or prepayment penalties. SoFi allows applicants to choose between four different loan terms and fixed or adjustable rates. Those interested in refinancing can choose between traditional mortgage refinancing, cash-out refinancing, and student loan cash-out refinancing. If SoFi Home Loans isn’t able to handle a loan request, SoFi provides an easy option to digitally transfer member information to its affiliate partner who may be able to help.

Apple’s new credit card keeps advisors guessing (Financial Planning), Rated: AAA

The Apple credit card is the latest offering by a Silicon Valley tech giant looking for a ready-made avenue into the financial services’ sector. While the new card mostly benefits loyal users of Apple products, it’s also an unwelcome reminder of an ever present question on the minds of wealth managers: Will the FAANG companies like Facebook, Amazon, Apple, Netflix and Alphabet continue their land grab of services historically provided by the financial services industry — and at what cost to traditional RIAs?

Ominously, a majority of investors considering switching financial services providers said they would consider banking with a tech company like Facebook, Google or Amazon if they could, according to a recent survey by Novantis.

US Yield Curve Inverts; New Products from FinTechs (PeerIQ), Rated: AAA

For the first time in 3,000 days, and with much anticipation, the 3-month and 10-year treasury curve inverted. The median time to a recession after this curve inverts is between 1 to 1.5 years. However, unprecedented interventions such as QE (and higher central bank holdings globally) make it difficult to draw hard and fast conclusions. Market participants are pricing in a 41% probability of an interest rate cut in the September meeting.

Source: PeerIQ; Bianco Research

New Products from FinTechs

FinTech innovation continues with new products from PeerStreet and Figure. PeerStreet has launched a 30-year loan to enable private investors to buy rental properties. Residential for Rent loans are targeted towards rental home operators. The rental market in the US has grown exponentially post-crisis people struggle to buy homes. The number of rental homes has grown from 36 Mn in 2006 to 43 Mn in 2017.

Source: FactTank, PeerIQ

2019’s Cities with the Most Overleveraged Mortgage Debtors (WalletHub), Rated: AAA

Buying a home represents an important milestone for most consumers. But for those who dive in to the deep end of real estate without a financial safety net, the decision could lead to buyer’s remorse in the long run. Mortgage rates are slowly falling after reaching their latest peak in November 2018, and are close to the lowest they’ve been in the past 3 decades. This makes 2019 a tempting time to buy a home. Some industry experts believe 2019 is friendlier toward buyers than sellers because of the lower rates.

Source: WalletHub

Household Debt – Mixed Signals (DBRS), Rated: AAA

The most recent Quarterly Report on Household Debt and Credit issued by the Federal Reserve Bank of New York (the Fed) and Equifax Inc. (Equifax) showed that household debt rose for the 18th consecutive period during Q4 2018 to $13.5 trillion, $869 billion higher than the peak reached in 2008. This represented the third-smallest increase (0.24%) over the 18 consecutive periods of growth, partly because of decreasing mortgage loan debt during Q4 2018 to $9.2 trillion from $9.4 trillion at the end of Q3 2018 and flat levels of auto loan debt at $1.3 trillion for both Q3 and Q4 2018.

Expanding Access to Credit in the Land of New “Halves” (Lend Academy), Rated: AAA

Credit is one of the largest, most powerful, lucrative and important industries in the world. It also is one of the best tools for wealth creation – home ownership, small business ownership and growth, and, leveraged investing.  This is readily accessible for prime consumers with more options now than ever before. But for the other half of the country that is non-prime, options are still limited and in many cases non-existent.

Early pioneers of securitizations like SoFi, the scaling of marketplace lending like Lending ClubProsper and Best Egg, and new distribution models like Greensky and Affirm have contributed towards increasing comfort of these “new asset classes” that were mostly locked up in bank’s balance sheets.

There are a lot of new “halves” in today’s world.

Amount Delivers Seamless Digital and Mobile Lending Platform to TD Bank (PR Newswire), Rated: A

Amount, a technology provider for financial institutions, today announced a strategic partnership with TD Bank. TD Bank, a top ten U.S. bank, is leveraging Amount’s platform to power the bank’s TD Fit Loan, which launched in August 2018. This initial offering allows consumers to consolidate higher-interest debt, while helping TD meet growing consumer demand for a seamless digital and mobile lending experience. Through this partnership, TD and Amount will roll out additional offerings, as well as standalone tools addressing fraud, verifications and decisioning.

5 Freebies With Your Student Loans (NerdWallet), Rated: A

1. Career coaching

Who offers it: SoFi.

SoFi members have received over 15,000 coaching sessions to date.

4. Referral bonuses

Who offers it: Multiple refinance lenders.

  • Education Loan Finance offers $400 for each successful referral, as well as $100 for the loan applicant.
  • Laurel Road lets you split its $400 bonus however you and your referral see fit.
  • Splash Financial provides $250 apiece for both parties.

5. Charitable work

Who offers it: CommonBond.

If you prefer freebies that help others, CommonBond has a one-for-one social impact mission. For each loan the lender issues, it donates an amount based on a formula that funds a child’s education in a developing country through the nonprofit Pencils of Promise. Those donations have totaled over $1 million to date.

CNote Launches Wisdom Fund to Close Lending Gap for Women (PR Newswire), Rated: A

Women are the fastest-growing group of entrepreneurs in the U.S. Yet less than 5 percent of small business lending—only $1 in $23—goes to women. CNote aims to fix this disparity with the Wisdom Fund, a new impact investment opportunity launching today.

Investors in the Wisdom Fund will earn an estimated 4 percent annual return, over a 60-month term, on a loan portfolio that’s diversified across established CDFIs. Email wisdomfund@mycnote.com to learn how you can help fund more women-owned businesses today.

Women seeking loans should contact a participating CDFI. Partners in the Wisdom Fund’s first phase include:

  • Carolina Small Business Development Fund, which provides small business loans and financial training to startups, existing businesses and community organizations in North Carolina.
  • LiftFund, a Texas-based organization that empowers underserved entrepreneurs with capital and support services in 13 states.
  • TruFund, a national nonprofit organization that provides affordable capital to small businesses and nonprofits in AlabamaLouisiana and New York.

Study Finds 70% of Americans Would Share More Personal Data for Fairer Credit Decisions (PR Newswire), Rated: A

More than half (54%) of loan applicants don’t even have a clear understanding of why they receive the interest rate they do from a lender, while a majority (70%) say it is difficult finding lenders who will look at them as something other than their credit score.

  • 7 in 10 American adults (71%) wish there was another way to prove themselves to credit lenders outside of the standard credit score.
    • Hispanics (82%) and African Americans (81%) are more likely than Whites (67%) to want lenders to look at additional factors in lending decisions.
  • 77% believe more data is better when evaluating potential borrowers’ credit.
  • 71% would be willing to share more personal data with a lender if it resulted in a fairer credit decision. The motivation is even higher among middle-class earners. 79% of people making $50,000 to $75,000 would share more personal data to prove their creditworthiness, compared to 66% of people making over $100,000.
  • 84% think their bank should use modern technology to assess their creditworthiness.
    • Specifically, about half of loan applicants (53%) would like their ideal lender to use machine learning to make fairer credit decisions.
    • More than 2 in 5 (42%) would like their ideal lender to use machine learning to make the credit for homeownership more accessible to everyone.
    • Surprisingly, older generations want newer technology even more. Baby boomers and seniors (83% and 87%, respectively) wanted their banks to use new technologies to score them, compared to 79% for Millennials and Gen Zers.

Survey: Alternative Data Sharing (Urjanet), Rated: B

Urjanet surveyed more than 300 U.S.-based adults to assess consumer sentiment around alternative data sharing in the lending process. Key findings include:

  • A majority of consumers have multiple alternative sources of payment history
  • Alternative data sharing represents a huge opportunity for lenders to drive financial inclusion
  • Most consumers (59%) are willing to share utility and telecom data to boost chances of approval

SigFig launches platform to help retail banks sell financial products (Investment News), Rated: A

SigFig, the financial technology firm that developed digital advice platforms for several large financial institutions, wants to help banks automate more than investment management.

Technology to Play Crucial Role in Preparing ABS Professionals for Next Economic Cycle (ABL Advisor), Rated: A

An overwhelming majority (90 percent) of asset-backed securities (ABS) professionals feel that adopting new technologies will be important to preparing their businesses for the next economic cycle, according to Capital One’s sixth annual survey at SFIG Vegas 2019.

The survey also revealed that ABS professionals believe the biggest risks to their businesses are uncertainty around regulatory risk and increased credit risk, both at 29 percent. However, despite regulatory risk being a top concern, the industry’s apprehension has nearly cut in half over the last two years. In 2018, 48 percent noted regulations were the biggest risk to their businesses while 58 percent thought so in 2017. Additional top-of-mind concerns for 2019 include increases in interest rates (18 percent) and increased competition (17 percent).

TrustToken’s Stablecoin Now Available On Cred’s Crypto Earning Platform (BlockTribune), Rated: A

Asset tokenization platform TrustToken has announced a strategic partnership with crypto lending platform Cred.

Founded by former PayPal financial technology veterans, Cred is a decentralized global lending and borrowing platform that allows stablecoin issuers, exchanges and wallets to provide valuable earn and lending services worldwide.

Fintech in Brief: Update on Legal Challenges to OCC Fintech Charter (JDSupra), Rated: A

On March 19, 2019, the New York State Department of Financial Services (“NYDFS”) filed a brief in opposition to the Office of the Comptroller of the Currency’s (“OCC”) motion to dismiss the NYDFS’ lawsuit challenging the OCC’s statutory authority to grant special purpose national bank charters to Fintechs (the “Fintech Charter”). The brief in opposition signals that the NYDFS will continue its opposition to the Fintech Charter under the leadership of Acting Superintendent Linda Lacewell, who replaced outgoing Superintendent Mari Vullo in February. In opposing the OCC’s motion to dismiss, the NYDFS argued that it has standing to challenge the Fintech Charter, the matter is ripe for judicial review, and its claims are not time-barred. The NYDFS also argued that the OCC’s interpretation of the “business of banking” is not entitled to Chevron deference and “should be invalidated in its entirety.”

Mortech Partners with Roostify for Enhanced Online Mortgage Experience (Business Wire), Rated: A

Today, Mortech, a Zillow Group business providing mortgage technology solutions for mortgage lenders and secondary market teams, announced a new partnership between Mortech’s product and pricing engine (PPE) and Roostify, a digital lending platform that gives customers more control of their home buying process while allowing loan officers to utilize the latest technology to more easily process loans. The strategic partnership will integrate two proven mortgage technology solutions to improve the digital mortgage experience for many industry-leading lenders.

Finastra brings community banking services outside the branch with the launch of Fusion Digital Front Office (Finastra), Rated: A

Finastra has launched Fusion Digital Front Office, an innovative tablet-based banking platform that enables community banks and credit unions to take services directly to the consumer, outside of the branch. The solution provides a simple gateway to manage account origination, sales and service, and transaction processing from any remote location.

Huobi’s US Arm Launches Institutional Group for OTC Crypto Trading (CoinDesk), Rated: A

“We’re entering the market now with a real institutional offering, we’re definitely going to be offering some new products and services,” such as token lending and over-the-counter (OTC) trading, in the coming months, he added.

Elevate Named as a Finalist for LendIt Fintech 2019’s Financial Inclusion Award (AP News), Rated: B

Elevate Credit, Inc. (“Elevate”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, has been named as one of six finalists in the “Excellence in Financial Inclusion” category for the LendIt Fintech Industry Awards 2019. This award is given to the company that has made the biggest impact in expanding access to financial services in new and innovative ways.

J.D. Power ranks Regions among top alternative lenders for personal loans (Biz Journals), Rated: B

Birmingham’s largest bank has ranked among the top alternative lenders in the U.S. for providing personal loan satisfaction through digital applications.

United Kingdom

ARBUTHNOT BANKING GROUP (“Arbuthnot”, “the Group” or “ABG”) Audited Final Results for the year to 31 December 2018 (Morningstar), Rated: AAA

FINANCIAL HIGHLIGHTS

·      Profit Before Tax £6.8m (2017: £2.5m)

·      Underlying profit before tax £7.4m (2017: £3.2m)

·      Operating income increased by 24% to £67.9m (2017: £54.6m)

·      Negative earnings per share 134.5p (2017: positive 43.9p)*

·      Continuing earnings per share 38.0p (2017: 14.0p)

·      Underlying earnings per share 40.3p (2017: 17.6p)

·      Final dividend per share 20p (2017: 19p), an increase of 5%

·      Total full year dividend per share 35p (2017: 33p)

·      Bonus share issue to create new class of non-voting shares

·      Net assets £196m (2017: £236m)

·      Net assets per share 1283p (2017: 1547p)

·      Underlying return on deployed equity 5.6% (2017: 4.2%)

Consolidated statement of financial position

 

At 31 December

2018

2017

Note

£000

£000

ASSETS

Cash and balances at central banks

17

405,325

313,101

Loans and advances to banks

18

54,173

70,679

Debt securities at amortised cost / held-to-maturity

19

342,691

227,019

Assets classified as held for sale

20

8,002

2,915

Derivative financial instruments

21

1,846

2,551

Loans and advances to customers

22

1,224,656

1,049,269

Other assets

24

12,716

20,624

Financial investments

25

35,351

2,347

Deferred tax asset

26

1,490

1,527

Interests in associates

27

– 

83,804

Intangible assets

28

16,538

15,995

Property, plant and equipment

30

5,304

3,962

Investment property

31

67,081

59,439

Total assets

2,175,173

1,853,232

EQUITY AND LIABILITIES

Equity attributable to owners of the parent

Share capital

37

153

153

Retained earnings

38

209,083

237,171

Other reserves

38

(13,280)

(949)

Total equity

195,956

236,375

LIABILITIES

Deposits from banks

32

232,675

195,097

Derivative financial instruments

21

188

931

Deposits from customers

33

1,714,286

1,390,781

Current tax liability

236

705

Other liabilities

34

18,549

16,239

Debt securities in issue

35

13,283

13,104

Total liabilities

1,979,217

1,616,857

Total equity and liabilities

2,175,173

1,853,232

Read the full report here.

Tech Nation Lists 10 Fintech Pioneers In Future Fifty 2019 Cohort (Forbes), Rated: AAA

Revolut, Monzo, Starling Bank, Currencycloud, Aire, Blockchain, MarketInvoice, Quantexa, Nested and Salary Finance were revealed to be among the 24 most dynamic and fast-growing late-stage technology companies to be chosen to join Future Fifty’s 2019 cohort.

Tech Nation and Dealroom data has also revealed that the U.K. has attracted a whopping $7.9 billion in funding in 2018 and closed the gap for exits of venture-backed companies with the U.S. As well as this U.K. sales, IPOs and mergers were worth $40 billion – ahead of every other European country – which points to the success of the tech sector as a whole in the country.

OAKNORTH ANNOUNCES BRITISH BUSINESS BANK ENABLE GUARANTEE OF £133M (Business Leader), Rated: AAA

OakNorth has today announced its participation in the ENABLE Guarantee programme, securing a guarantee of £133m from the British Business Bank, the UK government’s economic development bank. OakNorth will use the guarantee to strengthen further its lending support to fast-growth businesses and established property developers and investors.

The ENABLE Guarantee programme is designed to encourage banks to increase their lending to smaller businesses by reducing the amount of capital required to be held against such lending. Under an ENABLE Guarantee, the UK Government takes on a portion of the lender’s risk on a portfolio of loans to smaller businesses, in return for a fee.

Inside OakNorth’s plan to take its lending technology global (Tearsheet), Rated: A

As a challenger bank, OakNorth charts a different course. While Revolut, Monzo, and N26 focus on putting their digital current accounts in the hands of millions, OakNorth doesn’t even offer a current account. While other challengers are racing to acquire banking licenses all over the world, OakNorth is happy with just a UK license.

OakNorth is also posting profits while other challengers aren’t.  The bank announced a £33.9m profit for 2018, up 220 percent from 2017.

OakNorth provides debt financing to entrepreneurs in growing businesses, lending £0.5M to £40M to profitable, scale-up, British businesses. To fund its underwriting, OakNorth offers digital savings accounts. It currently has 40,000 customers with digital savings accounts and has lend £3 billion in under four years.

Successful UK Payday Lender Western Circle Limited Begins Offering Personal Loans Online (Finger Lakes Times), Rated: A

Western Circle Limited has made a name for itself by offering responsible payday loans online. Their decision to branch out into the personal loans market through the new brand PersonalLoansNow.co.uk was well received by their customers.

Five last-minute IFISA ideas (P2P Finance News), Rated: A

THE END of the tax year is fast approaching, so if you haven’t yet taken full advantage of your £20,000 ISA allowance to make tax-free returns, now is the time. The peer-to-peer lending industry is expecting to see an uptick in inflows into Innovative Finance ISAs (IFISA) this year now that there is a much wider choice of products available and the potential for higher returns than cash with lower volatility than the stock market.

FINTECH LAUNCHES AI LOAN COMPARISON SERVICE (Business Cloud), Rated: A

Loan marketplace Monevo has launched a new platform to give consumers comparisons of pre-approved loans.

Based in Macclesfield, the business is a licensed credit broker for personal and business loans and is Europe’s largest personal loan marketplace.

An Alternative Approach (IFA Magazine), Rated: A

When it comes to asset allocation, advisers constantly face the challenge of finding real diversification in client portfolios. Sue Whitbread met with Matthew Ardron and Benedict Yung of Basset & Gold Group, to talk about their approach of offering fixed rate bonds that invest in alternative lending.

Half of Brits running out of cash before payday – pushing them to rogue lenders (Mirror), Rated: A

Exclusive research for Mirror Money shows by the end of this month, those turning to payday loans will have shelled out more than £214million – that works out at £28 per second

P2P to have strong presence at Innovate Finance Global Summit (P2P Finance News), Rated: B

FOUNDERS of the ‘big three’ peer-to-peer lenders are among the confirmed speakers at Innovate Finance Global Summit (IFGS), which takes place next month at London’s Guildhall.

Giles Andrews of Zopa, Samir Desai of Funding Circle and Rhydian Lewis of RateSetter are all participating in various sessions at the fintech industry trade body’s flagship conference on 29-30 April 2019, which marks the start of UK Fintech Week.

Other confirmed speakers from the P2P world include Zopa chief executive Jaidev Janardana, ArchOver’s Angus Dent, Ali Celiker from British Pearl and Roxana Mohammadian-Molina from Blend Network.

China/Hong Kong

Hong Kong SME financing platform raises $ 15m for China push (Finextra), Rated: AAA

Hong Kong-based online SME trade financing platform Qupital is targeting the mainland after closing a $15 million Series A funding round led by CreditEase FinTech Investment Fund.

Consumers hunger for loans, lenders popping up everywhere (Shine), Rated: AAA

Qin Shuifeng, 30, who lives in the suburban district of Jiading, went to a branch of the Postal Savings Bank of China in 2016 to seek a loan for home improvements.

The lender granted her and her husband a credit line of 1 million yuan (US$148,600), of which they drew 600,000 yuan, with an interest rate 10 percent higher than the benchmark rate.

Competition 

The central government has issued a series of policies favorable to consumer lending since the second half of 2018.

Still, risks remain. To realize sustainable development, players need to build strong operational and risk control capabilities, either by themselves or in partnership with financial technologies firms.

European Union

Klarna Launches Open Banking Platform (PR Newswire), Rated: AAA

Today, Klarna, one of Europe’s leading payment providers and the global market leader in payment initiation services, announces the launch of its own Open Banking Platform. This platform will enable access to more than 4,300 European banks through a single Access to Account (XS2A) API in line with Payment Services Directive (PSD2). Klarna’s XS2A API is the most established and proven solution that has been developed at scale across markets for almost 15 years through the Klarna Group company Sofort.

This platform provides a fully proven and mature infrastructure, superior market coverage and connectivity, with access to 99% of online banking consumers currently across 14 European markets. By opening up its own advanced technology and capabilities, Klarna is simplifying and democratising access to APIs securely. Both established and newer banks and fintechs as well as other licensed businesses, will be able to build smart and personalised offerings that meet the evolving needs of consumers across Europe. Klarna has been one of the leading proponents of the PSD2 legislation and believes high-quality APIs will drive innovation and competition but most importantly will empower consumers across Europe with increased choice, control and clarity on their finances, and ability to access better products.

International

Has Alternative Lending Seen Its VC Peak? (PYMNTS), Rated: AAA

U.S. FinTech funding reached its highest level in five years in 2018, according to CB Insights data published last month, hitting $11.89 billion. Yet at a time when analysts say VCs are focusing more on late-stage investment, alternative lenders are having a tougher time securing funding, particularly market newcomers in a crowded market.

But there is evidence that investors’ appetite for alternative lending startups is on the wane, even as overall FinTech funding continues to climb — and as the success of the alternative lending market grows, too.

eToro buys blockchain company Firmo (Fintech Futures), Rated: A

Just weeks after launching in the US, trading and investment platform eToro announced plans to purchase Copenhagen-based blockchain firm Firmo, reports Julie Muhn  at Finovate

Founded in 2017, Firmo offers a programming language called FirmoLang that runs on a sidechain. Exchanges can leverage FirmoLang to create financial instruments such as P2P lending platforms or cryptocurrency derivatives with tokens. And Firmo is versatile, allowing the tokens to be run on any blockchain.

Battlestar Capital Earns 30% Returns For Holding Crypto (ChainBits), Rated: B

Battlestar Capital, which is a blockchain staking-as-a-service company, revealed that customers could potentially earn up to 30 percent on a yearly basis when it comes to their idle crypto holdings. Here is everything about the startup’s claims in a nutshell.

In an interview, the company said that it has teamed up with crypto lending startup called Celsius Network in an attempt to launch a large-scale service capable of offering potentially high returns.

Australia

APRA Proposes Stricter Credit Risk Management Standards (Regulation Asia), Rated: AAA

The revised prudential standard enhances board oversight of credit risk and requires more intensive credit checks on borrowers. APRA also highlights the risks of P2P originated loans.

India

New modes of lending, fund raising on cards (The Asian), Rated: AAA

In a bid to change the market dynamics of the banking and financial sectors, the Reserve Bank of India (RBI) will soon come up with alternative models of lending and capital raising for the sectors.

Asia

Bukalapak partners three P2P lenders to provide loans for offline businesses (Tech in Asia), Rated: AAA

Bukalapak is teaming up with Indonesian P2P lending startups Amartha, Modalku, and PohonDana to provide loan facilities in a program called Modal Mitra. The loans are available to offline vendors who are part of the company’s Mitra Bukalapak program.

The financing offered through Modal Mitra ranges between US$70 and US$700 and can be paid back in up to six months, with weekly installments starting from US$6. It can only be used for purchases in the Mitra Bukalapak app.

Eurasia

Russian fintech launches digital bank 131 (Finextra), Rated: AAA

Bank 131, a new digital bank focused on Russian companies and entrepreneurs that work for global internet companies and/or buy from global ecommerce companies with a Russia presence, announced today they have received their banking license from authorities – the first and only new bank to do so in four years.

Canada

Shadow banking has grown, but risks to financial systems are modest (Advisor’s Edge), Rated: AAA

Canada’s shadow banking sector has grown substantially in recent years, but the overall financial system has grown even faster, keeping risks in check, suggests a new report from the Bank of Canada.

In the report, the central bank details the results of its monitoring of so-called “non-bank financial intermediation” (NBFI), also known as shadow banking. Among other things, the report finds the Canadian NBFI sector has grown by 1.7 times since 2006, driven by strong growth in investment funds, securities financing transactions and private lending.

Authors:

George Popescu
Allen Taylor

The post Thursday March 28 2019, Weekly News Digest appeared first on Lending Times.

Wednesday June 27 2018 Daily News Digest

Bank of Amazon unbundling financial services

News Comments Today’s main news: Consumer debt surpasses mortgage debt. Funding Circle, INTRUST Bank expand partnership. Revolut offers app store for business banking. VPC Specialty Lending hits record monthly returns. Today’s main analysis: Amazon’s big push into lending, and beyond. Today’s thought-provoking articles: The past and future of banking. Should income investors consider P2P lending? Banks can’t partner themselves into […]

Bank of Amazon unbundling financial services

News Comments

United States

United Kingdom

International

Other

News Summary

United States

Consumer Debt Now Surpasses Mortgage Debt (Investopedia) Rated: AAA

Mortgages may represent the largest debt for households, but as a percentage of disposable income, home loans are comprising less of a liability, LendingTree found.

In a research report, the online lender, which analyzed data from the Federal Reserve, said that mortgage-related household debt has declined 5.5%, while consumer credit, which includes revolving credit and installment loans, jumped 45%. Of that, 42% was student loan debt. What’s more, LendingTree found that American household debt is on track to hit $1 trillion above the 2008 peak by the end of June. The debt figure has been increasing at a 3.4% annual rate and includes mortgage debt.

By the end of the second quarter, LendingTree is forecasting total mortgage and consumer debt to reach $15.7 trillion compared with $14.7 trillion 10 years ago.

INTRUST Bank and Funding Circle expand partnership (PR Newswire) Rated: AAA

Funding Circle, the small business loans platform, and INTRUST Bank, a leading US regional bank headquartered in Kansas, today announced the next phase of their strategic partnership to support the growth of US small businesses. Following the successful launch of this partnership earlier this year, the second phase increases INTRUST’s funding commitment and kicks off a targeted, co-branded marketing campaign, giving business owners across KansasMissouriOklahoma, and Arkansas greater access to fast and flexible financing.

To date, over 150 American small businesses have received loans backed by INTRUST through the Funding Circle platform. The upsized commitment is anticipated to increase this number above 500.

Amazon and Their Push Into Fintech (Lend Academy) Rated: AAA

Last week CB Insights released this really interesting report titled, Everything You Need To Know About What Amazon Is Doing in Financial Services.

Source: Lend Academy

The report provides an in depth look at the moves Amazon has made in payments, lending, the new Amazon Cash program and also takes a look at how the company has been developing fintech programs internationally.

By the simple addition of a debit card, Amazon could move the unbanked into a quasi bank account that could be used at places beyond Amazon.

They have had a small business lending operation since 2011 and much fanfare was made about the $3 billion they have loaned through June 2017. But that doesn’t even put them in the top three online small business lenders in that time period. OnDeck, Kabbage and CAN Capital all loaned more.

To be fair Amazon is not trying to be a general purpose lender. Their SMB lending operation is targeted solely at Amazon marketplace sellers as a way to help them grow their business so they will sell more products on Amazon. It is not clear they have a desire to do more than that.

Source: CB Insights

The Banking Industry: Past and Future (The Motley Fool) Rated: AAA

INDUSTRY FOCUS // Financials // 06-25-2018

One of the big things that’s happened over the past 25 years is that the big banks have gotten bigger. We now have what are known as the Big Four banks in the U.S. — CitigroupBank of AmericaWells Fargo and JPMorgan Chase. All of those have grown substantially through acquisitions, not just from the financial crisis, which saw a lot of consolidation, but beforehand. Actually, three of the four were actually acquired themselves, and the acquiring companies just decided to keep the names because they were more recognizable.

Douglass: I believe that peer-to-peer lending will represent at least 25% of total lending spent in 25 years. Now, I only say 25%. For me, it’s very clear that peer-to-peer lending has become a lot more widespread and a lot more feasible than it was previously. I do expect the peer-to-peer lenders — or a bank, perhaps, who hops in — to help solve for one of the current difficulties, which essentially is poor underwriting by some of the peer-to-peer facilitators right now, meaning that the investors who are putting the money in aren’t making the kind of money that they’d hoped to — I believe those will ultimately be solved.

But, I only say 25% because banks have legitimately trillions of dollars to lend, and they will absolutely be looking for ways to deploy that capital effectively. So, I would expect that they will be helping facilitate a lot of these peer-to-peer loans. I believe they will be, in some cases, investing alongside. I think they will often invest in alone, and perhaps then sell it to peer-to-peer lenders for an arbitrage so that they can do it all again, sort of like you see with agency-backed mortgages.

Marcus Is Not Adding Credit Cards Products … Yet (Bank Innovation) Rated: A

Marcus, the consumer lending arm for Goldman Sachs, wants to become the one-stop shop for many of your financial matters, except for one: credit cards — at least for now. Right now, Marcus is heavily focused on launching a savings platform in the U.K. in the coming months, Talwar said. 

The challenges for a new ‘bank’ with a famous parent (American Banker) Rated: A

When JPMorgan Chase set out to make its digital-only brand Finn, it quickly rejected the idea of using it to lure millennial customers over to the institutional side of the bank.

Finn has also found that for the 27 states where JPMorgan Chase is part of a shared ATM network but has no ATMs or branches of its own, customers have difficulty depositing cash. While those same customers can still withdraw cash and often don’t carry money with them, customers that work for tips have a hard time keeping Finn as their main banking account.

Sharestates Launches New Loan Programs  (PR Newswire) Rated: A

Sharestates announced the launch of a Long-Term Portfolio Loan Program to facilitate the needs of borrowers throughout the life cycle of their real estate projects.

Some highlights of the Long-Term Portfolio Loan Program include 30 and 40-year mortgage terms, interest rates ranging from 5.99 to 7.5%, loans with a 10-year interest only period, followed by 20 or 30 years of amortization, as well as the ability to cover three or more properties under a single loan.

Venmo officially launches its own MasterCard-branded debit card (TechCrunch) Rated: A

Venmo today is officially introducing its own debit card in partnership with MasterCard, following beta tests of a Visa-branded debit card last year. The new card will allow Venmo users to pay anywhere MasterCard is accepted in the U.S., and will record transactions to the user’s Venmo account for easy splitting with friends. It can also be used at an ATM to withdraw funds from the Venmo’s account’s balance.

Unlike the beta version of the card, the MasterCard-branded Venmo card can be used to withdraw up to $400 per day at ATMs displaying the MasterCard, Cirrus, PULSE, or MoneyPass acceptance marks. No fees apply for U.S. MoneyPass ATMs, while the others will charge a $2.50 ATM domestic withdrawal fee.

There are no fees for using the card for purchases, even if you get cash back at the point of sale. However, if a signature is required to get cash back at a bank, you’ll pay a $3.00 Over the Counter Domestic Withdrawal Fee, the company says.

PayPal gets anti-fraud ability with $ 120m acquisition of Simility (Fintech Futures) Rated: A

Following on from its $400 million purchase of Hyperwallet on 20 June, it has now acquired fraud prevention and risk management platform Simility for $120 million.

Following the close of the deal, merchants on the PayPal platform will gain access to fraud tools that can be customised through their existing account management dashboard.

Crowd lending fintech raises more than $ 17M (American Banker) Rated: A

The crowd lending startup P2Binvestor has secured more than $17 million in funding from more than 20 participants to expand its bank partnership program, the company announced Thursday.

CrowdOut Capital Surpasses $ 100 Million in Loans to Middle Market Companies to Fuel Growth (Business Wire) Rated: A

CrowdOut Capital, the first tech-enabled online marketplace to fund corporate loans for middle market companies, announced it funded more than $112 million in loans in less than two years. Accredited investors choose from the company’s vetted loan offerings on a deal-by-deal basis.

CrowdOut funds loans as small as $3 million to companies with annual revenues between $10 – $500 million to fuel growth.

James Gutierrez of Insikt (Lend Academy) Rated: A

My next guest on the Lend Academy Podcast has spent his career doing just that. James Gutierrez is the CEO and Founder of Insikt. Since I last had James on the show a lot has changed but their mission is still to improve the financial health of the underserved consumer.

Banks can’t partner themselves into digital relevancy (American Banker) Rated: AAA

For banks, these partnerships won’t generate the quantum leap they need to move beyond a decades-old, product-centric mentality to deliver next-generation financial services that consumers deserve. At best, financial institutions may gain a workable solution that squats awkwardly in the existing infrastructure and brand. At worst, after a lot of time and effort — and increasing their infrastructure costs — banks will fail to deliver any noticeable difference to customers beyond a flurry of press releases.

StraightUp Announces Merger With Slice (PR Newswire) Rated: A

StraightUp, an innovative real estate-focused platform giving investors access to previously unavailable development opportunities, announced today a merger with Slice, the first blockchain-based REIT for investors around the world.

StraightUp was designed to democratize access to previously unattainable high-potential investment opportunities in New York City. As a result of merging with Slice, the new and improved platform will give international investors access to premium equity opportunities in desirable cities across the country, including New York CityLos Angeles and San Francisco.

Mobile app for underbanked looks to go national (American Banker) Rated: A

You could easily mistake Anne Leland Clark, a Twin Cities nonprofit executive, for a banker with with big, national ambitions as she discusses her organization’s digital platform for the underbanked.

The product, known as Fair Financial, launched in a pilot program this week to serve about 500 local customers over the next 18 months.

Majority of Americans Won’t Use a Credit Card to Pay for This Summer’s Vacation (Herald Courier) Rated: A

The survey of over 1,000 U.S. respondents, conducted by Affirm, found that Americans typically take their biggest vacations of the year over the summer, and cost is a major factor when planning travel.

55 percent of Americans said it’s very important to have the cost of the vacation paid off before going. The cost of a trip can linger even after the vacation is over: 32 percent of people said they regretted taking a vacation altogether.

House passes bill allowing telecom, utility payments in credit scores (American Banker) Rated: B

The legislation, authored by Rep. Keith Ellison, D-Minn., is aimed at helping consumers, those in particularly lower-income and minority households, build their credit histories.

Under the bill, information about a consumer’s utility or telecommunications service may be reported only to the extent that the information relates to payment by the consumer for such service.

Depositing the Future (NullTX) Rated: A

What differentiates Depository Network from both of those companies/platforms is the fact that Depository Network is actually not a lending platform. Rather, it is a depository infrastructure that other P2P lending platforms, banks and credit institutions can utilize. Depository Network is the world’s first fully decentralized multi-platform collateral network that connects traditional lending and blockchain technology.

Invoice Factoring Edges Out Competition Among Short-Term Borrowing Options (PR Newswire) Rated: A

When a business needs to raise capital, the more short-term the borrowing options, the better. For every option, though, business owners must weigh the increased cash flow against the trade-off. Interstate Capital looked at a breakdown of options – from bank loans to savings – invoice factoring comes out on top.

AFR Announces Expanded Technology Offering (AFR Wholesale) Rated: B

American Financial Resources, Inc. (AFR) announces that it has completed a pilot and will now be providing its broker network with notification when a house for which AFR owns the servicing is listed for sale. This will enable AFR’s broker partners an opportunity to reconnect with the homeowner and, ideally, assist with their next mortgage, on both the relisted property as well as the borrower’s next home.

Wells Fargo revamps premium card to compete on rewards (Payments Source) Rated: B

Two years after JPMorgan Chase & Co. launched an arms race in credit-card rewards with its Sapphire Reserve card, Wells Fargo will now offer three points per dollar spent on dining, travel and streaming services such as Netflix on its Propel card. Other purchases will earn one point per dollar, and points are redeemable at one cent per point.

United Kingdom

Revolut Now Offers an App Store for Business Banking (Crowdfund Insider) Rated: AAA

Revolut, a digital only bank that says it is signing up over 120 businesses per day, has launched a new services for their business customers – Revolut Connect. This new feature is described as an “App store” for businesses to help provide easier access to digital tools.

With more than 60,000 businesses uses their bank now,  Revolut Connect is designed to help firms easily connect and build integrations for the most popular business apps, including accounting platforms like FreeAgent, communication tools like Slack, Apps to help with tax, payroll, expense management and more. Revolut adds that many more popular Apps are in the queue. Revolut wants to create a one stop mobile experience where businesses may manage all of their financial needs in a single mobile friendly application.

VPC Specialty Lending sees record monthly returns (AltFi News) Rated: AAA

The £289m VPC Specialty Lending investment trust has recorded its highest monthly return to date for May 2018, according to stock market filings.

Its net asset value [NAV] total return for the month of May, the latest numbers released by VPC, was 1.03 per cent for the month. Returns comprised 0.94 per cent of income gains and 0.09 per cent of capital gains.

Should Income Investors Consider P2P Lending? (Morningstar) Rated: AAA

Peer-to-peer investment trusts now have around £1 billion of assets under management between them, but the jury is still out on whether or not they are worth backing.

P2P trusts launched four years ago as direct peer-to-peer lenders including Zopa and Funding Circle were fast gaining traction. The trusts promised exposure to hundreds, or even thousands, of different peer-to-peer loans, in return for a juicy dividend yield.

Majority of brokers’ biggest frustration is lenders changing their mind on a deal (Mortgage Introducer) Rated: A

Over half (56%) of brokers said the lenders changing their mind on a deal frustrates them the most about the specialist finance market, LendInvest found from surveying brokers at the NACFB Commercial Finance Expo in Birmingham.

A quarter (24%) identified the lack of good service as their main frustration. Rates not being good enough was an issue for 14% of those surveyed, while only 6% of those surveyed cited lack of choice as their biggest frustration.

Acceptance of robo advice on the rise (Financial Reporter) Rated: A

According to a recent poll carried out at the Intelliflo Change the Game conferences held in Manchester and London, robo-advice is now regarded as less of a threat to business for advisers than it has been in recent years.

Last year, both options gained equal top share in the poll (37% each of 315 respondents), while this year,’ robo-advice’ dropped to 25.5% (419 respondents), with ‘large product providers going direct’ down slightly but still the top concern at 32.5%.

A guide to liquid IFISAs (Peer2Peer Finance) Rated: A

But the rising popularity of the secondary market and ‘instant access’ accounts have created enhanced liquidity for P2P investors. On an array of platforms, lenders can sign up for long-term loans before selling their stake to others, while some of the bigger platforms allow free or low-fee withdrawals.

We’ve put together a guide to all the platforms offering IFISAs with extra liquidity…

  • Ablrate
  • Abundance
  • Assetz Capital
  • CapitalRise
  • Crowd2Fund
  • Folk2Folk
  • Funding Circle
  • FundingSecure
  • HNW Lending
  • JustUs
  • Landbay
  • LandlordInvest
  • LendingCrowd
  • Lending Works
China

Chinese online lending platform Hui Ying Financial lowers US IPO deal size to $ 32 million (Nasdaq) Rated: AAA

Hui Ying Financial Holdings, which operates an online peer-to-peer lending platform in China, lowered the proposed deal size for its upcoming IPO on Tuesday.

The Shanghai, China-based company now plans to raise $32 million by offering 5.6 million shares at a price of $5.85. The company had previously filed to offer 6.8 million shares at the same price. Hui Ying Financial Holdings will raise -19% less in proceeds than previously anticipated and command a market value of $436 million. Shares are currently listed on the OTCQB under the symbol SFHD.

European Union

Raisin and Banco BNI Europa Deepen Collaboration (Crowdfund Insider) Rated: AAA

Fintechs Banco BNI Europa and Raisin have furthered the collaboration between the two firms. Banco BNI Europe says it has entered into a cooperation to allow Portuguese savers to gain access to the best savings rates available from across Europe.

International

Global Debt Registry Launches Decentralized Ledger for the Loan Market  (Payment Week), Rated: A

Global Debt Registry (“GDR”)today announced the launch of its loan registry designed to verify and provide transparency on loan data on the cloud-based IBM Blockchain Platform. All loan level collateral positions and verification activity will now be immutably recorded on the decentralized registry with highly secure permissioning and access controls to provide new levels of efficiency to the $400bn asset backed securities (ABS) market.

Mobilum Crypto Payment Processor Partners With EthicHub Crowdlending Platform (Bitcoin Exchange) Rated: B

Mobilum is a cryptocurrency enabled payment processing platform which allows for cryptocurrency payments in real time at points of sale via an already existing debit or credit cards of the customer and the issuer of the Mobilum token. Mobilum recently announced its partnership with EthicHub, an affiliation that is expected to bolster a mutual sharing of investment opportunities for users on both platforms.

EthicHub’s crowd lending projects have provided financial solutions for small projects especially those involving farmers in less economically disadvantaged parts of the world, an accomplishment for which it was awarded the Best financial inclusion project at LaBitConf in Bogota as well as the award of the “Start-up with the Greatest social impact” at Unconference Fintech Awards in Madrid, Spain.

Australia

Mortgage Choice partners with P2P lender (The Adviser) Rated: AAA

Mortgage Choice has announced that it has partnered with RateSetter in a move that would provide its 600 brokers with access to personal loans and green loans offered by the P2P lender.

RateSetter CEO Daniel Foggo claimed that the partnership was part of the lender’s plan to develop its broker relationships.

ING distribution boss joins RateSetter (Independent Financial Adviser) Rated: B

ING’s former head of third-party distribution, who led relationships with financial advice and mortgage broking networks, has left to join fintech peer-to-peer lender RateSetter.

India

All Financial Transactions on Faircent Conducted through Escrow Account (BW CI World) Rated: AAA

Faircent.com was the first platform in India to meet all guidelines prescribed by RBI and receive the NBFC-P2P certification in May, this year. This is a validation of the business model that we have painstakingly built over the last five years.

All financial transactions on our platform are undertaken through an escrow account under the trusteeship of ITSL (an IDBI Trusteeship Services Ltd). Borrowers are evaluated by our fully-automated credit evaluation mechanism across more than 400 data points to understand their ability, stability and intent to repay before they are listed on the platform.

Canada

Finastra to sell Canadian-based Collateral Management Corporation business to Teranet (Finastra) Rated: AAA

Finastra today announced that it has entered a definitive agreement to sell its Canadian-based Collateral Management Corporation (CMS) business to Teranet. The transaction is expected to close in July 2018, subject to required regulatory approvals and customary closing conditions.

CMS will join Teranet as a new complementary line of business. Jointly, they will deliver enhanced, integrated solutions to a broad set of financial services customers, leveraging investments in technology, rich insightful data, and market leading electronic registry and workflow platforms.

Authors:

George Popescu
Allen Taylor