Thursday February 28 2019, Weekly News Digest

Annual fintech financing Singapore

News Comments Today’s main news: SoFi to roll out crypto trading with Coinbase. Walmart now offers Affirm loans. Funding Circle fund ups the ante on buyback strategy. Orca launches IFISA. LendDenClub cross 1 million borrowers, lenders milestone. Today’s main analysis: 2019 securitization update. How marketplace lending is a growing and dynamic global market. (A MUST-READ) Today’s thought-provoking articles: The 2009 […]

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

Annual fintech financing Singapore

News Comments

United States

United Kingdom

International

Other

News Summary

United States

Fintech Startup SoFi to Roll Out Crypto Trading Via Partnership With Coinbase (CoinTelegraph), Rated: AAA

Fintech startup SoFi — known for its online lending services — is partnering with major United States-based crypto exchange Coinbase to roll out crypto trading support, according to a CNBC report Feb. 26.

Millennial online lender SoFi to offer zero-fee ETFs, an unexpected rival for index fund giants Vanguard, iShares (CNBC), Rated: A

The race to zero-fee exchange-traded funds has found an unlikely competitor: Online lending and personal finance platform SoFi, which has filed for two index ETFs that will waive management fees for the first year. In making the move to zero-fee ETFs, the online lender is crashing an ETF party dominated by Vanguard and BlackRock‘s iShares.

FTC orders SoFi to stop misleading consumers (MPA Mag), Rated: B

The Federal Trade Commission has ordered online lender SoFi to stop lying about how much borrowers can save by refinancing with the company.

Digital lender founded by ex-SoFi CEO raises $ 65M to fuel expansion (American Banker), Rated: A

The new company founded by Mike Cagney, the former embattled chief executive of Social Finance, plans to announce a $65 million funding round on Wednesday, bolstering firm’s expansion into other financial services, including wealth management.

With the new venture, Cagney is using some of the strategies from his tenure at SoFi — like diversification into areas typically only occupied by traditional banks. However, the new company, Figure, is focusing on different customers, and it’s taking steps to avoid scandals similar to the ones that saw Cagney step down from the SoFi helm.

Walmart teams with Affirm to offer point-of-sale loans (American Banker), Rated: AAA

Walmart will offer its customers point-of-sale loans for the first time — both on its website and in nearly 4,000 U.S. stores — under a partnership with the Silicon Valley lender Affirm.

Under the deal, Walmart shoppers will be able to get Affirm loans of three, six or 12 months to finance purchases ranging from $150 to $2,000. The loans are already being offered in Walmart stores, and they will be available to Walmart’s online shoppers in the coming weeks.

Affirm’s latest partnership brings its alternative financing to Walmart’s US stores and website (TechCrunch), Rated: A

The companies announced this morning that Affirm’s financing options would be made available in more than 4,000 Walmart Supercenters across the U.S., and will roll out to Walmart.com in the weeks ahead.

The offering will go live across Walmart Supercenters nationwide, except in Iowa, West Virginia and Puerto Rico, and will be soon available on Walmart.com.

Loan app Affirm CEO breaks down new Walmart partnership (CNBC), Rated: A

Loan app Affirm CEO breaks down new Walmart partnership from CNBC.

ABS Vegas – 2019 Securitization Update; Square Charter Status (PeerIQ), Rated: AAA

In regulatory news, Square’s ILC charter application has received opposition from 37 community groups. The groups are concerned about Square’s CRA activities and have asked the FDIC to bolster Square’s CRA requirements. Before this letter from community advocates, nearly all of the 15 letters the FDIC received were in favor of Square’s bid. Square is the furthest along the path to getting an ILC charter and its experience will determine whether other FinTechs follow its lead.

Structured Credit Investor magazine explores the challenges facing the maturing marketplace lending sector. Issuers need to distinguish between the borrower experience that they provide and manage liquidity. The article also makes the point that the sector is ripe for consolidation, although we haven’t seen any M&A yet.

2019 Securitization Update

The first two months of 2019 saw 5 securitization deals totaling $1.7 Bn in new issuance. The issuance volume represents a 23% drop over that seen in the first two months of 2018, as the market recovers from the volatility in equity and credit markets seen at the end of 2018. Total securitization issuance now stands at $46.2 Bn, with 147 deals issued to date.

Source: PeerIQ

The Housing Market’s 10 Year Challenge — Comparing The Housing Market of 2009 to Today (LendingTree), Rated: AAA

When the real estate bubble burst in late 2008, many Americans saw their home values fall drastically, but a lot has changed in the 10 years since — housing prices have rebounded from their lows during the Great Recession. And though prices are now starting to cool, in many cases, home values have even exceeded their 2006 highs.

On average, median home values have increased by nearly $50,000 across the 50 largest metros in the United States since 2009.

Metros where housing prices have recovered the most since 2009

San Jose, Calif.

Median home value 2009: $638,300
Median home value 2017: $957,700
Median home value change: $319,400
Median unemployment rate change: -6.4%
Median household income change: $32,991

San Francisco

Median home value 2009: $591,600
Median home value 2017: $849,500
Median home value change: $257,900
Median unemployment rate change: -5.4%
Median household income change: $27,889

Los Angeles

Median home value 2009: $463,600
Median home value 2017: $617,100
Median home value change: $153,500
Median unemployment rate change: -5.0%
Median household income change: $11,467

Source: LendingTree
Source: LendingTree

Gen Xers Carry the Biggest Auto Loan Burden; Study Finds (One World Herald), Rated: A

According to the loan comparison website, the median balance of Gen Xers who have auto loans is $18,741 is higher than other age groups. It is 9% more than baby boomers’ $17,185 median balance. This is higher than millennials’ $16,200 and 37 percent more than the lowest median balance of $13,666 held by Gen Z.

Personal Loan Interest Rates for February 2019 (Nerdwallet), Rated: AAA

Personal loan interest rates, whether you’re considering a loan from a bank, credit union or online lender, generally range from about 6% to 36%. The actual rate you receive depends on factors such as your credit score and history, annual income, existing debt and where you get the loan.

Online lenders offer the lowest starting interest rates on personal loans to borrowers with good to excellent credit.

Source: Nerdwallet

LightStream and Marcus both require a minimum credit score of 660. LightStream accepts joint applications, and one applicant can have a credit score lower than its minimum. SoFi has a slightly higher credit score requirement and requires at least $45,000 in annual income.

Elevate Credit (ELVT) Posts Earnings Results, Meets Expectations (Fairfield Current), Rated: A

Elevate Credit (NYSE:ELVT) announced its quarterly earnings results on Monday, February 11th. The company reported $0.09 earnings per share (EPS) for the quarter, meeting the Zacks’ consensus estimate of $0.09, Bloomberg Earnings reports. The business had revenue of $207.29 million for the quarter, compared to the consensus estimate of $212.42 million. Elevate Credit had a return on equity of 15.72% and a net margin of 1.59%. Elevate Credit updated its FY 2019 guidance to $0.55-0.65 EPS.

Source: Fairfield Current

Hunt Real Estate Capital buys RealtyMogul’s proprietary loan underwriting program (Housing Wire), Rated: A

Hunt Real Estate Capital, which offers financing for all types of commercial real estate, will soon have a new underwriting system to help it originate those loans, as the company is buying a proprietary loan underwriting system from RealtyMogul.

Elevate’s Joan Kuehl Named Dallas ORBIE CIO of the Year (The Progress), Rated: B

Elevate Credit, Inc. (“Elevate”) today announced that Executive Vice President and Chief Information Officer Joan Kuehl has been named the Large Enterprise CIO of the Year by the Dallas ORBIE CIO of the Year Awards. The award honors chief information officers who have demonstrated excellence in technology leadership.

A Recession Coming? Small Business Lending Platform Kabbage Says It’s Prepared (Forbes), Rated: A

The world is bracing for a recession, with the latest data showing  in the U.S. expect it to occur by the end of 2021

If those predictions prove true, it will be the first major economic downturn for some of the nation’s leading fintechs. Born out of the ruins of the recession, these startups have enjoyed nearly a decade of success buoyed by strong economic growth, a bull run in the stock market and low unemployment.

Here’s more on the  AJC Top Workplaces midsize companies (AJC.com), Rated: B

Kabbage has been named to the list for five consecutive years and this is its first year in the top five. The private financial technology company, founded in 2009, has 489 global employes and 367 at its U.S. headquarters in Atlanta. Flexibility at work and perks, such as a daily catered lunch and snacks, are among reasons employees appreciate working for Kabbage. Wellness benefits include fitness classes, health equipment onsite, biweekly meditation classes, CPR training, an annual flu shot clinic and sponsoring sports clubs. It also fully pays health benefits for individuals and provides annual bonuses and a 401(k) match. Through its sabbatical program, employees of five years can receive six weeks of paid time off and an additional $6,000. In 2018, Kabbage participated in the Atlanta PRIDE parade and also took a stand against gun violence after the mass shooting at Stoneman Douglas High School. Workers in 2019 will build a Habitat for Humanity home as part of its Kabbage Kares program, which also has supported PAWS Atlanta, Easter Seals and the Epilepsy Foundation.

Diversifying a Self-Directed IRA Made Simple with New Offering from CrowdStreet (The Progress), Rated: A

CrowdStreet, an online marketplace for direct equity investment in commercial real estate (CRE), today launched a streamlined, investor-friendly approach to investing qualified retirement account funds into commercial real estate offerings. This new option makes it easier than ever for individuals to access CRE investments with their self-directed IRAs (SDIRA), thus reducing their investment exposure to a volatile stock market and achieving more independence in managing their investments.

Liquid P2P and Interest Radar Announce Strategic Partnership (Liquid P2P), Rated: A

Liquid P2P and Interest Radar are pleased to announce that they have entered into a strategic partnership. The two third-party investing services for online peer-lending giant Lending Club will combine strengths under a single platform to deliver a more comprehensive automated tool with a patent-pending liquidity solution.

Direct Lending Investments Suspends Investor Withdrawals (Lend Academy), Rated: A

Earlier this month Brendan Ross, the CEO of Direct Lending Investments, Inc., sent a letter to investors notifying them that they have suspended withdrawals and redemptions effective February 8, 2019. Lend Academy was able to obtain a copy of this investor letter, dated February 11, that provides some color into what happened. The reason given was the delinquency of a large holding, VOIP Guardian, a telecom receivables factoring company.

Fintech deal will provide access to midsize businesses in U.S. (American Banker), Rated: A

Add HSBC to the list of banks partnering with commercial online lenders.

The bank on Tuesday announced a partnership with Neptune Financial, a San Francisco online lender that focuses on businesses with $10 million to $100 million in assets. The bank estimates that, with the access it will get to Neptune customers, the deal represents a $1.5 trillion opportunity.

Venmo debuted a limited-edition rainbow-colored card (Business Insider), Rated: A

Venmo, the PayPal-owned peer-to-peer (P2P) giant, debuted a limited-edition rainbow-colored version of its physical card product. The card will function the same as regular Venmo cards, allowing customers to pay wherever Mastercard is accepted, split costs and tips, withdraw funds from select ATMs, and manage their Venmo balance, but it will only be available for as long as supplies last, according to Venmo.

Source: Business Insider

Why digital identities will be so important in the next few years, according to Mastercard’s vice chairman (CNBC), Rated: A

The pace with which we are moving toward the internet of things is “very rapid” but we “can’t have the internet of everyone without the inclusion of everyone,” according to the vice chairman of payments giant Mastercard.

“You have to start focusing on how does the human get involved, and that’s going to be through having a digital identity,” Ann Cairns told CNBC’s Karen Tso on Monday at the Mobile World Congress in Barcelona.

Credit Karma’s Dana Marineau: ‘We want users to think of us as more than just free credit scores’ (Tearsheet), Rated: A

Today’s marketer on the hot seat is Dana Marineau, Credit Karma’s vice president of brand, creative and communications. People love Credit Karma for its free credit scores, but the company provides so many other free tools. Dana’s team is tasked with elevating the brand beyond just free credit scores, as a place to get help with financial decisions and achieve financial progress. She brings a 15 year experience at EA, working on many of the top sports games in the business.

Why this small bank created a separate, digital-first brand (American Banker), Rated: AAA

When Midwest BankCentre, a community bank in St. Louis, launched the digital-first Rising Bank in February, it joined the ranks of other financial companies —generally large players such as JPMorgan Chase, Wells Fargo and MUFG Union Bank — that have created separate, digital-only brands. Unlike them, the $1.9 billion-asset Midwest hopes to keep a community bank feel at the internet-only unit.

The Future Is Plastic: Fintech Unicorn Brex Launches New Credit Card For E-Commerce Merchants (Forbes), Rated: A

Brex, a San Francisco credit card startup that reached a valuation of $1.1 billion late last year, 22 months after its founding, is launching its second product, a physical credit card for e-commerce companies. Its first card, targeted to venture-backed tech startups, has attracted more than 3,000 customers by providing higher spending limits and simplifying the application process.

YieldStreet raises $ 62M to democratise alternative investments in shipping, real estate and more (TechCrunch), Rated: A

YieldStreet — which provides a platform for making alternative investments in areas like real estate, marine/shipping, legal finance, commercial loans and other opportunities that in the past were only open to institutional investors — is today announcing that it has raised $62 million in a Series B round of funding.

Guaranteed Rate Leads Mortgage Executive Magazine’s List of Top Loan Originators in America (GlobeNewswire), Rated: A

For the seventh consecutive year, Guaranteed Rate has the most loan originators of any lender on Mortgage Executive Magazine’s annual list of the “Top 200 Mortgage Originators in America,” including the number one originator.

Guaranteed Rate led the way with 36 originators ranking within Mortgage Executive Magazine’s Top 200, including three of the top five. Shant Banosian of Boston, Mass., was named the nation’s 2018 Top Originator by funding $536 Million in total loan volume.

Americans Focus On Debt Management But Lose Focus On Retirement Savings (Forbes), Rated: A

Our minds are wired to prioritize the near-term over the long-term. We shouldn’t be surprised that a new survey by 

U.S. banking regulator fights NY lawsuit over fintech charters (Reuters), Rated: A

The U.S. Office of the Comptroller of the Currency has asked a Manhattan federal court to dismiss a lawsuit by a New York financial regulator over its plan to issue banking charters to fintech companies, saying the lawsuit is premature.

Blockchain and data protection: the main concerns (JDSupra), Rated: A

Blockchain’s usage is no longer limited to digital crypto currencies, as blockchain databases may be deployed in innumerable circumstances and scenarios, including, for instance, within the financial services and insurance sectors for money transfer, peer-to-peer lending and transfer of securities, as well as automatic execution of contracts.

LoanStreet positions for growth with new hires (LoanStreet Email), Rated: B

After the launch of LoanStreet’s commercial lending product and the announcement of their $6.5 million funding round, LoanStreet – the first fully-integrated platform that streamlines the process of sharing, managing, and originating loans – has appointed three credit union industry veterans to support LoanStreet’s aggressive growth.

These new hires include Mike Doherty, Managing Director and Head of Credit Union Sales; Tony Harter, Business Development Director; and Joe Parvin, Business Development Director.

White Oak Business Capital Hires Carol Bader Apicella to Expand Northeast and Mid-Atlantic Markets (GlobeNewswire), Rated: B

White Oak Business Capital, Inc. (“WOBC”), an affiliate of White Oak Global Advisors, LLC, has announced that Carol Apicella has joined the firm as Senior Vice President and Senior Business Development Officer. Apicella will be responsible for expanding the firm’s markets in the Northeast and Mid-Atlantic.

United Kingdom

Funding Circle fund adds firepower for buyback strategy (AltFi), Rated: AAA

The portfolio, an investment trust, of loans originated by Funding Circle lowered its dividend expectations amid lower projected returns last year prompting a discount to its net asset value.

Following a move to a more than 10 per cent discount last year it started share buybacks in a bid to narrow its discount. It has now made additional capital available from its free cash flow to be deployed into share buybacks, the fund said yesterday.

Orca Innovative Finance ISA Launches, Enables Diversified P2P Investment (Crowdfund Insider), Rated: AAA

Orca Money is finally launching its long-anticipated Innovative Finance ISA (IFISA). Orca’s spin on the savings vehicle allows investors to spread their money across multiple peer-to-peer lenders (P2P) thus providing a heightened degree of diversification. Additionally, Orca Money conducts due diligence on behalf of IFISA investors.

Currently, the Orca IFISA allows access to 5 P2P platforms: Lending Works, Assetz Capital, Landbay, Octopus Choice and Lending Crowd.

Experian, ClearScore scrap merger plans (Reuters), Rated: A

Experian Plc, the world’s biggest credit data firm, said on Wednesday that it had agreed with rival ClearScore to abandon their proposed merger, after Britain’s competition watchdog indicated that it may block the deal.

NatWest launches account aggregation as Open Banking takes hold (AltFi), Rated: A

It’s been a long time coming, but Open Banking is finally spreading through the traditional banking industry, this week with the launch of account aggregation for NatWest customers.

The RBS subsidiary becomes the UK’s 4th bank to let customers connect rival current accounts.

Will Open Banking boom in 2019? (AltFi), Rated: A

It has been over a year since the Open Banking UK initiative under the Competition and Markets Authority order and Second Payment Services Directive (PSD2) was launched and has become one of the industry’s biggest technology and regulatory shake ups in recent years. It is no surprise that the initiative’s first year has seen a relatively low consumer uptake. This has been coupled with reports that consumers’ knowledge of the scheme appears to be markedly low.

Aave Launches Platform to Pay Bills Using Crypto (Finance Magnates), Rated: A

In an attempt to bring crypto closer to the mainstream, the London-based fintech startup has announced the launch of Aave Pay.

The app will allow its users to pay their utility bills using digital coins by converting crypto into fiat in real-time using bank transfer facility. The company is claiming that the platform can be used to business expenses as well including employee salaries, income taxes, and other commercial or corporate expenses.

Investing in crowdfunded development projects – what you need to know (Property Investor Today), Rated: A

You can invest in peer to peer development loans for the short term or in an Innovative Finance ISA for a longer commitment period, but with the potential to earn tax free returns.

By comparison, a peer to peer lending platform with its own development company will have much more control over its projects and be able to give you more detailed and trustworthy updates.

Failed Lender Reaching ‘From Beyond The Grave,’ MPs Warn (Law360), Rated: A

Failed payday lender Wonga is damaging the finances of thousands of customers “from beyond the grave” because they cannot seek redress for allegedly missold loans as the company was not covered…

International

Some Bankers Are Doing Even Worse Than in 2009 (The Washington Post), Rated: AAA

It may not feel like it, but some corners of banking are suffering as badly as they did during the depths of the financial crisis. Global volumes of initial public offerings and share placings in January and February have been nearly 60 percent lower than in the same period last year. The numbers are worse than the first two months of 2009. If activity doesn’t pick up soon, it would be worrying evidence of the fragility of investor sentiment.

The hope is that the lull is temporary, and technical. The government shutdown in Washington has gummed up U.S. IPOs. Uncertainty over the U.K.’s future relationship with Europe just drags on. And the December stock-market wobble probably killed off deals that were being planned for the window that traditionally opens between January and the start of the full-year earnings season in late February.

Marketplace Lending – A Growing and Dynamic Global Market (DBRS Email), Rated: AAA

I wanted to share with you a new joint report from our U.S. and European structured finance teams. The new report, attached to this email, analyzes the growth of the marketplace lending market around the globe.

The commentary includes the following topics:

— The evolution in finance, from traditional banking to FinTech.
— FinTech’s influence on marketplace lending around the globe.
— Growth hurdles.
— Securitization considerations.

Bank on it: How Enova’s software expands credit access worldwide (Built in Chicago), Rated: A

Not all credit histories are created equal.

That’s the case for a large part of the world’s population who can’t get access to a loan from a traditional credit provider — like a bank — creating a world in which the hardest working people don’t always get access to the credit they need. Enova, however, believes it has a solution. The fintech company draws on the power of machine learning and data to offer products that expand access to credit for consumers and small businesses.

Blossom Capital scores $ 85m from Robinhood and Funding Circle backers (AltFi), Rated: A

Blossom Capital, which has already backed five startups including rental marketplace Fat Lama, today raised $85m which it will use to lead Series A rounds of between $5m and $10m in Europe.

Eight Simple Ways to Earn Bitcoin Online Legally (The Crypto Updates), Rated: B

Earn Bitcoins as the interest payments: If you have earned some Bitcoins already, you can put the Bitcoins to earn for you. Lend them out at particular interest rate. You can lend the Bitcoins directly to someone known at a greed interest rate and repayment period. You need to assess trustworthiness of borrower. Peer to peer Bitcoin lending is another way to let the earned Bitcoins earn for you. There are many peer-to-peer lending websites where the borrowers post the borrowing requests. Over these websites, you can act as a lender. It is also possible to fund the small portion of numbers of loans to reduce the risk.

European Union

Grid Finance suspends taking investments below € 100,000 (Irish Times), Rated: AAA

One of the largest providers of peer-to-peer loans in the State has shut down a key part of its business aimed at smaller investors, blaming an absence of regulation in the crowdfunding space.

Grid Finance, which is backed by Enterprise Ireland, wrote to holders of its “Brick” accounts – that facilitate the investment of up to €100,000 – in recent days stating that it would withdraw the offering from the marketplace.

China

Dragon Victory International: Exposure To The Chinese Crowdfunding Market At A Regulatory-Driven Discount (Seeking Alpha), Rated: AAA

In recent years as China winds down its industrial and manufacturing powerhouse growth, it’s looking to other developed nations to determine which platforms it should invest in and pave the way to sustained economic growth. As most other major developed nations have done over the past century, financial services and engineering have been a very profitable platform and companies in China are quick to launch their own services to capitalize on the triple-digit growth in online financial services exhibited since 2003.

Similar to Hexindai (HX), which I’ve previously covered as a leading online lender which is capitalizing on the middle class appetite for debt to finance their lives and vacations, Dragon Victory International Limited (LYL) is taking on the crowdfunding segment in the People’s Republic of China. Similar to countless other platforms around the world, the company’s services are around financing new companies and capitalizing entrepreneurs through public funding and they already have over 4.5M users who use their services, a number nearly doubling each year.

Source: Dragon Victory International F-1 filings

China Fintech Today: The P2P Boom Is Truly Over (SupChina), Rated: A

This year, the government has continued to lead a reorganization of the industry:

  • More companies will die: As of February 17, only 60 percent of online lending institutions had disclosed their operational information for January 2019, including five problematic platforms.
  • However, the current asset quality of the online lending industry has improved significantly according the data from firms that did report.
  • As of the end of January 2019, the accumulated amount of the online P2P online loan industry was about 7.78 trillion yuan ($1.16 trillion). The total loan amount in January was 91.4 billion yuan ($13.61 billion), down 55.1 percent year-on-year and down 1.3 percent from the previous month.
  • Further consolidation of industry players is certain. Some experts quoted in media reports predict that the scale of future online loans will continue to shrink because of regulation.
  • Some listed companies, such as Aoma Electric and Panda Financial Companies, have abandoned their P2P businesses.
  • Aoma Electric issued a letter of concern to the Shenzhen Stock Exchange on February 14, attributing the decision to the broader economic slowdown, and a high number of overdue loans.
  • Panda Gold Control in 2018 was also dragged down by its P2P business, and expects a net loss of 41.16 million ($6.13 million) to 57.63 million yuan ($8.58  million) in 2018. Faced with the uncertainty of the P2P sector, Panda Gold Control chose to divest.

A Crypto Project That Raised $ 20 Million Is Caught Faking Its Founding Team (CoinDesk), Rated: A

Launched on Dec. 2, BHB claims to offer an ethereum-based solution for peer-to-peer lending, but by Jan. 18, local media reports were already accusing the project of operating an illegal pyramid scheme. Now, CoinDesk is able to reveal inconsistencies in the information provided about its founding team that further suggest something may be amiss at the China-based project.

However, the image of Bobby White used in BHB’s marketing materials is identical to that of an economics professor at China’s Tsinghua University named Alexander White. Meanwhile, the image of Gregory Moss is the same as one used by a philosophy professor at The Chinese University of Hong Kong, who is also named Gregory Moss.

Tencent-backed brokerage firm downsizes US IPO amid weak market demand (Technode), Rated: A

Tencent-backed online brokerage firm Futu Securities has set the terms for its US initial public offering (IPO) to raise up to $130 million, which will value the company at more than $1 billion. The company previously set its target at as high as $300 million when it filed for the US listing in December.

Chinese tech behemoth, Tencent, owns over 38% of the company, has shown interest in purchasing up to 25% of the new shares issued.

Australia

How should accountants talk to clients about fintechs? (In the Black), Rated: A

Like the ombudsman’s office, ASIC has also made information available to educate consumers and advisers, including on its MoneySmart Borrowing Basics and Peer-to-Peer Lending sites.

Is any flexibility possible, Shiel wonders, with a peer-to-peer lending model in which the borrower likely doesn’t know who is providing the funds?

India

LenDenClub crosses 1,00,000 borrowers and lenders milestone (News Barons), Rated: AAA

LenDenClub, one of India’s fastest growing peer-to-peer (P2P) lending platforms, recently crossed an important landmark with more than 1,00,000 borrowers and lenders on its platform. The breakdown of borrowers to lenders is 83,300 and 16700, respectively. The company crossed this milestone by keeping up with latest market trends, and saw an increase in the use of its product InstaMoney, which was launched in June 2018.

Why Do Fintech Startups and Investors See a Huge Potential in Lending? (Entrepreneur), Rated: AAA

Today, thanks to the ongoing digitization, borrowing has become as easy as it can get in India. For contrast, all it takes now is the touch of a few buttons, answers to a few verification-related questions, and anyone can receive a loan in a matter of hours or days, if not minutes. And all of this is without any collateral and while enjoying the comfort of your home. Now, compare this with taking a day off to go to the bank, doing extensive paperwork, visiting frequently to check the progress of your loan application, and ultimately, getting your application rejected because of the loan officer’s misjudgement. All while wasting two months of time in the constant to and fro and taking multiple days off from your office.

It is beyond doubt that the advent of fintech startups has altered the game of lending in India. It has become both simpler and convenient to borrow using their revolutionary approaches driven by state-of-the-art technologies. Currently, more than 1,500 fintech startups (of all shapes and sizes) are catering to the Indian market, and more than half of these startups have been launched over the last 3 years. This gives us a clear picture of how lucrative the sector is becoming for our startup ecosystem. But what is essentially fuelling this trend? Let’s find out.

Banning of UDS to benefit P2P Lending Industry (Inventiva), Rated: A

The latest ordinance of the Banning of Unregulated Deposits (UDS) 2019, was passed by the government to provide a comprehensive mechanism to ban UDS as well as to protect the interest of depositors. This is in line with the Reserve Bank of India’s guidelines on the NBFC-P2P sector, issued in October 2017 to regulate the unorganized lending business in the country.

Asia

Singapore fintech investments rose two-fold to US$ 365m in 2018 (SBR.com.sg), Rated: AAA

US$102.2m of the total funds raised went to lending fintech companies such as the homegrown Funding Societies.

Fintech investments in Singapore more than doubled to US$365m in 2018 from US$180m in 2017, putting the country amongst the top five fintech markets by funds raised last year in Asia Pacific, behind China, India, Australia and Japan, according to Accenture’s analysis of CB Insights data. The number of deals in the country rose to 71 from 61 in 2017, making it the third busiest market in the region, behind only China and India.

Source:

Validus Capital raises $ 15m for SME financing (Fintech Futures), Rated: A

Validus Capital, a Singapore-based SME financing platform, has raised SGD 20.5 million ($15.2 million) in a Series B funding round, led by FMO, a Dutch public-private development bank.

Latin America

PayPal expands its small business loans initiative to Mexico (Leaprate), Rated: AAA

Online payment giant PayPal launched its Working Capital initiative in 2013 as an alternative method for business to access working capital much faster than through traditional means. Many small and medium-sized business (SMB) clients embraced the program and since then the company has advanced more than $6 billion in loans to over 170,000 businesses in the UK, US, Germany and Australia.

PayPal also recently revealed that it has partnered with Konfio, a Mexican online lender that utilizes unconventional data sources to facilitate fast credit assessments, in a deal that will allow PayPal to extend its Business loan and working capital programs to Mexican businesses.

ID Finance eyes ‘pivotal moment’ for Latam fintech as revenue in region climbs 403% (Fintech Finance), Rated: A

ID Finance, the fintech company operating in Europe and Latin America, saw revenue of $49m in 2018. This represents growth of 236% for the business, which was formally separated from its operations in Russia and CIS region last year.

The company is enjoying particularly strong growth in Latam, one of the world’s fastest growing markets for fintech adoption thanks to high mobile penetration and a sizeable underbanked population – according to the World Bank 61% of Mexico’s population is excluded from the traditional banking system, while 40% of Brazil’s 207m population are blacklisted. The company now has 141 employees in Latam and saw revenue growth of 403% in the region last year.

Challenger bank N26 expands to Brazil (Fintech Futures), Rated: A

Germany-based mobile challenger bank N26 is powering on yet again as it has revealed its plans to expand to Brazil.

Africa

How FinTech Companies Inspire Africa With Mobile Technology (PYMNTS), Rated: AAA

With the potential for rapid growth and job creation, FinTech firms in Africa have caught the attention of global investors. According to the London Stock Exchange Group’s 2019 “Companies to Inspire Africa” report, which highlights these firms, the FinTech sector has the second highest growth rate representation of technology and telecoms as well as financial services. As it stands, companies in this space represent more than a quarter of 360 featured firms from 32 different countries. Pan-African payments firm Cellulant is among the companies that appeared in the first and second editions of the report.

Authors:

George Popescu
Allen Taylor

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

Thursday January 17 2019, Weekly News Digest

marketplace securitizations

News Comments Today’s main news: RateSetter surpasses 3B GBP in lending. SoFi Money bank-like offerings. LendingClub land on 2019 Bloomberg Gender-Equality Index. HeZhong International to list on Nasdaq. Robo.cash doubles investors in 2018. Kabbage to provide point-of-sale loans to Alibaba shoppers. Today’s main analysis: Marketplace lending securitization slowed in Q4 2018. Today’s thought-provoking articles: Consumer credit continues to grow. Loan default […]

The post Thursday January 17 2019, Weekly News Digest appeared first on Lending Times.

marketplace securitizations

News Comments

United States

United Kingdom

International

Other

News Summary

United States

SoFi Offering Bank Like Services, But it is Still Not a Bank (Crowdfund Insider), Rated: AAA

Today, SoFi is distributing more invites to their bank-like services – SoFi Money, a service announced last summer. SoFi is offering consumers the following:

  • No “freakin” fees, including annual, transactional, overdraft, or any other account fees.
  • Higher interest rates, a “whopping” 2.25% APY on your money.
  • Free ATM usage as SoFi will reimburse the fees.
  • Mobile first as your phone is your [bank] branch.
  • Secure – Accounts are FDIC insured up to $1.5 million.³

More MDs, fewer residents in SoFi’s next student loan securitization (Asset Securitization Report), Rated: A

Social Finance’s next student loan securitization features higher exposure to physicians, and fewer of them are still in a residency program, according to rating agency reports.

Borrowers with medical and dental degrees are considered to be good credits in part because they have some of best employment prospects. They account for 28.8% of borrowers in the pool of collateral who have medical degrees, up from 22% for SoFi’s previous student loan securitization, according to Moody’s Investors Service.

LendingClub Selected for 2019 Bloomberg Gender-Equality Index (LendingClub), Rated: AAA

LendingClub Corporation (NYSE: LC), today announced that it is one of 230 companies selected for the 2019 Bloomberg Gender-Equality Index (GEI), which distinguishes companies committed to transparency in gender reporting and advancing women’s equality. The index doubled in size from 2018 and includes firms from 10 sectors, headquartered across 36 countries and regions. Collectively, these firms have a combined market capitalization of USD 9 trillion and globally employ more than 15 million people, of which 7 million are women. Thirteen markets are represented for the first time this year, including Argentina, China, Israel, and South Africa.

Securitization in Marketplace Lending Slowed in Q4 2018 (Lend Academy), Rated: AAA

Issuance totaled $2.6 billion, which is the slowest pace of issuance in 5 quarters and was related to market volatility according to PeerIQ. Volume decreased 44% from the prior year period and dropped 25% quarter over quarter. Total issuance in 2018 was $15.3 billion and included newer issuers Upgrade and Enova. PeerIQ expects that Upgrade and Enova will continue to participate in the securitization market going forward. While Q4 represented a drop in deals, cumulative issuance still stands at $44.5 billion across 142 deals which is a significant amount.

Source: Bloomberg, PeerIQ

We should also point out that LendingClub sold more than $1 billion in CLUB certficates in 2018 which likely reduced their securitization volume in 2018.

Source: Lend Academy

Fed Affirms Flexibility on Rate Hikes (PeerIQ), Rated: AAA

Consumer credit continues to grow. The Fed reported that consumer credit outstanding grew at an annualized rate of 6.7% in November to $3.98 Tn. This is the third month out of the past four that consumer credit grew more than $20 Bn, for the first time in four years.

Source: Federal Reserve, PeerIQ

Experian: Loan Default Rates Rose In Dec (PYMNTS), Rated: AAA

According to the S&P/Experian Consumer Credit Default Indices, which the companies said in a press release represent a comprehensive measure of changes in consumer credit defaults, the composite rate rose six basis points from December to 0.89 percent. The bank card default rate rose 25 basis points to 3.34 percent, while the auto loan default rate jumped 10 basis points to 1.03 percent. The default rate on first mortgages was three basis points higher at 0.67 percent.

What’s more, S&P Dow Jones Indices and Experian said that all five of the metropolitan statistical areas showed a higher default rate in December of 2018. In Miami, it increased 41 basis points to 1.93 percent, while New York saw a 13 basis-point increase to 0.96 percent and the Chicago default rate was up four basis points to 0.88 percent. In Dallas, the default rate ticked up three basis points to 0.85 percent, while in Los Angeles it was up two basis points to 0.52 percent.

Source: PRNewsfoto/S&P Dow Jones Indices

Fiserv to acquire First Data for $ 22bn (Fintech Futures), Rated: A

A giant will roam the fintech land as Fiserv will acquire First Data in an all-stock transaction of $22 billion.

LendingTree Ranks Most Competitive Housing Markets (LendingTree), Rated: AAA

Key Findings:

Denver, Los Angeles, and Portland, Ore., have the most competitive buyers in the country. Buyers in these areas have higher than average credit and the ability to put down a larger down payment.

Birmingham, Ala., Virginia Beach, Va., and Pittsburgh have the least competitive buyers in the country.Living in a less competitive market can be beneficial for buyers as it means that the path to homeownership is less challenging than it is in other parts of the country. For example, in these three areas, only 43% of mortgage shoppers had prime credit, compared to an average of 49% across the 50 largest metros in the U.S.

Roostify Enables Digital Mortgage Solution for Glacier Bancorp (BusinessWire), Rated: A

Roostify today announced that Glacier Bancorp, Inc. has launched a digital mortgage solution powered by Roostify. Glacier Bancorp, Inc. is a regional bank holding company providing commercial banking services in 104 communities through 164 banking offices in Montana, Idaho, Colorado, Utah, Washington, Wyoming and Arizona. The company holds total assets of $11.9 billion and shareholder equity of $1.5 billion.

Joust launches a digital bank for gig-economy workers (American Banker), Rated: A

The fintech startup Joust is launching a mobile banking app Tuesday designed for the 56.7 million Americans who rely on freelance income.

The product comes with a bank account, a merchant account, and a way to get quick credit. Behind it is a network of community banks that will gather the deposits the app brings in.

Snoop Dogg Invests In Klarna, Sweden’s $ 2.5 Billion Unicorn (Forbes), Rated: A

Klarna, the Swedish financial technology giant valued at $2.5 billion last year, has a new addition to its shareholder register from the most unlikely source.

Millionaire American rapper Snoop Dogg, aka Calvin Broadus, has today become a minority shareholder in the company which offers buy-now-pay-later services at 100,000 retailers in Europe and across the U.S.

2019 business: 5 trends that will dominate 2019 (Business Report), Rated: A

1. Consumers demand data control:  a Deloitte report shows 71% of purchased data is … inaccurate.

2. Alternative lending will surge: It makes sense that non-bank lending will continue to grow, not only was 2018 a big year for the industry but, more importantly, 80% of small business loans are rejected.

6 Personal Loan Lenders That Accept Cosigners (Credible), Rated: A

Not all personal loan lenders allow you to add a cosigner to your physical or online application, but there are some that do. Here are six lenders that allow cosigners on their applications.

  1. Freedom Plus
  2. Laurel Road
  3. Lending Club
  4. Lightstream
  5. OneMain Financial

What happens to robos in a downturn? (Financial Planning), Rated: A

As stocks soared to record highs over the past decade, robo advisors amassed billions of dollars in investable assets. But now with the onset of ominous market indicators and volatility, advisors say they are worried about how automated investment platforms will perform during a major market downturn and what that might mean for their bottom lines.

“It is a wild unknown,” says Josh Pace, president of the custodian TCA by E-Trade.

SMB BANKING: THE NEXT WAVE OF INNOVATION (LendIt), Rated: A

Key findings address:
  • How the largest banks, regional banks and community banks differ in their approaches to blending hi-tech and hi-touch customer interactions
  • Who are emerging SMB-focused fintech companies and partnerships to watch
  • What banking functions and features are most sought after by SMBs
  • How mobile apps are being designed specifically with SMB customers in mind
  • Why big data and artificial intelligence are key to integrated financial dashboard and advisory applications
White Oak Healthcare Finance, LLC (“White Oak”) today announced it acted as sole lender and administrative agent on the funding of a senior credit facility for GMF Capital (“GMF”) and Meridian Senior Living (“Meridian”). The funds were used to acquire assisted living/skilled nursing facilities located near Providence, Rhode Island.

FundThrough Engages 919 Marketing to Fuel U.S. Expansion (PRWeb), Rated: B

FundThrough, North America’s fastest growing automated, tech enabled invoice factoring company and a power player in the fintech SMB (small and midsized businesses) working capital space, has engaged 919 Marketing, a leading national franchise marketing agency offering content marketing and public relations services to all companies (franchise or non-franchise), to generate consistent brand awareness and accelerate expansion in the U.S. markets.

Fed not an impediment to fintechs’ charter ambitions (American Banker), Rated: B

Comptroller of the Currency Joseph Otting on Wednesday downplayed concerns that applicants for the agency’s new fintech charter may face resistance from the Federal Reserve Board.

Some in the fintech industry are raising alarm that the Fed may balk at allowing holders of the new special-purpose charter into the payments system, which could reduce the overall value of the charter.

United Kingdom

RateSetter Milestone: Online Lender Surpasses £3 Billion in Lending (Crowdfund Insider), Rated: AAA

UK based peer-to-peer lender RateSetter announced on Tuesday it has surpassed £3 billion in online lending. RateSetter reported that the milestone follows a successful year, with the lender originating more than £700 million of new lending and active loans under management grew to £820 million.

RateSetter also revealed that more than 600,000 customers have used its lending platform to invest or borrow. To date, investors have lent £1.9 billion to individuals and £1.1 billion to businesses. A total of £2.2 billion has been repaid by borrowers, generating returns of £120 million for RateSetter investors, who have enjoyed an average annual interest rate of 4.4% per year since RateSetter’s launch in 2010.

Rapper Big Narstie named among celebrities joining Zopa hotline for a day (P2P Finance News), Rated: AAA

PEER-TO-PEER lender Zopa is making four celebrities honorary ‘Zopians’ for a day next week.

It has launched a “FeelGood Hotline” to banish the January blues that will be staffed by pop star and TV host Frankie Bridge, broadcaster Lauren Laverne and rapper Big Narstie (pictured) on 23 January.

Boxing icon Frank Bruno will also be on the hotline.

UK challenger bank Tandem eyes IPO (Fintech Futures), Rated: A

UK digital challenger bank Tandem has got its young beating heart set on an IPO within the next few years.

In a brief written and video update, it looks to the future and the past. For example, it cites its recent $15 million investment from Hong Kong for Asian market expansion plans.

Tide Collaborates With ClearBank to Transform UK SME Banking Market (Crowdfund Insider), Rated: B

Tide, a UK-based SME challenger banking, announced on Monday it has formed a new partnership with ClearBank to help transform the UK SME banking market.

Tide reported that through its support, ClearBank has applied for a grant from Pool A of the Capability and Innovation Fund that forms part of the £775 million RBS Alternative Remedies Package, a government-backed competition. 

A quarter of UK consumers will have a neobank account within five years (Business Insider), Rated: A

Currently, 9% of Brits, equating to 4.5 million people, have opened an account with a digital-only bank, according to the study. By 2024, a further 16% of the population, or 8.5 million people, intend to do the same.

Source: Business Insider

ARBUTHNOT COMMERCIAL ASSET BASED LENDING LTD. SUPPORTS MBO OF PLUMBWORLD WITH £3.5M STOCK ONLY FACILITY (Arbuthnot Latham), Rated: A

Arbuthnot Commercial Asset Based Lending Ltd. (Arbuthnot Commercial ABL) is pleased to announce the completion of a bespoke £3.5m transaction to support the management buy-out of Online Home Retail Limited (trading as www.plumbworld.co.uk), one of the UK’s leading e-commerce retailer of bathroom related products, from Grafton Group PLC, an international distributor of building materials.

BBVA name dropped in Atom Bank takeover talks (Fintech Futures), Rated: B

BBVA is one of the names coming up in a potential takeover of the UK digital challenger Atom Bank.

Sky News has learnt that Atom is in talks to appoint Citi to advise its board on options for the business.

Accountants Look Out (Fintech Finance), Rated: B

Two thirds (66%) of accountants surveyed said that they do recommend external finance providers to their clients. Whilst these recommendations will be based on the need of any given business, they also indicated their preferred source of funding. Half (50.8%) indicated that they would recommend their clients speak with a bank about their finance needs. Interestingly, more than a third (36.3%) are recommending an invoice finance provider ahead of a business loan provider (33.66%).

China

HeZhong International, Chinese P2P Lender, Seeks $ 5.8 Million Nasdaq Listing (Capital Watch), Rated: AAA

The Shenzhen company hopes to raise up to $5.8 million in New York under the symbol “HZ,” according to its prospectus filed with the U.S. Securities and Exchange Commission.

On its online platform, HeZhong matches borrowers and investors, facilitating mostly consumer loans ranging from $437 to $2,200. It also issues car loans in the amounts ranging between $2,900 and $29,200.

HeZhong IPO: Tempting But Risky With 3,330% Revenue Growth (Seeking Alpha), Rated: A

  • Based in Shenzhen, China, HeZhong offers an online peer-to-peer lending marketplace, providing consumer and automobile loans to the Chinese borrowers and risk-adjusted returns to the investors.
  • Certain investors will believe that the interest rates seem quite appealing. Annual interest rates are between 8% and 15%, and usual tenures are from 7 days to 360 days.
  • The year 2018 was also great in terms of profitability. The company went from reporting losses from operations of -$1.1 million to report operating profit of $5.6 million.
European Union

Robo.cash doubles new investors in 2018 (P2P Finance News), Rated: AAA

LATVIAN peer-to-peer lending platform Robo.cash has reported that it doubled its investor base in 2018 as it expanded its product range and scaled up its lending.

The P2P payday lender said the total volume of investments on its platform hit €5m (£4.45m) after a strong year, representing 93 per cent growth. Meanwhile, it attracted 3,200 new investors, twice the number in 2017, with the majority coming from Germany.

Investment in European Companies Remains Steady but Deal Flow Dives (Crowdfund Insider), Rated: A

Dow Jones has published their Q4 VentureSource report today and while investment in European companies “held steady” deal flow dropped.

The report indicates that the number of deals in Q4 stood at 729. In comparison to the prior quarter, it dipped slightly from 738. When you compare year over year quarters the discrepancy is greater as Q4 2017 delivered 865 separate deals.

In total amount raised, Q4 2018 came in at € 5.19 billion. This is a decline from Q3 at €4.98 billion. But year over year the amount was down as well as Q4 2017 saw € 5.6 billion raised.

Better systems can aid business of giving money to tackle poverty (Breaking News), Rated: A

On a visit to Ethiopia last week, the Taoiseach chose to visit one of the most impoverished areas of the world and witness, first hand, profound poverty.

While there, he was introduced to a woman who had bought four potentially life-saving sheep with a micro-loan provided by Irish Aid.

Irish Aid is operated by the Department of Foreign Affairs. It is, effectively, managed on behalf of us citizens.

International

Kabbage to provide point-of-sale loans to Alibaba shoppers (American Banker), Rated: AAA

Kabbage, an online lender to small businesses, is now providing point-of-sale loans to small businesses that buy things on Alibaba’s online shopping site, the two companies announced Monday.

Under the program, which is called Pay Later, small-business owners can get credit lines of up to $150,000 for their orders on the site.

White Oak Global Advisors Surpasses $ 2.5 Billion of Loan Originations (AP News), Rated: A

White Oak Global Advisors, LLC (“White Oak”), today announced it funded over $2.5 billion in loans in 2018.

Klarna links up with Daniel Wellington to allow shoppers to slice their purchase and pay over time (Klarna), Rated: B

Today, global payments provider, Klarna announced a new collaboration with Daniel Wellington, maker of classic and timeless watches. Loyal shoppers of Daniel Wellington will now benefit from Klarna’s newest payment option, which allows customers to pay for their watches and accessories in 4 equal interest-free installments collected bi-weekly from the shopper’s chosen debit or credit card.

India

Blockchain, AI providing traction to India’s crowdfunding platforms (Financial Express), Rated: AAA

Although crowdfunding in India is at a nascent stage, with only 15 notable crowdfunding platforms (CFPs), the concept holds immense potential for the country’s startup ecosystem.

A World Bank report states crowdfunding has emerged as a multi-billion dollar global industry, and is expected have a volume of $300 billion by 2030.

Authors:

George Popescu
Allen Taylor

The post Thursday January 17 2019, Weekly News Digest appeared first on Lending Times.

The Rise of Marketplace Lending Securitization

Cumulative MPL securitizations

With the evolution of digital banking and mobile-commerce, marketplace lending (MPL) has entered a new growth phase. If compared on the basis of loan volume, the U.S. is said to have one of the biggest P2P lending markets in the world (second only to China). According to a report by PwC, the size of the […]

The post The Rise of Marketplace Lending Securitization appeared first on Lending Times.

Cumulative MPL securitizations

With the evolution of digital banking and mobile-commerce, marketplace lending (MPL) has entered a new growth phase. If compared on the basis of loan volume, the U.S. is said to have one of the biggest P2P lending markets in the world (second only to China). According to a report by PwC, the size of the U.S. MPL market is expected to touch almost $1 trillion by 2030. The industry has already crossed $50 billion in originations for 2018, and such numbers have obviously attracted institutional capital to the sector. Financial institutions have been structuring their MPL investments in multiple ways, but, by far, the most important for the growth of the industry is securitization.

The Nascent Stage of Marketplace Lending Securitization

Securitization, in layman language, refers to the selling of illiquid loans by converting them into marketable securities via a process of bundling thousands of small loans into one single security. The buyers of the securities earn returns when people pay back their loans. Securitization provides the twin benefits of increased market liquidity because of easy buying and selling and lower cost to the borrower as the risk of holding (and managing) a small loan gets consolidated.

As per the U.S. Department of Treasury, P2P loan securitization has emerged as a prime funding avenue in the U.S., capturing investment of around $13 billion in 2017. The trend started when Eaglewood Capital Management undertook the first P2P loan securitization in 2013. The transaction was worth $53 million in value. The deal involved securitizing unsecured consumer loans originated by Lending Club.

The securitization of loans helps to tap a new market that may not be available otherwise. In the Eaglewood securitization deal, the final buyer was an insurance company that was not able to directly invest in Lending Club loans. But the securitization deal allowed the insurance company to fund the P2P loans. In 2014, Eaglewood announced yet another round of securitizations worth $75 million.

Along with institutional involvement, the participation of rating agencies in P2P securitizations has also gained momentum. For instance, Blackrock’s securitization of $327 million in Prosper loans was rated by Moody’s and it became the first rated MPL securitization in history. The first quarter of 2017 saw all securitization deals being rated by the rating agencies. Another Prosper loan (Prosper’s PMIT 2017-1) was rated by Fitch, which represents the growing acceptance of P2P securitizations across such agencies. With rating agencies entering the market, even the skeptical institutional investors should not be far behind.

The Growth of MPL Securitization

The increasing securitization of loans is seen as a shift in the P2P loan market as they fight the traditional banking industry for the multi-trillion dollar lending market. This will help the MPL industry go mainstream in its aim to raise funding, and will also deepen the market. Even more importantly, it will bring an additional level of oversight for young lending startups.

Large institutional investors and Wall Street are actively observing the developments in the sector and simultaneously undertaking their research. This signals a strong future of institutional participation in the industry. In the end, if MPL players are able to deliver the promised returns over an extended period of time, fixed income investors will be forced to invest in MPL securities in search for higher yields.

Deal Book

SoFi, the student loan giant, securitized a total of $727 million in loans by issuing SoFi Consumer Loan Program notes in November 2017. The transaction was recorded as the largest offering by an MPL company to date. The company claimed to be one of the U.S.’s biggest sponsors of ABS, completing deals worth $6.5 billion over the past year.

A total of seven deals worth $4.3 billion were finalized in the first quarter of 2018. The total volume indicated an increase of 34% year-on-year against the total volume in the first quarter of 2017. Out of the total issuance, student loan deals accounted for $2.1 billion. SoFi ,who had issued $1.8 billion in just two deals, led the student loan segment.

Average Deal Size Over Time

The Q3 2018 Securitization Report by PeerIQ confirms the growth trend. There were eight MPL securitizations this quarter worth a total of $3.5 billion. The industry has seen a cumulative $40 billion over 134 deals. All deals were rated, and rating agencies seem to be warming up to the sector with 119 upgrades as compared to just 12 downgrades. Wall Street has (as usual) joined the party with Citigroup, Deutsche Bank, and Credit Suisse dominating the issuance league with a combined 57% market share.

Conclusion

The Asset Backed Securities market is backing the MPL industry and record issuances with tightening spreads, and dropping yields are an important testimony to the fact. Investors are voting with their wallets, and they like what they are getting with the burgeoning MPL industry. But the Fed has started with its rate-tightening cycle, and the first wave of defaults will sooner or later hit marketplace lenders. This will help in determining the actual depth in the MPL market and how much the industry has matured.

Author:

Written by Heena Dhir.

The post The Rise of Marketplace Lending Securitization appeared first on Lending Times.

Wednesday April 18 2018, Daily News Digest

Wednesday April 18 2018, Daily News Digest

News Comments Today’s main news: Elevate, Mastercard collaborate on credit card for the New Middle Class. Funding Circle opens IFISA to new investors. Ant Financial’s $150B valuation. Funding Societies raises $25M. Today’s main analysis: Marketplace lending securitization tracker Q1 2018 (A MUST-READ). Why PPDAI is a buy. Today’s thought-provoking articles: Interview with Kabbage’s CEO. Cities with highest share of cash-out […]

Wednesday April 18 2018, Daily News Digest

News Comments

United States

United Kingdom

China

European Union

Other

News Summary

United States

Elevate to Collaborate with Mastercard on Credit Card Product for the ‘New Middle Class’ (News Channel 10) Rated: AAA

Elevate Credit, Inc. (“Elevate”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced an agreement to collaborate with Mastercard on the development of a new credit product to expand financial opportunities for the approximately 160 million Americans with low or no credit scores.

Elevate is committed to advancing growth and economic opportunity for these households that it has dubbed the “New Middle Class.”

Marketplace Lending Securitization Tracker Q1 2018 (PeerIQ), Rated: AAA

Seven marketplace lending securitizations priced this quarter totaling $4.3 Bn, the 2nd highest level of quarterly issuance, representing 34% growth YoY. To date, cumulative issuance equals $33.4 Bn across 114 deals.

We observed an unprecedented 21 months of non-stop issuance. Markets remain in a “risk-on” mode and MPL investor appetite continues to grow.

Spreads tightened this quarter, amidst rising rates and increased
volatility, and we saw deals price at record tights. Average spreads at
issuance are tighter in the consumer and student spaces across credit tranches. New issue spreads in the Consumer MPL space on As were tighter by 27 bps and those on Cs were tighter by 107 bps on average. New issue spreads in the Student MPL space were also tighter across the stack, with the Cs seeing a nearly 100bp tightening on average.

SoFi issued the largest consumer and student deals ever seen in the MPL space. SoFi continues to increase deal sizes every quarter with a billion-dollar student deal in 1Q18.

View the full report here.

Inside a Kabbagehead (Banking Exchange) Rated: AAA

Frohwein noted that there are multiple ways that companies can fail when trying to expand their offerings.

1. Trying too long a stretch.

By way of example, Frohwein pointed out that Prosper Marketplace, which offers three- or five-year personal and business loans, tried an expansion in 2016 called Prosper Daily.

2. Cheaping out on brand promotion.

Another error is failing to spend money on the company’s brand. Interestingly, given that the fintech fraternity is a crowd attuned to social media, Frohwein urged listeners to invest real money in their brands. (@KabbageInc, the corporate Twitter handle, has 23,400 followers, while @KabbageRob, Frohwein’s own account, has fewer than 2,000 followers.)

3. Developing customer knowledge.

Frohwein said that all those data connections referred to earlier give Kabbage a strong idea of what its customers look like. Few online lenders have that depth of customer knowledge, he said.

 

How JPMorgan’s CIO decides which startups to partner with, invest in, to buy (Business Insider) Rated: A

Here’s Beer:

“In some cases, we saw in the fintech ecosystem that one of their challenges is the size, scale and complexity of a company like JPMorgan Chase. If you’re trying to build out something in the wholesale payment ecosystem, you’re talking about 200 regulators, $5 trillion dollars we process a day, over 120 currencies and countries. There are multiple layers of complexities considering anti-money laundering rules, fraud requirements and new sanctions. How do you understand that complexity if I’m a startup in the payment space in wholesale?”

These companies could later wind up with an investment from JPMorgan if all goes well.

Here’s why banks need to prioritize digital platforms (Business Insider) Rated: A

With bank earnings season upon us we have seen a continued growth among mobile users at some of the biggest banks; JPMorgan Chase saw active mobile customers jump 13 percent and Wells Fargo saw total active digital users jump 3 percent; mobile banking has become a priority for all banks as the focus has shifted from just offering mobile to increasing engagement on mobile.

99,000 Investors and $ 5.8B in Commercial Properties Now on CrowdStreet (PR Newswire) Rated: A

With a steady focus and at an accelerated pace, CrowdStreet is moving the fundraising component of the $15-trillion commercial and multifamily real estate business online, helping real estate developers and operators raise capital and acquire new investors online, and helping high-net-worth investors build wealth through online real estate investing.

With more than 99,000 investors now on its platform, CrowdStreet is one of the largest platforms for online real estate investing.

LendUp and Nonprofit EARN Launch Cross-Sector Partnership to Combat America’s Savings Crisis (Lendup) Rated: A

LendUp, a fast-growing financial services firm for the emerging middle class, and EARN, a national nonprofit empowering low-income Americans to take charge of their financial lives through savings, today announced a partnership to offer LendUp customers, who represent the nearly half of Americans with subprime credit scores, the opportunity to begin saving with EARN’s SaverLife program.

LendingTree Ranks Cities With the Highest Share of Cash-Out Refinance Borrowers (Lending Tree) Rated: AAA

LendingTree analyzed mortgage requests and offers for refinance borrowers between March 1, 2017 and March 1, 2018, based on the location of the property to be mortgaged. The city rankings are generated from the percentage of total refinance mortgage funded that included a cash-out portion of the loan.

Cities with the highest share of cash-out borrowers

#1 Albany, N.Y.

Share of refinance mortgages funded with cash-out portion: 73% Average loan amount: $166,504

#2 Portland, Ore.

Share of refinance mortgages funded with cash-out portion: 72% Average loan amount: $266,152

#3 Cape Coral, Fla.

Share of refinance mortgages funded with cash-out portion: 72% Average loan amount: $162,975

Source: Lending Tree

What You Need to Know About Peerform Peer Lending Loans (Student Loan Hero) Rated: A

With Peerform, an affiliate company of Versara Lending, you can apply for personal loans via an online platform that connects you with individuals or businesses willing to loan you the money.

You can then use the cash to make home improvements, start a business, buy a new car, or consolidate your credit card debt.

The peer lending company offers unsecured, fixed-rate loans to people with a range of credit scores. Read on to learn the pros and cons of borrowing from Peerform.

 

This fintech partnership could serve as template for small banks (American Banker) Rated: A

New Resource Bank in San Francisco is working with a fintech firm to reach underserved small-business clients.

The $349 million-asset company has been offering asset-based loans to companies with at least $1 million in annual revenue through a partnership with P2Binvestor in Denver, known as P2Bi, since late 2017.

Family Offices: Beware of These Startup Investing Pitfalls (Wealth Mangement) Rated: A

According to PitchBook Data, family offices did $100.6 billion in deals in 2016, compared with $25.1 billion in 2011. These family offices are seeking opportunities that offer better returns than the public market and, therefore, investing in startup companies through longer-term private equity deals.

What Family Offices Get Wrong When They Try to Invest in Startups Alone

In emerging markets, family offices can face a number of challenges when they try to invest in startups.

Most family offices don’t possess specialized knowledge of startups, because the startup ecosystems in emerging markets are very different from the traditional business climate that family offices are used to. Because of limited experience and exposure, they may not always have a comprehensive list of questions or resources at their disposal that would aid them in the decision-making process or to evaluate a deal.

Best Oregon Mortgage Lenders of 2018 (Nerd Wallet) Rated: B

United Kingdom

Funding Circle opens IFISA to new investors (Peer2Peer Finance) Rated: AAA

FUNDING Circle has opened its Innovative Finance ISA (IFISA) to new investors.

The peer-to-peer business lending platform opened its IFISA to existing users last November but has now said that the tax wrapper, offering projected returns of 7.2 per cent, is open to the wider public.

Mid-sized P2P platforms taking bigger market share (Peer2Peer Finance) Rated: AAA

The peer-to-peer investor’s 2018 Direct Lending Report found direct lenders – which include P2P platforms – facilitated more than £4.5bn of lending in 2017, with the ‘big four’ – Zopa, Funding Circle, RateSetter and LendInvest – making up two thirds.

But loanbook growth at the biggest lenders was up just six per cent last year, while mid-sized lenders saw their lending grow 50 per cent to £1.6bn, according to the report.

The report also looked at the performance of P2P and alternative finance-focused investment trusts, finding that if you had invested the same amount in the main funds – P2P Global Investment, Ranger Direct Lending, VPC Specialty Lending, SQN Secured Income Fund and Honeycomb – last year, you would be down 1.69 per cent.

P2P Lender ArchOver Bridges Finance Gap with New Research & Development Advance (Crowdfud Insider) Rated: A

ArchOver, the UK P2P business lending platform, aims to bridge the funding gap to enable businesses to continue to grow while waiting for their R&D tax claim to be repaid. ArchOver’s Research & Development Advance (RDA) service is reportedly the first provided by a P2P lender funding advances upward of £100,000.

According to ArchOver, only 1.67 percent of national income is currently being spent on R&D compared to an average of over 2 percent across the EU. Government initiatives have been put in place to encourage further investment in innovation in the UK. Under the current system, UK businesses can claim cash repayments of up to 33 percent of their R&D expenditure, but it can take up to six months to receive payment from HM Revenue & Customs (HMRC). ArchOver aims to help qualifying companies to bridge this gap, and connect them with the money they need to invest in the products and services of the future.

 

Update: Landbay is Set to Close Latest Seedrs Funding Round After Securing More Than £1.6 Million (Crowdfund Insider) Rated: A

UK-based peer-to-peer lender Landbay is set to close its latest equity crowdfunding campaign on Seedrs later this evening with more than £1.6 million from nearly 285 investors. The funding round was launched last month and quickly secured its initial £1.25 million funding target.

All funds from the latest funding round will be used for lender’s growth, which are:

  • Technology – 50%.
  • Marketing & Brand Development – 25%.
  • General Operating Expenses – 25%.

 

More awareness of Open Banking benefits needed (London School of Business and Finance) Rated: A

The study surveyed 2,000 UK consumers and identified some of the barriers that Open Banking will need to address in order for the initiative to be adopted on a wide scale.

Implications

Security was found to be one of the main issues for UK consumers, with 69% citing this as a top reason for being against the idea of Open Banking, whilst more than 45% cited security issues such as data breaches and identity theft as the main implications of the initiative.

Seedrs: £500 Million in Crowdfunding by 2021 (Crowdfund Insider) Rated: A

Seedrs has raised more than £330 million for smaller firms so far but according to CEO Jeff Kelisky they expect growth to ramp up rapidly by 2021. While 2017 was their best year ever, Seedrs is just getting started.

He expects that before 2020 deals will get larger. In 2017, twenty four crowdfunding offerings were over £1 million. Some of these deals are starting to approach the € 5 million hurdle. In the UK, the European directive on doing a prospectus at € 5 million has become a regulatory speed bump of sorts for crowdfunding platforms. But raising that limit to € 10 million, or perhaps € 20 million, is currently under discussion.

Two tribes: fintech versus traditional banking (CLNews) Rated: A

Quietly though, another part of Britain’s finance sector is leading the world and it’s starting to disrupt the traditional financial companies in the UK.

Fintech describes the marriage of finance and technology within one company. The first big growth sector in fintech was the peer to peer marketplace originally launched by Zopa in the UK. Peer to peer finance allows those who have savings who want a better return than they’d get from their bank in interest the opportunity to lend money to those who need quick access to money.

 

China

Ant Financial’s $ 150bn valuation belies glaring risks for investors (Financial Times) Rated: AAA

Ant Financial’s $150bn valuation belies glaring risks for investors. Alibaba founder Jack Ma and his trusty advisers have pulled off a coup in gaining a $150bn valuation for Ant Financial ahead of a mooted listing next year. It is easy to see how the pitch to investors went.

Chinese P2P Players Yirendai And Hexindai On Making It In China’s Lending Industry (Forbes) Rated: AAA

Yihan Fang: The P2P lending industry is in a different stage now, it went from being very wild to heavy regulation, and after that it will be a more rational industry. Yirendai is in compliance with regulations, implementing minor modifications along the way. Compliance was always the highest priority, and from day one we had a very good business model and didn’t change it along the way. We have high quality customers. We have a good business platform and have used a bank as custodian since 2015, even before the regulations came out. Yirendai also strives for transparency. Regulations are good, because the industry has been quite chaotic since other companies don’t do the same things as we did.

Johnson Zhang: Hexindai has had no negative impact of regulation. The new regulations are focused on petty loans. We don’t touch the petty loans market so we have no impact. In this market, all of the borrowers lack the capacity to repay loans, they just borrow more money to repay existing loans. Unlike these other firms, we offer loans in the range of 20,000 to 200,000 RMB to middle class consumers with a stable income. These are borrowers who are upgrading their social class for a better life. The second part of the regulations restricts financial institutions like banks from providing funds to fintech companies, but we do not rely on any financial institutions. All of our fund sourcing is from individuals. Our company is part of the Beijing Internet Finance Association, which alerts us to upcoming regulations. The China Banking Regulatory Commission governs the P2P industry. Government registration for P2P companies is mandatory this year. Those that fail the process will be shut down. The number of competitors will become smaller.

China Looks to Implement Credit Scoring System Without Giving Top Players too Much Power (Financial Times) Rated: A

China has been looking to create a credit scoring system seen in many developed economies like the U.S. and the U.K.; initially asking 8 top companies to be involved, though they found it hard to form as companies were unwilling to share proprietary data with competitors; the PBoC is now tasked with having a industry wide system that does not favor giants like Alibaba and Tencent.

PPDAI Group: China’s ‘Lending Club’ Is In A Buy Range Now (Seeking Alpha) Rated: AAA

  • Net loss was RMB 507.1 million (US$77.90 million) for the fourth quarter of 2017, compared with a profit of RMB 266.0 million in the same period of 2016. More specifically, the loss was due to:
    • Net interest income/(expense) and loan provision losses for the fourth quarter of 2017 was an expense of RMB 13.2 million (US$2.0 million), compared to an income of RMB 3.6 million in the same period of 2016. This was primarily due to a one-time provision of RMB 107.7 million (US$16.3 million) for expected discretionary payments to investors in investment programs protected by the investor reserve funds caused by the increase in delinquency rates.
    • Other income recorded a loss of RMB 694.8 million (US$106.8 million)for the fourth quarter of 2017, compared with income of RMB 124.7 million in the same period of 2016. The loss was caused mainly by an expense of RMB 271.9 million (US$41.8 million) related to the quality assurance fund and an expense of RMB 460.4 million (US$70.8 million) from a fair value change of financial guarantee derivatives due to increased credit risks across the industry which led to upward adjustments to the company’s expected default rate for loans protected by the quality assurance fund and underlying loans in investment programs protected by the investor reserve funds.
Source: Seeking Alpha

Indeed, when we look at the delinquency rate by balance at each quarter, there was a significant jump in every delinquency bucket at 2017 Q4:

As of 15-29 days 30-59 days 60-89 days 90-119 days 120-149 days 150-179 days
March 31, 2015 0.79% 1.75% 1.10% 1.01% 0.87% 0.67%
June 30, 2015 0.88% 1.06% 0.67% 0.54% 0.89% 0.67%
September 30, 2015 0.67% 0.89% 0.61% 0.54% 0.44% 0.35%
December 31, 2015 0.80% 0.93% 0.51% 0.49% 0.39% 0.32%
March 31, 2016 0.62% 0.93% 0.72% 0.61% 0.48% 0.32%
June 30, 2016 0.82% 1.01% 0.63% 0.43% 0.47% 0.44%
September 30, 2016 0.83% 1.11% 0.80% 0.63% 0.49% 0.39%
December 31, 2016 0.63% 0.91% 0.75% 0.79% 0.69% 0.57%
March 31, 2017 0.57% 0.95% 0.79% 0.59% 0.54% 0.51%
June 30, 2017 0.86% 1.11% 0.79% 0.51% 0.55% 0.52%
September 30, 2017 0.89% 1.40% 1.15% 1.02% 0.79% 0.60%
December 31, 2017 2.27% 2.21% 1.72% 1.63% 1.36% 1.20%
 Source: PPDF’s Q4 ER release
European Union

Homelend ICO (HMD Token): Blockchain Mortgage Crowdfunding? (Bitcoin Exchange Guide) Rated: A

Homelend is a mortgage crowdfunding platform built on blockchain technology.

What is Homelend?

Yes, just like we have P2P lending platforms for smaller loans and offers, we now have lending platforms for larger loans – like home mortgages.

The goal of Homelend is to disrupt the $31 trillion global real estate lending market. As of April 2018, Homelend is still preparing to launch. They’ve published a whitepaper online and appear to be preparing for a token sale in the near future.

Spotcap Opens Fintech Fellowship Applications (Crowdfund Insider) Rated: B

Spotcap, an SME focused online lender based in Berlin, announced on Tuesday it has opened applications for its Fintech Fellowship. According to the lending platform, this program offers a £8,000 award to a postgraduate student studying a fintech related course at a UK university. Applications will be open for four months and close on August 1st.

International

HOLD ICO: Cryptocurrency Lending & Investing For Instant Cash? (Bitcoin Exchange Guide) Rated: A

HOLD provides members with unique P2P lending and borrowing capabilities. The platform allows users to leverage their existing cryptocurrency holdings for instant cash advances from other willing users. Through their mobile app and prepaid card, they enable online and offline purchases with over 45 million retailers worldwide and over 3 million ATMs.

BitcoinEthereum, and Litecoin can be used as collateral for cash advances at a competitive rate of 8%, not requiring a good credit history and without geographic restrictions.

HOLD cardholders earn HOLD tokens every time they use their card. On almost all purchases, the HOLD platform will provide a 1% cashback in HOLD tokens, directly into the user’s wallet. The platform will progressively match provided liquidity with cash advances, producing lucrative and low-risk returns of up to 7.5% p.a. for lenders, representing a lucrative money-making opportunity.

Australia

 

Mortgage trust sector has nearly doubled over the past year (Australian Financial Review) Rated: AAA

The size of the mortgage trust sector has nearly doubled over the past year but the quality of underlying loans are healthy with low arrears, research group SQM Research says.

Source: SQM Research

Australian millennials have taken to robo financial advice (Business Insider) Rated: B

In Australia, robo-advice has gained significant recognition among the Australian online share investor population, with 22% saying they are familiar with these services.

Only in the US, where the bulk of innovation in robo-advice is taking place, is familiarity with robo-advice significantly higher (39%).

India

Mumbai-based P2P Lending Platform PaisaDukan Raises $ 650K Through Angel Funding Route (Indian Web2) Rated: A

PaisaDukan.com a P2P Lending marketplace solely owned by Mumbai based FinTech start-up BigWin Infotech, today announced a secured seed funding of USD 650K through Angel funding rout. The fund will be used for marketplace platform and mobile app development.

 

Asia

Homegrown P2P lending platform Funding Societies raised US$ 25m (Singapore Business Review) Rated: AAA

Peer-to-peer (P2P) lending platform Funding Societies has raised US$25m in its oversubscribed Series B funding round, which was led by Softbank Ventures Korea, along with Sequoia India, Alpha JWC Ventures (Indonesia), and Golden Gate Ventures. Qualgro and LINE Ventures also participated.

Its Series B funding round was led by Softbank Ventures Korea and Sequoia India.

Ex-law firm boss fined $ 10,000 for failing to report suspicious deal (The Strait Times) Rated: A

The former director of a Singapore law firm decided to find out more about a “high net worth client” who was buying a house in Sentosa Cove – and discovered she was linked to one of China’s biggest Ponzi schemes involving $10.8 billion.

Kang Bee Leng, 56, failed to notify the authorities that a sum of almost $5.5 million involved in the purchase could have been benefits of criminal activities.

Kang, who was a managing director of Sterling Law Corporation during the offence but has since left the firm, was fined $10,000 on Tuesday (April 17) after pleading guilty to the offence last month.

MENA

Why unbanked Egypt is ripe for a FinTech revolution (ZDNet) Rated: A

World Bank data reveals that the Middle East has the lowest level of bank-account penetration in the world, averaging 14 percent of adults, in line with the in-country figure for Egypt.

Authors:

George Popescu
Allen Taylor

Monday February 12 2018, Daily News Digest

credit immigrants

News Comments Today’s main news: SoFi loan performance suffers, earnings projections missed. Ant Financial to pursue equity fundraising at potential $100B valuation. Elevate publishes FY 2017 results. Symphony, OpenFin join forces. Openwrks, Zopa, TrueLayer get into open banking. Rupeek raises $6.8M. Today’s main analysis: MPL securitizations comparison (SoFi 2018-A, MFT 2018-1, SCLP 2018-1). Today’s thought-provoking articles: Silicon Valley investors fund […]

credit immigrants

News Comments

United States

United Kingdom

China

Australia

India

APAC

News Summary

United States

SoFi Reports Disappointing Earnings as Loan Performance Suffers (WSJ), Rated: AAA

Customers of online lender Social Finance Inc. are missing their loan payments at an unexpectedly high rate, a misstep for a company that has boasted that its focus on high-earning individuals would yield better borrowers.

The privately held San Francisco-based company said it missed its internal fourth-quarter earnings projections, due in part to a markdown in the “value of certain personal loan assets due to lower-than-expected credit performance,” according to a letter to investors that was reviewed by The Wall Street Journal. The company also cited increased hiring costs and expenses related to recent management changes.

You won’t believe how much grads from these top business schools rake in (Moneyish), Rated: A

SoFi examined 60,000 student loan refinancing applications to determine which MBA programs churn out the highest earners, and which produce grads who are mired in student debt.

According to SoFi, these are the top 10 business schools, ranked by average salary three years after graduation:

1. University of Pennsylvania (Wharton School of Business): $224,034
2. Columbia University: $189,295
3. Stanford University: $186,534
4. Harvard University: $184,463
5. University of California, Berkeley: $171,270
6. Dartmouth College: $169,498
7. Northwestern University: $167,770
8. Cornell University: $167,544
9. University of Chicago: $166,215
10. Massachusetts Institute of Technology: $165,666

These 10 programs have the best salary-to-debt ratio in the US:

1. University of Wisconsin-Madison: Avg. salary = $122,532; avg. debt = $52,568
2. Brigham Young University: Avg. salary = $114,559; avg. debt = $50,224
3. Harvard University: Avg. salary = $184,463; avg. debt = $83,337
4. Stanford University: Avg. salary = $186,534; avg. debt = $85,443
5. Villanova University: Avg. salary = $136,464; avg. debt = $63,014
6. University of Pittsburgh: Avg. salary = $149,157; avg. debt = $71,471
7. Loyola University, Maryland: Avg. salary = $122,915; avg. debt = $59,029
8. North Carolina State University: Avg. salary = $92,184; avg. debt = $46,140
9. University of Florida: Avg. salary = $110,942; avg. debt = $56,035
10. University of Houston: Avg. salary = $105,476; avg. debt = $54,308

Elevate Announces Full Year 2017 Results (Crowdfund Insider), Rated: AAA

Elevate’s  Fourth Quarter 2017 Financial Highlights are the following:
  • Fourth quarter GAAP net loss due to federal tax law charge, but fourth consecutive quarter of net income on an adjusted basis: Fourth quarter 2017 net loss totaled $12.2 million, or $(0.29) per diluted share, reflecting a one-time $12.5 million charge associated with the change in the federal tax law resulting from the tax reform in 2017. Excluding the impact from the tax law change, net income for the fourth quarter of 2017 would have been $0.3 million, or $0.01 per diluted share, versus a net loss of $4.4 million, or $(0.34) per diluted share, for the fourth quarter of 2016. The net loss for full-year 2017 totaled $6.9 million, or $(0.20) per diluted share. Excluding the impact of the federal tax law, net income for full year 2017 would have been $5.5 million, or $0.16 per diluted share, compared to a net loss of $22.4 million, or $(1.74) per diluted share, for full-year 2016.
  • 16% year-over-year revenue growth: Revenues for the fourth quarter of 2017 increased 14.5% from the fourth quarter of 2016 and were up 16.0% for full-year 2017 versus 2016. Revenues totaled $193.4 million in the fourth quarter of 2017 compared to $169.0 million for the prior-year period. Full-year 2017 revenues totaled $673.1 million compared to $580.4 million for full-year 2016.
  • More than 28% year-over-year growth in combined loans receivable – principal: Combined loans receivable – principal totaled $618.4 million, a 28.5% increase from $481.2 million for the prior-year period. The Rise installment loan and Elastic line of credit combined loans receivable – principal balances as of December 31, 2017 were up 19.6% and 47.4% over the prior year-end balances, respectively.
  • Adjusted EBITDA up 45% compared to prior year: 2017 Adjusted EBITDA totaled $87.5 million, up 44.7% from $60.4 million in 2016. Adjusted EBITDA margin was 13% for both the fourth quarter of 2017 and full-year 2017.
  • The ending combined loan loss reserve as a percentage of combined loans receivable was 14.3%, lower than the 16.1% reported for the prior-year period due to the improved credit quality and the continued maturation of the loan portfolio. Charge-offs as a percentage of originations for full-year 2017 continued to trend below previous years at less than 25% of principal originations.
  • The total number of new customers acquired during the fourth quarter of 2017 was approximately 95,000 with an average customer acquisition cost of $231, below the targeted range of $250-$300. This represented a 34.6% increase over the approximately 70,000 new customers acquired in the fourth quarter of 2016.

Equity Market Volatility, GS Dialing Up M&A (PeerIQ), Rated: AAA

Volatility made an abrupt return to capital markets after a nearly 18 month hiatus. Equity markets dropped almost 10% from their peaks, as investors focused on rising US treasury yields. 10-year yields touched 2.88% – nearly a four-year high. Corporate bonds (CDX.IG spreads) widened 5bps this week to 60bps, while high-yield widened 16bps to 353bps.

US consumer credit grew by $18.4 Bn in December 2017, at an annualized growth rate of 7.7%. Revolving credit card debt increased by $5.1 Bn to $1.03 Tn, the highest on record. Consumer spending has boosted US GDP, although the increasing cost of leverage and rising rates could create a drag on growth.

GS M&A Accelerating

Source: PeerIQ

 

Source: PeerIQ

Taking a cut of student’s future paychecks has Silicon Valley investors funding education (Quartz), Rated: AAA

The model is attracting a new generation of startups, as well as investors, eager to bail out American students drowning in $1.3 trillion in student debt. The Brookings Institute estimates as much as 40% of students who entered college in the early 2000s may default on their loans by 2023, based on historical trends.

One of the first firms to enter the US market was the Chilean firm Lumni founded in 2002 (although it only came to the US in 2009) followed by 13th Avenue (2009), Cumulus Funding (2011), Upstart (2012), Pave (2012), and Vemo (2015). Not all are still signing ISAs, but current interest seems to be based on growing demand.

Are income-sharing arrangements a good deal for students?

The federal government already provides more than $200 billion (paywall) in grants, loans, and work-study assistance for students’ post-secondary education each year. Private lenders hand out about $8 billion in student loans annually, estimates the Consumer Financial Protection Bureau. Parents and family contribute still more.

Almost 60% of college graduates in the US carry student debt, and about 57% of Americans regard it as a major problem, reports the Harvard Kennedy School of Government. Yet many are not even confident their college educations are still the golden ticket they once were. A 2017 survey of 32,000 college students revealed only one-third felt prepared to enter the job market, while only half said their major will lead to a good job.

Four-year universities like Purdue are using them as a way to show their commitment to students as much as reduce their financial burden. The school’s program, Back a Boiler (an abbreviation of the nickname for the student body known as Boilermakers), is offering 175 students almost $2 million in ISA funding. Graduates with high income never pay more than 2.5 times their original ISA amount, while those earning less than $20,000 a year see their payments go to $0.

MissionU, a one-year training program in data analytics and business intelligence, offers students a blended online (80%) and in-person curriculum (20%), and work experience. It charges no tuition. After graduates earn at least $50,000, they pay back 15% of their income for the first three years.

 

2 startups are joining forces — and together they could pose a threat to Bloomberg (Business Insider), Rated: AAA

Symphony, a messaging service that has gained some traction among Wall Street firms, has been integrated into OpenFin, an operating system built for financial-services, the two companies announced Thursday.

OpenFin hosts more than a hundred applications on its platform, and the integration means Symphony will be “interoperable” with those apps, the same way social media apps on your phone are able to talk with one another.

In total, Symphony has 230,000 users across 200 firms, whereas OpenFin can be found on more than 100,000 desktops across the Street.Symphony, a unicorn, announced a $63 million fundraise in May, bringing the total amount the company has raised to $234 million. OpenFin finished a $15 million round of venture funding backed by JPMorgan in February 2017. It has raised $22 million in total funding.

For new immigrants, buying a home or getting a cellphone is complicated and expensive. Even if they have financial identities and wealth in their home countries, they have no credit history in the U.S.

It’s a challenge for millions of people, and a handful of fintechs, including Nova Credit, CreditStacks, and Petal, see an opportunity to help with some creative solutions.

Others, like Deserve (formerly SelfScore) and Petal have been hoping to woo immigrants and other thin files with their own credit products, while still others like eCredable are crunching alternative data to help people build up their credit history.

And in January, CreditStacks announced a credit card product aimed at immigrant professionals who want to have a U.S. credit card in hand when they arrive in America.

San Francisco mortgage fintech Lenda expects growth spurt in 2018 (San Francisco Business Times), Rate: A

San Francisco mortgage fintech Lenda, which offers mortgages faster and at lower cost than traditional rivals, expects growth to accelerate this year as it expands into a dozen states and puts to work the $5.25 million it raised in its first venture round.

New Retail P2P Investment: The Worthy Bond (P2P Lending Expert), Rated: A

When I wrote my book on P2P Lending for the retail investor, P2P Investing 101 (the paperback version here), that came out in November, there were only 7 options for retail investors.  Those options were Lending Club and Prosper, as well as 5 options that take advantage of the adjustment to SEC Regulation A known as Reg A+.

We now have an 8th investment option.  The Worthy Bond, which uses Reg A+ and comes from Worthy Financial. By using Reg A+, the Worthy Bond is available to retail investors as a proxy savings account within the p2p lending landscape.

Prices up for January, Subaru 0-percent financing (Kelley Blue Book), Rated: A

While the average transaction price (ATP) for light vehicles hit $36,270 in January, a whopping $1,360 or 3.9-percent gain over a year earlier, the ATP declined from December’s record, dropping $486 or 1.3 percent month over month.

Subaru 0-percent financing

Subaru, which has been setting sales records, typically runs tight inventories and keeps a close rein on incentives. However, through the rest of February it is offering 0-percent financing for 63 months on select models along with a couple of enticing fleet deals.

The 0-percent deal for 63 months is being extended on 2017/18 Legacy models, 2017/18 Outbacks and 2017 Foresters. On the 2018 Legacy, there’s also a $185 per month lease for three years with $2,595 down. The 2018 Outback is being offered on a 3-year lease deal for $239 per month with $1,739 down, while the 2018 Forester can be leased for 36 months at just $219 with $1,719 down.

Interest rates climb

According to Bankrate.com, the average 60-month new car loan is averaging 4.51 percent interest, a two-basis point increase over rates being offered at the end of November. Shorter 48-month loans are slightly cheaper, averaging 4.44 percent, again, two basis points higher than two months ago. On the used car side of the ledger, rates are closing in on the 5 percent level, averaging 4.97 percent on 3-year loans. That’s up from an average of 4.78 percent at the end of November.

Eyeing robo advisors, IBDs to launch new client portals (FinancialPlanning), Rated: A

Independent broker-dealers are rebuilding their online presences for a digital investing era, ushering in new client portals and offering automated investing for smaller accounts.

Advisors have pushed the firms to mimic the speed and look of digital investment platforms. Digital advice clients of all kinds will soar 844% to more than 17 million by 2021, according to a September study by Aite Group. In a nod to incumbents’ services, robos have also started offering human advisors to clients.

Narmi integrates top fintech companies into digital banking platform for credit unions (CUInsight), Rated: A

Narmi, a financial technology company, showcases two of its remarkable fintech integrations – Billshark and Lemonade.

Billshark – Helping Reduce Monthly Bills for Millions of Americans

Billshark helps consumers reduce monthly bills on cable, satellite TV, wireless phone, internet and many other categories. There are currently approximately 375 million monthly bills in America and roughly 80% can be negotiated. The average amount saved per bill is $280-300.

Lemonade – Reinventing Insurance Through Artificial Intelligence

Lemonade provides a mobile-first, artificial intelligence-infused way to obtain a home insurance policy. The company’s focus is on homeowners and renters insurance, and policies start at $25 a month and $5 a month, respectively.

When fintech lite is the right small-business lending strategy (American Banker), Rated: A

Adding a community touch to automation has proved a profitable lending strategy for one bank.

Marquette Bank in Chicago has been able to digitize its lending processes and improve its credit memo creation time by upwards of 25% using technology from the cloud-based loan origination software firm Baker Hill.

Small-business lending has long been a staple of community banking, but in recent years customers have turned to online lenders and other fintechs for credit, in large part due to the speed and digital aspect of the experience.

Zelle’s next phase takes shape at BNY Mellon (American Banker), Rated: A

The banks behind the Zelle network had more in mind than P-to-P payments between consumers, and BNY Mellon is beginning the network’s evolution by targeting the business payments market.

Zelle will help support tokenized digital payments for institutional and corporate clients in a market that is notoriously resistant to automation. BNY Mellon hopes corporates will see the Zelle network’s ability to increase control over cash flow through near-instant processing.

Webster Bank Offers Customers An Automated Digital Investment Platform (PR Newswire), Rated: A

Webster Investments, a division of Webster Bank, N.A., now offers Guided Wealth Portfolios (GWP), an advisor-enhanced, digital investment platform designed to enhance customer experience by providing an additional option to manage their investments. The online investment platform was designed as an innovative option for clients seeking a technology-enabled investment solution combined with the opportunity to have a relationship with a financial advisor.

We’re partnering with SURE to bring you Small Business Insurance (Inc Authority Email), Rated: B

Small Business Insurance is an all-in-one policy that protects you and your growing business from critical risks. Your policy will cover:

  •   General liability
    • Get up to $2 Million of coverage in legal and litigation issues tied to 3rd party claims of property damage, and bodily injury and associated medical costs.
  •   Business personal property
    • Replace lost or damaged property owned by your business, such as computers, furniture, and machinery.
  •   Lost business income
    • Receive up to $250,000 in lost income if your business has to close due to a covered loss.
  •   And other coverage
    • Includes coverage for data breaches, litigious employees, non-business automobiles, and more.
United Kingdom

Openwrks, Zopa and TrueLayer get into Open Banking groove (Finextra), Rated: AAA

The UK’s major banks are being shown a clean pair of heels by non-bank competitors in the Open Banking space, with new announcements by TrueLayer in tandem with Zopa, and Openwrks demonstrating the determination of third party providers to open up access to consumer account data.

Zopa has worked with TrueLayer to create an income verification product which removes the need to manually upload documents to verify income – replacing it with Open Banking data.
Separately, Openwrks – which likewise enables providers of consumer and small business products and services to access consumer’s financial data – has become the first third party provider to successfully connect to all of the banks currently providing functional APIs (Lloyds, RBS, AIB, HSBC and Danske).

Elliott takes majority stake in new Welsh online bank (The Times), Rated: A

China

China’s Ant plans equity fundraising at potential $ 100 billion valuation – sources (Reuters), Rated: AAA

China’s Ant Financial Services Group is planning to raise up to $5 billion in fresh equity that could value the online payments giant at more than $100 billion, people familiar with the move told Reuters.

The new round should start with a valuation of between $80 billion to $100 billion, the people said.

China Fintech Watchdog to Step Up ICO Oversight (CoinDesk), Rated: A

A self-regulatory association that draws support from China’s banking and securities sectors is vowing to increase its oversight over cryptocurrency and initial coin offerings (ICO) in 2018.

In its annual meeting held on Feb. 9, China’s National Internet Finance Association (NIFA) revealed that while it has put special efforts into overseeing the sector in 2017, it expects this work to become a regular part of its 2018 agenda.
Australia

Loans.com.au slashes home loan rates for owner-occupiers, investors (mozo), Rated: AAA

Online lender, loans.com.au has today slashed rates for both owner-occupiers and investors on certain home loans, and is now offering some of the lowest mortgage rates in the market.

One of the changes was to cut the Essentials Variable 80 rate for owner-occupiers looking to make principal and interest repayments by 12 basis points, bringing it to a red hot 3.52% – the lowest rate for a loan of its kind in the Mozo database.

The rate on loans.com.au’s Offset Variable 80 for owner-occupiers making principal and interest repayments was also slashed by 12 basis points, bringing it down to a competitive 3.60%.

India

Online gold loan platform Rupeek gets $ 6.8 mn from Accel, Sequoia (VC Circle), Rated: AAA

Bengaluru-based Rupeek, which operates an online marketplace for gold loans, has raised $6.83 million (Rs 44 crore) in a fresh funding round led by Accel Partners.

Eduvanz Financing raises funds from Blinc Advisors (livemint), Rated: A

Eduvanz Financing Pvt. Ltd, an education technology start-up that provides loans for skill development to students, has raised $500,000 in a round of funding led by Blinc Advisors, a venture capital fund, a senior executive at the start-up said.

Fintech start-up EarlySalary is making emergency loans more affordable (Business-Standard), Rated: A

Neha Kumari needed a new phone urgently after her old one was damaged during a Saturday night party. To add to her difficulties, it was the beginning of the last week of the month and the salary day was 10 days away. Missing client calls for more than a couple of days was out of the question and the weekend was expensive anyway.

Neha, who did not have a credit card, could have borrowed from friends, but most of them were as broke as she was then. And borrowing from the family was ruled out. The last time she had borrowed Rs 10,000 from a friend to book emergency tickets was three …

Preventive measures (The Hindu Business Line), Rated: A

This is with reference to reports on market volatility. Regulators must ensure that this trend does not end up promoting alternative investment avenues of an uncertain nature. Investor interests demand that risk-based P2P lending via online/social marketplaces be regulated. Peer lending has significantly grown and enabled borrowers with a sub-par credit history. P2P lending is highly prone to performance risks on account of a higher probability of a borrower-default, credit risks owing to poor loan-sanctioning decisions & lack of fund-monitoring post disbursal, cash drag risks because of a larger borrower-population than the available lenders, platform Risks driven by borrower insolvency or frauds or technology risks/cybersecurity breaches and market risks owing to interest rate fluctuations and unemployment risks leading to non-payments.

What’s Driving India’s Fintech Boom? (Wharton), Rated: A

With more than 200 million active users in India — the largest anywhere in the world — WhatsApp is expected to drive large volumes on peer-to-peer (P2P) payments and also become a popular platform for merchant payments. India is slated to be the first country globally to get the payments facility from WhatsApp.

Other global giants, too, are zeroing in on this space. For instance, Google has already launched its payments app Google Tez (“Tez” in Hindi means fast), while Samsung has launched Samsung Pay and Amazon has introduced Amazon Pay.

Paytm, India’s largest online payments and mobile wallet company, has invested Rs. 5,000 crore ($786 million) in mobile payments to date.

This was 13% less than $14.6 billion in 2015. On the other hand, fintech investments in Asia increased to $5.4 billion in 2016, up 12.5% from $4.8 billion in 2015.

Fintech Will Change How We Bank (Business-Standard), Rated: A

In the not too distant future, there may come a time, where we cease to interact with the as we know it. which were monolithic organization who created the products, sold it directly and owned the customers are being slowly ceding ground to so called new breed companies chipping away at the edges. While regulations and strict KYC/AML regulations still enable to continue to be in business, the power they once wielded is diminishing. As Niti Aayog Chairman, Amitabh Kant said “Debit cards, credit cards and ATMs might lose relevance in the next four years”.

Peer to peer lending picks pace (Telengana Today), Rated: B

According to the latest annual report of RBI, during Q1 of FY18, as against negative incremental rise in bank credit, the non-bank sources gained space in lending. The total flow of funds to the commercial sector from non-bank sources during the period increased to Rs 1,16,600 crore while the formal banking system trailed behind.

In terms of financial assets, NBFCs recorded a healthy growth — a compound annual growth rate (CAGR) of 19% in the past few years — comprising 13% of the total credit and are expected to reach nearly 18% by 2018-19.

APAC

Asia-Pacific Fintech Market to reach US$ 72 billion by 2020, finds Frost & Sullivan (Business Insider), Rated: AAA

Active support and initiatives by financial regulators such as the Monetary Authority of Singapore, Bank Negara Malaysia and Bank Indonesia has enabled the Asia-Pacific Fintech ecosystem to grow significantly in 2017.

The Fintech industry in the Asia-Pacific region is expected to grow at a CAGR of 72.5% from 2015 to 2020, reaching US$72 billion.

Future of Cashless Payments in Singapore

According to Ms Quah Mei Lee, Industry Principal, ICT, Asia-Pacific, the mobile payments market in Singapore was estimated to be worth US$1.4 billion in 2017. The market is still small but is growing fast. There are many supportive regional and local regulations and initiatives that will help Singapore move towards a cashless Society.

Fintech in Singapore’s SME Landscape

In the wake of the global Fintech boom, disruptive market innovations have forced a radical shift of business models in the Financial Services industry, notably within the P2P Lending segment. Frost & Sullivan believes that leading banks and financial institutions are driven to be lean and agile on multiple fronts, including but not limited to new digital services, elevated customer experiences and innovative technological solutions.

Online loan providers have recently begun targeting young adults here in their 20s and 30s in Korea in the name of “providing pocket money.” Other peer-to-peer lending platforms promote their services as an investment fund or shared wallet to relax young people’s vigilance toward the money lenders.

Blockchain spending surges in China and Asia (Shine), Rated: B

Blockchain spending in Asia Pacific excluding Japan will jump 91 percent in the five years until 2021, thanks to applications in finance and supply chain industries, said IDC in a report today.

China will see a five-year annual growth rate of 95 percent, compared with about 81 percent growth worldwide, said IDC in the report, the first blockchain report released by the company.

For example, PPDai, China’s first online P2P (peer-to-peer) lending platform listed in the US market, said in January it would invest 1 billion yuan (US$156 million) within three years to set up a new research institute.

Authors:

George Popescu
Allen Taylor

Asset Verification for MPL Secondary Markets and Securitizations

Equity ETFs

VeriComply, headquartered in San Francisco, California, was founded by Roger Cohen in late 2015 with the goal to improve and scale the workflow processes around the documents a lender needs to assess. The company is focused on leveraging its proprietary technology to automate the entire chain of reading, extracting, and verifying data from financial documents. […]

Equity ETFs

VeriComply, headquartered in San Francisco, California, was founded by Roger Cohen in late 2015 with the goal to improve and scale the workflow processes around the documents a lender needs to assess. The company is focused on leveraging its proprietary technology to automate the entire chain of reading, extracting, and verifying data from financial documents. Cohen has 35 years of experience in the financial services industry as a consultant, a professional attorney, and a business owner. As a lawyer, he helped five companies go through the IPO process and understands the massive inefficiencies existing in the document management space.

He founded Portford Solutions in 2000 as a document management company. Its flagship product, DocuNECT was designed to connect business users with the information locked in documents. To achieve this, DocuNECT maps the document lifecycle to capture the document, extract the appropriate data, and distribute the data/document to third party business applications, and/or workflow and data specifications. This became the backbone of VeriComply. Cohen essentially took the underlying DocuNECT system and re-engineered it exclusively for use in the financial services industry.

Company Background

VeriComply used family and friends for the initial phase of funding. But in February 2017, it managed to raise an undisclosed amount in seed funding from private investors including John Barlow, founder of Eaglewood Capital, and John Maute, CEO of Helios AMC and Situs Holdings, a global real estate diligence firm, as well as a board member of Money360, a CRE marketplace lending platform.

The company was able to add impetus to its growth story when it brought on Roger Dickerson as President. Dickerson worked as VP of financial operations at Lending Club from 2012 to 2016. He was responsible for the entire investor operations process, which included order placement, treasury, and building out capabilities to sell to institutional investors, reporting, cash custody, loan documentation, and settlements. He oversaw funding of over $23 billion in loans during his tenure. After looking at the prototype, he knew Cohen had developed a document verification product that is better than anything available in the market.

Dickerson also brought in TJ Valenzuela as national sales manager for educating the client base and driving demand. The underlying idea was to provide verification throughout the life cycle of the loan, from creating an asset at origination level and verifying at POS for warehouse lenders and custodians to providing verification in the secondary market.

The VeriComply Process

Since its primary customers are trust companies, VeriComply acts as a sub-verification agent or document custodian. Basically, on getting the loan documents, it extracts data and compares it with loan/data tapes. Outcomes are then discussed with originators and trust company partners to remove any discrepancies. The report is then sent to the client notifying approval status. Loans are verified on various parameters and cover all characteristics of a loan: term, rates, state of origination, APR, etc. It also incorporates the borrower’s information for better analysis.

Considering this is an important cog in the selling of loans in secondary markets and securitization, automating the process gives credibility as well as integrity to the entire portfolio when it sells.

The state-of-art technology used to build the platform means it can quickly configure for multiple originators, loan types, documents, and various field verifications. Fees are charged for the configuration set up, per loan process, and for monthly storage.

Cloud Flexibility: The Difference Maker

VeriComply relies on Microsoft’s cloud offering, Azure, to provide a secured user interface that enables multiple users to work with documents. On top of that, its cloud-based deployment architecture enables users to scale quickly and undertake massive volumes of loan verifications in different verticals. By providing a secure and scalable configuration system, it responds faster to the emerging demands of the market. Moreover, it also enables the holder of the documents to redact data in documents.

VeriComply is on track to provide 100% automation, which is not currently available in the market. Its peers still rely on human-dependent sampling techniques.

Most of VeriComply’s sales are executed through its reseller partners. It has many trust companies on board and works with different originators. The company was able to process 19,000 loans in less than two and half hours for an Upstart securitization, which is a new benchmark for the industry. It is also working with mortgage diligence providers and legal firms. The firm is currently focused on the MPL industry since the concept is easier to sell, documents are more precise and clear, and set up is faster. However, it plans to branch out to other verticals and asset classes, though the point of entry will remain with markpetlace lending.

Riding the Industry Tailwind

Stringent regulations in the MPL industry coupled with longer credit cycles have led to greater scrutiny of underlying loans. Buyers in the secondary market want to make sure whatever they are buying have the least risk attached to it. Thus, there is an overwhelming need for top-of-the-line document verification.

Also in terms of storage of documents, there is a change in trend. Earlier companies used Excel spreadsheets to record transactions, but now people want to use data from the primary source so that there is no chance of manipulation. This is great news for VeriComply.

VeriComply’s Future Plans

Keeping an eye on the future, the company wants to incorporate blockchain technology for publishing legacy documents. It also wants to create a system to help lawyers create customized smart contracts. Though the industry is a long way from leveraging the full power of blockchain, the growing need to transmit information at a quicker pace is forcing companies to move toward the blockchain universe.

For now, the company wants to concentrate on creating demand for its product and raise capital to execute its plans. The company’s product has garnered a good response from the market and is on track to close with over 100 prospective client companies. VeriComply can reduce the time span of the financial services sales cycle and will help further grow the marketplace lending industry by streamlining the documentation process. Strategic funding can help it become the new standard bearer for this niche industry.

Author:

Written by Heena Dhir.

Asset Verification for MPL Secondary Markets and Securitizations

VeriComply document verification

VeriComply, headquartered in San Francisco, California, was founded by Roger Cohen in late 2015 with the goal to improve and scale the workflow processes around the documents a lender needs to assess. The company is focused on leveraging its proprietary technology to automate the entire chain of reading, extracting, and verifying data from financial documents. […]

VeriComply document verification

VeriComply, headquartered in San Francisco, California, was founded by Roger Cohen in late 2015 with the goal to improve and scale the workflow processes around the documents a lender needs to assess. The company is focused on leveraging its proprietary technology to automate the entire chain of reading, extracting, and verifying data from financial documents. Cohen has 35 years of experience in the financial services industry as a consultant, a professional attorney, and a business owner. As a lawyer, he helped five companies go through the IPO process and understands the massive inefficiencies existing in the document management space.

He founded Portford Solutions in 2000 as a document management company. Its flagship product, DocuNECT was designed to connect business users with the information locked in documents. To achieve this, DocuNECT maps the document lifecycle to capture the document, extract the appropriate data, and distribute the data/document to third party business applications, and/or workflow and data specifications. This became the backbone of VeriComply. Cohen essentially took the underlying DocuNECT system and re-engineered it exclusively for use in the financial services industry.

Company Background

VeriComply used family and friends for the initial phase of funding. But in February 2017, it managed to raise an undisclosed amount in seed funding from private investors including John Barlow, founder of Eaglewood Capital, and John Maute, CEO of Helios AMC and Situs Holdings, a global real estate diligence firm, as well as a board member of Money360, a CRE marketplace lending platform.

The company was able to add impetus to its growth story when it brought on Roger Dickerson as President. Dickerson worked as VP of financial operations at Lending Club from 2012 to 2016. He was responsible for the entire investor operations process, which included order placement, treasury, and building out capabilities to sell to institutional investors, reporting, cash custody, loan documentation, and settlements. He oversaw funding of over $23 billion in loans during his tenure. After looking at the prototype, he knew Cohen had developed a document verification product that is better than anything available in the market.

Dickerson also brought in TJ Valenzuela as national sales manager for educating the client base and driving demand. The underlying idea was to provide verification throughout the life cycle of the loan, from creating an asset at origination level and verifying at POS for warehouse lenders and custodians to providing verification in the secondary market.

The VeriComply Process

Since its primary customers are trust companies, VeriComply acts as a sub-verification agent or document custodian. Basically, on getting the loan documents, it extracts data and compares it with loan/data tapes. Outcomes are then discussed with originators and trust company partners to remove any discrepancies. The report is then sent to the client notifying approval status. Loans are verified on various parameters and cover all characteristics of a loan: term, rates, state of origination, APR, etc. It also incorporates the borrower’s information for better analysis.

Considering this is an important cog in the selling of loans in secondary markets and securitization, automating the process gives credibility as well as integrity to the entire portfolio when it sells.

The state-of-art technology used to build the platform means it can quickly configure for multiple originators, loan types, documents, and various field verifications. Fees are charged for the configuration set up, per loan process, and for monthly storage.

Cloud Flexibility: The Difference Maker

VeriComply relies on Microsoft’s cloud offering, Azure, to provide a secured user interface that enables multiple users to work with documents. On top of that, its cloud-based deployment architecture enables users to scale quickly and undertake massive volumes of loan verifications in different verticals. By providing a secure and scalable configuration system, it responds faster to the emerging demands of the market. Moreover, it also enables the holder of the documents to redact data in documents.

VeriComply is on track to provide 100% automation, which is not currently available in the market. Its peers still rely on human-dependent sampling techniques.

Most of VeriComply’s sales are executed through its reseller partners. It has many trust companies on board and works with different originators. The company was able to process 19,000 loans in less than two and half hours for an Upstart securitization, which is a new benchmark for the industry. It is also working with mortgage diligence providers and legal firms. The firm is currently focused on the MPL industry since the concept is easier to sell, documents are more precise and clear, and set up is faster. However, it plans to branch out to other verticals and asset classes, though the point of entry will remain with markpetlace lending.

Riding the Industry Tailwind

Stringent regulations in the MPL industry coupled with longer credit cycles have led to greater scrutiny of underlying loans. Buyers in the secondary market want to make sure whatever they are buying have the least risk attached to it. Thus, there is an overwhelming need for top-of-the-line document verification.

Also in terms of storage of documents, there is a change in trend. Earlier companies used Excel spreadsheets to record transactions, but now people want to use data from the primary source so that there is no chance of manipulation. This is great news for VeriComply.

VeriComply’s Future Plans

Keeping an eye on the future, the company wants to incorporate blockchain technology for publishing legacy documents. It also wants to create a system to help lawyers create customized smart contracts. Though the industry is a long way from leveraging the full power of blockchain, the growing need to transmit information at a quicker pace is forcing companies to move toward the blockchain universe.

For now, the company wants to concentrate on creating demand for its product and raise capital to execute its plans. The company’s product has garnered a good response from the market and is on track to close with over 100 prospective client companies. VeriComply can reduce the time span of the financial services sales cycle and will help further grow the marketplace lending industry by streamlining the documentation process. Strategic funding can help it become the new standard bearer for this niche industry.

Author:

Written by Heena Dhir.

Monday November 6 2017, Daily News Digest

SoFi CLP 2017-6 structure

News Comments Today’s main news: Lending Club considering bid for bank charter. N26 to launch in the UK. TransferWise hooks $280M investment for APAC expansion. Zopa vows rate hike won’t impact loan performance. Hexindai debuts on NASDAQ with 60% increase. Westpac profits AU$7.99B. Kaodim raises $7M. Today’s main analysis: SoFi’s latest consumer lending deal. Today’s thought-provoking articles: How payment tech is […]

SoFi CLP 2017-6 structure

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Middle East

News Summary

United States

Lending Club eyes charter as landscape evolves (Global Capital), Rated: AAA

Lending Club is exploring the idea of operating as a bank or obtaining a fintech bank charter in order to keep pace with a changing lending and regulatory landscape, an executive from the marketplace lender said on Thursday.

Speaking at the Digital Lending + Investing conference in New York, Valerie Kay, Lending Club’s head of institutional investor group, said that the platform is considering both pathways as the business grows.

How payment technology is being disrupted (The Next Web), Rated: AAA

One of the earliest changes involving the payment industry is how banks and customers behavior is shifting with one another. Quite simply, people have different expectations with how money should move, as well as how quickly. This is a cross-generational phenomenon and something that banks are trying to keep up with.

According to Bank Innovation, approximately 70 percent of millennials now do their banking online.

According to Business Insider, peer-to-peer payments alone are on pace to be worth $86 billion by 2018. And with the popularity of apps like VenmoPayPal, and even Square Cashcontinuously on the rise, this trend doesn’t show signs of slowing down anytime soon.

CurrencyPay, an online payment system that not only finances major equipment for businesses, but extends online payment methods from credit and debit cards to include ACH or wire, all the while reducing fees across the board.

SoFi’s Latest Consumer Lending Deal (PeerIQ), Rated: AAA

On Thursday, President Trump announced his nomination of Jerome Powell to succeed Fed Chairwoman Janet Yellen as the next chairman of the central bank.

Also on Thursday, President Trump rolled out his new tax plan which reduces the number of tax brackets from seven to four and cuts the corporate tax rate to 20% from 35%. Relevant to marketplace lenders, the tax plan reduces the mortgage interest deduction cap by half.

SoFi’s Latest Consumer Lending Deal

SCLP 2017-6 is the largest deal on SoFi’s shelf, and the first since SCLP 2017-5, which priced concurrently with Mike Cagney’s resignation. As we discussed in our previous blog post, SCLP 2017-5 priced slightly wider on the news (10 to 15 bps). SoFi’s latest consumer lending deal, SCLP 2017-6, is the first deal from SoFi with borrowers living in FEMA declared disaster areas, comprising approximately 12% of the deal.

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

SCLP 2017-6 Structure
Although it may seem that SoFi is structuring deals more aggressively, the A and B classes have higher initial CE when compared to SCLP 2017-5 by 2.38% and 0.76% respectively.

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

Square’s Jack Dorsey: We’re moving as fast as we can with bank application (Fast Company), Rated: A

“I think the [regulatory] environment really changes depending on who you’re talking about,” says Dorsey, who traveled to New York this week for the unveiling of Square Register, a new hardware device. “There’s a lot of appreciation for the fact that we’ve spent eight years serving an underserved customer, an underbanked customer, both on the seller and the individual side.” Before Square unveiled its signature card reader, he adds, micro-merchants “couldn’t participate in the economy in the way that the economy was moving.”

Investors see “perfect storm” in marketplace loan ABS (Global Capital), Rated: A

An investor roundtable at the Digital Lending + Investing conference in New York on Thursday highlighted developments in the securitization of marketplace loans over the last 12-18 months. The transition to a hybrid funding model for lenders, in addition to the emergence of more sophisticated deal structures, have …

MoneyLion takes on America’s savings crisis with the launch of MoneyLion Plus (BusinessWire), Rated: A

Despite solid economic and wage growth in the U.S. since the 2008 crisis, a host of studies point to critically low rates of savings and widening income inequality among American consumers. In the face of this savings crisis, mobile consumer finance platform, A monthly subscription gives MoneyLion Plus members access to the following benefits:

  • Guided savings: MoneyLion Plus makes it easy and convenient to save $50 or more per month. MoneyLion’s technology analyzes each member’s cash flows to determine when to set aside and save money from their checking account. Via the MoneyLion mobile app, members are provided with personalized daily budgeting tips to help them optimize their spending and increase their savings even further.
  • Fully-managed investment account: The funds saved are automatically invested into a fully-managed investment account featuring a diversified portfolio of ETFs built to suit the financial needs and life stage of each member, all without any additional trading or management fees. These portfolios are based on simple investment strategies that will help members grow their wealth.
  • Low-cost access to credit: Unexpected expenses can reset savings back to square one, preventing longer-term growth of wealth. Access to personal loans with APRs of 5.99% or less, regardless of credit score, offers MoneyLion Plus members an affordable means to manage their cash flow needs and avoid costly overdraft or late payment fees. 
  • Cashback bonus: MoneyLion Plus offers its members additional rewards, including an instant $1 cashback bonus deposited into a member’s investment account each day they log into the MoneyLion app. Members also earn rewards based on their investment account balance.
  • MoneyLion mobile app: Members can access all of their benefits on-the-go via MoneyLion’s mobile app, including viewing their savings progress, getting personalized tips and offers for saving more, and accessing their loan funds in just a few taps.

Credit Karma Launches Online Vehicle Center (Finovate), Rated: A

Consumer credit monitoring and financial health startup Credit Karma has launched a new offering today that changes those routines. The company’s new automotive information center is a one-stop shop for helping consumers to manage and organize their vehicle-related finances and information. Included among the capabilities are an overview of the user’s DMV profile, with vehicle and drivers license information, vehicle value estimations, and manufacturer recall notices.

The two most notable capabilities are the auto insurance score and comparison tool and the vehicle refinancing decision tool.

Fintech Lenders Are Holding Larger Portion of the Personal Loan Market (Lend EDU), Rated: A

During the Digital Lending + Investment Conference in New York, the consumer credit reporting agency Transunion released the results of a study called ”Fact versus Fiction: FinTech Lenders.” In a nutshell, the study concluded that fintech lenders were not riskier than other lenders, and they are starting to represent a more significant part of the loan industry in the USA.

By the end of the year, the fintech lenders comprised 30 percent of outstanding personal loan balances which is up from four percent in 2012. Up through June in 2017, fintechs represented 32% of the personal loan market.

In the second quarter of 2016, 14.8 million people had a personal loan; after one year, that number increased to 16.1 million. Additionally, the total outstanding personal loan volume more than doubled from $45 billion in Q2 2012 to $106 billion by Q2 2017.

Wells Fargo Launches New Banking App “Greenhouse” (Crowdfund Insider), Rated: A

Banking giant Wells Fargo announced on Thursday the launch of its new banking app, Greenhouse. The company described the app as a new mobile banking experience that provides tools to help consumers manage their money and know where they stand financially. 

According to Wells Fargo, consumers using the Greenhouse app will be able to have money management with two accounts that work together, immediate access to their Greenhouse account, and the ability to send and receive payments.

Marketplace Lending News Roundup – November 4 (Lend Academy), Rated: A

Redpoint Capital Group Sells Stake to Dundon Capital Partners (BusinessWire), Rated: A

Redpoint Capital Group, LLC (“Redpoint Capital”), a leading alternative credit manager, announced today that it has agreed to sell a stake in its affiliated General Partner and Management Company to an affiliate of Dundon Capital Partners, LLC (“DCP”). DCP is led by Thomas (“Tom”) Dundon, one of the founders and former CEO and Chairman of Santander Consumer USA (“SCUSA”), a leading publicly-traded non-captive finance company.

As part of the transaction, both Tom Dundon and DCP Partner, John Zutter, will sit on Redpoint Capital’s Board of Directors along with Redpoint Capital Managing Partners Alex Dunev and Andy Thomas.

Digital Lending Innovation Starts with the Simple Things, Bank of America Says (Bank Innovation), Rated: A

Financial services should focus on “making the easy stuff really easy,” Schleck said yesterday during a panel discussion at the American Banker Digital Lending and Investing conference in New York.

Schleck was the sole representative from a traditional bank during the discussion, with fellow panelists hailing from alternative fintech companies and lenders  – Lending Club, Funding Circle, and Varo Money.

The key to BofA’s innovation in this space was a cross between data (also highlighted by others on the panel) and simplicity, Schleck said, pointing to the bank’s success with mobile direct deposit as an example.

Citizens Digitizes SMB Lending Process With Fundation (PYMNTS), Rated: A

Citizens Bank is enhancing its small and medium-sized business (SMB) lending offering by digitizing the loan application process, according to a press release published by the financial institution (FI) on Thursday (Nov. 2).

The bank is launching a new platform, built in collaboration with alternative online lender Fundation, allowing SMB customers of the bank to apply for a loan or line of credit and receive an approval online.

BlackRock pivots to US west coast as part of tech push (Financial Times), Rated: A

BlackRock is pivoting its business to the US west coast, moving Mark McCombe, head of Americas, to San Francisco as part of a broader plan by the world’s top asset manager to step up its focus on technology and innovation.

More than 40 per cent of BlackRock’s $5.9tn in client assets are managed from San Francisco, which accounts for a third of group revenue.

New Online Portal Offers Loans Up to $ 500,000 to African American Entrepreneurs in Chicago (Black Enterprise), Rated: A

The national advocacy group Small Business Majority, national online lender Fundera, and micro-lender Accion have developed SimpleGrowth, a new online lending marketplace. Calling SimpleGrowth a first-of-its-kind local lending portal, officials say the platform will allow African American entrepreneurs in Chicago to connect with area lenders via a website.

Individuals can seek loans ranging from $500 to $500,000 at various rates, depending on the business owner’s readiness and other factors.

There are 230,000 small businesses in Chicago, but an unusually high percentage of those businesses are owned by African Americans. Cook County, Illinois—which includes Chicago—has the most African American-owned small businesses of any county in the country at 110,000, the U.S. Census Bureau’s 2012 analysis of small businesses reports.

The financing will come from Chicago lenders including Accion, Local Initiatives Support Corporation Small Business and the Women’s Business Development Center, all Community Development Financial Institutions that support small business entrepreneurship. Businesses can apply for the loans for free.

LoanDepot Starts JV (Orange County Business Journal), Rated: B

LoanDepot LLC, the nation’s second largest non-bank consumer lender, announced a joint venture with OfferPad, a real estate investment company, to speed up the process of mortgage approval.

The joint venture will be a stand-alone mortgage broker with LoanDepot acting as the wholesale lender, Calle said. It is expected to launch in the first quarter and will be based in Phoenix.

Online Lender Better Mortgage Names Jeff Corbett New Director of Business Development (Crowdfund Insider), Rated: B

Better Mortgage, a digital mortgage company working to improve access to home financing through transparency, honest guidance, and zero loan officer commissions, announced on Friday it has appointed Jeff Corbett as its Director of Business Development and adding him to its growing Strategic Partnership team.

Silicon Valley Start-ups Join the Line-up for Blockchain Expo North America (Coinspeaker), Rated: B

Amongst those speaking is Karma – a cross-border peer-to-peer lending platform, working to eliminate inefficiencies in the P2P lending industry. Karma will be taking to the stage in the ICOs, Tokens and Cryptofinance conference track on November 29, to introduce their service to delegates ahead of their closed ICO sale later this month.

Goji Appoints Peter Breitstone As New CEO (Crowdfund Insider), Rated: B

Specialist provider of P2P and marketplace lending products and services, Goji, announced on Friday it has appointed Peter Breitstone as its new CEO. According to the company, Breitstone has over 20 years of senior executive leadership experience at several global insurance companies, including Insureon, Zurich, and Aon. Breitstone also built and ran Environmental Partners, an insurance brokerage specializing in Environmental Risk and Insurance Management, which he sold to Aon.

Weekly WealthTech Report: The First CEFEX-Certified Robo (Wealth Management), Rated: B

PlanCorp is putting its experience and research into a new hybrid robo advisor called BrightPlan, which it says is the first of its kind to be certified by the Centre for Fiduciary Excellence for providing prudent fiduciary practices to clients. The online service offers goals-based financial planning without requiring users to invest.

Clients can choose either a digital-only service, or tap into Plancorp’s team of wealth managers.

United Kingdom

European Fintech N26 to Launch in the UK in Early 2018 (Crowdfund Insider), Rated: AAA

N26, a digital-only challenger bank based in Germany, announced on Friday it is launching its services in the UK in early 2018. This news comes after the fintech startup announced plans to launch in the U.S. next year. UK customers may now get early access by signing up directly on the company’s UK homepage.

TransferWise announces $ 280m investment round as company looks towards APAC expansion (AltFi), Rated: AAA

The international money transfer service raised $280m in a Series E round as it plans for global expansion and challenge to banking disruptors.

The round was led by asset management firm Old Mutual Global Investors (OMGI), investing funds managed by its small and mid-cap UK equities desk, and Silicon Valley venture capital firm IVP.

Zopa says rate hike will not impact loan performance (P2P Finance News), Rated: AAA

ZOPA has reassured investors that the Bank of England’s interest rate hike will not impact the performance of the peer-to-peer platform’s loans.

On Thursday, the central bank raised the base rate from 0.25 per cent to 0.5 per cent – the first increase in a decade.

LendInvest to enter BTL market after securing new funding line (Bridging&Commercial), Rated: A

LendInvest has agreed a long-term financing facility with Citi which will help the lender enter the UK’s £40bn buy-to-let market.

LendInvest now manages over £500m of lending capital on behalf of its institutional investors.

UK interest rates rise for first time in 10 years (Growth Business), Rated: A

For the first time in more than ten years, the Bank of England has raised interest rates. The official bank rate has been lifted from 0.25 per cent to 0.5 per cent, the first increase since July 2007.

The hike has divided opinion and it is yet to be seen how severely the impact will hit the UK. Mr Carney expects banks to pass on the rate rise to savers, but said many mortgages, loans and credit cards would not see an immediate impact.

With an alternative outlook, Giles Cross, CMO at FOLK2FOLK, says, “For years low interest rates have been bad news for consumers wanting a positive return on their money in real terms. So today’s announcement may come as a small relief to many people who are looking for an increase. Whilst the reality is that consumers may not see the outcome passed on from their financial services provider or bank for a long time.

British fintech lender Cashplus seeks licence (Times of Malta), Rated: A

Cashplus said yesterday it will soon apply for a UK banking licence as part of the British fintech firm’s plan to step up its challenge to traditional banks.

The move will allow Cashplus to convert the £200 million of customers’ funds it holds into bank deposits, its chief executive Richard Wagner told Reuters.

Volkswagen explores obtaining UK banking licence (Financial Times), Rated: A

Volkswagen is preparing to apply for a UK banking licence so it can carry on providing finance to motorists after Britain leaves the EU.

Lendy considers offering auto-invest products (P2P Finance News), Rated: A

LENDY is seeking views from investors on the introduction of an auto-invest product.

The peer-to-peer property lender has issued a survey to its customers to find out their views on a product that would self-select loans for lenders.

Simon Champ of P2PGI and Pollen Street Capital (Lend Academy), Rated: A

In this podcast you will learn:

  • How Simon first became interested in the online lending space.
  • Simon’s original goal when he started P2PGI.
  • What it was like trying to raise the initial capital for the fund in 2014.
  • How many platforms they launched with initially.
  • The scope of the fund: both lending verticals and geographies.
  • How Brexit and the currency challenges of the British Pound has impacted the fund.
  • How the fund has evolved from P2P to a broader direct lending focus.
  • The main challenge of pure peer to peer lending platforms.
  • How they are using leverage today at P2PGI.
  • The P2PGI approach to due diligence and how they decide to make an investment in a new platform.
  • The historical returns of the fund and Simon’s views of the challenges here.
  • His view on the poor performance at US consumer platforms in 2015 and 2016.
  • Why P2PGI left Marshall Wace and merged with Pollen Street Capital.
  • Simon’s view on the evolution of the lending space and where it is going.

CoInvestor Provides First Digital Access For Advisers Into LendInvest’s Real Estate Opportunity Fund (MondoVisione), Rated: A

CoInvestor, the alternative assets platform, has been chosen by LendInvest Capital as a preferred method for UK advisers to invest in its Luxembourg-domiciled Real Estate Opportunity Fund.

Interview with Stuart Law, CEO and co-founder of Assetz Capital (P2P-Banking), Rated: A

Assetz Capital is now the UK’s second-largest peer-to-peer business and property lender and also the second largest in Europe.

What are the three main advantages for investors?

Firstly, we only lend to businesses who we assess as credit worthy businesses with tangible assets.

Secondly, we cater for all types of investors.

Thirdly, we are also the only major UK P2P platform to still offer a manual investment option.

What are the three main advantages for borrowers?

Rather than being just a website with automated credit assessments, Assetz Capital is run by finance, banking, credit and lending professionals with huge industry experience, alongside our large UK-wide network of employed Regional Relationship Directors who visit potential borrowers and help structure the loans.

We’re also a lean business, and as such we have lower overheads than traditional lending institutions.  Coupled with the fact that we only lend to credit worthy businesses holding tangible assets, this means our cost of borrowing for businesses is kept low.

Assetz Capital has succeeded in growing loan originations sharply in the past 12 months. How did you achieve that and were intermediaries like brokers a major factor?

To date, more than 350 successfully funded projects have come through brokers, and we predict that this will grow to approaching 1,000 by the end of the 2018 year.

Singaporean sovereign wealth fund piles into OakNorth fundraise (AltFi), Rated: A

Challenger bank OakNorth entered into the UK’s stable of unicorns in October when it raised £154m.

The £154m round valued OakNorth at £934m (approximately $1.3bn). The money came from three investors, The Clermont Group, Toscafund and Coltrane, which collectively took a 16 per cent stake in the company. Today, the trio has been joined by a fourth investor: GIC, Singapore’s sovereign wealth fund.

Anyone for a Crowd VCT? (AltFi), Rated: A

Currently the excellent Wise Alpha is plastered all over the Waterloo and City line. And in recent months Crowdcube has also been blasting out adverts at the Waterloo train station. Not to be outdone, Seedrs is making a regular appearance on the London tube as are a whole number of digital banking apps. Even Abundance in recent years has been making an appearance on billboards at railway stations as far away as Winchester. Now we’re seeing Funding Circle blasting out its message nationwide as part of its multi-million-pound advertising campaign.

This is all very welcome, but I think it poses some broader questions about what the alternative finance space needs to make itself seem more mainstream. I see no reason why a big player such as Funding Circle shouldn’t use big national brand advertising, but I doubt its overall effectiveness.  My sense is that much smaller, baby steps are needed to mainstream the sector and originate new customers – and, crucially, build brand acceptance amongst investors.

Three alternative reasons to consider peer-to-peer investing (Your Money), Rated: B

However, any investment where capital is at risk – such as alternative lending – is not covered by the Financial Services Compensation Scheme (FSCS) and should not be considered as a substitute for cash deposits. So, why should investors look at the burgeoning alternative lending sector? There are three possible reasons:

  • Diversification
  • Funding your income needs
  • Managing pension allowances – Alternative lending certainly offers attractive returns relative to other investment options, as well as against cash at the bank. ThinCats has achieved average returns for investors of 7%-8.5%(as at 11 Oct).

Hello Soda Raises £5.5M in Funding (FINSMES), Rated: B

Hello Soda, a Manchester, UK-based international big data and text analytics company, raised £5.5m in equity and debt funding.

China

Chinese peer-to-peer lender Hexindai shrugs off tighter scrutiny concerns, rising more than 60pc on Nasdaq debut (SCMP), Rated: AAA

Shares in Hexindai, China’s fifth biggest P2P lender, surged more than 60 per cent on its Nasdaq debut on Friday, shrugging off looming concerns of possible tighter scrutiny on P2P lending platforms by Chinese authorities.

Shares in the company traded up 65 per cent to US16.50, just 20 minutes into the listing under the symbol HX, from its offering price of US$10 per American depositary share. The company aims to raise up to US$88 million through the flotation.

China’s unicorns face questions over fundraising (Financial Times), Rated: AAA

Jianpu Technology, the Chinese financial comparison site poised to list later this year, has been stripped of its status as a “unicorn” worth $1bn after regulatory filings revealed it had inflated the funds raised from investors.

Peer-to-peer lender Ppdai’s fundraisings detailed in its filing also fall short of earlier disclosures, according to calculations by Crunchbase, which collates its data from a variety of mostly publicly available channels, including US Securities and Exchange Commission documents.

Qudian’s initial public offering prospectus put its bad-loan ratio at 0.5 per cent — an unusually low but not impossible figure, especially if was selling off bad debt to third parties, which is a common practice among online lenders.

Source: Financial Times

Qudian’s prospectus did not advertise a clear pre-IPO fundraising figure. However, Crunchbase says the company raised about $873m from a number of investors before it went public.

Source: Financial Times

Chinese auto-trading IPO may prove to be a lemon (NASDAQ), Rated: A

Yixin could raise more than $800 million in a Hong Kong float. The Chinese firm wants to be to cars what Ctrip has become for mainland travellers: a one-stop online shop. It is well-positioned for China’s car boom and changing attitudes towards borrowing, but a punchy valuation means it could struggle after listing.

China’s car market is booming. And Yixin smartly targets people born from the 1980s onwards. They are more open to borrowing than their thrifty parents, and many don’t have credit scores, making it tricky for them to borrow from banks instead.

Yixin Group, an online auto-trading and financing company backed by Chinese internet giant Tencent, is planning to raise up to $867 million through an initial public offering in Hong Kong, Thomson Reuters publication IFR reported on Nov. 2.

IDG Capital, CreditEase help retail investors tap new economy (China Daily), Rated: B

Leading venture capital firm IDG Capital and Credit Wealth Management, an independent wealth management arm of CreditEase Group, has formed a comprehensive strategic partnership at the latter’s 2017 private equity investment forum held in Beijing on Friday.

The system enables analysis of 20,000 institutions via 60 dimensions such as styles of their management teams, when they exit from companies they have invested in and who buy into these companies.

European Union

Early Facebook Backer Tied to Russia Bank, Kushner Platform (Bloomberg), Rated: A

A prominent Silicon Valley investor who was an early backer of Facebook Inc.partnered in two investments with the Russian state-controlled bank VTB Bank PJSC before it was sanctioned, his spokesman confirmed Friday.

Yuri Milner, the Russian-born founder of DST Global, also invested $850,000 of his personal money last year in Cadre, a real-estate investing platform co-founded and partially owned by the family of Jared Kushner, President Donald Trump’s son-in-law and senior adviser. Milner’s spokesman said that VTB played no part in his Cadre investment, which was done solely on the business merits of Cadre.

You too can become an investor in exciting new Irish innovation (Independent), Rated: A

Backing young companies sounds expensive and risky but it doesn’t have to be either. Today with no more than €50 you can start lending to fledgling Irish businesses through a peer-to-peer platform like Linked Finance. The same €50 could back numerous new ideas on a crowdfunding platform like Fund It.

Today there are 17,000 people lending a total of over €35m through Linked Finance alone but there’s €99bn more sitting in Irish deposit accounts, according to the Central Bank’s July 2017 figures.

International

An Acceleration in Fintech Capital Raising (Lend Academy), Rated: AAA

The recent CB Insights Fintech Trends Briefing points to the rise in fintech financings as Q3’17 saw 278 deals to VC-backed fintech companies, the largest quarter since Q1’12. While total capital invested is down 25 percent from Q2’17 to $4bn the pace of the deals show investors appetite for fintech companies is still very strong.

Facial recognition startup Megvii Face++ raised $460mn in their most recent investment round led by China State-Owned Venture Capital Fund and the China-Russia Investment Fund.

German based online lender Spotcap raised $26mn in equity and debt funding.

Credit Sesame, a San Francisco and Mountain View, Calif. – based personalized credit service and financial wellness company, raised over $42mn in funding.

FS Card Inc., a Washington, DC-based financial services company focused on underserved consumers, raised a $150mn credit facility.

Finova Financial, provider of fair and affordable digital alternatives for Americans underserved by the traditional banking system, secured $102.5mn in equity and credit facility funding.

LendingHome, a San Francisco, CA-based real estate marketplace lender, raised $457mn in capital, which includes both permanent equity and the launch of LendingHome Opportunity Fund II.

BlueVine, a Redwood City, CA-based provider of working capital financing to small and medium-sized businesses, secured up to $130mn in debt capital financing.

OakNorth, a London, UK bank that provides debt finance to fast-growth businesses and established property developers, received a $202mn investment.

SalaryFinance, a London U.K.-based innovative financial wellbeing employee benefits company, completed a $52mn funding round.

How banks can use ETHLend to reduce interest rates globally (TechBullion), Rated: A

P2P platforms are great for smaller loans (i.e. paying off credit cards or repairing a damaged car), but they might not be as affordable and available for larger purchases (i.e. a home purchase or a new car). Especially in developing markets, such larger finance goals might be out of reach due to the lack of credit scoring systems or access to capital in the first place.

Now, how could ETHLend be used to fulfill this market? Let us imagine that a bank or an institutional financer is looking to finance asset backed loans. They have a minimum loan amount of $100,000, and because of this they will be unable to accept loan terms for smaller loans. These banks and institutional financiers would be able to go onto the ETHLend platform, and offer their liquidity to another investor (wholesale borrower) who has large amounts of digital tokens (cryptocurrency) to pledge as collateral.

The investor (wholesale borrower) can then take that $100,000 they got from the bank and turn around and offer loans on a smaller scale to people on the platform or in their local markets, whom do not need to pledge collaterals.

Lendoit – The Decentralized Marketplace Lending Platform Where Everyone Benefits (Chipin), Rated: A

Current P2P platforms are not really P2P because they need to have intermediaries like issuing banks or trust accounts for the system to work. This is a problem as intermediaries usually lack transparency and are also restricted geographically.

For instance, the annual interest of a loan in Brazil may be more than 50% while it is only 1% in Japan.

Source: Chipin

Lendoit is a decentralized peer-to-peer lending marketplace platform that connects borrowers and lenders globally in a fast, easy, and extremely secure manner by using the blockchain and smart contracts.

With the blockchain, Lendoit is able to automate all of the processes required in P2P money lending without sacrificing anything. Instead, everything will be much cheaper and more efficient which is exactly the solution to problems of cross-border loans.

Smart Loan Contracts contain the borrower’s details including his or her score as well as containing the conditions of loans and their respective tenders.

The Smart Reputation Contract works similarly to credit score; in Lendoit, they act as the global score of an Ethereum address and can be utilized for other purposes other than credit transactions.

The Smart Conversion Contract is responsible for converting currencies into the LOAN token when it comes to making transactions on the platform.

Lendoit Global Payments will launch a token for sale for the aptly named LOAN token.

  • Token name: LOAN
  • Token base: Ethereum (ERC-20 compliant)
  • Token supply: TBA
  • Token sale duration: December 13th, 2017

P2P Lending Offers Participants More Efficiency and Convenience in the Financial Services Sector (NewsBTC), Rated: B

The global lending marketplace market is projected to reach $290bn. by 2020, with an expected compound annual growth rate of 51% from 2014-2020.

Colombia Fintech Startups Alegra and Bankity to Compete for Funding at Finnosummit in Miami Next Week (Finance Colombia), Rated: A

Later this month in Miami, a group of 10 Latin American fintech startups will gather in Miami to compete. Two companies, Alegra and Bankity, are from Colombia and will be vying against peers from Mexico, Brazil, Argentina, and Chile for the $50,000 USD prize.

The competition is part of Visa’s Everywhere Initiative and will be taking place within Finnovista’s larger Finnosummit on November 9 in Florida’s largest city.

Bankity offers the first intelligent banking card in Latin America.

Alegra, founded by Santiago Villegas and Jorge Soto, is also great because it aims to help small business owners with tedious tasks like invoicing and reporting with its cloud-based accounting software.

Blockchain is bringing the sharing economy to everyone (VentureBeat), Rated: A

The sharing economy relies on a distributed workforce, shareable assets, and peer-to-peer transactions and contracts. Companies in these emerging marketplaces handle payments through smart contracts and blockchain technology. This greatly lowers costs, improves trust and transparency with the community, and simplifies transactions at a global scale by making them near-instantaneous, even when distributing payments to thousands of digital wallets at once.

One of the biggest markets for data is social media and online retail. DataWallet, based in San Francisco, helps users download their digital identity and upload it to a blockchain-powered data exchange where companies can purchase it, with payments made to users through the blockchain.

Ride-sharing company LaZooz, based in Tel Aviv, is building a decentralized, Uber-like app that uses blockchain to pay drivers and other community participants. WeTrust, in Fremont, CA, is doing something similar in the peer-to-peer lending space, charging only a max fee of .3 percent instead of 1 percent, like LendingClub.

Australia

Westpac posts AU$ 7.99b yearly profit, sends digital Customer Service Hub live (ZDNet), Rated: AAA

Westpac has processed its first live home loans through its new technology platform, the Customer Service Hub, with the bank saying the initiative aimed at speeding up and simplifying the home loan process as its largest transformation program to date.

For the 2017 financial year, the bank reported AU$7.99 billion in after-tax profit, on revenue of AU$21.8 billion, an increase of 4 percent year-on-year.

As of September 30, 2017, Westpac boasted 13.8 million customers; 4.53 million were considered digitally active, with 72 percent of them using a mobile platform.

Additionally, through its AU$100 million venture capital firm Reinventure, Westpac has made 16 investments covering areas such as blockchain and digital currencies, payments, peer-to-peer lending, as well as big data and data analytics.

The bank also this year entered into a “strategic” relationship with Australian-listed payments firm Zipmoney, investing AU$40 million by way of a private share placement in August to allow the integration of the fintech’s products and services across Westpac’s network throughout Australia, as well as other initiatives including the provision of in-development business-to-business products and services.

In April, the bank went live with Samsung Pay, opening up the phone-based wallet to debit and credit card cardholders across both Mastercard and Visa. This came a year after it launched Android Pay, in addition to Westpac’s own tap and pay function, which was unveiled to customers in 2014.

Banks wealth models are ‘unravelling’ (Financial Review), Rated: A

Independent investment and superannuation platforms like Hub24 and Netwealth are readying to reap the rewards of the “unravelling” of the bank’s traditional wealth management models.

The best interest duty is a key plank of a package of financial advice reforms, known as the Future of Financial Advice (FOFA), introduced in July 2013. This was tested with the corporate watchdog recently ordering Melbourne-based financial planning firm to pay $1.1 million in fines and costs as part of the first civil penalty imposed for breaching its duty to act in the best interest of its clients.

Last week, BT Financial Group (BTFG) said it would expand its life insurance APL from its sole in-house product, adding a minimum of three alternative insurers by March next year.

Increasingly, these platforms are snaring a fair whack of adviser business in the $750 billion platform market, which is growing at 10 per cent a year.

Netwealth has about $16 billion in funds under advice and more than 2000 financial advisers and planners using its services. When it lists on the ASX with an $879.2 million market capitalisation late next month, it will be the second biggest IPO of the calendar year to date

Australian FinTech SelfWealth IPO Offering Self Directed Investors Alternative to Traditional Broker Trading (BusinessWire), Rated: A

SelfWealth Limited (“SelfWealth” or “the Company”), an Australian FinTech business offering a flat fee brokerage service and social portfolio construction network for Australian investors, is pleased to announce the opening of its Initial Public Offering (IPO) to raise up to A$7.5 million (with a minimum subscription of A$5.0 million).

SelfWealth is offering for issue 37.5 million shares priced at A$0.20 per new share; the indicative market captialisation of SelfWealth will be approximately A$26.1 million. The Company’s ASX ticker code will be SWF.

India

Here are four lending platforms that are helping unbanked SMEs (The Hans India), Rated: A

Despite being a major part of the Indian economy, Small and medium-sized enterprises (SMEs) in India face multiple challenges.

From inadequate banking to lack of constant cash supply, these SMEs are deprived of the smooth and consistent growth factors

These four SME lending platforms are bridging the requirements digitally:

  1. Lendingkart – The company aims to transform small business lending by making it convenient for SMEs to access credit easily.
  2. CoinTribe – Another online loan disbursement platform, CoinTribe provides quick and easy collateral-free loans to small businesses and individuals.

    It is the only online lending platform which has back-tested its credit model with large banks.

  3. Faircent – Largest peer to peer lending website, Faircent caters to retail and business loans.
  4. TAB Capital – The platform has commissioned an advanced proprietary algorithm that leverages big data and analytics to simplify and accelerate loan application, verification, approval and disbursement.

China’s Fosun leads $ 10 million round in fin-tech startup Kissht (VC Circle), Rated: A

OnEMi Technology Solutions Pvt. Ltd, which runs lending startup Kissht, has raised $10 million (Rs 67 crore) led by China’s Fosun International, a report in a financial daily stated.

In June this year, the startup raised $2 million (around Rs 13 crore) from Endiya and Ventureast.

India’s Largest Bank Goes Big on Blockchain (Cryptocoins News), Rated: B

The State Bank of India is gearing up to implement blockchain solutions in a number of financial processes including the management of its Know Your Customer (KYC) system.

SBI is now pressing ahead with its first implementation of the decentralized technology by using an enterprise blockchain solution for managing its Know Your Customer (KYC) system, via a new partnership with Intel that sees the technology giant become the consortium’s official technology advisor.

Asia

Square Peg, SIG Asia lead $ 7m round in SEA service marketplace Kaodim (Deal Street Asia), Rated: AAA

Southeast Asian service marketplace Kaodim Group has raised $7 million (MYR 29.5 million) in a funding round led by Australia venture capital firm Square Peg Capital and Shanghai-headquartered SIG Asia Investments.

A clear path to transforming Singapore’s financial services sector (Channel News Asia), Rated: A

Minister for Education (Higher Education and Skills) and Monetary Authority of Singapore board member Ong Ye Kung unveiled the Industry Transformation Map (ITM) for the financial services sector on Monday (Oct 30).

The ITM outlines key growth strategies for the financial sector that aim to generate greater productivity, attain higher growth rates, and create 4,000 jobs each year up to 2020.

These include strengthening financing channels for small- and medium-sized enterprises (SMEs), simplifying the regulatory framework for venture capitalmanagers, introducing dual class share structures for high-tech companies, and encouraging other sources of private sector financing for start-ups and entrepreneurs.

According to a Deutsche Bank report released last year, debt burdens have risen from less than 240 per cent of GDP in 2009 to 265 per cent in 2015. This is largely due to Singapore’s high levels of private sector leverage, for which there are limits to greater growth.

Singapore plays fintech evangelist on global mission (Business Times), Rated: A

IN TWO short years, Singapore has zipped into pole position in the fintech space, challenging rivals such as London in drawing intellectual and funding capital into the city-state with its open adoption of new technology and more broadly, innovation.

The strategy, led by the Monetary Authority of Singapore (MAS), is now widening to a regional and global endeavour, as MAS expands into cross-border projects that could pay significant digital dividends in time.

This will chiefly include blockchain experiments, with MAS now looking at ways to expand an inter-bank payments pilot to create a cross-border payments system between two countries, Ravi Menon, managing director of MAS, said in a wide-ranging interview with The Business Times.

Middle East

Seven in ten UAE residents unsure how to achieve their financial goals (The National), Rated: AAA

Seven in ten UAE residents are unsure of the steps needed to achieve their financial goals, a poll by National Bonds revealed on Monday, as the UAE investment company launched a new campaign to encourage better saving habits.

According to the poll of almost 400 residents conducted in the first nine months of the year, 69 per cent of respondents lack awareness about financial planning.

Despite the lack of clarity on how to save and invest their money, 53 per cent were most interested in receiving financial advice related to retirement planning. This was consistent among Arabs, Asians and Western expats, according to National Bonds, while Emiratis are more concerned with advice on financial health.

Authors:


George Popescu


Allen Taylor

Monday October 16 2017, Daily News Digest

fintech financing

News Comments Today’s main news: SoFi withdraws banking application. SoFi completes largest loan securitization to date. Retailer sues Kabbage. New UK marketplace loan deal mandated. OakNorth achieves unicorn status with 154M GBP raise. PPdai plans $350M U.S. IPO. Linked Finance gets 2M Euro equity investment. Today’s main analysis: Q3 2017 FinTech Insights Report (must-read). New generation of high net worth individuals spur […]

fintech financing

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Middle East

Africa

News Summary

United States

SoFi withdraws U.S. banking application, citing leadership change (Reuters), Rated: AAA

Student online lender Social Finance Inc said on Friday that it is withdrawing its application for a bank license in the wake of the departure of a number of senior executives, including co-founder and former Chief Executive Mike Cagney.

SoFi Completes its Largest Loan Securitization to Date (PR Newswire), Rated: AAA

SoFi announced today the closing of a $776.7 million offering of SoFi Professional Loan Program 2017-E notes.

SoFi 2017-E marks the company’s largest asset-backed securities issue to date and its 10th ABS transaction this year, bringing SoFi’s total issuance for 2017 to $5.375 billion.  Since inception, SoFi has closed 30 transactions totaling $12.4 billion in issuance.  With the closing of SoFi 2017-E, SoFi maintains its position as a top ten ABS sponsor. The recent transaction was heavily subscribed with orders totaling $2.3 billion.

Wealth Management Firm GENCapital Partners with SoFi and Celebrates One-Year Anniversary (Digital Journal), Rated: A

GENCapital is proud to announce a partnership with SoFi, a new kind of finance and lending company. In addition, GENCapital celebrated its one-year anniversary in September.

FT Partners Research Publishes Q3 2017 FinTech Insights Report (FT Partners Email), Rated: AAA

Highlights of the Q3 2017 report:

  • Q3 2017 financing volume of $5.1 bn was lower than in Q2 2017 ($8.8 bn), but higher than in Q1 2017 ($4.3 bn). This quarter saw the second highest financing deal count ever at 412 transactions, only behind Q1 2016, which had 438.
  • Financing volume year-to-date is tracking just below 2016’s record level and is on pace for the second strongest year ever. This is even more impressive considering that 2016 was skewed by a handful of megadeals in China.
  • The Banking sector continues to be the most active sector this year in both the number of transactions (356 year-to-date) and financing volume ($6.3 bn year-to-date).
  • 2017 FinTech financing volume in Europe ($5.3 bn) is already more than 2x the financing volume of 2016 for the region ($2.6 bn).
  • Q3 2017 M&A volume ($32.9 bn) was the highest since Q4 2015 ($50.5 bn), which included Visa’s $23.4 bn acquisition of Visa Europe. This quarter had eight $1 billion+ M&A deals, which is the most since Q4 2015 (which also had eight).
  • So far this year, 57% of the total global M&A dollar volume is comprised of international targets, although only 38% of the number of transactions represents international targets.
Source: FT Partners

Get the full report here.

Mass. Retailer Sues Over Alleged High-Interest Loan Scheme (Law360), Rated: AAA

A Massachusetts clothing and sports retailer filed suit in federal court Thursday alleging that financial technology company Kabbage Inc. evaded state law by offering high-interest loans through an industrial bank based in Utah, which places no ceiling on interest rates for commercial loans, all the while serving as the true lender.

NRO Boston LLC and owner Alice Indelicato accuse Kabbage and Celtic Bank Corp. of devastating the retailer with their “rent-a-bank” scheme, whereby the bank was listed as the lender for loans in order to get….

Lending Club founder Renaud Laplanche opens up on his ‘frustrating’ exit and new startup Upgrade (Business Insider), Rated: A

Renaud Laplanche tries to “keep a positive attitude rather than focus on my frustration” when it comes to Lending Club.

“It was very, very frustrating. I’m not commenting on the story, but the best way to actually understand what really happened is to read the filings. I think the press made it sound a lot worse, a lot more sensational, than it really was.”

Upgrade raised $60 million (£45.7 million) in April, the biggest ever Series A funding round for a US fintech startup. Many of Lending Club’s original investors have backed the business and Jefferies, an investment bank burned by Lending Club’s loan term scandal, has signed up to buy loans from Upgrade — a vindication for Laplanche.

Now he is focused on “what can I learn from it, what can I do better. Upgrade has been part of that.”

Global Debt Registry Verifies Over $ 1.5 Billion in Loans (AltFi), Rated: A

Global Debt Registry (GDR), the asset certainty company known for its loan validation expertise, today announced it has exceeded a $1.5 Billion of loans issued by digital lending platforms and verified by the Company’s suite of due diligence solutions. On the heels of the GDR’s announcement of its successful SOC 1 Type 2 and SOC 2 Type 2 attestations last week, this achievement confirms the Company’s role as a leader in online lending’s ongoing expansion, driving capital growth in the sector by providing certainty and transparency around investors’ online lending portfolios and protection against risks surrounding the loan data integrity.

Amex targets Square, PayPal in small-biz lending (American Banker), Rated: A

In the digital age, a lot has changed about how businesses operate — and a lot of new data is being generated in the process.

This creates new possibilities for judging a consumer or merchant’s creditworthiness. Square and PayPal have been taking advantage of this for years with models that rely on a merchant’s sales history to determine their likelihood to repay a loan, and American Express is ready to compete.

Redpoint Capital Group, LLC Enters into Credit Services Agreement with Elevate Credit, Inc. Subsidiaries (BusinessWire), Rated: A

Redpoint Capital Group, LLC (“Redpoint”), an alternative investment company focused on providing financing across an array of asset-based strategies, announced it has entered into two additional Credit Agreements with two separate wholly owned subsidiaries of Elevate Credit, Inc.

Rise Credit Service of Ohio, LLC entered into a Credit Services Agreement with Redpoint Asset Funding Ohio, LLC (“Redpoint Ohio”) whereby Rise Credit Service of Ohio, LLC acts as a credit service organization on behalf of consumers for certain loans originated, funded and collected by Redpoint Ohio.

Furthermore, Rise Credit Services of Texas, LLC, a wholly owned subsidiary of the Company, entered into a Credit Services Agreement with Redpoint Capital Asset Funding, LLC (“Redpoint”) whereby Rise Credit Services of Texas, LLC acts as a credit access business on behalf of consumers for certain loans originated, funded and collected by Redpoint.

In addition to the agreements with Redpoint and Redpoint Ohio described above, Rise Credit Services of Texas, LLC, Rise Credit, LLC and the Company also entered into new guarantees of certain receivables of the Company and its subsidiaries held by Redpoint and Redpoint Ohio.

True Link Financial Secures $ 8 Million Series A Round (PR Newswire), Rated: A

True Link Financial, the financial services provider for seniors, announced today that it has raised $8 million in a Series A funding round led by QED Investors, with additional investment from Radicle Impact and Initialized Capital. In conjunction with the investment, QED’s Founding Partner Frank Rotman will join True Link’s Board of Directors. With this latest round True Link has raised $15.8 million since the company’s founding in 2012.

The 45 million seniors in America – the largest and fastest-growing segment of the population – are facing new challenges. Average lifespans increased by more than thirty years over the 20th Century, stretching savings further and layering in new medical costs. Since the time today’s retirees entered the workforce, the percentage of workers with a pension has dropped by more than half. 5.5 million Americans have Alzheimer’s today, and more than 16 million will have the disease by 2050. And according to True Link’s groundbreaking 2015 study, financial fraud costs the aging a whopping $36 billion a year. In short, people are living longer with fewer resources and more risks.

The company’s customer base has grown twentyfold in the last three years. Its cards division is the first Silicon Valley startup debit card issuer to turn a profit, and its robo-advisor is Silicon Valley’s first robo-advisor to turn a profit.

Could online lending become the next systemic risk? (American Banker), Rated: A

When banks resisted expanding credit in the years following the financial crisis and passage of the Dodd-Frank Act, online marketplace lending seized on what seemed like a niche opportunity: targeting the credit markets deserted by banks.

But with issuance of marketplace securitizations now exploding — rising 300% cumulatively in the past two years — the idea of online lending as a niche is quickly deteriorating.

Google and Amazon are ready to disrupt small business lending, former Obama advisor says (CNBC), Rated: A

Tech behemoths Google and Amazon are poised to put competitive pressure on traditional banks in the small business lending arena, one of former President Barack Obama‘s cabinet members said Tuesday.

Karen Mills, who served as Obama’s administrator for small businesses, told CNBC that the tech giants would probably push to disrupt the market and deal a blow to established lenders.

“I think they are going to dominate the market, and that is the next phase that’s coming,” she told the LendIt Europe fintech conference in London.

SBA Lending Activity in FY17 Shows Consistent Growth (PR Newswire), Rated: A

The U.S. Small Business Administration today announced fiscal year 2017 lending numbers showing increasing loan levels in small business lending through the 7(a) and 504 loan programs, as well as increases in lending to women, veterans and emerging communities.

SBA approved over 68,000 loans in the 7(a) and 504 loan programs in FY17.  These programs provided over $30 billion to small businesses.

In FY17, the 7(a) program supported a consistent number of loans — more than $25.44 billion combined across 62,430 loans.  The SBA continues to streamline and improve access to its loan program for small loans and emerging communities, delivering more than $5 billion in smaller loans of $350,000 or less in FY17.

7(a) lending to women-owned businesses (both majority and minority owned) grew in total dollar and volume.  FY17 lending exceeded $7.5 billion, an increase of $298 million from FY16.

FY17 504 lending to women-owned businesses reached $955.2 million, a $277 million increase over the previous fiscal year. Loans to veterans totaled $1.15 billion for 7(a) and 504 lending.

Ray Sturm of AlphaFlow (Lend Academy), Rated: A

In this podcast you will learn:

  • What AlphaFlow does and why it is unique in real estate investing.
  • The real estate platforms they are working with today.
  • Why they are looking to also work with offline hard money lenders.
  • How they decide which platforms to work with.
  • Details of their own proprietary real estate analytics platform.
  • The area of the real estate market they focus on.
  • The average duration, rate and LTV of the loans they invest in.
  • Why they decided to become a Registered Investment Advisor.
  • The types of investors coming to their platform today.
  • How they are able to get new investors a diversified portfolio with days.
  • The tech they are using to connect to the real estate platforms.
  • Some of the big names that participated in their recent seed round.
  • Ray’s view on the real estate crowdfunding space in general.
  • How Ray thinks about the long term direction of AlphaFlow.

    

P2B Investor Program Allows Community Banks to Lend More with Marketplace Lending Partnership (Crowdfund Insider), Rated: A

P2B Investor has launched an interesting partnership program that is good for banks, good for borrowers and good for P2Bi. Banks, typically smaller banks, would like to lend more to SMEs but are risk averse due to multiple reasons. P2B Investor’s new program allows the bank to buy the first half of the loan with their low cost of capital, and P2Bi marketplace buys the second half. Thus the SME has a hybrid line of credit to finance its cash needs.

Payday loans rule could change in 2019 (MSN), Rated: A

Consumers who are caught in a financial squeeze might one day be able to skip the payday loan store and turn to banks and credit unions for lower-cost, quick-fix loans.

Congress could move to overturn the rule — but some say that’s unlikely.

What could change: Lenders eventually would be required to research upfront whether borrowers could afford to repay all or most of  their short-term loans at once — including payday loans and auto title loans — and longer-term loans with “balloon” payments.

What won’t change: People who are cash-strapped still will be looking for ways to cover their bills.

AutoGravity Is Fintech’s Answer To Car Shopping (Benzinga), Rated: A

AutoGravity, a fintech platform for car shopping, has been nationally available for less than a year. The app’s been downloaded more than 750,000 times and processed more than $1 billion in financing requests.

Of the 20 largest automotive lenders, AutoGravity has some form of an agreement with 19, said chief marketing officer Serge Vartanov.

The app’s momentum is building: 100,000 of its downloads came in the month of August alone.

AutoGravity is now available in 49 states after kicking off with a soft launch in California.

While AutoGravity doesn’t disclose its overall lender portfolio, it has previously announced partnerships with Mercedes-Benz Financial Services and Hyundai Capital and a $30 million investment from Volkswagen and Daimler Financial Services.

Cardplatforms disrupts the financial services market (Biz Journals), Rated: A

The Boca Raton fintech company has grown revenues by nearly 400 percent in 2016.

CarGurus races up 72% in a week with 4 strong pops (NASDAQ), Rated: A

CarGurus and three medical device companies each had a strong debut, averaging a first-day pop of 45%.

Issuer
Business
Deal Size
($mm)
Market Cap
at IPO ($mm)
Price vs.
midpoint
First day
return
Return
at 10/13
CarGurus ( CARG ) $150 $1,798 14% 72% 78%
 Online marketplace for buyers and sellers of new and used cars.

The rise of a new kind of finance is setting off alarm bells at the Fed (Business Insider), Rated: A

The challenge is that regulatory bureaucracies in Washington, including the Federal Reserve, may be too slow to react to new technology — from cryptocurrencies and blockchain to crowdfunding — in the same way policymakers missed the risks embedded in the “innovations” in mortgage finance that ultimately fueled the worst housing bust and financial crisis in modern history.

“We’re not going to call it banking — we’re going to call it something else,” Bullard said.

The Unbanking of America, by Lisa Servon (Patheos), Rated: A

Add in the number of people suffering because of the poor economy, especially millennials in the Gig Economy, living from paycheck to paycheck, unable to accumulate enough money for emergency savings, and Americans’ use of businesses such as check cashing companies or payday lenders or other alternate lenders, is entirely rational, in her portrayal, and it’s wrong for policymakers to act as if all Americans need to do is to be told they should get a bank account and that’s that.

Servon’s research for the book consisted, in part, of actually working at a check cashing service and a payday lender.

She then concludes the book by talking about “innovators.”  She profiles a start-up that intends to provide an alternate credit-scoring model that takes into account other types of financial behavior that’s not typically incorporated into the mainstream credit bureaus’ credit scores, and a start-up that intends to make it cheaper to transfer money from one person to another, and a bank, KeyBank, that is more mission-oriented than the usual faceless big corporate bank.

One thing she entirely fails to mention is the fact that interest rates have dropped so dramatically.

A second development in the banking world that she neglects to mention is the rise in prepaid debit cards.

And the third missing item is that of competition.

Corporate Boards Should be Demanding Management Answer These 5 Questions About Company Culture (Entrepreneur), Rated: A

  1. Is the leadership team operating with a high level of professionalism and integrity? Do they value diversity and inclusion?
  2. Do legal and HR have a seat at the table in making key strategy, organizational and business decisions?
  3. Does the company have published policies, processes and trainings so employees easily understand what type of behavior is unacceptable and what to do if they have a problem?
  4. What is the company’s strategy to create a diverse and inclusive environment on the board and in the office?
  5. Does the board have oversight and access to management, so as to be informed about the company’s internal controls and policies and when the same are violated?

Is the way the CFPB handles enforcement about to change? (Housingwire), Rated: B

But regardless of what happens to Cordray, the way the CFPB handles enforcement could be changing as we speak, because the CFPB’s enforcement director is apparently leaving the bureau.

Anthony Alexis, the Consumer Financial Protection Bureau’s enforcement chief, is stepping down after more than two years overseeing the agency’s efforts to combat abuses by the financial industry, a departure certain to fuel speculation that Director Richard Cordray will leave soon to pursue the Ohio governorship.

Alexis, a former Mayer Brown partner who was named enforcement director in 2015 after holding the role in an interim capacity, announced his departure plans to CFPB staff Thursday afternoon, according to a former CFPB attorney who is familiar with the matter.

BREAKING: Auto Racer, Atty Guilty Of Running Criminal Payday Loan Empire (Lexis Nexis), Rated: B

A Manhattan jury on Friday found auto racer Scott Tucker and his attorney Timothy Muir guilty of operating a $2 billion criminal payday loan empire that preyed on millions of vulnerable borrowers and entered into sham deals with Native American tribes.

FINRA ratchets up fintech engagement (FinancialPlanning), Rated: B

FINRA was looking to ratchet up engagement with industry players, he said.

To that end, the regulator has hosted roundtable discussions around the country with fintech firms, robos, vendors, and traditional broker-dealers’ technology departments to get a better handle on how the business is changing, Cook said. Later this month, FINRA will convene a new fintech advisory committee.

United Kingdom

New UK marketplace loan deal mandated (Global Capital), Rated: AAA

The transaction, MOCA 2017-1, will be offered in three tranches and is backed by 31,153  Zopa loans with a total outstanding balance of £208.96m. The loans have an average current balance of £6,708 and a weighted average seasoning of 4.5 months. The average interest rate is 7.2%.

Challenger bank OakNorth nabs £154m, claims unicorn status (AltFi), Rated: AAA

OakNorth, a challenger bank focussed on lending to high growth businesses and property developers, has raised £154m in equity money in a round that values the company at £934m (approximately $1.3bn). The fundraise pushes the firm into “unicorn” territory – a term reserved for private tech firms with a valuation north of a billion dollars.

The money comes from The Clermont Group, Toscafund and Coltrane, which together have purchased a 16 per cent stake in the challenger bank. OakNorth says the money will be used to boost its lending by an additional £1.5bn.

This £4bn problem is stunting SME growth (City A.M.), Rated: A

Every year, tens of thousands of small businesses see their loan applications refused by the big banks.

In fact, figures from the British Business Bank (BBB) indicate that this amounts to around £4bn in loans annually – a staggering figure when you consider that this is preventing businesses from being able to reach their full potential.

SMEs are expected to contribute £241bn to the British economy by 2025, up 19 per cent from last year’s figure of £202bn, according to research from challenger bank Hampshire Trust Bank and the Centre for Economics and Business Research.

Seen and Heard at LendIt Europe: The Future of Finance (Crowdfund Insider), Rated: A

“Data that the bank holds on the consumer belongs to the consumer and not the bank.”

Imran Gulamhuseinwala OBE, Global Head of Fintech at EY

“Banks have outdated technology. To change that takes a lot of effort. From where they are starting, it is not easy.”

Jaidev Janardana, CEO of Zopa

“Users do not really care about the tech. They just know it works.”

Radoslav Albrecht, CEO and founder of BitBond

“As for Cost of Capital. Marketplace lending has access to a very wide range of cost of capital. A lot of platforms sell loans to banks. You have Credit Unions buying loans. Credit Unions have a return target of 2 to 3%. Lower than Goldman Sachs. Marketplace Lenders have access to similar cost of capital.”

Renaud Laplanche, CEO and founder of Upgrade

“The biggest myth of all is that Banks and other financial services are advantaged at this.  They have all the data. The truth is the data is fragmented across all different tech stacks and it is difficult to utilize. Very expensive and slow. The data is in the wrong place.”

Antony Jenkins, CEO and founder of 10X Future Technologies

BitRent Opens New Horizons for Investors (The Merkle), Rated: A

Blockchain platform BitRent announced a revolutionary solution in the area of new-built property: commercial and residential property shared investing at an early stage of construction and total control over construction process in real time by means of modules and structures chipping. The company operates on blockchain technology and smart-contracts protocol. BitRent platform’s mission is to make real estate investing easy, transparent and profitable all over the world.

Christine Farnish on the changing role of the P2PFA (P2P Finance News), Rated: A

There are changes ahead for the Peer-to-Peer Finance Association (P2PFA). The self-regulated trade body has been shaping industry standards for six years, but as alternative lending enters the mainstream, even the P2PFA has to be willing to evolve.

However, the next board meeting – set to be held in November – is expected to focus on an update to the P2PFA rules, membership criteria, and the association’s role in the wider regulatory community.

The departure of RateSetter and LendInvest (which no longer defines itself as a P2P lender) has brought the P2PFA’s market share down to around 50 per cent of the UK’s P2P sector. Current members include Funding Circle, Zopa, MarketInvoice, Landbay, ThinCats, Lending Works and newest member Folk2Folk but no new members have joined since February of this year. However, Farnish rejected rumours that the association is “a closed shop”.

For now, the P2PFA is focused on reviewing its own rules and Farnish confirmed that a revised version of these rules will be published before the end of the year.

Robo-advice in ten points  (London School of Economics and Political Science), Rated: A

The asset management industry is currently in a state of flux, and the manner in which individuals and institutions interact with their wealth managers is on the cusp of dramatic change. Digitisation and increased use of technology should mean that we are at the point of a low-cost revolution.

Robo-advice in ten points:

  • Robo-advice is online
  • The key is probably cost: Robo-advisors can be 60-70 per cent cheaper than traditional solutions and can provide savings of 1 percentage point per year of assets. Over a lifetime of investing, this would make £100,000s of difference to millions of investors in the UK alone.
  • Growth is strong: Whilst still only a fraction of the market, the assets under management of major players are growing between 50 and 100 per cent per year, and new entrants and concepts are developing all the time. There are currently over 100 robo-advisors in Europe with most based in either Germany or the UK.
  • There is a long way to go: Nutmeg, the UKs’ largest robo, has $1bn in assets, but Legal and General, the UK’s largest traditional asset manager, has over $1 trillion – a thousand times larger. Data in the US is similar, with BlackRock having $6 trillion under management and Betterment, the largest US robo, having a fraction of this.
  • On-boarding is a noted differentiator, but also a concern: The faster process and fact finding may not always be up to date with regulations or as rigorous as it should be.
  • Millennials are less important than predicted: Most of the original players in this nascent market targeted millennials. But older, wealthier and still tech-savvy baby boomers have become core clients.
  • Robo-advisors mainly use ETFs
  • Future robo-advisors will be more sophisticated
  • Robo-advice aids financial inclusion: Both the regulator and the industry are hoping that robo-advice will improve participation and access to the investment process.
  • Robo-advisors typically use Modern Portfolio Theory: Robo-advisors typically use mean-variance optimisation for asset selection, but future solutions are likely to use Liability Driven Investment (LDI) frameworks  for portfolio construction.

Ignoring women: Banking’s £130bn a year own goal? (AltFi), Rated: B

Financial services firms could be missing a £130bn opportunity by not winning over women, according to a new report.

UK financial institutions are failing to connect with female customers at every stage of the buying journey, from advertising to offerings and funds, finds Kantar’s latest research. It shows financial advertising and marketing strategies fail to communicate trustworthiness, dependability or understanding – particularly to women, 65 per cent of whom report low confidence in their financial institutions, compared to 55 per cent of men.

Only 38 per cent of women claim to feel ‘in control of their financial future’ compared to 51 per cent of men.

China

Chinese P2P Lending Platform PPdai.com Plans $ 350M IPO In US (China Money Network), Rated: AAA

Chinese peer-to-peer lending platform PPdai.com will seek an initial public offering on the New York Stock Exchange, the company said in a filing, marking the latest Chinese financial technology company to go public. PPdai.com is currently values as a unicorn on China Money Network’s China Unicorn List with a US$2 billion valuation.

The company aims to raise as much as US$350 million through the IPO, though it has not determined the listing price or the number of shares to be offered, according to an IPO prospectus filed with the U.S. Securities and Exchange Commission.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

This week, China Insurance Regulatory Commission (CIRC) announced that it had grant an operation license to Shenzhen Wei Min Insurance Agency Co. Ltd. Tencent owns a majority stake (57.8%) of this new insurer.

On October 10thAlipay announced to introduce house rental service in eight cities (Shanghai, Beijing, Shenzhen, Hangzhou, Nanjing, Chengdu, Xi’an and Zhengzhou). Users can enter the credit renting platform by searching “rent” in Alipay. If users’ Sesame Credit is above 650, they can enjoy deposit exemption and pay rent monthly.

Hexindai, a less well-known online consumer finance platform, is going to be listed in the US.  Hexindai plans to raise $80 million in this IPO.

October 10th marked the 92th birthday of the world-renowned Palace Museum. It was on the same day that the museum started to embrace a brand new era of digital payment. 

Li Ka-shing shows strong backing for Hong Kong’s fintech sector with MioTech funding (SCMP), Rate: A

Horizons Ventures, Li’s private investment arm, led a US$7 million Series A funding round for MioTech, one of just a few Chinese tech companies in the firm’s portfolio.

Qudian IPO: What Investors Need to Know (The Motley Fool), Rated: B

The Chinese micro-lending specialist is about to hit the U.S. stock market following an IPO early next week. Millions of Chinese consumers and businesses tap Qudian for credit, but does this make the stock a potential buy?

Qudian’s sweet spot is consumer loans. According to a study from Oliver Wyman commissioned by the company, it was the top small lender in the country in terms of number of active borrowers and volume of transactions as of June 30.

These loans are fairly small, even by local standards, and typically have short durations. There sure are a lot of them, though — in the first six months of this year, the company dispensed a total of around 38.2 billion yuan ($5.8 billion).

Over Ten Chinese P2P Lending Platforms expand to Southeast Asian Market (Xing Ping She), Rated: B

Recently, the PINTEC Group has announced a joint venture in Singapore to enter the Southeast Asian market with robo-adviser as its entry point. So far, there are more than 10 Chinese Internet finance companies layout in the Southeast Asian market,including Lufax, Dianrong.com, etc.

Yu-Hang Guo, the co-founder& co-chief executive of Dianrong.com, said that China’s internet finance companies have concentrated on the southeast Asian market, there are active plans as well as passive responses. With Chinese regulations tightening, many of them are looking abroad for growth. It is reported that cash loans, P2P and third-party data services have become the three most promising businesses in the Southeast Asian market.

Actually, before the small and medium-sized internet finance platforms have been set foot, industry faucets such as Ant Financial have already started to move and accelerate into the digital payment market in Southeast Asian.

European Union

Linked Finance Secures €2 Million Equity Investment (Crowdfund Insider), Rated: AAA

Ireland-based peer-to-peer lending company Linked Finance announced on Thursday it secured €2m in equity funding to support its plans for expansion. The funding round was led by the company’s original venture capital backers, Frontline Ventures. The platform has now lent over €34.5 million to Irish SMEs since its launch in 2013, with more than €16.9 million already repaid to its lenders.

The Revolut founder on why his people work 12-13 hours a day (Business Insider), Rated: AAA

So far this year, Revolut, which started as a foreign exchange card linked to an app, has launched business accounts, loans, loyalty offers, mobile phone insurance, a bill splitting feature, a subscription “Premium” account, a chatbot, and more. Oh, and raised $66 million.

“The vision is very simple,” Storonsky said. “At the moment in the world, all banks are very local. As a result, you always struggle with international activity. That means you always need to open new bank accounts, issue new cards, set up a new credit profile.

“Nowadays people are all international. Banks are not providing this service. The vision for us is alternative global banking. Anyone in the world can just download the Revolut app and set up a local bank account to access any services they need.”

‘A lot of people work on weekends’

It’s a bold ambition. But can the business sustain this pace? I had heard from people in the industry — startup founders, PRs, former staff — that Revolut’s working culture can be tough: long hours, aggressive targets, burn out.

“We are not about long hours — we are about getting shit done,” Storonsky said. “If people have this mentality, they work long hours because they want it.”

It should be said that all the company’s Glassdoor reviews are five-star reviews, even those that mention the hours. “This company is highly addictive,” one reads.

German fintech Compeon scoops €12m fundraise (AltFi), Rated: A

A credit brokerage platform by the name of Compeon has raised €12m in a series B fundraising round. The round was led by existing investor Tengelmann Ventures, with btov Partners and Dieter von Holtzbrinck Ventures also participating.

Compeon processed a total of €2.5bn in loan requests in 2016, with an average loan request of €700,000.

Israel’s Migdal Partners Decentralized P2P Lending Platform Lendoit (Finance Magnates), Rated: B

Lendoit, a new decentralized P2P lending platform, has announced that it has partnered with one of Israel’s biggest institutional investment firms, Migdal Investment Banking. Established in 1965 and part of Migdal Capital Markets Group, it currently manages assets valued at $9 billion for thousands of clients in the Israeli private, business and public sectors.

International

PRIVATE CREDIT INDUSTRY: SUPPLY AND DEMAND (All About Alpha), Rated: AAA

The Alternative Credit Council, an affiliate of the Alternative Investment Management Association, has put out a paper on the present state of the private credit industry, considering both the demand (from borrowers) for its services and the supply (from investors) of capital to lend.

In preparing this paper, the ACC has partnered with Dechert LLP, an international law firm that specializes in financial and regulatory intricacies, to research and present a discussion of how private credit has managed to “cement its place in the lending landscape globally.”

One of the points of the paper is that private credit so understood is no longer stuck in the midmarket. It is moving outward in both directions.

On the other side of the market, there continue to be a number of borrowers who are good risks yet whose needs are not being met by the banking system, which is undergoing its own uneasy transformation in the face of regulatory pressure.

The top three characteristics of private credit that borrowers value most are: the speed of decision making, the ability to develop complex structures, and the flexibility of terms.

FinTech builds on blockchain for international mobile payments (Computerworld), Rated: A

IBM has partnered with a Polynesian payments system provider and an open-source FinTech payment network to implement a new international exchange based on a blockchain electronic ledger.

The new payment network uses IBM’s Blockchain Platform, a cloud service, to enable the electronic exchange of 12 different currencies across Pacific Islands as well as Australia, New Zealand and the United Kingdom.

KlickEx Group, a United Nations-funded, Pacific-region financial services company, and Stellar.org, a nonprofit organization that supports an open-source blockchain network for financial services, are backing the new cross-border payments service.

How to Get a Loan with Bad Credit (The Global Dispatch), Rated: B

If your bank does not agree to your request, start exploring alternative lenders. Do not limit your options to institutions. Your friends or family members can lend you the cash you need to handle an emergency. Peer to peer lending is a great alternative to banks, which allows you to borrow from individuals instead of institutions.

You can easily access a quick loan with bad credit online if you have a stable and verifiable source of income. Online lenders run your credit history but will approve your loan request with proof that you can repay in time. In most cases, the lenders offer payday loans that fall due on your next payday. You must be careful when applying for a personal loan online. Most of the search results you will get are from marketing companies and not direct lenders.

Australia

TSYS’ ProPay Sets Up Shop In Australia (PYMNTS), Rated: A

TSYS’ merchant services company ProPay is expanding into new territory.

The company announced in a press release this week that ProPay has launched in Australia, bringing small- and medium-sized businesses (SMBs) there to its merchant acquiring payment network and enabling them to efficiently accept card payments. The solution is built for direct-selling companies, micro merchants, distributors and payment facilitators.

Australian Government Agencies Flagged For Company Card Fraud (PYMNTS), Rated: A

Australian government agencies are reportedly plagued by company card fraud and misuse, according to new analysis from media company Fairfax Media. By certain accounts, some agencies are seeing more than $100,000 in misspend.

Fairfax analysts found an array of instances in which government purchasing cards were used for personal use, including one that attempted to use a Weather Bureau card for a transaction surpassing $1,000, an Able Seaman who repaid nearly $2,350 after misusing a card and one employee at the Foreign Affairs department who was fired after spending more than $7,000 on the department’s credit card, The Sydney Morning Herald reported.

The ABS had 156 cases of inappropriate spend on its cards, Fairfax found, valuing more than $43,000 in misspend.

India

P2P lenders seek clarity from RBI on appointment of trustee (Livemint), Rated: AAA

Peer-to-peer lending (P2P) platforms in India have requested the Reserve Bank of India (RBI) to allow non-bank trust companies to act as trustees for fund transfers between the participants—investors and borrowers—on their platforms.

“It took us six months to get a trustee. Most of the bank promoted trustees were unwilling to come on board as the industry is nascent,” said Mukesh Bubna, founder and chief executive at Monexo Innovations Ltd, a Mumbai-based P2P platform.

“This creates a monopoly. A limited number of trustees managing transactions for multiple P2P firms may lead to conflict of interest and also a higher fee being charged by the trustees for managing the escrow accounts,” said Raghavendra Pratap Singh, co-founder at i2iFunding.com, a Noida-based P2P platform.

So far, the firms have informally reached out to the regulator, said two people close to the development. They requested anonymity. They are expected to send formal feedback to the regulator soon.

Email sent to RBI did not elicit any response.

Why RBI should ease regulations for P2P lenders (VC Circle), Rated: A

For the sake of brevity, below are summarised certain key issues of the P2P directions after taking into consideration various arguments in the central bank’s consultation paper:

  1. P2P entities as NBFCs
  2. Ambiguous definition of P2P lending – The term “or otherwise” in the definition does not clarify whether P2P lending is restricted only to online platforms.
  3. Net-owned fund and leverage ratio – The RBI in its directions stated that any NBFC-P2P platform needs to have net-owned funds of more than Rs 2 crore or as is prescribed by the central bank.
  4. Limit on lending – However, the P2P directions state that loans are subject to a cap of Rs 10,00,000.
  5. Exempting non-institutional lenders from regulation
  6. Are NBFC-P2Ps intermediaries for banks?

How tech has relaxed Mumbai’s monopoly on finance (India Times), Rated: AAA

Six months after he founded payment gateway company Razorpay in 2013, Harshil Mathur was looking to shift his headquarters from Jaipur. Of his three options — Delhi, Mumbai or Bengaluru, Mathur chose the tech hub of Bengaluru over the financial capital, Mumbai.

Source: Times of India

With the rise of tech startups that focus on financial services, the traditional banking landscape is transforming — and Mumbai, Delhi-NCR and Bengaluru are competing to become the country’s fintech capital. Mumbai is still the financial capital as it is home to major banks and financial institutions, but it is technology that is becoming integral to finance.

Source: Times of India

Watch out for these 5 fintech platforms to revolutionise business in India (Business Standard), Rated: B

A marketplace lending platform in India, Rubique empowers individuals and SMBs with an easy and smoother access to across a wide range of loan, credit card, and products.

LoanTap is a fintech platform delivering flexible EMI free loan products to salaried professionals.

India’s largest peer to peer lending website, Faircent is a platform where people who have spare money, use the means of lending it directly as a form of loan, thereby eliminating intermediaries and their margins.

Having started as an online mobile recharge and bill payments app. Paytm in a short span of time has scaled to over 250 million registered users.

CreditMantri is a multi-services platform that helps borrowers secure loans from its partner financiers.

Asia

A new generation of HNWIs spur shift in investment (Asia Asset), Rated: AAA

HNWIs’ wealth growth remains led by Asia, with ongoing gains from an increasingly affluent middle class, enhanced productivity, and property price gains.

As the largest HNWI market, the US has been the beneficiary of a sustained rally in the equities market, driven by capital inflow and currency appreciation. The recent resurgence in mergers and acquisitions and initial public offerings is also driving wealth growth.

By comparison, Europe remains beset by low yields and flagging economic growth, characterised predominantly by inherited wealth and ‘old money’.

Research from around 940 Asian shows a clear shift towards engagement of financial investment professionals over self-management.

Also notable is the shift in allocation from domestic to international equities. In 2013, there was a 60:40 split favouring domestic equities, but this has reversed to favour international stocks through to 2017.

HSBC, with US$112 billion of private bank client assets under management (AUM) in its core Hong Kong and Singapore markets, is building upon its existing investment platform and network as a new entrant to the Australian market as of November 2016.

Fintech Start-Up fidentiaX Introduces World’s 1st Marketplace for Tradable Insurance Policies (PR Newswire), Rated: A

Fintech start-up fidentiaX is in the developmental phase of creating the world’s first marketplace for tradable insurance policies by disrupting the status quo by empowering policyholders to monetise policies on the blockchain. fidentiaX will also be setting up fidentiaX Open Source Foundation (fSOF) to proliferate the embracing of blockchain technology for the insurance industry.

In 2016 alone, the total market size for insurance premiums in the 40 OECD reporting countries was estimated to be in the north of $3.86 trillion dollars and Asia is projected to the be fastest-growing market for life insurance with an estimated real annual compounded growth rate of 10.2%.

fidentiaX’s marketplace will be a membership-based ecosystem focusing on the key stakeholders and providing the following services:

  • Policy ledger – Break traditional reliance on intermediaries by creating a digital ledger for policyholders.
  • Trustless Marketplace – Provides a platform for buyers and sellers to connect and trade policies via the blockchain.
Middle East

Kuwaiti Fintech Startup Ajar Online Closes Second Investment Round Led by BECO Capital (Albawaba), Rated: AAA

Ajar Online, a fintech startup based in Kuwait, closed a second investment in a round led by Dubai-based venture firm BECO Capital, followed by an investment from Sharq Ventures, since late 2016.

The service allows tenants to pay their rent online, at anytime and anywhere via SMS and email in less than 60 seconds. Simplifying the rent collection process for landlords and providing efficient property management tools to save time, reduce cost and take the right decisions.

Africa

Discovery Gets Go-ahead to Operate a Bank (Tech Financials), Rated: AAA

The South African Registrar of Banks has given the go-ahead for Discovery, South Africa’s medical scheme operator and financial services group, to operate a retail bank.

The firm announced on Monday that NewDisc Limited (to be renamed Discovery Bank Limited) has been granted a banking licence in South Africa by the Registrar in terms of Section 17(1) of the Banks Act.

The company plans to operate a retail bank to be known as Discovery Bank by 2018.

Authors:

George Popescu
Allen Taylor

Monday July 10 2017, Daily News Digest

marketplace securitizations PeerIQ

News Comments Today’s main news: LendingClub receives unsolicited offer from IEG for nearly 10% stake. Goldman looks to spin off Simon at $75M valuation. Assetz Capital to expand UK broker network. Stripe integrates with Alipay, WeChat. Australian advisers drop big banks. Today’s main analysis: MPL securitization tracker. Will China Rapid Finance turn the tide for Chinese IPOS in the U.S.? […]

marketplace securitizations PeerIQ

News Comments

United States

United Kingdom

China

European Union

International

Australia

Canada

Middle East

News Summary

United States

LendingClub gets unsolicited offer from IEG for 9.99 pct stake (Business Insider), Rated: AAA

LendingClub Corp said it had received an unsolicited offer from IEG Holdings Corp to buy a 9.99 percent stake in the online lender.

IEG’s proposal offers two shares for each LendingClub share, and is at a 38 percent discount to LendingClub’s Thursday’s close.

The online lender urged its stockholders to ignore the offer, if and when made.

Marketplace Lending Securitization Tracker Q2 2017 (PeerIQ), Rated: AAA

 Some highlights:
  • This quarter we see quarterly issuance of $3.0 Bn, representing 76% growth over 2Q2016.  To date, cumulative issuance equals $21.9 Bn across 92 deals.
  • Multi-seller club deals and self-sponsored deals have emerged at several leading platforms.  All deals were rated in this quarter, including record-sized consumer deals from SoFi, large multi-seller deals from Marlette and Prosper, and the first self-sponsored, near-prime deals from Lending Club and Upstart.
  • Dealer and rating agency participation continues to intensify. Fitch rated its first Consumer MPL, Prosper’s PMIT 2017-1, indicating broadening acceptance across ratings agencies. Goldman Sachs, Morgan Stanley, and Deutsche Bank lead over 47% of MPL ABS transaction volume. Noteworthy is the rising presence of BNP Paribas, which co-managed CLUB 2017-NP1. DBRS leads the rating agency league table, and Kroll dominates the unsecured consumer sub-segment.
  • New issuance spreads continued to tighten and flatten—a credit friendly environment for securitization.  In 2Q2017, we saw spreads tighten in riskier tranches of consumer ABS, indicating strong investor appetite for MPL ABS paper in the market.
  • Delinquency rates have continued to increase across in several verticals—such as subprime auto, student, and personal loans—due to exposure to riskier borrowers, a re-leveraging of consumer balance sheets, “loan stacking,” and shifting payment priority trends.
  • Initial pricing is near record tight levels. Lending Club’s inaugural deal priced at Libor + 110, second only to Marlette’s MFT 2017-1 (L+100) on the Class A bond. Overall, spreads have tightened with greater investor acceptance in an overall “risk on” environment.

Get the full report here.

Source: PeerIQ

Online Lenders Work Wall Street For Capital (ValueWalk), Rated: AAA

Equity financing events dropped to $2.2 billion in deal value across 145 transactions in 2016 down from $5.1 billion across 174 deals in 2015. This pace has continued to trend down in 2017, with 25 deals completed through March, yet SoFi’s $453 million Series G has bumped the total deal value to $754 million.

Instead of an IPO, Prosper has resorted to a major down round to stop the bleeding. The company is raising a $59 million Series E venture round that values the company at $460 million (post-valuation), a steep drop from the $165 million series D raised in 2015 that valued the company at a postval of $1.87 billion.

Goldman Sachs is looking to spinoff one of its tech bets at a $ 75 million valuation (Business Insider), Rated: AAA

Goldman Sachs is looking to sell a stake in one of its fintech bets — an online platform for retail bond investors called Simon — that would value the web app at about $75 million, according to The Wall Street Journal.

The investment bank launched Simon — which stands for Structured Investment Marketplace and Online — a couple years ago to help clients more easily learn about structured investments and execute transactions.

How financial advisers can “bridge the digital” divide (Investment News), Rated: A

Of those surveyed, 55% said that an aggregated view of their key financial accounts would be “extremely useful” or “very useful.” An account reporting dashboard was the second most popular tool, at 50%, followed by customized notifications and alerts (44%) and financial calculators (43%). Each of these tools provides investors with easy access to their own financial information in an easily digestible way. The good news is that advisers agree with investors on what is “extremely” or “very” useful, with financial account aggregators (69%) and account reporting dashboard (67%) being seen as the top tools.

VW Credit, Inc., Invests In AutoGravity Leading Financial Technology For Vehicle Financing (Cision), Rated: A

VW Credit, Inc. (VCI) today announced that it has committed to make an equity investment in AutoGravity, pending customary regulatory approvals. With this strategic investment, VCI is supporting its goal to create a digital experience that enhances the customer financing process. AutoGravity is a FinTech pioneer facilitating car shopping and financing with the power of the smartphone.

In addition to this investment, VW Credit, Inc., has worked with AutoGravity to bring Volkswagen and Audi financing directly to car buyers across the United States. Through this project, VW Credit, Inc., has launched the Volkswagen Creditsmartphone app, powered by proprietary AutoGravity technology and available for iOS and Android. Finance options from Volkswagen Credit are now available on the AutoGravity platform, extending the range of options available to more than 400,000 consumers who have downloaded AutoGravity. Volkswagen dealers now can benefit from a new source of potential car buyers.

How the U.S. compares to others in fintech use (Benefits Pro), Rated: A

Why OCC fintech charter may have life under new leader (American Banker), Rated: A

With legal challenges and uncertainty about the agency’s leadership, the Office of the Comptroller of the Currency’s fintech charter appeared dead in the water just months ago. But industry observers say the OCC’s interim chief is emerging as a potential savior for the controversial initiative.

“We’re seeing an assertive OCC,” said Brian Knight, a senior research fellow at the Mercatus Center.

Podcast 108: Perry Rahbar of dv01 (Lend Academy), Rated: A

In this podcast you will learn:

  • How Perry’s time at Bear Stearns during the financial crisis influenced his thinking on transparency.
  • What problem dv01 is trying to solve.
  • The different ways they work with securitization buyers and whole loan buyers.
  • The details about their reporting partnership with SoFi.
  • How they are able to create data standardization with disparate data from many platforms.
  • How they are using Experian data in their partnership.
  • Why updated credit attributes on loan data is going to be critically important when the credit cycle turns.
  • When and how dv01 is going to expand beyond the online lending space.

SoFi Announces Partnership With Alaska Air (Crowdfund Insider), Rated: A

Online lending platform SoFi announced this week it has teamed up with Alaska Air to help its new members save money on student loans while also earning extra summer travel points.

CreditEase Fintech Fund continues to invest in strong Fintech companies in CB Insights’ Global Fintech 250 (Broadway World), Rated: A

As many as 13 companies backed by investments from CreditEase Fintech Investment Fund (CEFIF) were named today by CB Insights to the prestigious global Fintech 250, a select group of emerging private companies working on groundbreaking financial technology. The list was revealed during The Future of Fintech conference in New York on June 27th.

The winners in relation with CreditEase investments include Addepar, NAV, Tradeshift, Upgrade, Circle, TruMid, WorldCover, TrueAccord, Bocheng (CreditEase Insurance Agency) and others.

Apple Bank here we come (LinkedIn), Rated: B

According to the limited information available, Apple will automatically issue a virtual payment card to all iOS users, allowing them to receive and hold money in Apple Wallet.

This isn’t Venmo. Or even Paypal. We aren’t linking up accounts and plastic cards here. We are issuing cards. Virtual cards. To all iOS users.

How soon will they start to pay interest? What about something like Apple Wealth? The scale and impact really boggle the mind. We are breaking new ground here. Only WeChat and Alipay are operating on this scale, but let’s face it, they are still one trick ponies operating in a single market.

Private bank Brown Brothers Harriman creates fintech position (American Banker), Rated: B

Brown Brothers Harriman promoted Michael McGovern to the newly created position of head of investor services fintech offerings, as custodial banks ramp up digital offerings in the face of competition.

United Kingdom

Assetz Capital to Expand UK Broker Network to Further Scale P2P Business (Crowdfund Insider), Rated: AAA

Assetz Capital is looking to increase its active broker network significantly in the next two years, and has announced a strategy to further support brokers through several methods.  This includes using its network of nationwide Regional Relationship Directors to locally support more brokers, further product and pricing improvements, dedicated staff in the head office and a series of regional broker events which are specifically aimed at educating and supporting brokers.

Funding Options founder sees limit to P2P growth (P2P Finance News), Rated: A

THERE is a limit to how much peer-to peer lending platforms can grow, according to Funding Options’ founder Conrad Ford.

The head of the online small- and medium-sized enterprise (SME) finance aggregator told Peer2Peer Finance News that there are lots of “smallish, niche opportunities” for P2P firms but that they would not be able to graduate to originating larger facilities.

Authorised P2P property lender clinches seed funding (AltFi), Rated: A

LandlordInvest, a property-focused peer-to-peer lender, has clinched a round of seed funding from Alan Gabbay, director of O&H Properties, a London-based privately owned investment firm with assets valued at around £1bn. Further details of the investment have not been disclosed. The platform is also backed by LNK Capital, and angel investors Reece Chowdhry and Lee Josephs.

FCA applications have cost the P2P sector up to £2m (P2P Finance News), Rated: A

THE FINANCIAL Conduct Authority (FCA) has pocketed up to £2m from full authorisation of the peer-to-peer lending sector, figures suggest.

A freedom of information request by Peer2Peer Finance News shows that the City watchdog has considered 146 applications for full permission from P2P platforms since 2014 – when the FCA took over regulating the sector – with firms paying application fees of £600 to £15,000 depending on their income at the time.

This reveals that the regulator has raised up to £2.1m if all firms paid £15,000, or a minimum of £87,600 if all firms paid the lowest fee of £600.

Happy Birthday, Landbay!: P2P Platform Celebrates Three Years of Online Lending (Crowdfund Insider), Rated: A

On Friday, UK-based peer-to-peer lending platform Landbay celebrated its third birthday. The online lender revealed that in the past three years, it has lent a total of £47.31 million, which is funding buy-to-let mortgages throughout the UK.

New P2P business lender launches as Appointed Representative (AltFi), Rated: A

Huddle Capital is the UK’s newest peer-to-peer business lender, but its route to market is somewhat different to those that went before it. Huddle launched too late to operate under the FCA’s interim permissions regime, and achieving full authorisation – as even the biggest peer-to-peer lenders have discovered – takes time.

Huddle has come to market as an Authorised Representative of fully authorised peer-to-peer firm rebuildingsociety.com.

British venture capital investing trends in the tech sector (RealBusiness), Rated: A

Peer-to-peer lender Funding Circle and mobile banking service Atom Bank secured the biggest amounts of British venture capital investing, raising £83m apiece. In fact, the five largest deals accounted for a third of overall British capital investing.

Indeed, 27 fintech companies secured £262m from 49 investors.

People are raising hundreds of millions selling digital coins online (Business Insider), Rated: B

Over half a billion dollars has been raised through so-called “Initial Coin Offerings” (ICOs) since the start of the year, according to Richard Kastelein, a partner at the Cryptoassets Design Group, a company that helps launch ICOs.

Gnosis, a prediction market for digital currency Ethereum, raised $12 million in just 10 minutes in April. Brave, a new web browser startup set up by the founder of Mozilla, made that look pedestrian, raising $35 million in less than 30 seconds selling “Basic Attention Tokens” last month.

To raise money through an ICO, a company issues a new digital currency that can either be spent within its ecosystem, a bit like Disneyland dollars, or used to power part of the business, like the fuel you put in your car.

China

Bitcoin-Friendly Stripe Strikes Major FinTech Deal with China’s Alipay, WeChat (Cryptocoins News), Rated: AAA

The integration will now enable all Stripe merchants in over 25 countries make money from Chinese consumers. Alipay, the payments platform of Ant Financial – the financial arm of e-commerce giant Alibaba has over 500 million users on its platform. WeChat Pay, the digital payments platform of WeChat – China’s most popular messaging app – has over 600 million users. The two firms were responsible for handling near $3 trillion in 2016, according to a UN report.

The integration coincides with the payments processor’s official launch in Hong Kong.

Alibaba-Backed Company Could Turn The Tide For Chinese IPOs in US After String of Busts (Frontera News), Rated: AAA

The pipeline of Chinese (FXI) IPOs planning to list on the New York Stock Exchange (SPY)(NYSE) (NDAQ)could make 2017 the biggest year for the country’s stocks since 2014 when Alibaba (BABA) listed its shares.

2016 saw new listings worth $119.4 billion on the New York Stock Exchange with Chinese logistics company ZTO Express (ZTO) being the largest with an IPO worth $1.4 billion. So far in 2017, 137 IPOs worth $27.2 billion have been announced in the United states, 6.6% higher year over year.

Shares of Alibaba(BABA) are up 42% while shares of JD.com have surged 94.9% since their IPOs in2014. Shares of Baidu are currently trading 19 times of its IPO price.

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

On June 27th, The Alibaba Group financial affiliate rolled out an artificial intelligence-driven, image-recognition system to aid vehicle insurance claims adjusters in operating faster and more efficiently.

Yu’E Bao, one of China’s most popular internet-based funds, had amassed CNY 1.43 trillion of assets under management by the end of June, which has already exceeded the size of individual deposits at some of China’s largest banks.

The development of the Shenzhen Municipal Government Financial Services Office, the local banking regulator in Shenzhen, has released guidelines to prompt large and medium-sized banks to set up inclusive finance divisions, a move to increase loans for money-starved small firms, which is the latest native government’s effort to improve links in economy.

European Union

Visa’s Long-Term View On Klarna (PYMNTS), Rated: A

Though the actual terms of the Klarna investment, such as dollar size and the magnitude of the equity ownership stake, remain under wraps, the intent was more clearly shaped in an interview between Karen Webster and Bill Gajda, SVP of Innovation and Strategic Investments at Visa following the announcement.

This is Visa, after all, so … think credit — but transactional credit extended at the online point of sale. Think payments, but not just card-based payments, since Klarna today is a pay-by-bank account model. Think cards, but digital ones, accounts issued digitally by the Bank of Klarna.

That comes against a backdrop where Klarna’s transactions grew more than 50 percent over 2015 and volume was up 44 percent in Europe, driven by mobile commerce.

International

Fintech VC Funding on the Decline: What Next? (TechBullion), Rated: AAA

According to a call co-hosted by Lawrence Wintermeyerof Forbes and Peter Rentonof LendIt, fintech venture funding has declined both in the U.S and the U.K.

In 2016, venture funding for fintech in the US fell by 13% to $6.2 billion. Much of this decline is attributable to poor performance by lending platforms coupled with a contraction of investment as venture capital firms went slow on investments to figure out what would be the most profitable fintech investment in future.

The situation in the UK was not any better as there was even a greater decline in VC fintech investment during the same year, 2016. The sector attracted only $834 million worth of investment, translating to a 38% decline.

Despite the general decline in fintech VC funding, some sectors are still thriving. For instance, the payments subsector has witnessed sustained growth. Similarly, Insurtech is flourishing especially as far as seed investment is concerned.

Fintech enterprise solutions have increased with innovations around machine learning, distributed ledger, big data and cloud heralding the entry of global tech giants into the fintech sector.

How the FinTech revolution is changing the regulatory approach (Fintastico), Rated: A

Some national authorities have chosen to regulate fintech companies through preexisting frameworks. This mean using the same set of rules previously applied to all financial and banking institutions. Other authorities have preferred introducing specific and tailored regulations for fintech companies with the aim of adapting the system to the particular needs of the sector and of stimulating the growth of these companies.

Continental Europe

For instance, Germany does not have specific regulations for fintech credit platforms. In other words, a fintech credit company must be granted a banking license to pursue a credit activity; however, it must ascertain what type of service the business is providing to verify if the business offer might qualify as a regulated activity under general German financial regulatory laws.

As in Germany, the Netherlands does not have specific regulations for fintech companies. In the Netherlands, a fintech credit platform must obtain a regular license for credit activity from the Dutch Central Bank (“DNB”) and the Netherlands Authority for the Financial Markets (“AFM”) before providing credit to customers.

Several authorities have created specific and tailored regulations for fintech companies by introducing new licenses for fintech platforms. For instance, one of the most customized and effective one is in Switzerland. The national policymakers have introduced a new licensing category for fintech companies. This regulation would give the Swiss Financial Market Supervisory Authority (“FINMA”) the chance to analyze the fintech platforms individually and to tailor the appropriate regulation according to the activity they pursue.

China

The core of the regulatory framework is represented by the Guiding Opinions on Promoting the Sound Development of Internet Finance and the Provisional Rules for the Administration of the Business Activities of Online Lending Information Intermediary Institutions, respectively were amended by the People’s Bank of China and the China Banking Regulatory Commission (CBRC) with the assistnace of other authorities. However, there is something unusual characterizing the Chinese approach in the way it conceives fintech credit platforms as being essentially information intermediaries rather than credit intermediaries.

English-speaking countries

Some jurisdictions, such as United Kingdom, Australia and Singapore have introduced a different kind of approach to regulate fintech service providers. Using the innovative approach dubbed “regulatory sandbox”, fintech providers offer their products or services to a limited group of customers to minimize the risks, allowing them to test the market without any risk or regulatory sanctions.

United States 

Fintech providers in the United States are not subject to a fintech-specific regulatory framework. However, fintech providers are subjected to numerous and fragmented federal and state licensing or registration requirements depending on the activities of the company, and are also subject to laws and regulations at both the federal and state levels. Such complexity has appeared as an obstacle to the expansion and growth of the entire sector because it may subject fintech companies, looking to expand their business across the U.S., to regulation and supervision by the laws and regulations of different regulators.

FinTech players are taking away the remittance business from banks (Moneymail), Rated: A

Commercial banks remain the most expensive channel for sending money, pricing their services at 11.12%, while a post office is the least expensive channel (5.88%). As for money transfer operators, they were able to decrease the price of sending money to 6.24%.

Non-bank providers charge an average of 0.9% on £10,000, which is 4 times less than the average for banks.

 

Australia

Advisers quit big banks, AMP as watchdog intensifies scrutiny (The Australian), Rated: AAA

Financial advisers are deserting the major lenders, voting with their feet as the corporate watchdog heightens its scrutiny of the controversial cross-selling of wealth products in the “vertically integrated” lenders.

The big four banks and AMP, which control nearly half of all financial advisers in Australia, have bled more than 400 advisers in the last six months, according to Bell Potter analyst Lafitani Sotiriou.

Mr Sotiriou believes the rush for the exit has been caused by major banks limiting the freedom of their advisers to recommend products offered by rivals.

In the past six months, Commonwealth Bank, Westpac, ANZ, NAB and AMP have lost nearly 2 per cent of their market share in the country’s advisers.

SocietyOne’s lending tops $ 300 million, bucking personal credit weakness (The Sydney Morning Herald), Rated: A

SocietyOne will on Monday report its total loans arranged since it launched in 2012 have exceeded $300 million, with new lending in the first half of 2017 up 67 per cent on a year ago.

Rival P2P lender RateSetter has also funded about $130 million of loans since its inception in late 2014, according to its website, a figure that has roughly doubled since December.

Canada

Power Corp. venture capital fund plays the long game (Montreal Gazette), Rated: A

Faced with a changing market, one of Montreal’s largest companies is using an in-house venture capital fund to give it access to new technologies and new ideas.

Power Corp. of Canada (TSX: POW) runs some of the largest insurance and financial services companies in the country, it’s a market where new, technologically-enabled computers are emerging.

Last October, through three of its subsidiaries, Power launched Portag3, a venture capital fund that invests in fintech startups.

Last October, through three of its subsidiaries, Power launched Portag3, a venture capital fund that invests in fintech startups.

Middle East

FinTech comes to the fore in the GCC (Gulf Business), Rated: AAA

It’s an industry that is blossoming in earnest across the world, with investments worth $7.7bn taking place in China last year, $6.2bn in the US, and $1.5bn in the UK. It’s an industry that was valued at a staggering $867bn in 2016.

To date, the Middle East has accounted for only a small proportion of this, with regional FinTech companies expected to raise $50m in 2017, according to a report by Wamda Research Lab and Payfort – a marked improvement on last year’s $18m. In total, the report shows that only $100m has been raised in the past 10 years, while a 2016 report by FinTech Week said less than 0.1 per cent of global FinTech investments originated in the Middle East.

Authors:

George Popescu
Allen Taylor