Friday December 9 2016, Daily News Digest

Friday December 9 2016, Daily News Digest

News Comments Today’s main news: LendingHome exceeds $1B in mortgage originations. FCA plans tougher rules for P2P lenders. Today’s main analysis: China outpaces US, UK to become FinTech hub. Today’s thought-provoking articles: ABS, partnerships to lift MPL. eMoneyUnion responds to FCA report. Mambu expands into Singapore. United States LendingHome exceeds $1 billion in mortgage loan orginations. GP:” $1bil in […]

Friday December 9 2016, Daily News Digest

News Comments

United States

United Kingdom

  • FCA plans tougher rules on P2P lending. AT: “The FCA has released its initial review findings. The interesting thing here is not so much that the FCA plans to regulate P2P lending. We’ve seen that coming for a while. The really interesting thing is what they have to say about Ratesetter. This makes me wonder what will become of Ratesetter and its provision fund. Does the FCA’s prognosis mean tougher regulations of these instruments or a denial of authorization for Ratesetter? I think it’s a clear indication that provision funds are seen as a different category than P2P lending or marketplace loans.”
  • eMoneyUnion responds to FCA report. AT: “Founder Lee Birkett adresses provision funds as well as client money and wind-down arrangements.”
  • CapitalStackers receives FCA authorization. AT: “As we thought, the wave of authorizations continues, but the Big 3 are still waiting.”
  • Ratesetter loses chief risk officer to HSBC. AT: “I can’t help but wonder if this might have anything to do with the FCA.”
  • Interview with LendInvest CIO.

China

India

Asia

United States

LendingHome Exceeds $ 1B in Mortgage Loan Originations (VentureBeat), Rated: AAA

LendingHome, the largest and fastest-growing mortgage marketplace lender, has now funded over $1 billion in mortgage loans in the two and a half years since the company launched.

This year has marked a substantial period of growth for LendingHome. The company completed three securitizations, launched an investor platform for individuals, transitioned to servicing its mortgage loans in-house, expanded programs to include jumbo loans, and grew revenue over 2.5x in the process. Additionally, LendingHome hired two new executives to augment its risk and operational leadership, bringing deep experience in underwriting, risk modeling, credit analytics, mortgage operations, and technology from top financial institutions.

ABS, bank partnerships to lift marketplace lending (Structured Credit Investor), Rated: AAA

Marketplace lending and fintech will play an increasing role in the future of the securities market, according to US SEC chair Mary Jo White. Speaking at a recent SEC fintech seminar, White praised the benefits of innovative financial technologies, but outlined the need for relevant regulatory guidelines to protect investors and wider participants.

White stated that “fintech innovations have the potential to transform key parts of the securities industry” and added that marketplace lenders are providing individuals and SMEs with new paths to access capital. However, while such developments have brought many benefits, the SEC has a responsibility to “evaluate how our existing rules address both the challenges and opportunities presented by these new technologies”.

Specifically on the area of marketplace lending, White stated that the SEC is unique to other regulators as it focuses exclusively on investor protection.

Ram Ahluwalia, ceo and co-founder of PeerIQ, highlighted that securitisation is “the primary financial innovation that has enabled consumers and businesses to access capital markets” and that “it transforms illiquid credit of any kind into marketable securities, which can then be sold into a broader base of institutional investors”.

Conor French, general counsel at Funding Circle, added that marketplace lending has the ability to strengthen the financial system because of its potential to “provide better access to safe and affordable credit to consumers”.

However, he added that the ability of the sector to do this is perhaps limited by a relative amount of uncertainty regarding future regulation. French nevertheless said that he is “excited” to see the SEC refocusing on marketplace lending and that it is important for the sector that it establishes clear “customer guardrails”.

She added, however, that while banks have “low cost deposits and customers”, they don’t have the customer-facing technology that SMEs want today. Mills added that should online lenders wish to partner with banks, they will have to be prepared for “regulatory oversight” that banks have to comply with, which will then apply to marketplace lenders in a bank partnership.

Student Loan Marketplace Credible Partners with New Hampshire Higher Education Loan Corporation (Crowdfund Insider), Rated: A

Student loan marketplace Credible.comannounced that the New Hampshire Higher Education Loan Corporation (NHHELCO) will offer student loan refinancing through the site, expanding the range of options available to borrowers.

Available in all 50 states, NHHELCO’s EDvestinU Consolidation Loan lets borrowers combine multiple student loans, federal and private, into a new loan with a potentially lower interest rate and monthly payment. Borrowers refinancing with EDvestinU can choose a fixed- or variable-rate loan with a repayment term of 5, 10, 15 or 20 years. Variable-rate loans currently range from 2.47% to 6.07% APR, with fixed-rate loans available from 3.94% to 7.54% APR.

Day One of Crowd Invest Summit Strives to Broaden Crowdfunding’s Appeal (Equities.com), Rated: A

The Crowd Invest Summit West, held at the Los Angeles Convention center on Wednesday and Thursday, was geared towards helping equity crowdfunding break into the mainstream.

The day’s first speaker was legendary author and investor James Altucher, who delved into his personal history, and what he learned from a roller coaster of success and failure that led him to make millions selling two companies early in his life, only to blow through all that cash twice in a row. One valuable takeaway was to make a point of really engaging with his creative mind.

Following Altucher was a fireside chat between Darren Marble and Ron Suber, President of Prosper Marketplace, a P2P loan platform. Suber delved into the success that Prosper has found, including a hair-raising tale of a long Labor Day weekend when they were perilously close to seeing their success come crashing to a halt. He also emphasized that the key to success for an industry relying on the crowd required balance between users and companies. If any piece of the equation seriously outweighs the others, it disrupts the industry. During his concluding remarks, Suber emphasized that building a strong community was an essential part of finding long-term success for the industry.

Moderator Devin D. Thorpe, author and contributor for Forbes, and panelist Rodney Sampson, veteran author and tech entrepreneur, reminded the audience that the vast majority of venture capital goes to white men living in three states. While crowdfunding offers an opportunity to potentially break the stranglehold that New York, California, and Massachusetts has on startup capital, the industry will still need to address the fundamental issue that there remains a huge disparity in wealth in this country between white families and African-American and Latino families.

Bricksave Launch New Website and First New York Property (Benzinga), Rated: A

Real estate crowdfunding platform Bricksave have launched their brand new website, as well as their first property in the city of New York. The new site includes enhanced security features, a more intuitive investment dashboard and an increased focus on catering to different investor types.

As the platform closes in on successfully funding over $2 million worth of properties, Bricksave are accompanying their new site with the launch of a new investment opportunity in New York, located in the prestigious neighbourhood of Hell’s Kitchen.

Lendit USA 2017 – New York City (Crowdfund Insider), Rated: B

 The World’s Biggest Show in Lending and Fintech LendIt returns to the financial capital of the world for its largest conference and expo ever. Join established and emerging fintech innovators and investors for two-action packed days of networking, learning and dealmaking at the iconic New York Javits Center.

March 6, 2017 – March 7, 2017

Kabbage’s Nationwide “Elevator Pitch” Contest Names Supafly Skate ,000 Grand Prize Winner (SAT PR News), Rated: B

Kabbage(R), the leading financial services data and technology platform, today announced the small business pitch contest finalists and grand prize winner. Kabbage is excited to reveal that Junior Lubin, owner of Supafly Skate Company, Inc., is the $10,000 grand prize winner and recipient of a private, one-hour business consultation with entrepreneur and investor, Lori Greiner.

The following “Elevator Pitch” finalists received a $1,000 consolation prize to help grow their business:

United Kingdom

Finance watchdog plans tougher rules for UK peer-to-peer lenders to ‘strengthen investor protection’ (Business Insider), Rated: AAA

The Financial Conduct Authority (FCA) on Friday released the initial findings of its review into crowdfunding — a term it uses to cover both crowdfunded equity schemes like Crowdcube and peer-to-peer loan providers such as Funding Circle.

The inquiry, launched in July, found that:

  • It’s difficult to compare platforms to each other;
  • Risks are hard to assess;
  • Financial promotions do not always meet requirements to be “clear, fair and not misleading;”
  • Increasingly complex structures are introducing new risks and conflicts of interest;
  • Provision funds, which platforms like RateSetter offer to cover a certain amount of investor losses, “introduce risks to investors that are not adequately disclosed and may not be sufficiently understood by investors;”
  • Wind-down plans, put in place to take care of loans in case firms go bust, are not adequate;
  • Some platforms client money handling standards are not up to scratch.

eMoneyUnion responds to FCA report (eMoneyUnion Email), Rated: AAA

A number of concerns have been raised by the FCA following our feedback and their own research, such as unnamed platforms provision fund promotion, client-money account management and wind-down arrangements.

A review of our own policies and procedures has taken place throughout the year in consultation with the FCA. This has led to a number of minor amendments to our T&C’s and some day to day client-money management tweaks. These are covered in more detail below.

  • Provision Funds: The use of a provision fund is NOT to be deemed a guarantee or insurance policy, and as you are all aware, when the funds in the rainy day pot are gone; they’re gone. The Provision figure we promote is a financial buffer to smooth out late payments by unsecured borrowers and is displayed to approved lenders only and not on the public website. Property loans are not covered by the provision fund, as the properties themselves carry equity as the financial cushion to any potential losses.
  • Client Money: As reported earlier in the year, we are pleased to confirm that our client account policies and procedures meet the required regulatory standards. When the FCA client money team visited our offices, it was confirmed to them that that provision fund is a discretionary tool of the platform. And is not deemed “client money” it’s actually discretionary “platform money” and will not co-mingle with “client money”
  • Wind-down arrangements: As reported in September, our related party business Moneybrain Ltd, which is our contracted wind-down provider, received full FCA Authorisation.

I was very pleased to see from the FCA report, proposals for new rules to be considered in Q1 2017, in particular “extending mortgage-lending standards to loan-based platforms.”

As property lending (mortgages) is very much part of our JustUs.co plans for 2017, when coupled with our team’s mortgage experience over the last 25 years; the future is looking very positive indeed!

Lee Birkett, eMoneyUnion founder

P2P Lending Platform CapitalStackers Receives Full FCA Authorization (Crowdfund Insider), Rated: A

UK peer-to-peer lending platform CapitalStackers announced it received full authorization from the Financial Conduct Authority (FCA) following a detail assessment. 

Its key mission is to plug the funding gap between typical bank debt and developer’s equity. CapitalStackers noted that investors typically receive double digital returns up to 20%.

Ratesetter loses recently-hired chief risk officer to HSBC (Financial Times), Rated: A

The chief risk officer of Ratesetter, one of the UK’s top three “peer-to-peer” lenders, has left the company just six months after joining.

Sallé de Chou said in a text he had moved to HSBC to be chief risk officer of their European retail business. “[It is] a great opportunity I could not refuse. Not a sign of concerns re RateSetter. I thoroughly enjoyed my time at RateSetter,” he said.

One to One: Ian Thomas, Co-founder and CIO, LendInvest (Mortgage Strategy), Rated: A

We were always confident that Scotland was a good destination for our first ‘office’ out of London. The market is undersupplied for short-term mortgages and small-scale development finance. The housing situation is no less desperate than in England and Wales. There are too few houses in Scotland, so supporting SME developers to get more houses built is a good thing.

We’ve also just launched in northern England and have appointed Damien Druce to lead our efforts there.

I want 2017 to be the year when we really accelerate our lending throughout the country.

I also want our Property Development Academy to launch outside London, helping aspiring developers to gain skills anywhere in the UK.

China

China outpaces US, UK to become undisputed global fintech hub (The Asset), Rated: AAA

China has leapfrogged the US and UK as the undisputed global fintech hub, according to a collaborative report produced by DBS and EY entitled “The Rise of FinTech in China.”

Currently, 40% of Chinese consumers use new payment methods compared with 4% in Singapore, while, 35% use fintech to access insurance products compared with 1%–2% in many Southeast Asian markets. There are also significantly higher rates of fintech participation in wealth management and lending.

As of the end of 2015, mobile online payment users reached 358 million, 64.5% up year-on-year. At that point, China’s utilisation ratio of mobile online payments stood at 57.7%, with more than 1-in-2 persons using their smartphone to conduct financial transactions primarily through Alibaba’s Alipay or WeChat’s payment service.

Ant Financial, Alibaba Group’s financial affiliate which operates Alipay, have expanded into investment products, lending, credit scoring, insurance and so on.

India

Mywish Marketplaces Announces Appointment of New Members to the Board (TechStory), Rated: A

Mywish Marketplaces (MMPL), the company that owns Deal4loans.com, today announced strategic additions to their Board of Directors. Financial industry veterans Alok Sethi, Chairman, Franklin Templeton Services, and Vivek Kudva, Managing Director, EMEA & India, Franklin Templeton Investments have joined the company’s Board of Directors effective July 2016.

MMPL pioneered the neutral loan marketplace in India and has successfully established trust with over 7 million customers, leveraging technology to enhance customer acquisition for participating banks’ loan products, and smarter matching of customers with products.

Asia

Mambu expands to Singapore (Finextra), Rated: AAA

Mambu, the SaaS banking platform provider, today announced the company has opened its first office in the APAC region.

Mambu’s APAC clients are spread across China and South East Asia as well as Australia and New Zealand, accounting for nearly a third of the company’s total business to date.

Authors:

George Popescu
Allen Taylor

July 21st 2016, Daily News Digest

News Comments A lot of news today, and today we have an especially good international section. Please do pay attention to the Australian, Singapore and China sections in particular. (And Lending Times technical team reports that yes, Mailchimp has not answered any of the multiple requests for support from a paying client in 17 hours. […]

News Comments

  • A lot of news today, and today we have an especially good international section. Please do pay attention to the Australian, Singapore and China sections in particular.
  • (And Lending Times technical team reports that yes, Mailchimp has not answered any of the multiple requests for support from a paying client in 17 hours. We will send today’s newsletter by hand again using the older design template.)

United States

United Kingdom

European Union

Switzerland

India

Singapore

Australia

China

News Summary

 

United States

The marketplace lending market has received an influx of positive news recently, (Peer IQ), Rated: AAA

The WSJ reports that Moody’s removed Class C mezzanine bonds issued by CHAI 2015-PM1, 2015-PM2, and 2015-PM3 from downgrade review and confirmed Ba3 rating.

At the time of downgrade review in February, Moody’s cited a faster build-up of delinquencies and charge-offs than expected. Moody’s also increased the expected cumulative lifetime net loss from 8% to 12% (bringing revised estimates in-line with platform and market expectations).
As of the June 15, 2016 distribution date, losses on the CHAI 2015-PM1, 2015-PM2 and 2015-PM3 pools have reached 3.6%, 1.5% and 0.5%, respectively.
Improvement in Credit Spread on MPL ABS bonds
The ratings action was presaged by the ABS market which showed spread tightening from 1000 to 400 bps. Readers may seek to review the May month-end newsletter to see the analysis cited in the WSJ report:
PeerIQ credit spread on MPL ABS bonds
Leading up to the CHAI 2016 PM-1 offering in April, the culmination of ratings actions, regulatory chatter, delinquency fears, and volatile credit markets created an inhospitable environment for new deals. The auction resulted in limited participation and wide initial pricing–10.26% coupon priced to 12.5% yield on the CHAI 2016 PMI-1 C tranche.
Investors that bought the CHAI C tranche at new issuance without any leverage would have seen about 15% price appreciation in 3 months. Investors that performed the up-front credit work and applied analytics to separate the signal from headlines were able to earn outsized returns.
Dislocation creates opportunity
Ironically, the dislocation in recent months has created substantial investor interest in MPL ABS and whole loans. The CHAI 2016-1 PM1 offering prompted investors that were historically dismissive of marketplace lending to do a double-take
Repeat ABS investors are now looking upstream to capture additional whole loan economics.
Large asset managers with double-digit return objectives in a negative to low rate world are looking to strike bargains with platforms. There is still much more to be done. Nevertheless, the climate for establishing relationships with platforms may be as good as ever.

Little Change in LendingClub Loans Since Madden Decision, (BNA), Rated: A

So far, LendingClub loans haven’t changed in average interest rate or risk, either in the 2nd Circuit or nationwide.

Both the total number and value of loans and the amounts arranged through the company have only grown, not diminished, while average FICO scores measuring a borrower’s credit rating remain consistent, and internal loan grades have remained the same. One exception is that the average value of borrowers’ previously requested FICO score did increase steadily since the decision, even though FICO scores at the time of loan issuance did not.

LendingClub has also continued to arrange loans to borrowers in the 2nd Circuit that surpass the interest rate caps in those states. The Madden decision does not prevent national banks from providing loans above a state’s interest rate cap. Instead, it applies to debt collection agencies that purchase those loans.

Lending club changes after Madden vs Midland

As a result of the court’s decision, LendingClub in February renegotiated terms with WebBank—the Utah bank that originates all of the loans through the online service (40 BBD, 3/1/16)

Under the new arrangement, WebBank maintains ongoing accounts for the borrowers and receives regular payments from LendingClub—called “loan-trailing fees”—rather than a single lump sum fee on every loan it originates. The loan trailing fee is based on the total amount serviced by the bank and a “loan fee factor.” A LendingClub representative told Bloomberg BNA that the company does not publicly disclose the amount of the loan fee agreement with WebBank.

Different picture for Prosper

Prosper loan volumes

Representative for Prosper attributed any changes in lending to general market fluctuations but would not comment further for this story.

A 2009 paper from the Federal Reserve Bank of Atlanta said that loans sold into the secondary market through originate-to-distribute underperformed other loans by 9 percent. A 2010 academic paper funded by the FDIC’s Center for Financial Research also implicated the originate-to-distribute model in the subprime crisis.

Author and University of Michigan Finance Professor Amiyatosh Purnanandam told Bloomberg BNA that part of the problem with the originate-to-distribute model is that once the debt is sold, the originating bank has nothing at risk and the debt buyers don’t always have the skill in evaluating good borrowers as national banks do.

Jefferies revives stalled Lending Club bond: sources, (Reuters), Rated: AAA

Comment: We covered these news last week as well. At that time it was more of rumor. It seems it’s real news now.

Jefferies has revived its stalled Lending Club loan securitization in a club-style deal it has begun to pre-market to only a few select investors, two buyside sources with knowledge of the trade told IFR.

The bank is now looking to sell a two-tranche trade that could offer yields in the 4.25%-7% range, one of the investors said.

The top class of notes of slightly less than one-year were about 60% subscribed, while a longer 2-year tranche was already fully covered, the investor said.

The near-prime loan securitization was shelved after Lending Club said it had repurchased a US$22m pool of loans sold to Jefferies under Laplanche’s watch that included falsified documentation.

Goldman Sachs also hit pause on its potential bond sale of prime Lending Club loans.

But bankers told IFR that Goldman could now look to revive its bond deal, if the Jefferies trade finds favor with investors.

Goldman Sachs Sets Its Eyes on Retail Banking (GS), (Investopedia), Rated: AAA

Fast Start
According to the Wall Street Journal, more than 20,000 new customers have opened internet bank accounts with the Goldman unit since it launched three months ago. Unlike other Internet-only retail banks that tend to offer a wide range of services, Goldman’s products are geared towards long-term savings, and it solely offers its customers the option to open traditional savings and certificate of deposit (CD) accounts. As of July 20, 2016, the bank’s interest rate on online savings accounts was 1.05% while its interest rate on a 5-year CD was 1.85%. In many cases, these rates are a lot higher than what traditional banks pay their customers. For example, Wells Fargo (WFC), Citibank (C), Bank of America (BAC) and Chase (JPM) all pay less than 0.03% APY on regular savings accounts. GS Bank can offer above-average interest rates to its depositors because they do not have the overhead expenses of a typical brick and mortar bank. (See also, The Pros And Cons Of Internet Banks.)

Retail Diversification
For Goldman Sachs, savings accounts may not be as exciting as the main investment banking business. Yet, the company still benefits from expanding into retail banking, enabling Goldman Sachs to diversify its customer base and tap into a segment of the market, retail investors, that they have been unable to serve in the past. GS Bank will also help boost Goldman’s overall liquidity, and keep the company compliant with new regulations calling for more liquidity from financial institutions. Around the same time GS Bank was launched, the Federal Deposit Insurance Corporation (FDIC) proposed new rules that would require banks to own sufficient ‘‘easy-to-sell’’ assets that would be able to cover any and all liabilities coming due within a one year period. (See also: The History Of The FDIC.)

The Realities Of Alt-Lending Regulation Begin To Set In, (Pymnts), Rated: A

Comment: we covered this yesterday as head news. However it is so important that we would like to remind our readers just in case.

“I suspect more regulation will come to the space, and I think that will suit us well,” said PayPal VP and General Manager of Small Business Lending Darrell Esch in an interview with Forbes last year.

When asked by PYMNTS whether he was concerned about incoming regulation on the space, OnDeck Vice President of External Affairs and Associate General Counsel Daniel Gorfine simply stated, “No, not concerned.”

Reports from Bloomberg BNA this week, however, could signal a shift in how alternative lending players are reacting to the incoming threat of regulation.

“Strong evidence indicates that small business loans under $100,000 share common characteristics with consumer loans yet do not enjoy the same consumer protections,” the Treasury stated in its May report. “Treasury is willing to work with members of Congress to consider legislation that addresses both oversight and borrower protections.”

“I would have to do everything differently,” said CAN Capital Chief Legal Officer Parris Sanz in an interview with the publication. “I can’t give you a rundown of all the various moving parts that would be affected, but I can tell you for sure that it would be significant.”

In a separate interview with Bloomberg BNA, Richard Eckman, a partner at Delaware-based Pepper Hamilton LLP, said alternative lenders are probably wise to pay attention to this possibility.

REFILE-Marlette gets second ever online loan ABS over the line, (Reuters), Rated: AAA

Marlette Funding got its second-ever bond backed by personal loans easily over the line on Wednesday, but investors said the primary market was still wary of deals from the online lending industry.

Marlette’s deal narrowed its pricing from guidance, but investors said global low rates had turned all types of US consumer debt-related assets with yield into a hot commodity.

And similar deals from a year ago were pricing far tighter.

Marlette priced its top US$149m of 1-year Single A (rated by Kroll) notes at 225bp over EDSF, tighter than a 235bp-250bp area guidance, two investors said.

Last July, Citigroup cleared its top class of A3 (rated by Moody’s) bonds – one notch lower – of Prosper Marketplace loans at 140bp over EDSF, according to IFR data.

Riskier Ba3 notes from Citigroup priced at 385bp over interpolated swaps, whereas Marlette’s BBs Wednesday printed at a whopping 825bp over swaps.

By another measure, the BBs were about 75bp more than a deep subprime auto ABS sold this week by lender Consumer Portfolio Services, according to IFR data.

“Marlette’s business model ensures an alignment of interests among the company, the originating bank and institutional loan buyers,” Kroll Bond Ratings wrote in its presale report.

The hunt for yield, meanwhile, has prompted two banks with exposure to online loans to revive postponed deals in the primary market, buyside sources said.

Non-bank Jefferies has rekindled a roughly US$140m bond deal of near-prime Lending Club loans, which was shelved for two months after Laplanche stepped down from Lending Club.

Bankers said that Goldman Sachs could also look to bring out its paused prime-quality Lending Club deal after Jefferies.

United Kingdom

Oxford economist John Kay: Where the opportunities are for fintech, (Alt Fi Credit), Rated: A

Large scale financial services firms are still ripe for disruption, according to the economist John Kay, who believes the City of London and other major financial centres have taken a wrong turn.

Kay explains that he sees four main ways that fintech can be successful and help the real economy by disrupting financial services.

These are firstly; the payments system This is the system that enables the payment of wages and salaries as well as bills. Secondly; capital allocation. This how peoples’ savings become invested in the physical assets and infrastructure of a country. Risk management is third, i.e mitigating the risks of everyday life such as insurance. Lastly is wealth management in a broader sense.

Technology will take over a lot this spectrum and he argues wealth management “is an area of major disruption”, encompassing P2P lending/investing, robo-advice and other discretionary investment services. However, he says payments is the one that will most clearly disrupt things and change our lives. He thinks cash will “seem crazy” in 20 years’ time.

Kay has a sizeable investment in online investment management firm Nutmeg, however, which is one of the dominant players seeking to disrupt the fund management and wealth management industries although they have yet to announce a P2P/market place lending function.

City regulator warns on peer-to-peer lending, (Financial Times), Rated: A

Chris Philp, a Conservative MP on the Treasury committee, said many consumers do not understand the dangers they are exposed to through P2P.

He said the way P2P sites are paid fees without taking on the risk of loans on a balance sheet is akin to the securitisation of subprime loans before the financial crisis.

Mr Bailey said in response, “I agree with you on the risks”.

Mr Bailey noted that although some platforms have so-called reserve funds to pay out to investors in the event that borrowers default, there is “no guarantee in that fund”.

European Union

Renowned investor Peter Thiel increases investment in leading European fintech, Deposit Solutions, (Press Release), Rated: AAA

Prominent venture capital firms today announce they have invested €15 million in European fintech company Deposit Solutions GmbH, a fast growing fintech innovator operating in the €9 trillion market for retail deposits in Europe.

The key highlights include:  PayPal co-founder and Facebook’s first outside investor, Peter Thiel, and German leading fintech investor FinLab jointly increase their share in the company  US investor Greycroft Partners, the global growth fund of e.ventures as well as Valar Ventures come on board as three new partners  The funding round increases the valuation of Deposit Solutions to €110 million.  This is the second successful investment round for Deposit Solutions within a year, following last year´s investment into the Company of €6.5 million. Since then the valuation of the company more than quadrupled.  The funds raised will be used to further develop the proprietary technology platform and continue Deposit Solutions´ international expansion, having already recently expanded to the UK and Switzerland.  Deposit Solutions will increase the number of employees at its UK HQ in the City of London and is expected to launch its retail platform in the UK in 2017.

“We are seeing substantial demand from banks looking to offer their clients attractive deposit products under the existing account relationship. As a result we have gained access to millions of clients and billions of deposit appetite in a very short amount of time. This in turn is very attractive to banks wanting to raise deposits through our platform.”

Max von Bismarck, Chief Business Officer and Managing Director of Deposit Solutions, said: “We address an important structural problem in European banking today for banks and retail customers: Many banks are unable to offer attractive interest rates to their clients. At the same time other banks find it difficult and costly to gain access to retail deposit funding. Our platform provides a solution for both while savers find it easier to get access to better rates.”

ECrowd! Spanish Crowdlending Platform Receives License by the CNMV, (Crowdfunding Insider), Rated: A

Debt-based crowdfunding platform ECrowd! is one of the first Spanish sites to receive a formal operating license from the Comision del Mercado de Valores (CNMV), the securities regulatory agency in Spain. ECrowd!, based in Barcelona, has joined Crowdcube Spain, Lendix and MyTripleA in receiving official approval as a Collaborative Finance Platform under regulations enacted in 2015.

They were on track to achieve 100% growth during 2016. [Comment: Some authors have issues with important verb tenses, it is unclear if the author meant they are or they were.]

Switzerland

The era of Crowlending opens new market for startups, (Startup Ticker), Rated: AAA

In Switzerland significant growth in Crowdlending was achieved in the previous year. The Crowdfunding monitoring report 2016 published by theUniversity of Applied Sciences Luzern early this year reported a significant increase in the total amount of money raised through Crowdlending in the year 2015. A total sum of CHF 7.9 Million was collected through crowdlending with a growth rate of +126%. 266 campaigns were financed. Crowdlending has continued to become more popular not only among start-ups but also among investors.

The crowdlending market in Switzerland is booming and has opened new opportunities for entrepreneurs. New startups operating crowdlending platforms are been established and many projects have been successfully financed. Today, there are 7 crowdlending platforms: the pioneer Cashare for both SMEs and private ventures, CreditGate24 for private and institutional investors, creditworld for both private and on SME loan, Lend, splendid that is specifically focusing on education loans,swisspeers for SMEs and Wecan.fund for SMEs. Other platforms – such as Miteinander-Erfolgreich and Raizers – also operate alongside other models as crowdlending platforms.

India

India’s Mywish Marketplaces raises $ 15 M to expand to new financial products, (Tech Crunch), Rated: AAA

This isn’t a huge round compared to what other companies have closed, but it is entirely strategic. The capital was proved by Franklin Templeton, the U.S. banking giant with more than $700 billion in assets under management. Puru Vashishtha, who is board director at Mywish Marketplaces, told me in an interview that the company didn’t need to raise the funds and it wasn’t short of interest, but it did so for growth opportunities and was very deliberate with the capital that it did close.

“We were chased by a lot of venture capitalists and investors globally,” Vashishtha said. “Because we were profitable, we did not need to raise a lot and didn’t want to dilute too much too soon — that’s one of the reasons we chose Franklin Templeton. Also, Franklin Templeton has built a very big emerging market business, we want to leverage the experience and leadership of their team.”

To backtrack a little, Mywish Marketplaces operates Deal4Loans, a price comparison and loan aggregation website in India. Its products include credit cards, home loans, business loans and personal loans.

Like Credit Karma in the U.S. and countless others worldwide, it works with banks, credit card companies and other financial institutes to help drive customers, while for its users, it tries to provide a holistic look at financing option and which one suits best for each case. The Deal4Loans site claims to have served more than 6.3 million “satisfied” customers, while the company says it has dispersed a total of $2 billion loans in the last six years at a current rate of $400-$450 million per year.

So why is this profitable company — profitable from day one, it claims — raising money?

I hinted at it earlier, but Mywish Marketplaces wants to expand into more verticals with new financing products for Indian consumers.

P2P lender Faircent makes strategic C-suite appointments, (Economic Times), Rated: B

India’s largest peer- to- peer (P2P) lending marketplace, Faircent.com, on Wednesday announced the appointment of Shivam Gupta, who was a part of the global risk management team of Standard Chartered Bank based in Singapore, as chief risk officer and Karun Thareja, who was a part of the leadership at an analytics startup called WyzMindz, as head of marketing.

Thareja, on the other hand has extensive experience in Marketing, Sales and Business Management spanning more than 20 years. His domain expertise includes Analytics, Enterprise Systems, Contact Center Management and Process Management. In his prior roles he has led multi-fold growth in business units at companies like IBM, Microsoft, Oracle, Dassault Systems and NIIT.

Singapore

Online lending platform to offer investor insurance, (Straits Business), Rated: AAA

Online peer-to-peer funding platform Validus Capital has partnered home-grown insurance provider EQ Insurance to offer investor protection on some of the financing it provides to small and medium-sized enterprises (SMEs).

It will be the first platform in Singapore to provide investor insurance on its invoice financing services, the company said.

The platform, which was founded last year, has had a zero-per-cent default rate to date thanks to its “rigorous due diligence”, the company said. In the last few months, the company has had 27 SMEs approved for invoice financing services, each with an average revenue of $5 million.

Mr Prakash Somosundram, co-founder of Pealo – an aggregated marketplace for SMEs to access working capital – said the firm is looking into investor protection products. “This will definitely help us to attract more investors, and more people will see this form of investing as an asset class,” he added.

Pealo’s platform was launched in January – 300 SMEs have signed up and there are 46 live campaigns under way.

Mr Brian Teng, chief executive of InvoiceInterchange – which allows SMEs to put up their unpaid invoices for auction – also said the platform hopes to eventually make insurance available to investors.

Mr Teng declined to reveal how many SMEs have used the platform, but said there is significant room for invoice financing to grow as a source of funds for SMEs here.

“The penetration rate of invoice financing in Singapore is still low when compared with nations like Britain and the United States,” he noted. The company has funded $4 million of invoices since its launch in 2015.

Mr Roger Crook, chief executive of Capital Springboard – which runs a crowdfunding platform for invoice financing – said more than 100 SMEs have used the service.

The platform has funded over $85 million worth of invoices over the past year, with over 50 accredited and institutional investors taking part.

Australia

Online home loan marketplace exceeds billion in loans, (Broker News), Rated: AAA

HashChing, an online home loan marketplace, has surpassed $1 billion of home loans as momentum builds for the Sydney fintech company. The platform officially launched in August 2015 with just a few brokers on board across Australia. Now, more than a billion dollars’ worth of loans have been received and more than 1,200 mortgage brokers across the country have signed up. The platform works as an online marketplace connecting consumers to mortgage brokers.

“Customers aren’t just looking to save time. The key to our success is that our offer extends far beyond convenience. We’re able to offer pre-negotiated home loan deals from different lenders with equal features, the same products, but with an even better rate,” Sodhi, co-founder and CEO said.

Narang, co-founder and CIO added: “Our broker registration process has been automated to make it really easy and quick by allowing them to digitally sign the contract which instantly activates their account and saves the paper clutter at both ends.”

As the platform continues to build momentum, Sodhi and Narang have welcomed Claire Wivell Plater of The Fold Legal to their advisory board. Wivell Plater is a long standing member of the Business Advisory Committee to ASIC’s Licensing Division and was recently appointed to the Treasurer’s Fintech Advisory Group.

Narang explains HashChing 2.0 will involve more intelligent use of analytics for a better consumer experience.

China

How Chinese Search Giant Baidu Is Getting Deeper Into Banking, (Fortune), Rated: AAA

Chinese search giant Baidu is investing more deeply in financial technology startups as it seeks to expand its own lending efforts.

On Monday, Baidu announced an investment in ZestFinance, a startup taking on the credit scoring industry by using machine learning and a wide variety of data about borrowers to rate their ability to repay loans.

While the amount of the backing was not disclosed, Baidu also invested Bitcoin payments startup Circle Internet Financial last month, the Nikkei Asian Review reported on Wednesday.

Both investments followed Baidu’s decision last year to form an online bank in partnership with Citic Group’s banking unit. The new bank would be the first in China that “truly understands both the Internet and financial services,” Baidu CEO Robin Li said at the time.

Baidu had also made several notable hires from the finance sector, the Nikkei paper reported, including executives with experience from American Express , online financial marketplace Lufax, and Everbright Bank in China.

While online lending sites like Lending Club LC -0.22% have faltered in the United States, the market is strong in China. The peer-to-peer lending market reached almost $67 billion last year, the largest in the world, Nikkei reported citing data from Citigroup.

Baidu will use ZestFinance’s credit rating technology to assess the creditworthiness of its own users. Unlike the U.S., China lacks centralized credit bureaus, and only a small portion of the population has a credit card.

Author:

George Popescu
George Popescu