- Today’s main news: Fitch says OCC charter could harm innovative firms. UK’s Govt. bank funds almost 10% of MarketInvoice’s loans. Rakuten invests EUR10M in Kreditech.
- Today’s main analysis: CCI highest since before great recession.
- Today’s thought-provoking articles: Bank SME lending surges, alt-lenders flop. Vaya, RateSetter launch online mobile shop.
- OCC FinTech charter could harm agility, cost of innovative firms. GP:” Absolutely everything has a good side and a bad side, including OCC’s new fintech charter. It goes without saying that getting an OCC charter is more onerous than no regulation at all. But is it more or less onerous than partnering with a FDIC Bank ? I think that only once a few fintech companies jumps the gun and get a charter will we be able to compare. In my eyes even if it is more onerous, the benefits of being independent and not at the merci of a life-or-death partner (the FDIC bank) is worth a lot and if I would advise fintechs to setup a separate structure and test the waters with an OCC charter while continuing to operate as they have been so far with their primary structure.”
- Consumer confidence high. AT: “This is political commentary, but it’s not just political commentary. There is a great deal of insight here regarding the economy on the whole and consumer confidence in the economy specifically, especially regarding investments. If Halbert is correct and consumer confidence leads to increased investments in equities and stocks, how will that affect alternative investments? My guess is, there will be a negative correlation. Remember, part of the reason for the rise in alternative investing has been the decline in the stock markets. On the other hand, millennials are full of surprises, so continued distrust of banks may keep alternatives interesting to a segment of the investor class. Any way you look at it, the next four years should be an interesting run.”
- Bank SME lending surges, alt-lenders flop. GP:” The interesting number here is the 23.7% approval rate for traditional bank’s SME loan approval rate in Nov 2016. It seems high to me but if it is true, and it could be, that is much higher than the single digits numbers we all had in mind I believe. “. AT: “It’s possible this renewed faith in bank lending is tied to consumer confidence in the economic outlook.”
- Possible credit score changes for 2017. AT: “The initial comment on this Reddit thread has been redacted. Judging from some of the comments, it likely had something to do with medical bills being removed from credit scores if paid off.”
- SmartBiz Loans to offer up to $5 million SBA 7(a) CRE loans.
- InterNex Capital’s asset-based loans now available to small businesses through Bizfi.
- RECF is here and thriving.
- UK bank funds MarketInvoice loans. AT; “The UK government clearly is backing the marketplace loan sector despite FCA concerns. This is presumably because they enjoy the bragging rights of being in the top spot globally in at least one industry.”
- New P2P platforms are riskier. AT: “Written for the consumer, but it’s still good to see what the pundits are saying.”
- Vaya, RateSetter partner on online mobile shop.
- Taplend interview. AT: “Immediate approval with 0% interest. Incredible.”
- Denheath Desserts attracts nearly $370K on PledgeMe.
- UK alt-finance industry still not transparent enough.
- Rakuten drops 10m euros into Kreditech.
- Firm seals biggest ever Irish P2P loan.
- EstateGuru averages 13.4% return historically.
- United States
- Fitch: OCC Fintech Charter Could Harm Agility & Cost of Innovative Financial Firms (Crowdfund Insider), Rated: AAA
- Consumer Confidence Highest Since Before Great Recession (ValueWalk), Rated: AAA
- Bank SME Lending Surges, Alt-Lenders Flop (PYMNTS.com), Rated: AAA
- Growth of consumer borrowing slows a bit (News Journal), Rated: A
- Possible Credit Score Changes for 2017 (Reddit), Rated: A
- SmartBiz Loans Announces New Online SBA Commercial Real Estate Loan Offering up to $5 million (BusinessWire), Rated: A
- InterNex Capital’s Asset-Based Loans Now Available to Small Businesses through the Bizfi Marketplace (BusinessWire), Rated: A
- Real Estate Crowdfunding is Here and Thriving For Investors (Realty Biz News), Rated: B
- United Kingdom
- Government cash funds almost 10% of peer-to-peer MarketInvoice’s loans (Business Insider), Rated: AAA
- New crowdfunding platforms following peer-to-peer lending are riskier than many realise (Express.co.uk), Rated: AAA
- Vaya, RateSetter get together to launch online mobile shop (ITWire), Rated: AAA
- Taplend: Viktor Ihnatiuk (Startups.co.uk), Rated: A
- Denheath Desserts Closes PledgeMe Crowdlending Campaign With Nearly $370,000 in Funds (Crowdfund Insider), Rated: A
- The UK alternative finance industry is still not transparent enough (City A.M.), Rated: A
- European Union
- Rakuten invests EUR10m in Kreditech (Finextra), Rated: AAA
- Firm seals biggest-ever Irish P2P loan (Independent), Rated: A
- EstateGuru’s average historic return highest in the market! (EstateGuru Email), Rated: B
- NCFA Publishes Research on Alternative Finance in Canada (Crowdfund Insider), Rated: AAA
- eToro Announces Key Strategic Partnership for China with Lufax Holding (Finance Magnates), Rated: A
Fitch: OCC Fintech Charter Could Harm Agility & Cost of Innovative Financial Firms (Crowdfund Insider), Rated: AAA
Fitch Ratings is out with a note on the recently announced Comptroller of the Currency (OCC) Fintech charter. The OCC has crafted a document to allow digital banks to become regulated entities by receiving federal bank charters. Fitch is of the opinion the Fintech charter could have significant impacts on the operating strategies and regulatory environments of these innovative firms. And the impact may not be all good.
As for benefits, some Fintech firms such as marketplace lending platforms may no longer have to partner with banks to facilitate loan origination. This echoes a similar comment that Moody’s made just a few days back. A Fintech banking charter may also reduce uncertainty regarding state usury rate caps that have become a more prominent issue recently following the Madden versus Midland decision in June, which stated that agreed upon interest may not be enforceable in certain circumstances.
A special purpose digital bank charter may not allow for insured deposit-taking, which would require FDIC approval and regulation, but in Fitch’s opinion, it could be an initial, gradual step in that direction.
Consumer Confidence Highest Since Before Great Recession (ValueWalk), Rated: AAA
The US Consumer Confidence Index has been soaring since the end of the Great Recession, and it hit another recent new high last month. The Conference Board reported Friday that its Consumer Confidence Index rose to a surprising 107.1 in November, versus the pre-report consensus of 101.1, the highest reading since 2008.
On the other hand, the Commerce Department reported that 3Q GDP rose by 3.2% in the 3Q as reported on November 29. That surprising estimate will be revised again on December 22. But if the next GDP estimate confirms that GDP growth is above 3%, we will need to upgrade our outlook for the US economy going forward.
The post-election surge in the major stock market indexes also has buoyed feelings about equities, with 40% saying now is a good time to invest, up 10 points from before the election. Here again, Democrats became somewhat more negative on stocks while Republicans grew significantly more optimistic.
Those differences are also clear in the choice for what Americans believe are the best investments right now. While real estate remains the top choice for the third straight year, stocks gained the most ground at the expense of gold, real estate and Treasuries. For now, the shine is off of gold for Republicans and they, along with Independents, have grown more favorable toward equities.
Virtually everyone expects the Fed Open Market Committee to raise its short-term interest rate by 0.25% at the meeting today and tomorrow. Fed Funds futures put the odds at 97%. While the first rate hike last December sent stocks sharply lower, stocks are today at yet another new record high.
Investors are aggressively seeking alternative investments to generate income in today’s continued low interest rate world. While the US equity markets have soared to new highs since the election, many are wary of an overdue downward correction. That’s understandable.
Bank SME Lending Surges, Alt-Lenders Flop (PYMNTS.com), Rated: AAA
Reports Tuesday (Dec. 13) said Biz2Credit’s latest index showed surges in traditional banks’ SME loan approval rates in November, hitting 23.7 percent. According to researchers, eight out of the past nine months have seen loan approval rates for small business applicants increase among traditional, large banks.
Even small banks have seen their loan approval rates tick up to 48.8 percent.
At the same time, Biz2Credit found continuing declines in alternative lending activity for SME borrowers. November saw a decline in SME loan approval rates among alt-lenders, down to 59.2 percent in November, according to the report.
Growth of consumer borrowing slows a bit (News Journal), Rated: A
Total borrowing rose $16 billion, the Federal Reserve reported Wednesday. The October increase was the smallest since June.
Revolving credit, which covers credit cards, increased $2.3 billion in October. The non-revolving category, which covers auto loans and student loans, rose $13.7 billion in October.
Possible Credit Score Changes for 2017 (Reddit), Rated: A
I had over 12 collections on my credit as of a year ago and about 8 of them were hospital bills. What I did was write each creditor a letter saying essentially: “I dispute this debt. I don’t not recall this debt in anyway and it was not me. However, I am willing to pay the debt in full if you will agree to remove the debt from all credit bureaus. If you agree to these terms please send me on company letterhead the terms. Once I receive the agreement I will send payment by certified mail the same day I received your letter. If you do not accept these terms I am asking you to send me all proof that this debt is mine and I will dispute it further. You and I both know that paying this debt without you agree g to remove it from my credit report will not benefit me at all and I may as well wait until it falls off naturally.”
I now have 3 collections left, the rest were removed and
I’m working on the last few. You don’t even have to offer to pay 100% I’ve seen others offer 50% for a pay for delete and it went through. I offered 100% because I have the funds and I really wanted it off my credit report.
Edit 2: one of the collections was for capital one. They sent me a letter saying they denied my pay for delete request. Then about a month later they sent me another letter saying since I requested proof of the debt and they couldn’t provide it they are removing the debt from my credit report and my balance is $0. So they denied the request then started to assemble the proof and couldn’t find it. Was pretty funny.
SmartBiz Loans Announces New Online SBA Commercial Real Estate Loan Offering up to million (BusinessWire), Rated: A
SmartBiz Loans, the first online SBA marketplace and bank-enabling technology platform, has announced that they will now offer SBA 7(a) Commercial Real Estate (CRE) Loans up to $5 million to eligible business owners based in the U.S.
The CRE loans are now available through SmartBiz for purchase or refinance through an automated, mobile-optimized online flow that allows eligible businesses to pre-qualify online (even on their mobile phones) in less than five minutes without impacting their credit score. Loans are available for amounts between $350,000 to $5 million with 25-year repayment terms, variable rates as low as 5%, no balloon payments and no prepayment penalty after the first three years. Unlike traditional bank commercial real estate loans, SmartBiz SBA 7(a) CRE loans do not require re-qualifying every three to five years.
The loans are available to small-business owners based in the U.S. with a personal credit score of 675, a minimum of three years in business and $250,000 or more in annual revenue.
InterNex Capital’s Asset-Based Loans Now Available to Small Businesses through the Bizfi Marketplace (BusinessWire), Rated: A
Today, Bizfi (www.bizfi.com), the premier fintech company with a platform that combines aggregation, funding and a marketplace on a single platform for small businesses, expands its business lending capabilities through a funding partnership with InterNex Capital, an asset-based digital lender. The partnership will allow small to mid-sized businesses in manufacturing, wholesale, trucking, business and consulting services to apply for and access an asset-based revolving line of credit from $250,000 to $5 million through the Bizfi marketplace at www.bizfi.com.
Along with short-term financing, equipment financing, SBA loans, and many other products, small businesses that require $250,000 or more can easily and quickly apply for the revolving line of credit online. In addition to InterNex, the Bizfi platform features 45 lenders providing financial options to small businesses in the United States. Bizfi also acts as a direct lender on the platform.
Real Estate Crowdfunding is Here and Thriving For Investors (Realty Biz News), Rated: B
As a real estate investor, are you staying current with the latest investing technology? Just like all modern industry, the real estate industry continues to evolve and how investments are made has a new technology that is on the cutting edge for real estate investors, welcome to real estate crowdfunding.
Both dealmakers and lenders found a strong interest in private financing following the Great Recession. Dealmakers needed access to capital that the banks quit providing. Qualified investors and individuals with 401k funds to invest quickly became attractive. For money investors, more reliable and more secure investments (real estate) outside of the stock and bond markets also became attractive. Now, with crowdfunding, this match becomes even more powerful as more investors (beyond qualified investors) are able to participate in the market.
Government cash funds almost 10% of peer-to-peer MarketInvoice’s loans (Business Insider), Rated: AAA
The taxpayer-backed British Business Bank is providing a major boost to fintech MarketInvoice, new figures show.
9% of loans by value made over MarketInvoice’s platform to date have been financed by money from the government-backed British Business Bank, according to a Freedom of Information request seen by Business Insider.
The bank has provided the cash for £93.2 million-worth of loans on the platform, out of a total of just over £1 billion made by the platform.
New crowdfunding platforms following peer-to-peer lending are riskier than many realise (Express.co.uk), Rated: AAA
The new breed of crowdfunding platforms that have followed in the wake of P2P are far riskier than many realise.
City regulator the Financial Conduct Authority (FCA) is looking to crack down on these crowdfunding platforms to protect savers who do not understand the dangers.
It is lining up tough new regulations after warning that some platforms fall short of its demands to be “clear, fair and not misleading”.
Their interest rates have dipped lately, but Zopa still pays a variable 3.1 per cent and RateSetter pays 2.9 per cent.
Hannah Maundrell, editor-in-chief of Money.co.uk, says P2P platforms need a robust fallback plan so people do not lose money if the company goes bust: “They will also have to carry out more thorough checks on borrowers.
“Some do, but the FCA’s rules could make it compulsory.”
Vaya, RateSetter get together to launch online mobile shop (ITWire), Rated: AAA
Mobile service provider Vaya has teamed up with peer-to-peer lending platform RateSetter to launch an online mobile phone shop.
Vaya says it has worked with RateSetter to provide fair financing terms and an easy online sign-up process for mobile phone customers – combining “some of the sharpest handsets on the market with the choice of outright purchase or wallet-friendly payment terms over 12 or 24 months”.
The two companies say they are bucking the trend of telcos locking people’s mobile plans up with their handset repayments.
Taplend: Viktor Ihnatiuk (Startups.co.uk), Rated: A
Taplend is a financial help service. With our app, people can get up to £2,500 in a few minutes, provided by friends or lending companies.
The problem we are solving is a fairly common one for all of us – situations when you need money urgently, but cannot get it immediately. The mechanism of Taplend is a very simple one: after the user downloads the application, he sets the desired amount of money and return terms, submits detailed information and sends a request via the service to his friends or credit companies.
After the request is accepted, it takes a couple of minutes for the money to come to the user’s bank account or mobile wallet.
While working in the p2p lending area, we noticed that the average time to get a loan through such a platform is around three days, under affordable rates. It is clear that millions of people have the urgent need for money.
Our business model can be split into two parts:
- We let friends help each other with money under a 0% interest rate. Taplend would be useful for these people, who might face the strong need for the financial assistance to be provided as soon as possible. In other words, Taplend is a p2p money transfer tool for friends to help each other. In this case, we charge a small split fee from transactions between the users.
- Besides asking from friends, Taplend lets the user request the loan from our partners – financial institutions. In this case, we let the user to choose the lender among the list of companies, after this we provide him with specific loan application form (depends on the lender).
When the user finishes filling the application form, we send this data to the lender. If everything is ok with this data, the user gets his request approved, receives the money and the lender pays Taplend a lead generation fee.
Denheath Desserts Closes PledgeMe Crowdlending Campaign With Nearly 0,000 in Funds (Crowdfund Insider), Rated: A
Denheath Desserts, a custard square brand from South Canterbury, has officially closed its crowdlending campaign, which raised nearly $369,001 from 161 investors, on PledgeMe. Denheath Desserts currently produces 10,000 custard squares per day from its Timaru factor.
The UK alternative finance industry is still not transparent enough (City A.M.), Rated: A
One of the most important risks when it comes to crowdfunding and online lending, which will be fairly obvious to anyone with investment experience, is asset risk.
Then there is the risk in the instrument. What do you get for your money? Share, bonds, a loan contract? Are there other lenders? Are you senior or junior? Is the investment secured?
Crowdfunding should not say it is transparent, but be transparent. You don’t think people are funny because they tell you they are comedians. You think they are funny when they tell you a joke that makes you fall off your seat.
That means being transparent about fees for starters. How does that platform get paid? By the lender, the borrower or a bit of both? When does it get paid, and do they take a spread?
Platforms should earn their fees – and yes, those should be completely and clearly set out too.
Appropriateness tests and caps on the amount of investment are just some of the other methods that platforms can implement to help manage risk. Each of these are worth an article in their own right, but the most important thing for investors to be aware of, for now, is that not all platforms offer the same levels of disclosure and protection.
Rakuten invests EUR10m in Kreditech (Finextra), Rated: AAA
This is another landmark investment in fintech by Rakuten, a leader in internet services and global innovation headquartered in Japan. Rakuten joins Kreditech’s outstanding group of backers, including J.C. Flowers and the World Bank’s International Finance Corporation. Michael Piechalak of the Rakuten FinTech Fund will join the Board as an observer.
Kreditech aims to invest the new funding into further developing its partnership business. The company has launched its Lending-as-a-service in spring 2016. Renowned partners such as PayU (Naspers) are making use of Kreditech’s POS financing integration.
Firm seals biggest-ever Irish P2P loan (Independent), Rated: A
Irish peer-to-peer (P2P) lending firm Linked Finance has completed the country’s largest ever P2P loan, raising €150,000 for serviced workspace provider Iconic Offices.
The loan, which is double the size of the previous biggest amount raised by Linked Finance, will be used to fit out Iconic Offices’ location at Herbert House, Dublin 2.
Linked Finance, which targets the non-bank SME-lending sector, said the loan was fully subscribed in less than 20 hours.
EstateGuru’s average historic return highest in the market! (EstateGuru Email), Rated: B
In December, EstateGuru’s average historic return reached the level 13.4% (since December 2014), which is the highest return among crowdfunding platforms for secured property loans.
Within two operational years, EstateGuru has offered its investors the chance to invest in 95 secured property loans with a record high annual average historic return 13.4%,“ said EstateGuru’s founder and CEO Marek Pärtel.
In comparison, some of Europe’s most popular and most established crowdfunding platforms like LendInvest, PropLend and Saving Stream have an annual average return of respectively 7.06%, 9.39% and 12%.
EstateGuru has managed to offer its investors the best returns due to high-quality projects and additional bonuses (e.g when the loan is repaid earlier, the borrower is obligated to pay the minimum 3-4 months interest). Our platform allows both professional and still experimenting investors earn equally great returns. Moreover, our more eager investors can take advantage of our affiliate program,“ Marek Pärtel added.
EstateGuru’s more than 5600 investors from 34 countries have earned a cumulative interest revenue €648,421 and more than €15 million worth of loans have been funded. Largest investment portfolios on the platform exceed €700,000 and the investors have not lost a single euro on the EstateGuru platform throughout its entire history. EstateGuru’s priority is to offer its investors secured and high-quality investment opportunities in Estonia and abroad.
NCFA Publishes Research on Alternative Finance in Canada (Crowdfund Insider), Rated: AAA
The National Crowdfunding Association of Canada (NCFA) has published a report on the status of crowdfunding and other forms of alternative finance including online lending.
The report tallied numbers for 2015, tracking 100 online platforms including both rewards and investment, stating that Canada reached $133 million in total volume. This amount is predicted to increase to $190 million during 2016.
The NCFA is not totally complimentary of the current crowdfunding ecosystem. Earlier this year, one industry insider labeled the regulatory approach as a “mess”. Another called it “dead in the water.”
eToro Announces Key Strategic Partnership for China with Lufax Holding (Finance Magnates), Rated: A
One of the leading social trading networks in the foreign exchange and CFDs space, eToro has announced that it has signed a strategic partnership with Lufax Holding Ltd. The cooperation agreement between the firms is aiming to boost eToro’s profile with Chinese clients.