Friday January 27 2017, Daily News Digest

LendingRobot diversification

News Comments Today’s main news: Completely automated robo-hedge-fund for online lending by LendingRobot. 17 UK P2P providers have IFISA permissions now. Today’s main analysis: Making loan data actionable. Today’s thought-provoking articles: Why can’t financial advisors and P2P lenders get along? Scott Morrison backs robo-advisors to cheap superannuation advice to retirees. United States LendingRobot launches robo hedge fund […]

LendingRobot diversification

News Comments

United States

  • LendingRobot launches robo hedge fund for online lending. GP:”The interesting part of the fund is that it’s completely automatic and uses Blockchain. I am not sold on the need to use Blockchain, seem to be mostly a PR stunt, which will likely work.” AT: “We reported on LendingRobot’s plan to launch this fund but didn’t realize it would be so soon. I’d be interested in how it performs.”
  • Making Loan Data Actionable. AT: “There is some very interesting analysis on standardizing data in this white paper, but its focus is on the Orchard methodology.”
  • $15M raised through RealtyShares for real estate in New England. GP:””We continue to see the crowd funding real estate market growth. We look forward to when it will (mostly) cover other segments beyond the short term property flippers.”
  • LendIt USA publishes 2017 agenda. AT: “If you go to one conference this year, this should be it.”

United Kingdom

European Union

Australia

United States

LendingRobot Launches Robo Hedge Fund for Online Lending (Crowdfund Insider), Rated: AAA

LendingRobot has officially launched their next big vertical: a Robo-Hedge Fund for alternative lending.

The LendingRobot Series is described as a “one-stop” solution for cloud-based, automated investing secured by Blockchain (DLT) technology. The Robo-fund uses machine learning and proprietary algorithms to hopefully provide market-beating returns.  Unlike many other hedge funds, liquidity will be facilitated and transparency is paramount.

LendingRobot describes how the Robo-fund will work. The company will manage investments across four different Series, with target maturity going from 20 to 36 months, and estimated net returns up to 9.66%. Investor’s money is converted in Units of ownership in these Series, that are issued on a weekly basis. By default, loans payments keep being re-invested and the Units value increases. LendingRobot publishes every week a detailed ledger of its holdings, down to the value and individual payments made by each note.

LendingRobot started with just two lending platforms: Lending Club and Prosper. They later added Funding Circle – available to accredited investors only.  Today they are adding LendingHome to their portfolio of their assets.

Speaking to Marot, additional lenders are definitely on the list.

Will LendingRobot expand beyond the borders of the US? Absolutely.

First, LendingRobot will accept international investors. But do not be surprised if LendingRobot shows up in another country at some point in the future.

Making Loan Data Actionable (Orchard Platform), Rated: A

There’s no equivalent to the Financial Accounting Standards Board (FASB) and Generally Accepted Accounting Principles (GAAP) or Fannie Mae and Freddie Mac and the Uniform Closing Dataset (UCD) in the world of online lending.

Whether to power the tools investors need to conduct analysis across lenders or to allow originators to improve their businesses by providing better industry benchmarking, among other things, the creation of an industry-wide, standardized dataset will help advance the sector further. At this stage of the industry’s growth, it’s vital that we maintain focus on data quality, integrity, and transparency.

Download Orchard Platform’s white paper “Making Loan Data Actionable” here.

$ 15M Raised for New England Real Estate Through RealtyShares Ecosystem (BusinessWire), Rated: A

RealtyShares, a leading online marketplace for real estate investing, today released new data showing the wide reach the platform has established in Southern New England since inception.

Developed as a way to efficiently raise capital for real estate projects, RealtyShares has facilitated 20 deals across Massachusetts, Connecticut and Rhode Island totaling more than $15 million invested throughout the region. By leveraging technology and a network of 38,000 accredited investors, the company allows sponsors and developers to potentially raise money faster than traditional financing options.

While also a strong market for commercial opportunities, RealtyShares has focused mostly on the single-family home market in the Northeast. Along with individual properties, the company has completed ten separate portfolio deals encompassing multiple properties per listing. The largest raised $2 million dollars from more than 90 investors from across the country.

Massachusetts leads the way with 13 deals funded through the ecosystem, totaling $8.6 million across multiple cities. The majority of deals funded in the region have been residential equity offerings, giving investors a larger stake in the project with increased risks.

To date, the RealtyShares network of investors has funded upwards of $300 million across more than 550 investment opportunities on the platform, funding residential and commercial projects in 35 states.

LendIt USA 2017 AGENDA (LendIt), Rated: AAA

LendIt USA has published its full agenda for the 2017 conference on March 6 – 7. You can search panels by track (such as lending or real estate).

MARCH 6 • MONDAY

9:15am –  10:05am R OCC Limited Charter: From Theory to Practice

⑧ 1E16, 1E17 – RegTech: Policy & Regulation
  9:15am –  10:30am S Digital Marketing Channels

⑤ 1E11 – Training for Staff
  9:40am –  10:00am K If I Were To Start A Bank Today, This Is What It Would Look Like

① Special Events Hall
  9:45am –  10:35am L Financial Services Enterprise Projects

⑦ 1E14, 1E15 – The Fintech Universe
  9:45am –  10:35am G Empowering Women: The Key to Global Financial Inclusion

④ 1E10 – Financial Inclusion
  9:45am –  10:35am O China Disrupted: How Fintech is Changing the Way That 1.5 Billion People Bank

② 1E6, 1E7 – Global Perspective
  9:45am –  10:35am V Online Lending/Investing 101

⑥ 1E12, 1E13 – The Investor’s Perspective
  9:45am –  10:35am U How Banks are Coming Back to SME Lending

③ 1E8, 1E9 – Innovation in Lending
 10:00am –  10:20am K Alternative Lending is Dead, Long Live Data

① Special Events Hall
 10:10am –  10:40am R Self Regulatory Leaders

⑧ 1E16, 1E17 – RegTech: Policy & Regulation
 10:20am –  10:30am K Why Securitization and Online Lending are So Important For Each Other

MARCH 7 • TUESDAY

9:15am –  9:40am N Case Study: Using Artificial Intelligence to Improve Underwriting

④ 1E6, 1E7 – Innovation in Lending
  9:15am –  9:40am M The New Era of Buying and Selling a House

② 1E16, 1E17 – Innovation in Real Estate
  9:15am –  9:40am W AI Powered Investing

⑦ 1E14, 1E15 – The Fintech Universe
  9:15am –  9:40am P Valuation of Consumer Loans/Notes

⑥ 1E12, 1E13 – The Investor’s Perspective
  9:35am –  10:15am K Artificial Intelligence is Poised to Transform Financial Services

① Special Events Hall
  9:45am –  10:35am B Exploring Different Types of Bank Partnerships

⑧ 1E10, 1E11 – Bank Technology
  9:45am –  10:35am C Back on Track: Viewpoints from the Large Consumer Lenders

③ 1E8, 1E9 – Innovation in Lending
  9:45am –  10:35am N The New Frontier: AI, Machine Learning and Advanced Analytics

④ 1E6, 1E7 – Innovation in Lending
  9:45am –  10:35am M Bringing the Mortgage Process out of the Dark Ages

② 1E16, 1E17 – Innovation in Real Estate
  9:45am –  10:35am W The Future of Wealth Management

⑦ 1E14, 1E15 – The Fintech Universe
  9:45am –  10:35am P What it Takes to Securitize: Securitization in Marketplace Lending

⑥ 1E12, 1E13 – The Investor’s Perspective
 10:15am –  10:25am K Lang Di Fintech Announcement/China Fintech

See the full agenda here.

United Kingdom

Landbay’s broker website launch marks move on challenger bank market share (Mortgage Solutions), Rated: AAA

With an alternative funding model, the phrase attached to any form of funding which falls outside the traditional deposit-taking route or wholesale market financing, Landbay has sat on the fringes of buy-to-let lending since entering the market in 2014, but that seems about to change.

The announcement that Landbay plans to ramp up business volumes to a level which puts it neck and neck with the challenger banks seems courageous, given the buy-to-let market is currently going through one of its most turbulent periods since the financial crisis.

As an unregulated buy-to-let lender, Landbay is not required to follow the PRA’s rules, which could be seen as an unfair advantage by its regulated counterparts, but it is not an opportunity the peer-to-peer firm has chosen to exploit. “We believe the new regulatory framework is a good thing for the sector, and have chosen to fully comply with the regulator’s guidelines,” explains Goodall.

Aside from growing its mortgage lending this year, Landbay is preparing to launch its ISA in February – a first for the peer-to-peer sector, says Goodall.

Any other predictions for a fairly unpredictable market? Goodall says we could be heading for a slow down in buy-to-let remortgaging activity. “Some 50% of the buy-to-let market is remortgages. Five-year fixed rate products are exempt from the PRA’s standards so we expect to see borrowers opting for longer-term products, slowing down the speed at which people switch deals.”

Why can’t financial advisors and P2P lenders get along? (altfi), Rated: A

AltFi Data’s returns index, which is fuelled by granular loan level data from Zopa, Funding Circle, RateSetter and MarketInvoice, shows that the average net return of these four platforms has hovered between 4.5 and 6.5 per cent for the entire lifetime of the industry.

And yet the fact remains: financial advisors and peer-to-peer platforms simply do not get on.

LendingWell is attempting to solve some of these problems by providing a more seamless mode of access for advisors who are interested in peer-to-peer.

One platform that might stand a chance of breaking through the IFA barrier is the recently authorised Octopus Choice – Octopus Investments’ P2P offering. The platform has matched £45m of property loans since launching in April of last year, and already has a significant amount of advised money lent out. Parent company Octopus has over 6bn in assets, and has worked with thousands of financial advisors over the past 15 years or so.

Stuart Sheppard of Octopus think that the majority of peer-to-peer lenders simply lack the experience necessary for working with IFAs.

“Advisors, quite understandably, want to be paid for their advice,” said Slesinger.

Is the UK ready for the peer-to-peer lending gold rush? (Business Zone), Rated: A

The IFISA market is yet to come into full effect because the largest platforms are unable to offer the service. At the moment, 17 P2P providers have permission, but this group is limited to relatively small, new platforms. None of the biggest six marketplaces, which stand head and shoulders above the rest of the pack, are included.

BusinessZone’s sources say this will happen in the next two weeks when a number of platforms will receive authorisation to offer the product from HMRC.

The Current and Expected Crowdfunding Regulation in the UK. (TechBullion), Rated: B

Currently, the UK does not regulate donation-based crowdfunding and rewards-based crowdfunding. However, loan-based crowdfunding and equity-based crowdfunding are under the scope of the UK law.

Equity-based crowdfunding platforms are required to obtain a license or to have regulated activities managed by authorized parties. They are also required to have a screening process in order to sort sophisticated and non-sophisticated investors.  A “non-sophisticated” investor should not be allowed to invest more than 10 percent of their net investable asset through crowdfunding platforms.

Other important regulations in crowdfunding concern the communication of the offers, the language, fairness and clarity of description used to describe the offers and the risk awareness associated with them. These rules aim to establish platforms where people are not only treated fairly but allowed to make well-informed decisions.

The FCA is expected to introduce changes to the rules around the transparency and disclosure of information by companies raising money via crowdfunding. Although the new rules will apply to all types of crowdfunding, the focus will largely be on peer-to-peer lending, which in some cases provides products or services similar to more regulated products or services offered by banks.

European Union

5 Exciting Fintech Startups (The Merkle), Rated: A

Stash wants to stand out in this regard, and they have gathered support from over 300,000 users already. By letting users invest as little as $5, the platform is open to anyone looking to diversify their portfolio.

Competing in the world of cross-border payment services is not an easy challenge, especially for fintech startups. Founded in 2012 and based out of London, Currency Cloud provides this functionality for businesses and corporations only, rather than end users.

Enter iZettle, a startup based in Stockholm, Sweden that offers free card readers to their clients, focusing on small businesses owners.

Another fintech startup focusing on competing in the payment processing market is Klarna. Instead, the payment processor allows users to place orders by entering an email address and zip code.

Peer-to-peer lending is one of the many financial sectors that will see significant disruption by fintech startups. Founded in 2005 and based out of London, Zopa is one of the companies trying to gain a foothold in this competitive market.

German P2P Lending Market – Short News (P2P Banking), Rated: A

Documents accessed by P2P-Banking.com show that the largest (by loan volume) German p2p lending marketplace Auxmoney made an operating loss of 13.1 million EUR in the year 2015 (compared to 8.48M loss in 2014). This was before receiving Series D funding in early 2016.

Funding Circle CE, Berlin, the German division of Funding Circle closed 2015 with an operating loss of 9.45 million EUR (compared to 2.83M loss in 2014).

Germany seems to be a very hard market for p2p lending companies to crack. Interest rate levels for consumer loans are very low compared to other markets. banks are competitive. And there is no significant amount of credit card debt that can be refinanced. P2P Lending marketplaces cannot offer better interest rates, they need to find other competitive advantages. And customer acquistion costs to win borrowers through online marketing channels are high in Germany.

Australia

Scott Morrison backs robo-advisers to cheap superannuation advice to retirees (Financial Review), Rated: AAA

Treasurer Scott Morrison has endorsed “robo-advisers” offering cheap automated superannuation advice as the next step in Australia’s financial industry, and urged consumers to overcome their privacy fears about business and governments sharing personal data.

The government is considering major changes to Australia’s 500 privacy and secrecy laws which could allow businesses and government to capitalise on the “enormous untapped potential of Australia’s data” by giving customers more control over their personal information and giving greater access to “anonymous government-held data”.

Mr Morrison plans to encourage more robo-adviser start-ups in Australia by giving them greater scope to test their services in the market without facing the costs of regulatory licensing.

New Digital Lender Sharing the Love (Scoop), Rated: A

Set to open its virtual doors in 2017, Nectar is leading the next wave of digital lending to hit New Zealand shores after peer-to-peer lending arrived in 2014.

“Unlike other borrowing options, Nectar offers a simple, fully-automated online application and approval process that produces a personalised loan offer in just 7 minutes, and offers a same-day transfer of funds,” explains Symon Nausbaum, Nectar’s founder. “We want Kiwis to have a simpler, faster, and more transparent way to get a loan,” he says.

Nectar uses an advanced, data-driven method for assessing credit, drawing on a wider variety of data sources, to create a personalised 360-degree profile of customers, and thus improving their chances of being able to borrow when compared with other traditional sources.

Authors:

George Popescu
Allen Taylor