Thursday December 5 2019, Weekly News Digest

Prosper monthly originations

News Comments Today’s main news: SoFi gets BitLicense in New York. Funding Circle unveils 250M GBP securitization of SME loans. Zopa raises 1.4M GBP. RateSetter to close family finance product. RMBS gears up for securitization windfall. Reserve Bank of India raises P2P lending limit by 5x. Today’s main analysis: Prosper performance update – October 2019. […]

The post Thursday December 5 2019, Weekly News Digest appeared first on Lending Times.

Prosper monthly originations

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United States

United Kingdom

European Union

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News Summary

United States

Prosper Performance Update – October 2019 (Prosper), Rated: AAA

Highlights from the report include:

  • In October, 64% of originations were rated AA-B. The dollar‑weighted average FICO on the platform was 720, relatively flat month‑over-month.
  • The weighted average income of borrowers on the platform in October was ~$106K, relatively flat month-over-month.
  • The weighted average borrower rate for October originations increased 30 bps month-over-month largely due to a shift in Prosper Rating mix.
Source: Prosper

See the full report here.

New York Gives SoFi Green Light on BitLicense (SoFi), Rated: AAA

New York State Department of Financial Services (NYDFS) has approved SoFi’s BitLicense application, allowing SoFi Invest customers in New York to trade cryptocurrencies on its platform through SoFi Digital Assets, LLC.

FT Partners’ CEO Monthly Alternative Lending Market Analysis (FT Partners), Rated: AAA

FT Partners recently announced our role as exclusive financial advisor to 

Source: FT Partners

Financings

Source: FT Partners

See the full report here.

Online Lending Platform Refines the Science of Underwriting (CFO.com), Rated: AAA

Through the use of artificial intelligence, Upstart examines approximately 1,600 variables pertaining to loan applicants, says CFO Sanjay Datta. But he doesn’t like to draw attention to the artificial intelligence per se.

In a Nov. 8 report, Kroll rated the performances of five loan securitizations, worth a cumulative $1.5 billion, that Upstart offered from mid-2017 through early this year. Each one has significantly outperformed Kroll’s forecast at the time of the deal.

Kroll predicted that Upstart’s first securitization, dated June 21, 2017, would experience 13.07% credit losses by October 2019. But the actual losses were only 9.96%, 24% better than forecast.

Kabbage data places Vermont at third-highest small business revenue growth in the first half of 2019 (Vermont Biz), Rated: AAA

Kabbage placed Vermont at the third-highest in the nation at 173.90 on the Kabbage Index Value, based on monthly median-revenue growth for small businesses.

The Kabbage Index Value (KIV), a value used to track revenue growth of small businesses, increased almost 22 points, from 136.8 to 158.4 points, indicating U.S. small businesses’ median revenue grew 15.7% in the first six months of the year. This represents a 22% increase compared to the same time period in 2018 and a large contrast from the second half of 2018 when small business revenue only grew 1.8 percent.

Source: Kabbage

StreetShares Discontinues Major Segment of Its Financing Business (deBanked), Rated: A

StreetShares quietly discontinued a major part of its financing business on November 15, a new disclosure filed with the SEC revealed.

The company has only facilitated $180 million in funding to small businesses since inception in 2014. That would indicate that the invoice factoring portion was roughly half of the company’s funding volume.

Monzo hires Visa exec to lead US push (ZangPay), Rated: A

Monzo has hired a Visa executive — who was previously with Standard Chartered — to lead its US business as it ramps up efforts to become a fully-fledged bank in the country even though complex rules have deterred some rivals, according to the FT.

There’s a better way to regulate small-dollar lending (American Banker), Rated: A

Innovation in online lending has shifted consumers away from traditional payday lenders. And while that’s a safer bet, the shift has also sparked a misguided policy conversation around online lending that is focused on the wrong thing: capping interest rates.

Bad Credit? Regulators Back Ways for Risky Borrowers to Get Loans (WSJ), Rated: A

Consumers with spotty or no credit histories might find it easier to get loans after federal banking regulators endorsed alternatives to traditional methods of assessing creditworthiness.

The regulators on Tuesday backed the use of information such as borrowers’ cash flow as an alternative to the traditional credit-evaluation system, which relies on scores issued by companies such as Equifax Inc. and Experian PLC based on applicants’ past history of borrowing and repayments.

Assets managed by robos up 10% so far in 2019 to $ 283 billion (Investment News), Rated: A

Assets managed by digital advisers grew 10% over the first three quarters of 2019 to reach a total of $283 billion, according a new report from Aite Group, a consulting firm.

Fintech Lending Stocks Have Been a Bust. Here’s Why. (Barron’s), Rated: A

Fintech lenders were supposed to be the next big thing in finance. Big data, machine learning, peer-to-peer platforms, social networking data: the list of buzzy new ideas that were supposed to upend the business of money lending went on and on.

Bank Regulators’ Proposals Won’t Erase Madden Uncertainty (Law360), Rated: A

These Funding and Business Assistance Programs Are Helping Felons Restart Their Lives (Stamford Advocate), Rated: A

1. Prosper

Prosper is a peer-to-peer lending platform. The entire process is online, with no background check. Hence criminal history does not affect getting a loan.

2. HelpForFelons.org

HelpForFelons.org has lists of grants and loans for felons and links to reentry programs around the country.

More students from higher-income families taking out student loans (Marketplace.org), Rated: A

Whether their families are higher income, lower income, or somewhere in between, a majority of all students today take out loans to cover at least part of their undergraduate degree. Which wasn’t always the case.

In fact, over the last 20 years, the percentage of students from higher-income families — defined here as making more than $114,000 a year — who take out loans to get a bachelor’s degree has more than doubled, from 30% in the mid-1990s to 60% now, according to a new report out Wednesday from the American Enterprise Institute. The percentage of students from low-income families who take out loans is higher, just over 75%, but hasn’t increased nearly as much since the 1990s.

Source: Marketplace.org

Crypto lender hires local mayor to smooth over regulatory hurdles (Decrypt), Rated: A

Cred, a crypto lending and borrowing platform, announced earlier this week that it has added a local California mayor to its roster to further boost government relations for its business.

Ally Medina, mayor of Emeryville—a city in California, will lead the company’s strategic government relations and business development initiatives.

Payday Lender Curo Group Can’t Derail Securities Class Action (Bloomberg Law), Rated: A

Curo Group Holdings Corp. failed to shake off a proposed shareholder class action after the District of Kansas found sufficient allegations that the company didn’t disclose facts that were bound to impact its financial performance.

Curo Can’t Ditch Investor Suit Over Canada Products (Law360), Rated: B

Source: Law360

Elevate Credit to Attend the Jefferies’ Crossover Consumer Finance Summit (BusinessWire), Rated: B

Elevate Credit, Inc. (NYSE: ELVT), today announced that its Chief Executive Officer, Jason Harvison, and Chief Financial Officer, Chris Lutes, will attend the Jefferies’ Crossover Consumer Finance Summit on December 12, 2019 at The New York Lotte Palace Hotel. Mr. Harvison and Mr. Lutes will be available for 1×1 meetings with investors.

Harvard University and ArborCrowd Partner to Host Panel That Examines the Future of Commercial Real Estate Investing (Yahoo! Finance), Rated: B

On Tuesday, November 20, Harvard University’s Real Estate Development Club together with ArborCrowd (the “Company”), the first crowdfunding platform launched by a real estate institution, hosted a panel of experts at Harvard University to discuss the future of commercial real estate investing. The panel was attended by graduate students interested in pursuing a career in commercial real estate.

Finicity Solution Live Within Ellie Mae Encompass Consumer Connect (Markets Insider), Rated: B

Finicity, a provider of real-time financial data access and insights, and Ellie Mae, the cloud-based platform provider for the mortgage finance industry, today announced that Finicity’s digital Verification of Assets (VoA) solution is now available through Ellie Mae’s Encompass Consumer Connect, part of the Encompass Digital Lending Platform.

United Kingdom

Funding Circle Unveils £250 Million Securitization of SME Loans With Waterfall Asset Management (Crowdfund Insider), Rated: AAA

Marketplace lending company Funding Circle (LSE:FCH) recently unveiled its £250 million securitization of SME loans with Waterfall Asset Management. The duo reported that the portfolio brings the total amount of UK Funding Circle loans securitized to £1 billion and the deal will notably open up the small business loans asset class to an even wider range of investors such as insurance companies and pension funds.

Is the current share price of FTSE fintech company Funding Circle a bargain buy? (The Motley Fool), Rated: A

On, average Funding Circle collects 4.86% of the total amount of new loans generated annually as transaction revenue and 0.82% of the annual principal balance of loans under management in servicing fees.

Fintech Zopa raises £140m just in time for banking licence (Yahoo! Finance), Rated: AAA

Financial technology company Zopa has raised £140m, just in the nick of time to meet a key requirement of its provisional banking license.

Zopa announced on Tuesday it had secured the investment from IAG Capital, a US investment group that first backed the online lender in 2018.

Zopa valuation fall hits Augmentum Fintech but other gains buoy portfolio (AltFi), Rated: A

Zopa has seen its valuation fall by 47 per cent following its latest fundraise to a new money valuation of £188m.

The trust wrote down £10.3m in the value of Zopa and its share price has fallen has fallen 4.67 per cent as a result today.

Zopa Bank fundraising delays ‘not down to P2P lending concerns’ (P2P Finance News), Rated: A

ZOPA’S struggle to raise last-minute funding so it can launch its banking brand should not be seen as a sign of trouble for the peer-to-peer lending sector, an analyst claims.

RateSetter to close family finance loan product (P2P Finance News), Rated: AAA

RATESETTER is to stop offering its family finance product from the new year.

Uncapped raises £10M to offer revenue-based finance to growing businesses (TechCrunch), Rated: A

Uncapped, a London-headquartered and Warsaw-based startup that wants to provide “revenue-based” finance to growing European businesses, is officially launching today and disclosing that it has raised £10 million in funding.

UK start-up Student Finance raises €1.15m to tackle university loans (Fintech Futures), Rated: A

Educational technology start-up Student Finance has raised €1.15 million in a seed funding round led by Seedcamp and Mustard Seed Impact.

Growth Street CEO exits (AltFi), Rated: A

Greg Carter, the CEO of Growth Street, has stood down from his role.

Carter, who co-founded the business in 2014, is to remain with Growth Street in an advisory role, the company said.

Finastra joins World Economic Forum (Finastra), Rated: B

Finastra today announced that it has joined the World Economic Forum. The move will see the company collaborating with industry leaders and policy-makers to drive change across financial services, world trade and beyond, to help build a better, sustainable future.

China

China gradually cleans up P2P lending businesses (Ecns.cn), Rated: AAA

Southwest China’s Sichuan Province became the country’s latest province to ban all peer-to-peer lending (P2P) businesses amid regulators’ tightened grip on the internet financial industry due to monetary risks.

European Union

Securitization: RMBS gears up for windfall (Euromoney), Rated: AAA

Volumes have picked up since then, and RMBS-related issuance is forecast to reach $100 billion in 2019, up from $86 billion in 2018, according to Standard & Poor’s. However, the market is still a shadow of its former self. The banks still dominate mortgage lending, but not nearly to the extent that they used to. Most are quick to point out that their online disruptors have yet to perform through a cycle.

The banks still dominate mortgage lending, but not nearly to the extent that they used to. Most are quick to point out that their online disruptors have yet to perform through a cycle.

It’s securitization, but not as we knew it (Euromoney), Rated: A

There is no more ‘originate to distribute’, the grand name for the strategy behind so much of the dysfunctional lending that drove the sub-prime residential mortgage-backed securities (RMBS) crisis.

Today banks provide funding to a growing army of private and buy-side institutions that make the loans, and the banks then arrange securitization exits for them.

German fintech N26 targets IPO in 4-5 years (Reuters), Rated: A

German fintech N26, valued at $3.5 billion in its latest funding round, views a stock market listing as an attractive option, but rather in 4-5 years than in the short-term, its Germany head told Reuters.

Klarna Bank picks Amazon for expanded cloud services (American Banker), Rated: A

In a move to aid faster expansion and provide more security and regulatory compliance tools, Klarna Bank in Sweden is strengthening its longtime relationship with Amazon Web Services by making it the bank’s preferred cloud provider.

Klarna says it will leverage the AWS global infrastructure to support its scale, now at 60 million customers across 170,000 merchants in 17 countries.

European FinTech: the next generation trend setter (Finextra), Rated: A

Despite the influence of the US, we are finding something quite different when exploring the way the FinTech market is evolving. European technological innovation is having a profound effect on the approach US companies are taking, reversing the well-known ‘cultural influencing trend.’

International

International P2P Lending Volumes November 2019 (P2P-Banking), Rated: AAA

The total volume for the reported marketplaces in the table adds up to 658 million Euro.

Source: P2P-Banking

How in-branch video banking enhances customer service experience (Bob’s Guide), Rated: A

While they turn to online banking, and given the rise in digital transformation, the most customers still appreciate the need for financial advice face-to-face, especially for complex transactions or help. Accenture’s recent study of financial service consumers show that on average two-thirds of consumers favour face-to-face interaction with their bank.

A 2018 study supported by the retail banking industry group EFMA, Vidyo and CUNA Strategic Services suggested more customers would be willing to use in-branch video (90 percent) than online video banking (85 percent).

Crypto Loans See Solid Growth, Platforms Attract Community Interest (CoinTelegraph), Rated: A

Today, the entire crypto loaning industry is estimated at $4.7 billion and the number of crypto loan platforms is growing rapidly, according to a report made by blockchain company Graychain Ltd. While lenders have only earned a combined $86 million in interest since 2018, the demand for cryptocurrency loans is growing. In the first quarter of 2019, over 5,400 new loans were issued, and in the second, at least 18,500. The volume of lending also increased, with lenders issuing $64.8 million in loans in the first quarter and $159.3 million in the second.

Source: CoinTelegraph

OpenID Foundation Launches New Microsite Focused on Open Banking and Fintech Developers (OpenID), Rated: B

The OpenID Foundation has launched a new microsite focused on global open banking initiatives and providing resources for fintech developers implementing the Foundation’s Financial-grade API (FAPI).

Australia/New Zealand

Peer-to-peer lending and crowdfunding 2019 data published (Scoop), Rated: AAA

The Financial Markets Authority (FMA) today published its third statistical report on peer-to-peer lending (P2P) and crowdfunding services in New Zealand.

Year-on-year, there were 34% fewer successful crowdfunding offers and 52% less investment from licensed service investors.

India

RBI Raises Peer-To-Peer Lending Limit Fivefold (Bloomberg Quint), Rated: AAA

India’s central bank has raised the lending cap for peer-to-peer platforms fivefold, providing a boost to such lending.

The aggregate exposure of a lender to all borrowers at any point of time, across all non-banking financial company-peer-to-peer platforms, will be capped at Rs 50 lakh against Rs 10 lakh at present, the Reserve Bank of India said in a statement on Developmental and Regulatory Policies issued on Dec. 5.

A 30-year-old company is disrupting the loan marketplace business in an old-fashioned way (Economic Times), Rated: A

MyMoneyMantra is taking on rivals like BankBazaar and Paisabazaar head on. The company is growing its giant distribution network even as it swiftly expands its digital footprint to scale faster. But its physical network will remain the core business. A digital-only model just doesn’t deliver, believes its founder.

Xiaomi announces launch of digital lending solution Mi Credit in India (The News Minute), Rated: A

Xiaomi on Tuesday announced Mi Credit, its digital lending solution in India. Mi Credit is Xiaomi’s second Mi Finance solution to be launched in India after Mi Pay.

Xiaomi Offers Digital Lending Marketplace For Young Indian Consumers (PYMNTS), Rated: B

The new venture is an app called Mi Credit, and it’s a marketplace for personalized lending, offering users credit between Rs 5,000 ($70) and Rs 100,000 ($1,400). Xiaomi said it offers a “low” interest rate.

Online lending segment to witness consolidation in next 5-6 months: CASHe’s Ketan Patel (IBS Intelligence), Rated: A

The NBFC (non-banking financial company), which lends to the young salaried segment with a monthly income of Rs 15,000 and upwards, is already profitable. With a monthly run-rate of 19000 loans, the lender has  30,000 unique customers. Its CEO Ketan Patel, who had spent 18 years in Kotak Mahindra Bank before joining CASHe, told IBS Intelligence that as long as lenders use technology to focus on strong underwriting, they need not worry about collections or NPAs.

Asia

FinAccel raises $ 90 million for low-fee lending app (Impact Alpha), Rated: AAA

FinAccel’s mission is to improve financial inclusion across Southeast Asia’s “vast and fast growing middle class”. Its starting point is Indonesia, where most of the country’s 265 million people lack access to formal financial services but do have a cell phone.

Indonesian P2P lender Komunal bags seed money in East Ventures-led round (Tech in Asia), Rated: A

Indonesian peer-to-peer lending company Komunal secured an undisclosed amount of seed funding in a round led by East Ventures, with local VC firm Skystar Capital also participating.

Latin America

Goldman Makes Biggest Mexico Fintech Bet With MercadoLibre Loan (Bloomberg), Rated: AAA

Goldman Sachs Group Inc. agreed to lend $125 million to Mercado Credito, the bank’s third loan to a Latin American fintech this year and the biggest ever in Mexico.

MercadoLibre dominates Latin American e-commerce with an almost 25% market share and 40 million unique monthly visitors, Julie Chariell, a senior analyst at Bloomberg Intelligence, said in a November report. It’s based in Argentina, but almost two-thirds of its $603 million in third-quarter net revenue came from Brazil, according to the company’s financial statements. Its market value more than doubled this year to $29 billion.

The borrower, a unit of MercadoLibre Inc., plans to use the money to triple in about one year its $100 million working-capital portfolio provided to small and midsize companies in Mexico, Martin de los Santos, a senior vice president, said in a phone interview.

The Next SMB Lending Frontier (Nexoos), Rated: AAA

Source: Nexoos

See the full white paper here.

SoftBank pours $ 100M into Mexico’s Konfio (TechCrunch), Rated: A

Three months after Goldman Sachs lent $100 million to Mexican fintech Konfio, SoftBank has invested another $100 million into the financial services company. The investment confirms Reuters’ August report that SoftBank was in advanced talks with the startup — now one of the most heavily funded fintechs in Mexico.

Brazilian FinTech Rebel Lands $ 10M For Affordable Loan Products (PYMNTS), Rated: A

Rebel, a Brazilian FinTech that offers unsecured credit to middle-class citizens in the country, has raised $10 million in new equity funding, according to a press release.

Africa

Consumer credit scoring is the latest African fintech sector to get funding with $ 20 million for Migo (Quartz Africa), Rated: AAA

Migo, a fintech startup offering credit-as-a service to large companies, has raised $20 million in a Series B round led by Brazil-focused venture firm, Valor Capital Group. The round also saw participation from existing investors including The Rise Fund and Velocity Capital. It follows a $13 million Series A round in August last year.

Africa’s fintech boom is creating niche ecosystems to power the industry’s future globally (Quartz Africa), Rated: A

In the inaugural edition the Global Fintech Index City Rankings, four African cities are identified among the top 100 fintech ecosystems globally.

City Global Finech Index City rank
Johannesburg, South Africa 62
Nairobi, Kenya 63
Lagos, Nigeria 71
Cape Town, South Africa 87
Accra, Ghana 123
Kigali, Rwanda 132
Kampala, Uganda 168

Authors:

George Popescu
Allen Taylor

The post Thursday December 5 2019, Weekly News Digest appeared first on Lending Times.

Thursday May 23 2019, Weekly News Digest

young credit card delinquents

News Comments Today’s main news: DBRS assigns provisional ratings to SoFi Consumer Loan Program 2019-3 Trust. KBRA assigns preliminary ratings to Prosper Marketplace Issuance Trust, Series 2019-3. Funding Circle seeds shareholder input on wind-down plans for investment trust. TransferWise valuation doubles to $3.5B. Today’s main analysis: High income, super prime borrowers take bigger share of […]

The post Thursday May 23 2019, Weekly News Digest appeared first on Lending Times.

young credit card delinquents

News Comments

United States

United Kingdom

European Union

Other

News Summary

United States

DBRS Assigns Provisional Ratings to SoFi Consumer Loan Program 2019-3 Trust (DBRS Email), Rated: AAA

DBRS, Inc. (DBRS) assigned provisional ratings to the following classes of notes (collectively, the Notes) to be issued by SoFi Consumer Loan Program 2019-3 Trust (SCLP 2019-3):

— $420,000,000 Class A Notes at AAA (sf)
— $31,100,000 Class B Notes at AA (sf)
— $62,500,000 Class C Notes at A (sf)
— $35,600,000 Class D Notes at BBB (sf)

View the full report here.

KBRA Assigns Preliminary Ratings to Prosper Marketplace Issuance Trust, Series 2019-3 (Yahoo! Finance), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by Prosper Marketplace Issuance Trust 2019-3 (PMIT 2019-3). This is a $380.99 million consumer loan ABS transaction.

Class Rating Initial Class Principal
A A- (sf) $270,750,000
B BBB- (sf) $51,470,000
C BB- (sf) $39,720,000
D B- (sf) $19,050,000

Millennial DQs on the rise; GreenSky earnings; OCC on a fix for Madden? (PeerIQ), Rated: AAA

US consumer debt rose by 0.9% QoQ in 1Q to $13.7 Tn.

Source: Bloomberg, PeerIQ

Mixed FinTech Earnings

FinTech issuers saw growth in revenues and loans. Pace of loan growth weakened slightly as originations fell at Enova and grew by less than 10% YoY at OnDeck and OneMain. Stock price performance post earnings was mixed. Enova saw its stock price increase by 18% post earnings while OnDeck’s stock price dropped by 16%.

Source: Bloomberg, PeerIQ

High Income and Super Prime Borrowers Taking Bigger Share of Personal Loans on LendingTree Marketplace (Lending Tree), Rated: AAA

Over the past 10 years, the amount of outstanding personal loan debt has increased by 75%.

Key findings

  • The share of personal loan inquiries from those with incomes over $108,000 increased by 77% between the second quarter of 2017 and the first quarter of 2019, while the share of inquiries from people earning over $84,000 increased by 65%.
  • The share of personal loan inquiries from super prime borrowers (740 and higher) increased by 47% between the second quarter of 2017 and the first quarter of 2019, and the increase in prime and super prime borrowers (680 and higher) rose by 36%.
  • The share of personal loans closed by borrowers with incomes over $108,000 on the LendingTree marketplace increased by 38% between the second quarter of 2017 and the first quarter of 2019, and the share of borrowers earning over $84,000 increased by 26%.
  • The share of closed personal loans from super prime borrowers (740 and higher) increased by 37% between the second quarter of 2017 and the first quarter of 2019, and the increase in prime borrowers (680 and higher) rose by 19%.
  • Borrowers with incomes up to $24,000 decreased their share of closed loans by 22%, and those with incomes up to $48,000 decreased their share by 17%.
  • The share of loans closed by borrowers with scores below 560 increased by 28%, but the share of closed loans from borrowers with scores between 560 and 619 dropped by 24%.
  • The share of inquiries from people with incomes up to $24,000 dropped by 27% during the same period, while inquires from those with incomes up to $48,000 dropped by 16%.
  • The share of loan inquiries by borrowers with scores below 560 decreased by 12%, and the share of closed loans from borrowers with scores below 620 decreased by 9.2%.

For example, in the SoFi Consumer Loan Program 2017-3 LLC, securities show that the average gross income of borrowers as of May 2017, was $141,780, with an average FICO score of 731, and an average VantageScore of 682. The most recent offering, reported in February 2019, showed borrowers had an average income of $151,144, an average 753 FICO score, and a 713 VantageScore.

Job Loss and Medical Expenses Leading Causes of Bad Credit (Yahoo! Finance), Rated: AAA

Job loss and medical expenses are the leading factors causing Americans’ credit scores to drop, according to new research by Elevate’s Center for the New Middle Class (CNMC).

According to the new report, 55% of respondents cited job loss or reduction in work hours as the reason why their credit score dipped below 700. Nearly a quarter (24%) cited medical bills as the primary cause. Following these leading factors, a variety of typical, seemingly innocuous expenses follow, including repairing a car (11%), leaving home for the first time (6%), and putting a child through college (5%).

Non-prime consumers are 86% more likely to experience multiple factors that negatively affect their credit score compared to just one. For example, of the 23% who mention a medical reason, about three-quarters (75%) also experienced an income drop, severely complicating their ability to manage and cover medical expenses.

Americans Use Short-Term Loans to Pay Off Debt (Lexington Law), Rated: A

American debt is at an all-time high. How did we manage to dig ourselves into a steep $13 trillion hole? Credit card debt alone accounts for $1 trillion of this debt, with the average balance over $6,000 per capita.

  • 33% of Americans are going into debt to pay off debt
  • Generation X is most likely to incur short-term debt to pay down long-term debt
  • Women who use debt to make other debt payments tend to do so multiple times

Bernardo Martinez of Funding Circle USA (Lend Academy), Rated: A

In this podcast you will learn:

  • The knowledge that Bernardo brought with him from PayPal.
  • What he has learned in his first year on the job at Funding Circle.
  • The range of terms for their small business loans.
  • The types of investors they have on their platform today.
  • How and why 72% of their customers came to Funding Circle first.
  • How their offering compares to what is offered at banks today.
  • Who Bernardo sees as their biggest competitors.
  • How they view the SBA and their loan guarantee program.
  • How the LendingClub partnership came together.
  • Why no other online platform has reached significant scale in term loans for small business.
  • How they expanding their business into Canada.
  • Who they are hiring for their new Denver office.
  • How they are approaching their relationships with regulators in DC these days.
  • How they helped get SB-1235 passed in California.
  • How Funding Circle is monitoring their risk as it pertains to the economic cycle.
  • What is most exciting for Bernardo today at Funding Circle.

How a Silicon Valley startup is trying to rebrand payday loans (Vox), Rated: AAA

Once every few weeks, Myra Haq withdraws $100 or so from Earnin, an app that lets people borrow small sums of money.

The app lets her withdraw up to $100 a day, and never more than what she actually makes in a pay period, and then withdraws the money from her checking account once her direct deposit hits.

Unsurprisingly, payday lenders typically target low-income people — a 2013 Pew report found that 58 percent of people who use payday loans have trouble meeting monthly expenses at least half the time and usually borrow to deal with “persistent cash shortfalls rather than temporary emergencies.”

The average American household with student debt owes almost $48,000, and experts believe that student loan debt has held millennials back from major life milestones like marriage, homeownership, and having children.

How One Company Wants to Reduce or Even Eliminate Your Unpaid Medical Bills (Forbes), Rated: A

Relying on personal savings or insurance may not even be enough to pay off expensive medical bills. As a result, .

Earnin invited some community members to try HealthAid and was able to find savings for about 90% of people.

In one case, Earnin was able to get a patient’s $48,000 bill fully forgiven.

Figure Technologies loan platform secures $ 1B financing facility (CoinGeek), Rated: A

Figure Technologies looks to be profiting from increased interest in the cryptocurrency industry. Specifically, in a press release dated May 9, it was announced that the company had secured a $1 billion line of credit on the Provenance.io blockchain. The agreement also involves two other companies, Jefferies and WSFS Institutional Services, which will provide the line of credit.

LendKey’s Vince Passione on partnering with banks and credit unions and the future of lending as a service (Tearsheet), Rated: A

Vince joins us on the show to talk about his partnership model and the challenges and opportunities of working alongside banks and credit unions, which have deployed more than $2 billion in lending capital on the digital platform.

Small-business fintech launches lending platform for banks (American Banker), Rated: A

Spurred by bank interest, small-business lending platform Biz2Credit has unveiled a software-as-a-service version of its loan management, servicing and risk analytics product.

After HSBC and New York-based Popular Bank contracted with Biz2Credit to use the software, the company decided to launch the platform for all banks to use.

At a cramped desk on the 22nd floor of a downtown Manhattan office building, Gary Roth spotted a looming disaster.

An urban planner with two master’s degrees, Mr. Roth had a new job in 2010 analyzing taxi policy for the New York City government. But almost immediately, he noticed something disturbing: The price of a taxi medallion — the permit that lets a driver own a cab — had soared to nearly $700,000 from $200,000. In order to buy medallions, drivers were taking out loans they could not afford.

Prodigy Finance Aims to Bridge Healthcare Gap with New Loan Offering (University Business), Rated: A

Prodigy Finance today announces it will be supporting international students pursuing Master of Public Health (MPH) and Master of Science in Public Health (MSPH) degrees, Master of Science in Nursing (MSN) degrees, as well as those enrolling in Advanced Standing Dental programs and Select Certificate Dentistry programs in the U.S.

Crypto Lending Startup BlockFi Slashing Interest Rates on Ether Deposits (CoinDesk), Rated: A

Cryptocurrency lending startup BlockFi is almost halving the interest rates it offers on ether (ETH) deposits, while some bitcoin (BTC) rates will increase slightly.

From June 1, customers with 25–100 ETH balances in a BlockFi Interest Account (BIA) will see the interest rate drop from the current 6.2 percent annual percentage yield (APY) to 3.25 percent, the startup announced Tuesday. Those holding over 100 ETH balances will earn just 0.2 percent APY.

Some BTC balances, on the other hand, will see a slight interest rate increase – up to 2.15 percent from the current 2 percent – for deposits of over 25 BTC. Those holding 0.5–25 BTC will continue to earn 6.2 percent APY, BlockFi said.

Find the Right Loan Among 300+ Lending Partners for Credit Card Consolidation and More (CardRates), Rated: A

In a Nutshell: LoanStart helps consumers in search of a loan find a lender that suits their funding needs within just five minutes after submitting a simple, fee-free loan request form. Working securely with more than 300 trusted lending partners, including conveniently located storefront providers, the service makes finding a suitable lender easy. In today’s connected world where loan options abound, LoanStart cuts through the clutter to connect consumers in need of funds with lenders willing to provide financing.

Maxex Closes Series B Funding (FinSMEs), Rated: A

Maxex, LLC, an Atlanta, GA-based residential mortgage loan exchange, closed a Series B funding round of undisclosed amount.

CFPB Sues Debt-Collection Agency Over Deception Allegations (PYMNTS), Rated: A

The Consumer Financial Protection Bureau (CFPB) said Friday (May 17) that it has filed a lawsuit in federal court against a debt-collection agency that, the agency said, violated the Fair Debt Collection Practices Act.

The lawsuit targets Forster & Garbus, LLP, a debt-collection law firm based in New York.

Plaid gives digital banks and fintech a new tool to bypass traditional finance (CNBC), Rated: A

Start-up Plaid, recently valued at $2.7 billion, already connects bank accounts to fintech apps like Venmo, Robinhood, Coinbase and Acorns. It announced “Plaid Direct” on Wednesday, which lets users more easily connect to newer digital banks like Chime.

Capital Markets Veteran Joins PeerStreet to Manage Institutional Sales (BusinessWire), Rated: A

PeerStreet, a marketplace for investing in real estate backed loans, has announced the appointment of Deepa Salastekar as the Vice President of Institutional Sales. Ms. Salastekar joins PeerStreet to expand the company’s relationship base of institutional partners across all investment types available through PeerStreet.

Dharma now supports peer-to-peer lending in USDC to attract mainstream investors to DeFi (The Block Crypto), Rated: B

Defi startup Dharma announced Wednesday that it will start to support peer-to-peer lending of USDC, in a push to engage mainstream investors.

United Kingdom

Funding Circle investment trust asks shareholders to approve wind-down plans (P2P Finance News), Rated: AAA

FUNDING Circle is set to begin a managed wind-down of its dedicated investment trust, the Funding Circle SME Income Fund (FCIF), once it gets the green light from shareholders.

The FTSE 250-listed peer-to-peer business lender said last month that shareholders had backed plans to stop investing in new assets and begin the process of returning capital to investors.

Funding Circle Sets Hard Limit To Incentive Pay For Senior Executives (Morningstar), Rated: A

Funding Circle Holdings PLC clarified its director pay policy Wednesday following “feedback from shareholder advisory bodies”.

The small and medium enterprise loan platform said the amount granted in each year for a three year period under the company’s long-term incentive plan to can now no longer exceed GBP2.0 million and GBP1.1 million for the company’s chief executive and chief financial officer, respectively.

Span A Higher Than Span B for Funding Circle Sme Income Fund Limited (FCIF.L) (Williams Business Review), Rated: B

After a recent indicator scan, we have noted that Span A is currently higher than Span B for shares of Funding Circle Sme Income Fund Limited (FCIF.L). Traders may be paying close attention as this signal may indicate a possible bullish move.

TransferWise doubles its valuation to $ 3.5bn (Fintech Futures), Rated: AAA

UK-based international payments fintech TransferWise has doubled its value to $3.5 billion after raising $292 million in secondary funding, Jane Connolly writes.

Call for ‘credit curfew’ to help late-night borrowers (The Times), Rated: A

Banning borrowers from accessing high-cost credit websites between 11pm and 7am would ease the numbers of people spiralling into debt as activity peaks during these hours, according to researchers at Newcastle University.

Monzo hits 2m customers, adding 1m in eight months (AltFi), Rated: A

Monzo has hit 2 million current account customers in just two years since getting a banking license, and just eight months after it hit 1 million accounts.

It launched its current accounts less than 18 months ago with customers having spent £10.7bn through Monzo so far.

Arbuthnot Specialist Finance reveals offering (Bridging and Commercial), Rated: A

Arbuthnot Latham & Co has officially launched its specialist finance division.

Arbuthnot Specialist Finance will offer short-term residential finance up to 70% of market value (MV), with rates from 0.65% per month.

For this product, it will offer loans between £30,000–£3m-plus.

For commercial properties, it will offer up to 65% of MV, including interest and fees (up to 85% of the 90-day MV, or 95% of the purchase price, whichever is the lower), with rates available from 0.75%.

New peer-to-peer lender targets 7.5% return with education loans (Your Money), Rated: A

Lendwise plans to offer borrowers loans of up to £100,000, with interest rates ranging from 7.5% to 12%. Pricing will be based on a range of factors, which the peer-to-peer lender said go beyond the applicant’s financial profile and credit record. They include the specific postgraduate or professional qualification course they are taking, the length of study and the repayment period.

Finastra’s open cloud platform drives collaboration and innovation in financial services (Fintech Finance), Rated: A

Today ahead of its FusionONE developer conference, co-hosted with Microsoft, Finastra unveiled the latest developments to its FusionFabric.cloudopen platform for innovation.

The 61 new open APIs (and more than 200 Endpoints) span many of Finastra’s solutions, including retail and corporate banking (both enterprise and North American community markets), consumer lending and mortgage, payments and treasury and capital markets. These are now available in the FusionFabric.cloud API catalog for developers to harness in building financial services applications. Some of these powerful APIs are already enabling:

China

A fintech revenue surge helped Tencent smash quarterly expectations (Business Insider), Rated: AAA

Tencent posted record quarterly profits and smashed market expectations in Q1 2019, driven largely by surges in its fintech and cloud revenue, per Reuters.

Fintech and business services is now Tencent’s second largest division, responsible for a quarter of its revenue. This was the first time the tech giant broke out earnings for the unit, which brought in revenue of Rmb21.79bn ($3.2 billion), a 44% year-over-year (YoY) spike. Key in driving this growth is its payments wallet for WeChat, whose 1.11 billion users make it the largest social media platform in China, as well as its insurance services, which include a 20% stake in Aviva Hong Kong, and its cloud computing service.

Tencent’s online advertising grew 25% YoY, compared with 55% YoY in the same period last year, suggesting that China’s slowing economy and continued trade tensions with the US are hitting the firm.

Source: Business Insider Intelligence

DBS Bank Expects a Boost in Chinese P2P Lending Market from the Greater Bay Area (LearnBonds), Rated: A

Greater Bay Area could be the key to reviving the struggling P2P lending market in China, according to DBS Bank.

The Singaporean bank estimates that P2P lending will experience a 17% annual growth rate by 2030.

European Union

Identity technology and Dublin’s draw for fintech firms post-Brexit (Forbes), Rated: AAA

According to 

1 in 10 European banks to vanish by 2023 (AltFi), Rated: A

Bumper banking profits disguise an underlying weakness in traditional banks, as their per customer income has tumbled over the past decade.

That’s the finding of a report by consultants A.T. Kearney, which found data across 92 European banks revealed income per client had fallen 11% since 2008.

Australia/New Zealand

Commerce Commission’s court case against payday lender Ferratum scheduled for next year (Interest), Rated: AAA

A backlog of cases in the Auckland High Court means the next hearing in the Commerce Commission’s legal action against online payday lender Ferratum New Zealand won’t be held until June next year.

Asia

Indonesian fintech association sanctions lending platform that sets high interest rate (KrAsia), Rated: AAA

Two Indonesian lending platforms regulated under the country’s financial services authority (OJK) have been penalized by the ethics council of AFPI, the industry association for fintech lenders in Indonesia.

The organization revealed that one of the companies in question is P2P lender Do-It, which charged an interest fee rate of 1% per day.

Africa

Onefi is Expanding Carbon’s Digital Banking Services to Ghana (Technext), Rated: AAA

Nigerian digital financial platform, Carbon (formerly Paylater) is taking big steps to introduce its revamped financial services into Ghana. The online lender is looking to hire a new country manager for Ghana and this suggests the company is looking to introduce its new services like PayVest into Ghana.

Authors:

George Popescu
Allen Taylor

The post Thursday May 23 2019, Weekly News Digest appeared first on Lending Times.

Tuesday May 15 2018, Daily News Digest

McKinsey Asia Personal Financial Services Survey Customers and Digital only Banks

News Comments Today’s main news: Prosper loan originations up 27% year-over-year, over $2B co-sponsored securitizations closed. Funding Circle launches new borrower referral incentive. Renren investors seek to block asset sales. PayMate acquires Z2P Technologies. Today’s main analysis: Singapore’s biggest bank vs. China’s tech giants. Today’s thought-provoking articles: 80% of startup money goes to three states. The Sharestates story: $1B […]

McKinsey Asia Personal Financial Services Survey Customers and Digital only Banks

News Comments

United States

United Kingdom

China

European Union

International

Other

News Summary

United States

Prosper Loan Originations up 27% Year-over-Year; Over $ 2 Billion of Co-Sponsored Securitizations Closed (Business Wire) Rated: AAA

Prosper today reported financial results for the first quarter of 2018. Loan originations increased 27% year-over-year to $744 million, driven by strong demand for the company’s personal loan product and stable funding.

Financial highlights include:

  • Total Net Revenue, which includes the non-cash impact related to warrants to purchase preferred stock, was flat year-over-year at $30.5 million in Q1 2018 compared to $30.8 million in Q1 2017.
  • Core Revenue(1), which excludes the non-cash impact related to warrants to purchase preferred stock, increased $11.6 million or 34% year-over-year to $45.7 million in Q1 2018 compared to $34.2 million in Q1 2017.
  • Net Loss decreased by $12.6 million to ($11.4) million in Q1 2018 compared to a Net Loss of ($24.0) million in Q1 2017.
  • Adjusted EBITDA(1) increased $13.6 million to $4.5 million in Q1 2018 compared to ($9.0) million in Q1 2017, the fourth consecutive quarter of positive Adjusted EBITDA(1) generated by Prosper.
Key Operating and Financial Metrics (Unaudited)
(in thousands)
Three Months Ended March 31,
2018 2017
Loan Originations $ 744,127 $ 585,590
Transaction Fees, Net 31,354 26,869
Servicing Fees, Net 7,184 6,154
Total Net Revenue 30,450 30,845
Core Revenue (1) 45,729 34,152
Net Loss (11,401 ) (24,021 )
Adjusted EBITDA(1) 4,520 (9,039 )

80% of start-up money goes to three states — here’s what one visionary is doing to help spread the wealth (Business Insider) Rated: AAA

Baird: And the microfinance industry is — $30 billion a year around the world is lent in $500 chunks to small businesses, near a 100% repayment rate.

Microfinance is a tool. All investing is a tool. Every microfinance bank, every bank is neither good nor bad, they’re amoral. It’s just what are people trying to do with it. I’ve seen microfinance banks that act in extractive ways and their primary goal is extract as much profit out of poor communities as possible. I’ve seen payday lenders do the same thing. I’ve also seen microfinance banks that are very good and say, “Our core goal is building wealth for the community and we’ve structured our business in a way that works for us.”

One percent of start-up investment goes to African-Americans. Two percent of start-up investment goes to women. There are a lot of people who are overlooked.  So roughly 80% of start-up investment goes to three states: New York, Massachusetts, California. If you’re in Ohio or Florida or Nairobi or Mumbai, it’s really hard to get your idea into the system.

The Story of Sharestates: From Startup to $ 1 Billion in 3 Years (Lend Academy) Rated: AAA

Now, just over a year later, they have announced they recently crossed the $1 billion mark in originations. The company did so in just over 3 years, having officially launched in February 2015, just before LendIt USA that year. They are the second company in the real estate crowdfunding space to do so and are on our list as one of the ten options available for accredited investors in the marketplace lending space.

Originations in the lending space is only one metric. Any lending company’s survival depends on the quality of the loans they are making. According to the Sharestates’ website, investors have earned an average 10.54 percent annualized return. They also report 0% loss of principal for their investors. As of last year when we checked in the company was profitable which sets them up for continued success going forward. We’ve seen very few companies in the marketplace lending space broadly achieve this goal.

BuildDirect Partners With Affirm (Globe Newswire) Rated: A

BuildDirect, the first technology platform for the home improvement industry, today announced its partnership with Affirm Inc., a financial technology company that provides transparent payment alternatives to traditional credit. Now, U.S.-based BuildDirect customers have easy access to flexible and transparent financing options to pay for home improvement and renovation materials over time. At the point of sale, shoppers will see exactly how much they’ll pay in fixed monthly installments over the term they choose.

Banks struggle to combat the cyber crime bad guys (Financial Times) Rated: A

Digital banking has been a big positive for the financial services industry, though it has opened companies to greater cyber risk; cyber criminals now have a lot more entry points when it comes to getting access to funds illicitly; banks have increased their spending on defense but it isn’t enough as they also need to construct better, more secure systems; the CEO of Standard Chartered writes in the FT that banks can better utilize the data they collect, design tech better and work more closely with governments to catch bad actors.

Blockchains Could Be the Answer to Fairer Lending Systems (Nasdaq) Rated: A

The advancement of blockchain technology, this is poised to change. Through the technology, anyone anywhere in the world can raise financing from peers without having to rely on the traditional credit scores and the often heavily bureaucratic conventional mortgage processes.

Blockchain solutions such as Homelend  are making it possible for borrowers to directly reach lenders without depending on any intermediary and with no paperwork. The whole process is safeguarded by smart contracts to ensure that all parties in the deal adhere to their part of the bargain. According to Aneeza Haleem , a senior account manager at Cognizant Technology Solutions, blockchain-powered peer-to-peer mortgage financing significantly reduces the costs involved in the mortgage process.

Will Wells Fargo hurt Zelle by improving on it? (Payments Source) Rated: A

The irony of the explosive growth of mobile P2P is this: As consumers get more comfortable with paying one another through mobile devices, they’re thinking of P2P less as a service that one should find within a bank’s app.

This is a problem for Early Warning’s Zelle, the bank-run P2P network whose main selling point is its integration with banks. It’s a sharp contrast to rivals such as Venmo, which styled itself on a social media app; and Facebook and Apple, which took their own messaging platforms and blended P2P payments into the interface.

Capital One buys digital identity start-up Confyrm (Fintech Futures) Rated: A

Capital One has acquired San Francisco-based digital identity start-up Confyrm as it seeks to capture the market for consumer identity services.

Financial details were not disclosed, but as part of the deal Andrew Nash, founder and CEO of Confyrm, has become managing vice-president of Capital One’s consumer identity services. No word on what happens to the rest of the staff.

Confyrm was founded five years ago and offers help against online fraud.

Where Bank of America uses AI, and where its worries lie (American Banker) Rated: A

Bank of America spends $3 billion developing and buying technology every year, and about three times that on keeping its existing IT infrastructure going, says David Reilly, global banking and markets technology chief information officer.

As you might expect, some of that goes to artificial intelligence technology. The bank does not disclose how much.

An old-school fraud analytics program might see a customer using a card in a place they have never used a card before and block the transaction.

AI can do better.

The one area where banks and fintechs want more regulation (American Banker) Rated: A

Banks, fintech firms and data aggregators are asking regulators to provide more clarity on how to handle consumer data and who is responsible for leaks when it is shared between firms — a request that’s seemingly a reversal from the deregulatory approach the industry often takes.

The potential liability stemming from consumer data has become a critical concern for the financial industry as more data aggregators and fintech firms rapidly enter the space, seeking access to customers’ bank account information in order to offer loans and other products.

Could US Post Offices Become Banks? Here’s How The Plan Would Work (10 News) Rated: A

Now, there are a couple different ways Congress could build banking into the U.S. Postal Service. The first approach would just cover the basics.

That means offering low-dollar checking accounts and debit cards to low-income earners. That would at least offer basic financial services to all Americans, regardless of wealth. And it probably wouldn’t be too tough politically because the big banks typically aren’t interested in these customers.

But Gillibrand’s proposal would go further, allowing the postal service to also make loans of up to $1,000 with a super low interest rate around 2 percent, even to the poorest Americans. Because many of those loans would be at risk of not being paid back, some experts say the interest rate will have to be higher, maybe 25 percent. But that would still be a lot lower than rates from payday lenders, which often have people pay back three or four times what they borrowed.

Citizens Financial To Launch Online Consumer Bank (PYMNTS) Rated: A

Citizens Financial Group announced on Monday (May 14) plans to launch Citizens Access, a nationwide direct-to-consumer online bank.

In a press release, Citizens Financial said the digital platform will offer FDIC-insured deposits products aimed at serving people who want to save and want the flexibility of an online banking service. The company said it will provide digital deposit services at attractive rates and lower costs to help consumers save more for the future. The platform will be launched in the third quarter and will be available throughout the U.S.

 

Now Is the Time to Refinance Student Loans (Pharmacy Times) Rated: B

Refinancing your student loans from pharmacy school can potentially save you a significant amount of money while providing the convenience of making one payment a month. Keep in mind refinancing may not be for everyone. Individuals with a poor credit history, low salary from a pharmacy residency or fellowship, or those who want to keep the provisions in federal loans may want to closely consider their options before jumping right into refinancing their loans.

United Kingdom

Funding Circle launches new borrower referral incentive (Peer2Peer Finance) Rated: AAA

FUNDING Circle is offering £1,500 in Amazon vouchers to anyone who refers a business that takes out a loan of £25,000 or more with the peer-to-peer lending platform.

The UK’s third-largest lender to small businesses said the borrowers may need the cash to grow, refurbish, buy stock or equipment, hire more staff or simply boost their cash flow.

HMRC updates crypto investors on tax confusion (Peer2Peer Finance) Rated: A

However, a HMRC representative has told Peer2Peer Finance News that the tax office will deal with cryptocurrency related tax bills “on a case-by-case basis”.

The 2017-18 tax year saw huge volatility across the cryptocurrency sector, with Bitcoin reaching a high of £13,840 in mid-December before ending the tax year at approximately £4,750 per coin. This has led to confusion among retail investors regarding their tax liability, particularly if they sold out of the market at a high, then reinvested the profits only to see any gains wiped out.

Frederic Nze of Oakam (Lend Academy) Rated: A

In this podcast you will learn:

  • What was the catalyst that led to the founding of Oakam.
  • The loan products that Oakam offers.
  • The difference between small dollar loans in the US and the UK.
  • How Oakam is able to find their customers.
  • What percentage of their customers apply for a loan on a smartphone.
  • Why they still have physical stores where people can apply for loans in person.
  • How they have refined their underwriting models over the years.
  • How they are dealing with increased fraud via their online channels.
  • The interest rates they charge.
  • How their customers are able to reduce these rates for future loans.

Technology not size is key to banking success (Financial Times) Rated: A

Antony Jenkins, former CEO of Barclays and now head of 10x Future Technologies, writes in the FT that technology is key to the battle with banks; having technology that is more nimble and focused on the customer will help to better position challengers; UK challengers banks have found it hard to compete against the big names, even with recent consolidation; understanding what the customer needs most and allowing them to access services anytime and anywhere is what firms should focus on.

Fintech most popular sector for HNW investors (Investment International) Rated: B

Capitama’s current registered investors have a total annual investment capacity of £7.6bn. Of this total capacity, investors have expressed an annual investment capacity of £5bn into private equity opportunities, with £2.3bn total annual investment in Debt and Income opportunities. The interest of the registered investors in Philanthropic and Social Impact opportunities currently stands at £300m per year. This is an additional theme on Capitama given the rise in interest in these organisations from wealthy individuals and organisations.

69% of Capitama investors are interested in fintech investment opportunities and 67% want to see software and technology deals. Of the nine different investment types available on Capitama, Growth funding is the most popular, with 83% of Capitama registered Investors interested in this area, followed by Early stage investments (72%), Buy-outs (63%), and Real Estate (47%).

 

 

China

Renren Investors Seek to Block Asset Sales to Chief, SoftBank (Bloomberg) Rated: AAA

A group of Renren Inc. investors are trying to block the private sale of company-owned assets to a consortium that includes its own top executive and major shareholder SoftBank Group Corp.

Renren announced the complex deal in April, which it said was necessary to address concerns that the SEC might deem it an investment company — forcing its delisting if it failed to obtain relevant licenses.

The letter accused management of trying to transfer the assets at values equal to or lower than their book value, neglecting their duty to smaller shareholders and misrepresenting certain financial statements. For example, it says the shares in SoFi — one of America’s biggest student loan refinancers — are being sold at a valuation of $269 million when they could be worth double that amount.

US online lending model is unproven, Eisman of The Big Short fame says in Hong Kong (South China Morning Post) Rated: AAA

Steven Eisman, famous for successfully shorting the US subprime market before the onset of the 2008 financial crisis, has said the online lending business model used in the United States is unsustainable, and that losses from Canadian mortgages could widen.

The one pocket of financial market anomaly in the US was online lending, where, he said, the underwriting of peer-to-peer credit was unproven, as selling a loan to investors such as hedge funds and other financial institutions was an unsustainable business model.

“The problem [with P2P lending] is that selling a loan [online] is not the same as selling a book. You buy a book on Amazon and that’s the end of the transaction. When you make a loan, that’s the beginning of a relationship. The question is how you manage that relationship,” said Eisman.

Soft Chinese Tech IPOs Test Next Wave of Listings (Wall Street Journal) Rated: A

More than a dozen technology companies from China are rushing to go public abroad, in an enticing opportunity for investors but one that has generated poor returns recently.

Shares of most Asian tech companies that have listed in New York and Hong Kong since the start of 2017 have notched lackluster performances, with the bulk trading below their initial public offering prices after strong early gains.

European Union

Bondora Go & Grow – Bondora Rolling Out New Product (P2P Banking) Rated: AAA

Go & Grow is designed for the passive investors as hands off p2p lending. One of the main advantages is that Bondora says it is tax optimised.

The Bondora Go & Grow product features a target interest rate of 6.75% which will accrue daily. It runs completly on autoinvest. The investor just needs to join it and pay money into the Go & Grow account (or transfer it from the normal Bondora account). The Go & Grow account promises daily liquidity. There is a 1 EUR withdrawal fee making small withdrawals expensive but for portfolios of 1000 EUR or more and usual investment horizons this fee is negligible.

Three Year Old Fintech Mintos is Profitable (Crowdfund Insider) Rated: A

Latvian Fintech Mintos is reporting a profit in its brief three year old history. According to the company, the global online marketplace for loans has seen their revenue increase more than four-fold in 2017 to € 2.1 million generating a net profit for the year of € 197,000. Mintos says it has experienced significant growth, making it the “peer-to-peer lending market leader for continental Europe” with a 38% market share.

In aggregate, Mintos has topped € 660 million in investments by investors and the company expects the amount of loans funded to reach EUR 1 billion before the end of this year. As of May 2018, Mintos claims more than 58,000 investors using the platform and this number is expected to surpass 100,000 at some point in 2017. Currently, investors may expect an average 12.1% rate of return.

International

The 30 most valuable VC-backed companies in the world (Pitch Book) Rated: AAA

Ridehailing giants Uber and Didi Chuxing, based in San Francisco and Beijing, respectively, lead the list of most valuable private companies around the globe. And moving down the rankings, the pattern set at the top continues. A total of five of the companies are in the ridehailing industry, and 26 of the 30 are based in either the US or China.

 

Source: Pitch Book

What is Libra Credit: Digital Assets as the Future for International Credit (Coin Central) Rated: AAA

Libra Credit is offering a decentralized lending Ethereum-based ecosystem that helps users get open access to credit anywhere and anytime.

As long as a user has digital assets, they will be able to borrow money from Libra Credit by using those digital assets as collateral. Additionally, these users will be able to build an international credit history – a concept that Libra Credit and its partners plan to push to be recognized globally.

Source: Coin Central

Libra Credit plans to charge a fixed 8% annual interest rate charged by Libra Credit, which is party enabled by its partnerships with traditional finance institutions. The rate is competitive with that of other peer-to-peer lending platforms such as Lending Club and Salt, but isn’t tied to the availability of a peer match.

Source: Coin Central

How Misbehaving Australian Banks Are Causing Global Pain (Bloomberg) Rated: AAA

Australia’s four biggest banks — Commonwealth Bank of Australia, Westpac Banking Corp.National Australia Bank Ltd. and Australia & New Zealand Banking Group Ltd. — have been plagued by a string of scandals. The accusations run the gamut from giving misleading financial advice to trying to manipulate a benchmark interest rate. Simmering public resentment — stoked by a sense banks were gouging fees to fuel record profits and executive pay — boiled over last year when Commonwealth Bank was sued for systemically breaching anti-money laundering rules.

The government has announced tough new penalties for corporate wrongdoing and beefed up the regulator’s powers; analysts have trimmed earnings forecasts and speculate future legislation could force the biggest banks to sell off advice businesses.  All this comes at a time when bank profits are under pressure from a slowing housing market, rising costs and increased competition. Most of the banks are trying to simplify their operations and sell non-core operations.

Citi Inks $ 100 Million Trade Finance Deal With Asian Development Bank (PYMNTS) Rated: A

Global financial institution Citi is expanding its existing partnership with the Asian Development Bank (ADB) to share risk in trade finance transactions, reports in The Financial said Friday (May 11).

The ADB’s Trade Finance Program reached a deal worth $100 million with Citi that sees the financial institutions (FIs) sharing risk on trade finance transactions in an effort to bolster support for trade and access to finance across Asia.

 

Australia/New Zealand

FINNIES 2018: Here are all the finalists for Australia’s fintech industry awards (Business Insider) Rated: A

89 companies and individuals were chosen for Australia’s only industry-backed fintech awards, from a record field of more than 200 entries.

Excellence in Business Lending
● Finstro
● Prospa
● Spotcap Australia
● The Invoice Market – tim
● Trade Ledger

Excellence in Consumer Lending
● HashChing
● MoneyMe
● MoneyPlace
● RateSetter Australia
● SocietyOne

Robot financial adviser granted FMA exemption (Radio New Zealand News) Rated: A

The country has its first robot financial adviser after KiwiWealth was given an exemption by the Financial Markets Authority from the current law which requires humans to give financial and investment advice.

But Mr Bishop said it would still have human advisors offer detailed advice and have control of the robot.

India

PayMate Acquires Digital Lending Platform Z2P Technologies to Benefit SMEs (BW Disrupt) Rated: AAA

PayMate, an early pioneer in India’s payments industry and a leading player in electronic Business-to-Business (B2B) payments space, announced today the acquisition of Z2P (Zaitech Technology Pvt. Ltd.), a digital lending platform which provides hassle-free and real-time credit using social and banking data along with proprietary analytics and AI.

The acquisition is expected to be completed by May 2018 and it follows the announcement in February of this year by PayMate of its B2B partnership agreement with Visa.

As a result of the acquisition, PayMate acquires an innovative and proven lending solution in Z2P, which when combined with PayMate’s proprietary B2B payments platform will revolutionize the way businesses manage their payment operations, cashflow, and access to growth capital. PayMate plans to partner with banks and NBFCs to improve the flow of credit to SMEs.

Canada

Last week, Power Financial CEO Jeff Orr told reporters he plans to invest more money in fintech startups as the company looks to find technologies that can be incorporated into its business model and avoid disruptions that have hurt other sectors.

Widely known on the Street for its empire of financial advisers and investment products, Power Financial has spent $320-million in the fintech sector – with more than half the funds being allocated toward online robo-adviser Wealthsimple.

Asia

Singapore’s Biggest Bank Takes on China Giants in Fintech Battle (Bloomberg) Rated: AAA

 

Almost 55% of customers say they would consider branchless digital-only bank

Source Bloomberg

Gupta credits his early recognition of the threat to his early days in Citigroup’s transaction banking division, unusual for a bank CEO, who tend to hail from the retail or investment banking arms of their institutions. That background taught him both the nuts and bolts of banking and the importance of technology, Gupta said. He also dabbled briefly but unsuccessfully in the startup world, when he quit Citigroup in 2001 to found an Internet portal in India, around the time the dotcom bubble was bursting.

Latin America

Morgan Stanley Goes After Brazilian FinTech Market (PYMNTS) Rated: AAA

Bloomberg, citing four people with direct knowledge of the matter, reported that Morgan Stanley purchased $14 million in local subordinated bonds from online consumer lender Geru Tecnologia e Servicos. The Geru bonds, which the company issued in December of 2017, have a four-year maturity and pay about 11.2 percent each year, noted the report.

The company is also reportedly in talks with international investors about raising $50 million via an equity round that QMS Capital is handling. QMS has a 10 percent stake in Geru. General Atlantic could also be an investor in the round of fundraising, noted the report.

Authors:

George Popescu
Allen Taylor

Thursday May 3 2018, Daily News Digest

10 best states for small business lending

News Comments Today’s main news: Microloans for SMBs are becoming big business. RateSetter offers IFISA transfers. Funding Circle opens IFISA to transfers. Funding Circle SME Income Fund issues more shares. BNP Paribas Asset Management launches SME lending fund. Today’s main analysis: Lendio’s top 10 best states for small business lending. Today’s thought-provoking articles: The missing benefit in employee financial […]

10 best states for small business lending

News Comments

United States

United Kingdom

International

European Union

Other

News Summary

United States

Microloans a glimmer of hope for small businesses in need (USA Today) Rated: AAA

The microloan market has evolved in the last five years, says Antara Dutta, a social entrepreneur and mentor with the Delaware chapter of SCORE, a volunteer network of small business advisers. Many nonprofit organizations, foundations and peer-to-peer lending networks have also entered the microloan market.

One such company is Funding Circle, a San Francisco-based lending platform that connects investors with small business owners.  “Banks have really pulled back from doing small business loans over the past decade,” says Sarina Siddhanti, Funding Circle’s U.S. Head of Commercial. “We fill that gap.”

While Funding Circle awards business loans up to $500,000, they also offer microloans to entrepreneurs who need less.

Lendio Announces Annual List of Top 10 Best States for Small Business Lending (Lendio) Rated: AAA

In honor of National Small Business Week, Lendio, the nation’s leading marketplace for small business loans, today announced its third annual list of top 10 states for small business lending, based on lending data from the Lendio platform, which matches businesses with more than 75 lenders.

Source Lendio; sba.gov

CommonBond’s Latest Study Reveals the Missing Benefit in Employee Financial Wellness (Crowdfund Insider) Rated: AAA

On Tuesday, CommonBond, an online lending platform servicing the student loan market, released the results of one of the most comprehensive employee financial wellness benefits studies to date. According to the lender, the research revealed the extent to which student debt affects employees’ financial wellness, as well as how companies are meeting, or not meeting,  the financial wellness needs of their employees.

Key findings of the study included:
  • Student debt cuts across all age groups, including parents who are taking out loans for their children: Nearly 75% of all workers have taken out loans to fund their own education, while 21 percent of workers expect to take out a loan for a child or other family member’s education in the next five years. 
  • Human resources executives prioritize benefits for employees without student debt: For employees with student debt, student loan repayment is the most-requested financial wellness benefit; however, human resources teams rank student loan repayment as their third priority. 
  • Employees do not think their benefits are as innovative as human resources executives believe: 71% of human resources executives see their benefits offering as innovative, compared with 50 percent of employees. 
  • Student loan benefits attract talent, retain employees, and improve work performance: 78% of employees with current or future student loan debt want their employer to offer this benefit, and 65% of employees over age 55 in these categories want the same.

RealtyMogul Brings Fintech Solutions To Commercial Real Estate Investment (Benzinga) Rated: A

What does your company do? What unique problem does it solve?

RealtyMogul is a unique commercial real estate private markets investing platform that provides discerning investors exclusive access to thoroughly vetted opportunities, rigorous underwriting, and high-touch customer service through licensed investment professionals. We strive to build wealth through sound principles and data insights, serving real people who want a smart alternative investing strategy.

Fannie and Freddie approve thousands of loans with no formal appraisals (The Washington Post) Rated: A

For homeowners and buyers, it’s been a windfall: relief from having to pay for a traditional mortgage appraisal that usually costs between $400 and $600. The savings nationwide to consumers in just the past year alone may total tens of millions of dollars.

Last year, the two largest sources of American mortgage financing — federally backed Fannie Mae and Freddie Mac — began accepting home-purchase loans that carried no formal property appraisal.

Ryan Lundquist, an appraiser in Sacramento, noted that computer programs “cannot smell 20 cats living at the property.”

Pat Turner, a Richmond appraiser, says that, worse yet, the “savings” from Fannie and Freddie may not always flow to buyers. He cited a recent case in his area where a major online lender allegedly charged a buyer $600 on a loan with an appraisal-fee waiver.

 

After ceding a key competitive advantage to fintech companies in recent years, several mass market and regional banks are testing alternative data for use in marketing, pre-screening, and underwriting consumer loan products like credit cards and personal loans, and exploring emerging use cases in fraud prevention and other areas.

While most lender decisions still use traditional sources, such as credit file data managed by the consumer reporting agencies, the potential for alternative data to transform lending is clear. Rent and utility payments, employment information, and behavioral data paint a clearer picture of a consumer’s creditworthiness and could allow lenders to reach underserved populations. In fact, alternative data has allowed Lending Club, a marketplace lender, to extend lower-priced credit to borrowers that would otherwise be classified as subprime, according to the Federal Reserve.

Inside Bank of America’s big plans for small businesses (TearSheet) Rated: A

What about branch transformation on the small business side? How is B of A marrying its physical and digital strategies?
We know in certain pockets of towns and cities you’ll have more business owners coming in and out than in others; in those centers with high traffic of business owners we add more capabilities so we’re there for them and have more people who understand small business.

What’s an example of technology you’re investing in?
Three weeks ago we launched our relationship rewards program, which is our version of the Preferred Rewards, where when you bring more to us — more deposits or lending — you get more benefits. It’s a very straightforward way to bank with us that encompasses lending, merchants and operating accounts. That’s a technology investment in itself because we have to on the back-end tie everything together and understand the full picture of the relationship; it comes from updating our products and solutions in the backend to streamlining the underwriting and fulfillment processes.

 

 

First RealFund Raises $ 500,000 of Preferred Equity for Brooklyn Property Renovation (Citizen Tribune) Rated: B

First RealFund (“FRF”) has raised $500,000 of preferred equity financing for the renovation of a 4-story brownstone in Brooklyn’s Bedford Stuyvesant neighborhood.

Morgan Stanley kicks new tech strategy into gear (American Banker) Rated: B

Morgan Stanley CEO James Gorman has asked Rob Rooney, the investment bank’s technology chief and leader of its international unit, to return to New York to focus solely on the tech part of his job.

“We have enormous, staggering amounts of data for risk management, [anti-money-laundering], regulatory and other purposes,” Rooney said. “The use cases here are enormous. The job in our technology organization is to make sure we build a strategy we can leverage across the firm, otherwise it’s not efficient.”

The bank is increasing its investments in innovation and cybersecurity, he said.

United Kingdom

RateSetter opens IFISA to transfers (Peer2Peer Finace) Rated: AAA

RATESETTER has opened its Innovative Finance ISA (IFISA) to transfers from other providers.

RateSetter will accept full and partial transfers and there is no limit on the number of existing ISAs that can be transferred.

RateSetter introduces bonus scheme (Bridging & Commercial) Rated: B

Investors will receive a £50 bonus if they recommend the platform to a family member or friend who then invests £1,000.

The referred person can also receive a £100 bonus if they keep the £1,000 invested in RateSetter for a year.

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

FUNDING Circle has opened its Innovative Finance ISA (IFISA) to transfers, meaning that all of the ‘big three’ peer-to-peer lenders now offer this capability.

“Since last November more than £90m has been lent directly to businesses through the Funding Circle ISA, and we’re pleased to see so many of you taking advantage of the opportunity to earn attractive, stable returns tax-free,” the company said on a blog post on its website.

 

6%-yielding Funding Circle fund issues more shares (Citywire) Rated: AAA

The 6% yielding lender to small businesses, plans to sell up to 24.9 million shares it holds in treasury having bought them back when they briefly traded at a discount two years ago.

The shares are being offered to ‘qualified’ experienced investors at  102.2p, which is 2.2% less than the share price at Monday’s close and a 2%-3% premium to their net asset value.

Starling Bank partners with Samsung for mobile payments (AltFiNews) Rated: A

Announced today, digital bank Starling has partnered with Samsung to offer mobile payments method Samsung Pay to all Starling customers, creating the bank’s fourth partnership for making purchases via a mobile phone.

Starling users will now be able to make contactless payments at the point of sale using nothing but their Samsung phone, using iris, fingerprint or PIN recognition to prove their identity.

Nucleus targets start-ups with new type of loan (Peer2Peer Finance) Rated: A

The alternative business finance provider announced the launch of Start-up Finance on Wednesday, which is tailored to help start-ups get their business off the ground.

Young companies can borrow between £25,000 and £20m, with a secured interest-only loan, over a period of up to five years.

High-cost lending provides “a socially valuable function”, says regulator boss Bailey (City A.M.) Rated: A

The boss of the UK’s top financial regulator believes access to controversial high-cost loans is an “important feature” for many Britons to fund everyday living.

Andrew Bailey, the chief executive of the Financial Conduct Authority, today indicated a clampdown on the sector would not be forthcoming.

How to become an IFISA millionaire in 25 years (Peer2Peer Finance) Rated: B

Figures from P2P analyst 4th Way suggest if a lender invests £10,000 each year across several platforms and aims for nine per cent interest after bad debts, they could be a millionaire within two-and-a-half decades.

Rip-off debts soar as rent-to-own, catalogue credit and doorstep lending surge after payday loan crackdown (The Telegraph) Rated: B

Debts from catalogue credit, doorstep lending and rent-to-own have all more than doubled in recent years even as regulators cracked down on payday loans.

Lenders now face a crackdown as the City watchdog wants to make sure high-cost loans are only used by borrowers who can afford the debt and are helped by it.

 

China

Niwodai Seeks Partners for Fintech-driven Expansion into Southeast Asia (PR Newswire) Rated: AAA

Niwodai, one of the largest Chinese P2P lending companies, is said to be seeking a path into Southeast Asia, according to sources. The company is in frequent contact with potential partners, looking to map out a proper route to advancing their business, of which financial technology is the most powerful tool. Considering the challenges that most Chinese fintech companies have faced, proper cooperation with a local partner should be a win-win situation.

European Union

BNP Paribas Asset Management launches SME lending fund (AltFiNews) Rated: AAA

BNP Paribas Asset Management has launched a new SME lending fund for institutional investors.

The BNP Paribas Novo 2018 business loan fund follows on from its Novo 1 fund, launched in 2013. The new fund has the backing of the FF and the CDC and aims to provide new sources of financing to help French medium-sized companies expand.

BNP Paribas Novo 2018 could invest €264m over the next three years, the firm said in a statement.

German Varengold Bank Provides Credit Line to Estateguru (P2P Banking) Rated: B

Estonian property p2p lending marketplace Estateguru announced that it has secured its first institutional investor.

In March 2018, Estateguru signed the firm’s first institutional credit line to be invested in loans originated in the Baltic market with Germany based Varengold Bank AG.

International

New FIS Study Finds Larger U.S. and U.K. Banks Are Vulnerable to Losing Critical Small-Midsized Business Customers (Fintech Finance) Rated: AAA

The study found that more than 80% of surveyed SMB customers in the U.S., and 70% of SMB customers in the U.K., are satisfied with their primary banking providers. However:

  • In the U.S., SMBs report higher satisfaction with services from community banks over larger banks.
  • In the U.K., nearly one in four SMBs – most of which use larger banking providers – are planning to switch banking providers in the next 12 months
  • Common reasons cited by SMBs in both countries for switching banks are uncompetitive fees, dissatisfaction with services/products provided, outdated bank processes, or being declined for a business loan/line of credit.
  • SMBs in both countries report difficulty in obtaining reliable and accurate information from their banks, especially larger institutions, without visiting a physical bank branch.

Growing Adoption of Digital Tools

  • About 60% of SMBs in both countries have increased the number of transactions done digitally over the past year.
  • More than 40% of financial transactions were completed digitally by SMBs in both countries.
  • Acceptance of online, mobile app and person-to-person payments increased 38% over the last year for U.S. SMBs.

 

Banks are treating customers like product developers (TearSheet) Rated: A

Banks’ race to meet the customers “where they are” has taken on a new twist: customers are now product developers — not just end users.

Digital-only challenger banks like Monzo are emphasizing customer involvement to build a human connection with customers — a move others like Tandem, Revolut and Chime are also emulating. Chime, for instance, recently launched a chat feature within its mobile app that lets customers provide real-time feedback, a tool that’s used by around 50,000 users every month, according head of product Zachary Smith.

Three-year-old Monzo, which has 650,000 customers, has been active on various fronts in seeking feedback from customers on products while they’re in development — both through in-person “Testing Tuesdays” at Monzo offices and an exchange of views and polls on its online forums.

Rad Card Great HODL Survey Reveals Average Crypto User 25-34, Male (Bitcoin Exchange Guide) Rated: A

The team at Rad Card, found online at RadLending.com, just completed something called “The Great HODL Survey”.

  • The average cryptocurrency user is a male between the ages of 25 and 34
  • That person holds a bachelor’s degree
  • The average cryptocurrency users “hodls” between $1,000 and $10,000 worth of tokens, but has never used cryptocurrency for payment of goods and services
  • Crypto investors, overall, “prefer not to use their assets in real life as much as business owners”, according to the study, as well as freelancers or service providers that accept cryptocurrencies in exchange for their work, products, or services

Core features of the RAD platform include a P2P lending platform, crypto-secured lending, and a digital credit score. The company will offer its services to miners, small crypto businesses, post-ICO companies, exchanges and traders, and traditional fiat investors, all of whom can benefit from crypto-backed loans.

Fintech and the Sharing Economy (TLE) Rated: B

One of the phenomena this has supported is a surge in partnerships forged online, to provide peer to peer services.

The prediction is that the sharing economy will be worth over $335 billion by 2025. Fintech is pivotal in this, as it’s responsible for developing the accessible and efficient systems to carry out these digital “barter and buy” opportunities.

Peer to peer lending using Fintech also requires less cost to facilitate and therefore provides greater equality of opportunity.

ZPER Embeds Trustonic in New Mobile Wallet for Optimized Security (Blockchain News) Rated: B

Decentralized peer-to-peer (P2P) Lending Platform ZPER is using features from digital security semiconductor group Trustonic in its new mobile cryptocurrency wallet, claiming that it will be the most secure available.

The wallet will also be able to store and exchange multiple cryptocurrencies, thus enabling P2P cross-border value exchanges.

 

Australia/New Zealand

Online lender continues huge loan growth (Australian Broker) Rated: AAA

Neo-lender Wisr Limited saw a 42% growth in its origination of personal loans in the latest financial quarter.

This was the company’s largest quarter in loan originations since Wisr, formerly known as DirectMoney, began in 2014.

Loan originations have continued to grow over the financial year, growing by 20% in the first quarter and by 79% in the second quarter.

The FMA Makes A Guidance Note For Peer – To – Peer Lending Services & Crowdfunding Services (Mondaq) Rated: A

The Financial Markets Authority (FMA), New Zealand’s regulator for financial services, has released a guidance note to licensed peer-to-peer (P2P) lending services, licensed crowdfunding services for fair dealing in advertising and communicating offers of financial products or services.

Who is this guidance for?

  • The FMA addressed the guidance note to P2P lending services and crowdfunding services, but it is useful for anyone who is promoting or advising others about these services (i.e marketing teams, investment bankers, lawyers).
  • The fair dealing expectations stretch beyond New Zealand’s borders, so they apply to people overseas. Anyone who acts in relation to, or makes an offer of financial products or services in New Zealand should take note.
  • The guidance note is applicable to any media channel that businesses use to communicate and advertise their financial products and services (be it snail-mail or social media).

 

 

Bank names new group executive (Mortgage Business) Rated: B

Online lender ME has appointed Craig Ralston as group executive of customer banking, effective as of 1 May. He will be responsible for ME’s product and service delivery, with a focus on improving the design, simplicity and fairness of the bank’s offerings.

Mr Ralston joined ME in February 2015 as head of strategy to enhance the bank’s strategic and business planning cycle.

India

Fintech Startup OpenTap Raises ₹3 Crore from HNIs (IndianWeb2) Rated: AAA

Chennai-based OpenTap, a fintech startup focusing on the alternate lending segment, has raised about ₹3 crore funding from HNIs (high networth individuals). The capital raised will be used by the startup to strengthen its technology infrastructure and widen the reach of its financial services network across the country. The startup had earlier raised undisclosed amount in seed funding, in May 2015.

India Dealbook: MyLoanCare raise funding (Deal Steet Asia) Rated: B

Fintech startup MyLoanCare raises $975k in Series A round Online loans marketplace MyLoanCare, operated by My Finance Care Advisors Pvt. Ltd, has raised Rs 6.5 crore ($975,000) from Ncubate Capital Partners, the venture capital arm of Gurugram-based SAR Group.

Asia

Startup bags funds from Singapore ex-minister to get ultra-wealthy into crowdlending (Tech in Asia) Rated: AAA

Singapore-based Helicap is a new fintech platform that aims to bring a fund management angle in the peer-to-peer (P2P) lending space. To make this happen, it has raised US$1.5 million in seed funding.

The round was led by Teo Ser Luck, the former Minister of State for Manpower who last year decided to trade politics for the startup sector. Fintech company Nufin Data, where Teo serves as chairman, also invested.

Latin America

Neon Raises $ 22M in Series A Funding (Finsmes) Rated: AAA

Neon, a São Paulo, Brazil-based fully-digital Brazilian bank, raised $22m in Series A funding.

Propel Venture Partners, Monashees, Quona Capital, Omidyar Network, Tera, and Yellow Ventures participated in the funding round. As part of the investment agreement, Neon Pagamentos SA transferred its controlling interest to a holding company in the United Kingdom. In addition, as part of the new round, Jay Reinemann of Propel Venture Partners, and Marcelo Lima of Monashees, are joining Neon’s board of directors.

The company intends to use the funds for product expansion, investment in technology and innovation on customer experience.

Canada

On Wednesday, Lending Loop, a peer-to-peer online lending platform for small-business loans, announced a pilot project in partnership with Ontario that will provide $3-million of loans over the next two years. The government will boost Lending Loop’s loans by 10 per cent, which will help fund more than $30-million of loans to businesses across Ontario. The government will receive a full re-payment of the loan plus interest at the end of the loan terms.

Authors:

George Popescu
Allen Taylor

Friday March 16 2018, Daily News Digest

Friday March 16 2018, Daily News Digest

News Comments Today’s main news: SoFi CEO’s top 3 things to focus on. KBRA assigns prelim ratings to Prosper Marketplace Issuance Trust, Series 2018-1. Funding Circle fund dividend in line with target. Assetz Capital secures new funding. Experian acquires ClearScore. Today’s main analysis: Credit analysis and valuation methods for MPL. (A MUST-READ) Today’s thought-provoking articles: Top 5 trends of institutional […]

Friday March 16 2018, Daily News Digest

News Comments

United States

United Kingdom

European Union

International

Other

News Summary

United States

New SoFi CEO Anthony Noto on the 3 things his fintech company must do to outpace competition (CNBC), Rated: AAA

“First, we have to have the best selection — and not just selection of each product, but variations of those products,” Noto said. “Second, we have to provide unmatched convenience. Anytime, anywhere, on any device, you should be able to access all of your financial information, do any activity that you want across the broad spectrum of products that we’ll launch over time.”

Noto’s third initiative for the company — which helps its “members,” or customers, refinance student and mortgage loans, take out personal loans and even get career advice — had to do with speed.

KBRA Assigns Preliminary Ratings to Prosper Marketplace Issuance Trust, Series 2018-1 (BusinessWire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by Prosper Marketplace Lending Issuance Trust 2018-1 (“PMIT 2018-1”). This is a $647.5 million consumer loan ABS transaction.

Preliminary Ratings Assigned: Prosper Marketplace Issuance Trust, Series 2018-1

Class Preliminary Rating Expected Initial Class Principal
A A+ (sf) $387,800,000
B BBB (sf) $112,000,000
C BB (sf) $79,450,000
D B+ (sf) $68,250,000

Credit Analysis and Valuation Methods for Marketplace Lending Loan Portfolios (Lend Academy), Rated: AAA

As Marketplace lenders continue to lend at a fast pace, there has been a significant increase in the past several years in non-bank consumer, student and small business lending.

1. What are the most prevalent methods of valuing loan portfolios today?

Discounted cashflow (DCF) methodology at the loan or cohort level is the most prevalent valuation methodology used today to value marketplace loan portfolios and related assets, including tranches in securitizations and servicing rights, regardless of the lending vertical.

2. Are valuation methods standardized? If not, why not? How does this lack of a valuation standard affect investors?

Marketplace lending is a fragmented space, and it is also diverse, with innovative forms of underwriting and funding methods being deployed.

3. How do loan valuation methods differ across lending verticals?

Marketplace lending verticals cover a wide spectrum of product, ranging from $500 installment loans, to $100,000 merchant cash advances (MCAs) made to small businesses, to sub-650 FICO unsecured consumer loans to credit impaired borrowers, to student loans extended to borrowers in medical school with high future earning potential. Thus, any methodology that falls short of incorporating all impactful data to project full cashflows does not do justice to the portfolio. In essence, the assumptions used in the DCF are based on loan characteristics that have the biggest impact on prepayment, default, and recovery behavior. These loan characteristics depend on the asset class but often include underwritten payment schedule (e.g. 36 months amortizing term, 60 months amortizing term, daily pay MCA, etc.) credit metrics (e.g. FICO bands, platform ratings, repeat borrower flags), loan size (e.g. <$5K, $20-$30K, etc.), note rate, and more. These assumptions then feed into the DCF model to project principal and interest cashflows generated from the loan portfolio, incorporating prepayments and defaults, net of recoveries.

7. What about the secondary market? How are deals priced relative to what valuation methods tell us they should be priced? How do valuation analysts obtain information about private sales of loans? In the securitization market is there a valuation standard? How are these deals priced relative to the valuation of the underlying loans?

While many new platforms have started originating in the past few years, several lenders have been originating loans since early 2010s, albeit initially at lower volumes. Data on these loans has been normalized and made available for analysis by firms such as PeerIQ and dv01. More established lenders have returned to securitization markets as issuers with sizeable deals.

The Top 5 Trends of Institutional Investors Allocating Capital to Marketplace Lending (Lendit), Rated: AAA

The types of institutional investors allocating to the marketplace lending asset class has changed dramatically, from mostly family offices and fund of funds about five years ago to institutional investors such as pensions, endowments and sovereign wealth funds today.

It is a big shift from what the typical fund used to look like just a few years ago, which:

  1. only purchased loans from origination platforms
  2. invested only in consumer loans
  3. invested in loans only from the largest platforms such as Prosper and Lending Club
  4. used a credit model to purchase only select loans from the platforms (active buying versus passively buying)
  5. offered only one fund to allocators

The expansion of institutional investors has ushered in higher investment standards for this asset class which now require a very high level of portfolio management expertise, risk management oversight and robust operational infrastructure before making an allocation.

As a result, these allocators and investors have generally shifted investment activity towards the top five trends:

  1. investing through a combination of loans, securitizations and warehouse lines of credit
  2. investing in multiple sub-asset classes
  3. using both well established and newer origination platforms
  4. investing both actively and passively from platform
  5. investing through multiple sub-asset class funds

Marketplace Lending Update: Who’s My Lender? (Lexology), Rated: A

Over the last several weeks, two notable cases in federal court challenging certain aspects of the business model of marketplace lending companies headed down separate paths. First, in an action brought against Kabbage, Inc. and Celtic Bank Corporation in the United States District Court for the District of Massachusetts,1 the parties agreed to, and the Court approved, a stipulation staying the proceedings pending an arbitrator’s review of whether the claims in that action are covered by the arbitration provisions in the governing loan agreements. Second, in an action against marketplace lender Avant in the United States District Court for the District of Colorado,2 the Court accepted a magistrate judge’s recommendation to remand the case to state court over Avant’s objection.

Online lender’s new target: Small businesses waiting to get paid (American Banker), Rated: A

According to Fundbox, it takes the average small business 21 days to get paid, 81% of small- business invoices are 30 days past due, and the value of small businesses’ unpaid invoices is $825 billion — which is equivalent to 5% of U.S. GDP.

Source: Fundbox

Fundbox’s underwriting software pulls data from accounting systems, invoicing systems, payments (e.g. screen scraping from PayPal), public records, web interactions, social networks and tax returns. It uses artificial intelligence to assess the creditworthiness of the company and can render a credit decision in minutes based on the business’s incoming and outgoing invoices. Borrowers pay by the week for whatever credit they use.

Using the new Fundbox Pay product, a small business that has provided a product or service (a lawyer, say, or a construction company) puts in a request for payment and gets paid immediately by Fundbox. The seller pays a 2.9% transaction fee, in return for immediate cash flow and not having to worry about the buyer defaulting.

Even Financial Expands Partnership with Credit.com (Credit.com), Rated: A

Even Financial, the technology platform powering financial services online, has expanded its strategic partnership with Credit.com, a go-to source for expert information about credit scoring, credit reporting, credit cards and personal finance. Even Financial will now power Credit.com’s personal loans marketplace, as well as its related content tools.

With this expanded partnership, Credit.com will provide its users access with a native, personalized and optimized loan matching experience, powered by Even Financial’s proprietary technology. Even’s technology utilizes machine learning, big data and an extensive network of touchpoints and financial products to provide a personalized experience.

Consumer Capital Files For $ 40 Million Nasdaq IPO (Seeking Alpha), Rated: A

Consumer Capital Group (OTCQB:CCGN) intends to sell shares of its common stock for gross proceeds of $40 million from a U.S. IPO, according to an S-1 registration statement.

The firm aims to become a one-stop shop that focuses on lending service for micro, small-to-medium sized enterprises (“SMEs”) in China. The company is specifically engaged with micro financing services and financial advisory services, operating through the subsidiary Arki E-Commerce, and VIE, Arki Network.

Digital Assets Data Raises Seed Funding Round (Finsmes), Rated: B

Digital Assets Data, a NYC-based fintech startup, raised a seed funding round of undisclosed amount.

Vestigo Ventures, an early-stage venture capital firm focused on fintech, made the investment. In conjunction with the funding, Mark Casady, general partner of Vestigo Ventures, will serve on Digital Assets Data’s Advisory Board.

 

United Kingdom

Funding Circle fund announces on target dividend (AltFiNews), Rated: AAA

The £311m Funding Circle SME Income fund has revealed its latest dividend of 1.625p per share, in line with its forecast rate.

Its eighth pay-out and seventh at the same level – it’s first was 1p, the latest dividend will be paid on 30 April 2018 to shareholders on the register as at the close of business on 23 March 2018 (the record date) and the corresponding ex-dividend date will be 22 March 2018.

Assetz Capital secures new line of institutional funding (P2P Finance News), Rated: AAA

ASSETZ Capital has secured a new line of institutional funding that it says will widen its scope and scale of lending.

The peer-to-peer lender said the unnamed institutional investor was part of a $100bn (£71.5bn) global multi-asset manager and would provide funding dedicated to the residential property bridging, refurbishment and conversion markets.

Monzo adds investments and peer-to-peer lending to its marketplace (AltFiNews), Rated: A

In an update to its first release, Monzo has added a new category to its marketplace beta: investments.

Source: AltFi

AltFi can now reveal that users on the beta are able to access digital wealth investment accounts from Scalable CapitalWealthifyWealthsimple and WiseAlpha, peer-to-peer lending accounts with Zopa, and property-backed investments with Bricklane.com and Octopus Choice.

Challenger banks are edging ahead of the high street on savings (AltFiNews), Rated: A

Challenger banks like OakNorth, Masthaven, Aldermore and Axis Bank are coming out ahead of the game by offering savings rates more than 1 per cent higher than the average offered by high street incumbents.

New research conducted by fellow challenger Gatehouse Bank revealed today that the average one year fixed-term deposit account offered by UK challengers pays 1.82 per cent on average in interest returns, compared to 0.63 per cent by high street competitors.

Likewise, the average 2 year fixed-term deposit account at a challenger bank pays 1.29 per cent more than the high street, coming in at 2.05 per cent on average compared to only 0.76 per cent from incumbents.

Source AltFi

 

Experienced bankers are moving into alternative finance sector (London School of Business & Finance), Rated: A

Experienced bankers are moving into the alternative finance sector, creating an ideal environment for SMEs seeking finance, according to alternative finance provider ThinCats.

The shift towards digital banking was highlighted in a 2016 study from the Federation of Small Businesses, with 1,500 towns being without bank branches as banks aim to direct their customers towards digital banking.

Whilst more than 90 per cent of small businesses use internet banking, face-to-face services are still valuable to businesses when it comes to making decisions regarding the future of their company and obtaining finance.

SMEs becoming more aware of P2P lending (Peer2Peer Finance), Rated: A

The latest SME Finance Monitor, from insight agency BDRC, shows 32 per cent of the 130,000 firms interviewed were aware of P2P lending in the fourth quarter of 2017 .

When combined with crowdfunding, awareness of these forms of finance was 46 per cent. This was up from 36 per cent at the start of 2017.

Larger SMEs tend to be more aware of P2P, the research shows, with 48 per cent of firms with 50 to 249 employees familiar with the sector, compared with just 32 per cent of one-man bands and 31 per cent of those with fewer than 10 members of staff.

 

 

P2P platform sees strong growth in investors (AltFiNews), Rated: A

P2P lending platform Lendy has grown its investor base to 20,000 in the past year, according to a statement by the firm, representing a more than 50 per cent increase.

The secured property lender has seen strong demand in particular from investors under 40 years of age. It had 13,000 investors in total a year ago, it says. Investors aged below 40 now represent 50 per cent of the property platform’s investor base.

Investors, Lendy adds, have now received more than £37m in interest from Lendy loans since inception in 2012, up from £16m at the end of 2016.

Lenders warned against selling products to vulnerable consumers (Peer2Peer Finance News), Rated: B

In a speech to the Credit Summit on Thursday, Jonathan Davidson, executive director of supervision – retail and authorisations at the FCA, said there are worrying numbers of households who are too deeply in debt.

He said one in five mortgages today are interest-only mortgages, many of which were made at the height of the credit boom to borrowers with little equity in their homes and not a lot of disposable income. These mortgages will not mature until about 2032.

He said the £14.8m fine paid by rent-to-own firm BrightHouse last year shows how seriously the regulator takes the issue.

On a more positive note, Davidson reassured the industry that consumer debt in the UK has not reached levels that are likely to be harmful to lenders.

He also said there has been progress by the sector in addressing conduct issues and that “by and large you do a good job for us, your customers”.

European Union

Revolut adds direct debits in Europe (Tech Crunch) Rated: AAA

Fintech startup Revolut is slowly making traditional bank accounts irrelevant. The company is adding direct debits in EUR to make it easier to pay for utilities and subscription services.

The Top Three Irish Startups to Watch Out For This St. Patrick’s Day (Red Herring), Rated: A

Mingo

Backed to the tune of €650m ($800m) Mingo has clearly impressed more than a few crypto-noobs. Its versatility and learning curve should ensure it stays ahead of the crowd heading past St. Pat’s into the 2018 summer.

Flender

The company already has dozens of success stories to tell since its 2014 foundation – including itself, which has raised $1.5m to date.

“We’re addressing two markets across two countries with Flender: business lending and consumer lending in the UK and Ireland – an established market currently worth £2.5bn ($3.46bn) per annum,” co-founder and sales director Oli Cavanagh recently told Silicon Republic.

International

PayPal CEO sees international potential as countries like India skip over legacy fintech (CNBC), Rated: AAA

For PayPal CEO Dan Schulman, the main driver of his company’s gains to date has been “the digitization of cash.”

With 227 million subscribers, 65 percent of whom reside outside of North America, PayPal has seized on this “explosion” of digital payments around the world, Schulman said.

In its latest quarter, PayPal added 8.6 million net new active users, a record since Schulman joined the payment processing giant as president and CEO in 2014.

With over 50 percent of its revenues coming from outside North America, PayPal has started to leverage its international ecosystem to benefit small businesses in the United States as well, the CEO said.

“In North America, … only 5 percent of small businesses export internationally. Eighty percent of small businesses on PayPal in the U.S. export internationally,” Schulman said.

Experian Acquires ClearScore for $ 385 Million (Finovate), Rated: AAA

About a year after Experian received authorization from the U.K.’s FCA, the company has made further inroads into the nation with the acquisition of U.K.-based ClearScore. The deal is anticipated to close for $385 million (£275 million).

Founded in 2014, ClearScore has onboarded 6 million members in the U.K. through its free membership model. The company matches individuals to personal financial products, offers free credit reports, and provides financial education.  The company is projected to generate $55 million in revenue in 2018, a 50% increase over what it earned in 2017.

Debitum Network (DEB) gets listed on KuCoin (Crypto Insider), Rated: A

Debitum is a borderless, small business financing network that seeks to revolutionize the alternative finance industry to enable more small to medium businesses to obtain loans in situations that may previously have been difficult, time consuming, or outright impossible.

According to a review by the World Bank, although SMEs’ more than 2/3rds of SMEs do not have access to credit. Over recent years alternative financing via peer-to-peer lending, crowdfunding, balance-sheet lending, invoice trading (loans backed by account receivables) and VAT financing, has served to assist financing for SMEs, however no single solution encompasses all fields of business.

As a result, the global credit gap still stands at a whopping $2 trillion, accounted by the World Bank Organization and the IFC.

Singapore and Lithuania agree fintech collaboration deal (Finextra), Rated: B

The Monetary Authority of Singapore (MAS) and the Bank of Lithuania have agreed to work together to support the development of the FinTech ecosystems and encourage greater financial innovation in the two countries.

The FinTech Co-operation Agreement between the two countries was signed on the sidelines of the Money 20/20 Asia conference in Singapore today.

Australia/New Zealand

Guidance For Crowdfunding And Peer- to-Peer Lending Published (Proshare), Rated: AAA

FMA today published guidance on fair dealing in advertising and communications for licensed crowdfunding services, peer-to-peer lenders and the companies that offer financial products on these platforms.

The fair dealing provisions of the Financial Markets Conduct Act 2013 ban:

  • misleading and deceptive conduct
  • false or misleading representations
  • unsubstantiated representations
  • offers of financial products in the course of unsolicited meetings.
Asia

Securities Commission to push ahead with digital agenda (New Straits Times), Rated: AAA

The Securities Commission Malaysia (SC) and Bank Negara Malaysia established Brokerage Industry Digitisation Group (BRIDGe) yesterday, a joint working group between the regulators and industry to accelerate digitisation of the stockbroking industry.

Authors:

George Popescu
Allen Taylor

Friday December 22 2017, Daily News Digest

LendingClub charge offs

News Comments Today’s main news: DV01 finishes year with $7.9B in consumer unsecured bonds. PayPal invests in Raisin. Affirm CEO affirms its product is a personal loan. LexinFintech share price surges. The state of P2P lending in New Zealand. InvestUp considers cryptocurrency investing. Today’s main analysis: Why bitcoin is a threat to LendingClub. Today’s thought-provoking articles: High-tech lenders go after […]

LendingClub charge offs

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Cayman

News Summary

United States

High-tech lenders target the decades-old store credit card (Reuters), Rated: AAA

The once-hot online lending industry has been battered by scandal and losses since last year, but one of the oldest forms of lending – store credit – is increasingly attracting tech companies aiming to supplant a retailer’s credit card.

One such lender, San Francisco startup Affirm, is attracting investment and large customers by using a new approach to underwriting that allows it to approve more borrowers than traditional store credit cards.

Max Levchin, Affirm’s founder who also co-founded one of the earliest digital payments companies, PayPal, boasts that Affirm approves 126 percent more borrowers than Synchrony Financial, the largest issuer of private-label credit cards.

Startup Affirm CEO Clarifies that Product Is a Personal Loan – Not a Credit Card (LendEDU), Rated: AAA

Consumers looking for a personal loan option have another one to consider in Affirm, which is a startup from PayPal co-founder Max Levchin. With Affirm, consumers can access a loan, a form of credit, to buy items at a store, which was originally interpreted to be similar to how a credit card works.

But Levchin has pointed out there are important differences between an Affirm loan and credit cards.

Who Uses Affirm?

Generation X and Millennials are the customers who most frequently use Affirm. Younger consumers have seen how carrying high credit card balances affected their older relatives, and they are less likely to want to have much credit card debt.

The annual percentage rate can be steep, going from as low as 10 percent to as high as 30 percent. But, unlike credit cards, the interest isn’t compounded.

Why Bitcoin Frenzy Is Terrible News For LendingClub (SeekingAlpha), Rated: AAA

LendingClub (LC) has had plenty of troubles over the years. Back in 2015, you could throw a dart at a list of financial stocks and hit a double if you held it through today. LC stock, by contrast, has destroyed shareholder value since its IPO. Even the recent Trump financials rally did next to nothing for LC stock, and now shares are back to near new all-time lows after a downbeat earnings report:

Source: SeekingAlpha

In a booming economy, the G-rated loans did so badly that they jacked up interest rates almost 3% on consumers while also reducing expected returns by more than 3%. This suggests that the G-rated loans were fully 6% short of expectations. This speaks to massive problems with the company’s underwriting, and leaves you to wonder just how badly internet-originated subprime loans will fare when a recession hits and the unemployment rate goes up again.

Source: SeekingAlpha

Bitcoin Losses Ahead?

If you are someone with a low income and a challenging financial position, you have an almost no-lose proposition (if ethics don’t get in the way). You borrow money on a credit card or from LendingClub, “invest” it in Bitcoin or Ethereum, and then hope it keeps going to the moon. If it does, you make many multiples of your interest expense, and have hit the lottery.

Now if the trade goes bad, and Bitcoin plummets, what is your debtor going to do? Since there is little consequence to defaulting on unsecured debt (and LendingClub has a reputation for being a lax debt collector), you simply stop paying on the note. The borrower has a win/win situation – essentially the lender is financing purchase of lottery tickets. I don’t know about you, but I’d need a much higher interest rate than even the 15 or 20% you might get off a low-end LendingClub note to justify that risk.

Source: SeekingAlpha

DV01 to Finish 2017 With $ 7.9 Billion in Consumer Unsecured Bonds (Crowdfund Insider), Rated: AAA

dv01, the data management, reporting, and analytics platform that offers institutional investors transparency and insight into lending markets, announced on Thursday it is set to close 2017 with $7.9 billion of consumer unsecured bonds. This news comes just a few months after the company launched its Cashflows for Securitizations feature.

The company revealed that it has launched a redesigned Securitizations homepage to celebrate the $7.9 billion of consumer unsecured bonds.

SoFi Vs. Earnest Student Loan Product Comparison (StudentLoans.net), Rated: AAA

SoFi offers their clients an option. You can choose variable refinancing rates which currently range 2.75 to 6.84 percent if you enroll in the company’s autopay option. Fixed rates range from 3.25 to 7.24 percent.

Earnest offers their clients both variable and fixed rate options. For the variable option, the rates currently start at 2.57 percent APR while fixed rates start at 3.35 percent APR with their autopay options.

Both SoFi and Earnest do not have a maximum within their loan amounts, but the amount a client owes will affect the interest rates that are offered.

Repayment Options

SoFi offers a number of repayment options for their refinancing product. This includes flexible rates, terms, and an ability to set automatic payments that drop your rate by 0.25 percent. Repayment terms range from 5 to 20 years.

Earnest refinance loans offers the flexibility in the way of terms that range from 5 to 20 years. With their loans, you will be able to increase payments, pay lump sums, provide bi-weekly payments, skip a payment to pay later, and offers an interest break for those who set up automated payments.

American Financial Exchange (AFX) Announces Two-Year Anniversary Highlights (PR Newswire), Rated: A

American Financial Exchange (AFX), an electronic interbank lending market focused on U.S. small and mid-sized banks, announced today the second anniversary of its electronic trading platform. AFX facilitates the determination of Ameribor®, a transaction-based interest rate benchmark for small- to mid-sized banks via its electronic trading platform.

Since opening, more than $100 billion cumulative has been successful transacted. Recently, daily volumes have averaged approximately $350 million with several days of volume highs over $500 million principal traded.

Is Peer to Peer Lending the Best Option for Small Company Financing? (Newswire), Rated: A

If your small company needs a borrowing arrangement but does not have a credit rating that benefits instant endorsement from the banking institutions, you need to sign up for an alternative solution of capital such as peer to peer lending.

Rather than signing up to a recognized traditional bank for a financial loan, you create a proposal to be lent from people who, (if they are interested in your offer), sign up for the loan request in amounts as low as $25.

Unsecured business loans and where to get the best ones if you have bad credit (Las Vegas Informer), Rated: A

Kabbage

Kabbage offers loans that go between $2000 and $150,000, and the APR goes between 24% and 99%. They ask for no minimum credit score but you need to have been in business for at least one year in order to qualify, and have annual revenue of over $50,000.

Fundbox

With Funbox you’re looking at a loan amount of $1000 that can go all the way up to $100,000. The APR goes between 15% and 59%, and they also cater to the needs of people with bad personal credit.

OnDeck

With OnDeck you’re looking at loans that go up to $100,000 and an APR that can go from 14% to 40%. Unlike the other two, here you need good personal credit and also you need to be good at managing your cash flow. You will need a personal credit score of at least 600, not to mention an annual revenue of at least $100,000.

LendingClub

At LendingClub you can get a loan of up to $100,000, from a minimum of $5,000, with an APR that goes between 9.8% and 35.7%.

New Real Estate Investing Resource Platform is Changing the Landscape (Benzinga), Rated: A

Think Realty is a membership-based resource platform developed exclusively for real estate investors. Since launching in 2016, investors across the nation and around the globe have signed up at ThinkRealty.com to become Think Realty Members, with an 81 percent increase in membership in the past six months.

Think Realty’s reach continues to expand with its national talk radio show, Think Realty Radio, which will begin airing January 1, 2018 on Wall Street Radio. Think Realty is presenting four national conferences for investors in 2018, beginning with the Think Realty Conference & Expo in Dallas, Texas, February 24 and 25. The other locations are Baltimore, Maryland, April 14 and 15; Irvine, California, July 14 and 15; and Atlanta, Georgia, September 22 and 23.

The 10 biggest real estate tech deals of 2017 (The Real Deal), Rated: A

WeWork is now worth $20 billion. Compass is valued at $2.2 billion following a December funding round. Have you heard of Placester? Well, investors think it’s worth $202 million. The Jared Kushner-backed real estate crowdfunding startup Cadre now has a $800 million price tag.

  • 1) WeWork, $4.4 billion fundraising round
  • 2 & 3) Compass, $100M and $450M fundraising rounds
  • 4) Cadre, $65 million fundraising round
  • 5) Placester, $50 million fundraising round
  • 6) Common, $40 million fundraising round
  • 7) HomeLight, $40 million fundraising round
  • 8) Roofstock, $35 million fundraising round
  • 9) Knock, $32.5 million fundraising round
  • 10) Opcity, $28.77 million fundraising round

Congress: Hands off new rule protecting families from payday lenders (Herald Sun), Rated: A

Ignoring the voices of families and communities who have worked for many years for relief from the harms of predatory payday lending, a handful of members of Congress have introduced legislation that would nullify the Consumer Financial Protection Bureau’s national rule to rein in payday-lending abuses. Their legislation uses Congressional Review Act authority to repeal the rule and prevent the Consumer Bureau from issuing a similar rule in the future, giving predatory payday and car title lenders a free pass.

Why Amazon won’t buy a bank in 2018 (Tearsheet), Rated: A

Forget the speculation about Amazon buying a bank next year. But don’t count it out from adding banking to its near endless line of offerings.

For Amazon, providing financial services is just a means to an end: making more money by selling more things. Other retailers are still its main competition — not banks.

Why banks want to collaborate now on open banking standards (Tearsheet), Rated: A

Every U.S. banker is watching their European counterparts react to the looming Payment Services Directive, or PSD2, which will come into effect in 2018. When that happens, banks will lose their monopoly on customer data as merchants and retailers like Amazon will be allowed to retrieve customer account data from the banks (with customers’ permission).

Now, U.S. banks want to get ahead of their own regulators when it comes to creating data exchange standards. It can take 18 to 36 months to get a framework in place, Courbe said, but banks know they need to start exchanging data with other companies today.

LendingTree Adopts the RevJet Marketing Creative Platform (Sys-Con Media), Rated: A

RevJet, the first smart marketing creative platform, today announced that LendingTree has adopted RevJet’s system for producing, approving, personalizing, serving and automatically optimizing all formats of digital ad creative. Using RevJet to take a methodical approach to experimentation, LendingTree is able to deliver a higher volume of leads to their business partners while optimizing for revenue.

 

United Kingdom

December’s Lending Impact and Borrower Stories (Funding Circle), Rated: AAA

Whatever the season, small businesses work harder on any given day than Mr Claus on Christmas Eve. To celebrate their hard work and determination, we’ve created our very own Christmas Carol, looking at the past, present and future of small businesses. We begin with the small business past, looking at the history of small businesses, and how they adapted during the industrial revolution. Next up, dive into the small business present and learn about the impact they have on today’s world and the trends that have helped them along the way. Finally, discover what the landscape might look like for businesses in years to come in our small business future.

In our latest case study video, meet David, founder of The Creative Whisky Company.

Peer to Peer Robo-Lending Platform InvestUp Sizes Up Cryptocurrency Investing (Crowdfund Insider), Rated: AAA

FCA authorised crowdfunding aggregation platform InvestUp may be going crypto. The UK based Fintech has so far focused on the peer to peer lending space but management is currently looking at adding algorithm driven cryptocurrency investing.

InvestUp shares that 2017 has been another good year for P2P lending having delivered, on average, 10.74% to investors.

Protecting the future of peer-to-peer lending (Gov.uk), Rated: A

Today the peer-to-peer lending industry was given a boost of confidence as the government began legislating to clarify that no business borrowing through a peer-to-peer platform needs to be regulated as a ‘deposit taker’ (often referred to as a ‘banking licence’) unless that is their core business. The legislation will ensure that the industry can continue to thrive and innovate while still benefiting from the UK’s high quality regulatory standards.

The Committee on Exiting Europe Publishes Sector Reports Including Document on Fintech (Crowdfund Insider), Rated: A

The Exiting the European Union Committee, appointed by the House of Commons to examine the process of the Department for Exiting the European Union , released a grouping of documents from the Department today. As one may expect, the slew of reports addressed certain aspects regarding ramifications of the UK’s departure from Europe.

The Fintech Sector Report highlights the current regulatory regime in the EU and how cross border transactions take place between continental Europe and the UK. The document describes Fintech as covering four different categories:

  • Investment, advice (including Robo-Advisors) and  neo or challenger banks
  • Regtech for compaliance
  • Payments including digital currencies such as Bitcoin
  • Alternative finance including crowdfunding and peer to peer lending

Read the full UK Fintech Report here.

Bank of England approves Tandem’s Harrods Bank takeover (AltFi), Rated: A

Tandem can now end the year on a high note after the Bank of England today gave regulatory approval for the challenger’s purchase of Harrods Bank.

The deal will now give Tandem access to a full banking license and the 10,000 customers attached to Harrods Bank, as well as the bank’s mortgage and savings books. According to Tandem, the purchase will also come with a “significant capital injection”.

UBS and EPAM Win Best Use of IT Private Banking/Wealth Management for SmartWealth App at Banking Technology Awards (NASDAQ), Rated: B

EPAM Systems (NYSE:EPAM), a global provider of digital platform engineering and software development services, and UBS AG, the world’s largest wealth manager, have been awarded for Best Use of IT Private Banking/Wealth Management at the Banking Technology Awards held on December 13, 2017 in London.

China

Chinese online lender LexinFintech surges in U.S. market debut (Reuters), Rated: AAA

Chinese online lender LexinFintech Holdings Ltd’s (LX.O) shares surged in their U.S. market debut on Thursday, brushing aside worries related to Beijing’s recent crackdown on the booming micro-credit industry.

LexinFintech’s shares touched a session high of $14.88, a 53 percent jump from its IPO price that valued the Shenzhen-based company at $4.51 billion.

China online lending IPO meets tepid demand as fintech zeal wanes (Financial Times), Rated: AAA

LexinFintech, the latest Chinese online consumer lender to complete a US initial public offering, has met with muted investor demand amid concerns over Beijing’s regulatory clampdown on dubious lending practices.

Lexin scaled back its planned $500m IPO on Nasdaq to $109m, and final pricing was at the bottom end of the price range initially marketed to investors.

Qudian, which is backed by Alibaba affiliate Ant Financial, raised $900m on the New York Stock Exchange in October — the largest US IPO by a Chinese fintech group. After hitting that high point investor interest quickly slid: last month PPDAI raised $221m in a deal that priced below the initial price range.

Since their IPOs, both Qudian and PPDAI have faced allegations of issuing misleading financial disclosures. Qudian closed at 48 per cent below its IPO price on Thursday, while PPDAI was down 44 per cent.

Source: Financial Times

Is Qudian A Bargain Or A Falling Knife? (SeekingAlpha), Rated: A

QD’s stock price has taken a nosedive, plummeting from its $24 IPO price to $12.9 as of 12/19/2017. Given QD’s strong earnings and fast growth rates in the past, the current price may appear to be a great bargain. Is that true?

QD’s strong past operating performance is mainly driven by its online cash-loan business, which brings in 83.3% of its total revenue.

The regulations can be distilled into three key rules: (1) cap the interest rates at 36% (2) limit the leverage of cash-loan companies at 3 or lower, and (3) forbid commercial banks, insurance companies, P2P, etc from investing in cash loans. These rules will put QD’s extraordinary profits to an end, as discussed below.

  • Rule #1: The interest rate caps may turn QD’s strong profits into negative. While QD may have already compiled to the 36% interest cap by the time of its IPO, QD’s revenue will still take a nearly 1/3 cut, holding all else equal.
  • Rule #2: The leverage limit will bring QD’s entire cash-loan business to a halt. According to QD’s 3Q report (Qudian Inc. Reports Third Quarter 2017 Unaudited Financial Results), as of 09/30/2017, its capital structure consists of Liability: 11.18 billion; Mezzanine equity/convertible preferred shares: 5.94 billion;Total Shareholders’ deficit: 1.78 billion. However, the national regulation limits the maximum leverage at 3, or even at 1 according to some regional regulations (21jingji news). It is clear that with 1.78 billion shareholders’ deficit, QD has to raise literally billions of additional funds to satisfy this rule, which is “mission impossible” given the third rule as discussed below.
  • Rule #3: restricting the financing sources will shut the door for QD to raise additional capital.
QD PPDF
Market Cap 4,243 2,175
Total Transactions 3,938 3,231
Revenue 223 192
Net Income 100 83

Brett Diment: 2018 Will be China Fintech’s Breakout Year (FiNews), Rated: A

Fintech will increasingly be associated with Beijing, Shenzhen and Hangzhou in 2018 instead of Silicon Valley, Aberdeen Standard’s Brett Diment details in a contribution for finews.asia.

The Chinese online-payment industry already accounts for around half of global transactions. Alipay, operated by Alibaba’s financial arm, is the market leader.

But Tencent’s Tenpay has been catching up fast. Tenpay’s stroke of genius was to allow its users to send electronic hongbao – the red envelopes of money traditionally given as a Chinese New Year gift. Some 16 million online hongbao were sent in 2014 – rising to a billion in 2015. This helped Tenpay’s share of the online-payment market to reach around 40 percent in just three years.

The University of Hong Kong Online Fintech Course Now Open for Registration (Crowdfund Insider), Rated: B

The Fintech MOOC is a six-week online course on innovations in finance and is designed to provide a foundational understanding of the global changes impacting all financial services.

European Union

Mayo businesses raise almost €800,000 through Linked Finance (The Connaught Telegraph), Rated: A

LINKED Finance, Ireland’s leading peer-to-peer (P2P) lending company, has raised almost €800,000 for Mayo-based businesses.

Eighteen Mayo businesses, including Doherty for Men, Main Street, Castlebar, and Electric Escapes, based in Westport, have raised funds through Linked Finance’s online lending platform (www.linkedfinance.com) to facilitate business growth.

Electric Escapes has raised €50,000 over two separate funding rounds, facilitated through the platform.

PayPal backs fintech deposit marketplace Raisin (AltFi), Rated: AAA

Raisin has secured an undisclosed sum of investment from digital payments platform PayPal. The money will be used to accelerate the growth of Raisin across its core European geographies.

International

Blockchain is “no longer in proof of concept” phase (Global Trade Review), Rated: AAA

Sin has just helped launch the world’s first cross-border bancassurance distributed ledger technology (DLT) platform, working with China Life Insurance and Guangfa Bank in Macau.

In another sign that the technology may be fit for commercial purpose, SME lending platform ModulTrade has settled its first blockchain-based export transaction out of China.

This transaction was small –  just over US$1,000 – but again shows that the technology is beginning to be used outside of the laboratory.

The company teamed up with Rabobank to complete an inventory financing transaction on the blockchain that resulted in a real-time payment for farmers.

All payments were made in real time, using a Rabobank-backed digital dollar, pegged to the Aussie dollar. The digital dollar was issued and cleared by a central issuing and settlement institution.

BENCHMARKING DISTRIBUTED LEDGER TECHNOLOGY (All About Alpha), Rated: A

Two scholars affiliated with the Cambridge Centre for Alternative Finance, in Great Britain, have prepared a fascinating overview of the present state of blockchain and distributed ledger technology (DLT).

  • The protocol layer of this ecosystem is only slowly maturing, and the limit of this maturation is one of the key challenges for the broader adoption of DLT;
  • Most users experiment with only small-scale, isolated layers, with live applications allowed only as “permissioned” layers;
  • There is an increasing focus on creating common standards of enterprise DLT frameworks that will allow for interoperability, but this effort to overcome fragmentation is itself fragmented into “a variety of consortia”;
  • Ethereum in particular has been tested at 57% of central banks, either via the public network or a permissioned version.

Nearly half of the surveyed DLT start-ups are in North America (47%). The second largest group by continent is that which hails from Europe (28%), then 19% (Asia Pacific).

But employment isn’t precisely aligned with the number of enterprises on each continent. A full 61% of employees working in this field are in North America, and only 13% are in Europe.

RCN ANNOUNCES DECENTRALAND PARTNERSHIP (Bitcoinist), Rated: A

Earlier this week, RCNannounced their new partnership with Decentraland, the blockchain-based virtual reality platform where users can acquire virtual land to create and monetize their content.

Under the new partnership, RCN will be able to integrate its credit protocol with the Decentraland platform. This will enable users who own plots of land, content, or businesses created in the 3D world to issue and receive loans.

The Top FinTech Trends of 2017 … were they? (The Finanser), Rated: B

Rise of InsurTech

True. I’ve seen a lot of InsurTech movement this year with a number of standout start-ups like BackmeupBrollyBuzzmoveCuvvaInmybagLuther and Neos.

Rise of RegTech

Yep, I’ve heard more about RegTech this year than ever before, although that’s unsurprising when most banks have at least two staff checking the work of each employee (Citibank has 40,000 compliance people!). Consultancy picks out 100 of the most innovative firms in this space.

Platforms, APIs and Open Banking are the key

I feel like I’ve been talking platforms all year and, with PSD2 and Open Banking coming into play in January 2018, it is certainly true that platforms, APIs and Open Banking have definitely been the theme of 2017.

China and emerging markets focus

Ah yes, I definitely think this year has been a big year for financial inclusion and discussions of Ant Financial and Tencent.

Australia/New Zealand

Banking without the banks: the state of peer-to-peer lending three years on (The Spinoff), Rated: AAA

In 2014, New Zealand was one of the first countries to legalise peer-to-peer lending.

For the latter, Snowball Effect and PledgeMe led the way with the FMA awarding its first equity crowdfunding licences to the two firms. For the former, the first licence for P2P lending was granted to Auckland-based platform Harmoney, which was founded by Neil Roberts that very same year.

To date, there are eight licensed P2P lending services currently operating in New Zealand with more than 20,000 investors currently registered with P2P lending intermediaries. When it comes to borrowers, there are more than 200,000 individuals currently registered with P2P services.

Source: The Spinoff

Since launching in September 2014, it’s lent more than $655 million via 37,000+ loans and paid more than $87 million interest in total. In the most recent financial year, Harmoney saw over more than 830,000 investments made in loans by almost 5,400 unique investors.

Source: The Spinoff
India

Want Good Financial Advice? Ask a Digital Lending Platform (BW Disrupt), Rated: A

The need for credit can come for a variety of reasons, and can be catered to by a vast plethora of different loan products.

Clearly, if you had to get good financial advice, AI-leveraging algorithms are a better bet than humans. So why not use the same technology to help individuals and SMEs find the right credit options for their needs?

Asia

NewsBTC Interviews the Crowd-genie Team (NewsBTC), Rated: A

NewsBTC: Why is licensing so important? How difficult is it to get in Singapore? 

Crowd-genie: Being registered and licensed are two different stories. As peer to peer lending platform involves enormous monetary transactions, a securities license is crucial for regulated lending activities.

NewsBTC: Can you please explanation of how reputations coin work?

Crowd-genie: For each repayment, from the borrower to lenders, we will incentivise on-time payment by adding CGCOIN “Credits” to the borrowers’ wallets. This will be a spendable asset that will be tracked separately in the Digital Passport. The more CGCOIN Credits earned, the higher their reputation, and that in turn, will increase their chances of getting higher investments from more lenders and/or a lower interest rate.

 

Source: NewsBTC
Cayman Islands

Robot to speak at Cayman Alternative Investment Summit (Cayman Compass), Rated: B

Sophia, the world’s first robot to be granted citizenship of a country, will be one of the speakers at the Cayman Alternative Investment Summit on Feb. 8 to 9, 2018, organizers announced Thursday.

At the Cayman Alternative Investment Summit, Sophia will be interviewed on stage by a representative from event sponsor KPMG.

Organizers say the robot’s appearance complements the theme of the investment conference, “Wired: the rise of alternative investments in a digital age,” which targets opportunities at the intersection of alternative investing and technology.

Authors:

George Popescu
Allen Taylor

Tuesday November 28 2017, Daily News Digest

interest rate and value of loans

News Comments Today’s main news: Consumer Financial Protection Bureau (CFPB) to sue Santander. Welendus surpasses 150K GBP fundraising target. Klarna’s profits increase. The CFPB leadership fight migrates to email. Chinese regulator looks at online lender custodian banks. ETHLend, Brickblock partner on blockchain lending. Today’s main analysis: Everything you need to know about the P2P lending market in New Zealand. Today’s […]

interest rate and value of loans

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United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Africa

News Summary

United States

CFPB Set To Sue Santander Over Auto Protection Product (PYMNTS), Rated: AAA

The Consumer Financial Protection Bureau (CFPB)  is gearing up to sue Spain-based Santander Bank, claiming the bank has overcharged its car loan customers.

Citing sources familiar with the CFPB’s plans, Reuters reported that the CFPB suit could happen as soon as Monday (Nov. 27). The lawsuit is focused on Santander’s guaranteed auto protection financial product that protects car buyers from a portion of the cost if there is a serious crash.

Auto lending is big business for Santander, representing $38.5 billion of the bank holding company’s $137 billion in assets.

Cards, Bank Loans And AltFin Easing SMBs’ Search For Financing (PYMNTS), Rated: AAA

New reports from Biz2Credit, Reliant Funding and Mercator take a look at how small businesses are accessing external financing towards the end of the year as the holiday rush descends.

25 percent of SMB loan applications at large banks were approved in October, according to the latest research from Biz2Credit. That means large banks (with $10 billion-plus in assets) have boosted their SMB loan approval rates to a new post-recession high, researchers said.

56.8 percent of SMB loan applications were approved by alternative lenders, according to Biz2Credit.

12 percent of SMB owners told Reliant Funding they are aware of alternative lending and have used it. Nearly half said they are at least familiar with alternative lending. 39 percent of SMB owners told Reliant that they have never even heard of alternative lending.

42 percent of SMBs that use alternative finance say they use it to buy inventory, while more than one-fifth said they use it to replace or buy new equipment. One-fifth also said they use it for marketing initiatives, Reliant Funding found.

Workers Get Faster Access to Wages With These New Apps (WSJ), Rated: AAA

Uber Technologies Inc., McDonald’s Corp. and Bloomin’ Brands Inc.’sOutback Steakhouse are among a growing group of employers giving workers near-instant access to their wages through payday apps.

New tools that allow people to spend the money they just earned have provided some workers an alternative to short-term, high-interest loans, say the technology startups offering the services. The payment plan also can boost employee attendance and tenure, managers say.

Source: The Wall Street Journal

Daily payments could help some workers smooth out the financial volatility of fluctuating work schedules and income, economists say.

Mulvaney Shows Up For Work At Consumer Watchdog Group, As Leadership Feud Deepens (NPR), Rated: A

President Trump’s pick to lead the consumer watchdog, Mick Mulvaney, arrived at the office early Monday morning with a bag of Dunkin’ Donuts in hand. Mulvaney, the director of the Office of Management and Budget, is the acting director of the group until Trump can get a permanent leader through the Senate confirmation process — at least, according to the Trump administration.

But the former head of the CFPB, Richard Cordray, appointed Leandra English to lead the group following his departure. English has since filed a complaint in U.S. district court in Washington, D.C., to block the Trump administration’s rival appointment.

On Monday morning, English was communicating with CFPB staff through an all-staff email — a Thanksgiving message expressing gratitude and saying it was an “honor” to work with her colleagues.

Mulvaney, meanwhile, sent a competing all-staff, advising staff to “please disregard” messages from English in her “presumed capacity as Acting Director.”

Picking the best gift card this holiday season (Consumer Affairs), Rated: A

Online student loan marketplace LendEDU has ranked the best gift cards, pointing out the attributes that make one gift card a better choice than another.

According to LendEDU, roughly $1 billion in gift cards sold last year were not redeemed.

“The most important question to consider when buying a gift card is this: Is it versatile?” he told ConsumerAffairs.

Another important consideration, Brown says, is a gift card’s resale value. The recipient might rather sell the card for cash on one of the many gift card exchanges. The most popular gift cards often sell for 80 to 90 cents on the dollar, while less popular cards can go for half their face value or less.

A LendEDU poll of consumers found that 78.7 percent of consumers plan on giving at least one gift card this holiday season and 75.6 percent of consumers would rather receive a gift card than an actual gift.

Immigrant lending clubs provide capital, at a cost (Marketplace.org), Rated: A

When Chinese immigrants in Brooklyn’s Sunset Park have problems — legal, financial, marital — they come to see John Chan.

Lately, they’ve been coming to John Chan about money — specifically the collapse of informal lending clubs known as “biao hui.”

Biao hui are essentially informal banks made up of immigrants lending money to each other. A group — in China, this would traditionally be a group of close friends or relatives —gets together and throws money in the pot. One person acts as the organizer or banker and the money is then lent out on a rotating basis, with varying interest rates depending on how much money is needed, and when a person needs it.

But in New York City this year, two  biao hui worth a combined $22 million collapsed.

MERTON ON FINTECH, RETIREMENT, MORE (Top 1000 Funds), Rated: B

“Fintech will do a lot of good things, and help us, but it won’t do many of the things people are talking about, or it’s not going to do them well.”

United Kingdom

Short Term P2P Lender Welendus Surpasses £150,000 Funding Target Through Latest Seedrs Round (Crowdfund Insider), Rated: AAA

Less than a week after launching its latest equity crowdfunding campaign on Seedrs, short-term peer-to-peer lending platform Welendus has successfully secured its initial 150,000 funding target from more than 100 investors. 

One in five save less because they can’t get advice (FT Adviser), Rated: AAA

More than one in five are saving or investing less because they cannot access advice on how to handle their money, research for the Nottingham Building Society has suggested.

The study found 21 per cent of adults believe they are not saving as much as they could and would be able to put away an extra £134 a month on average if they could get financial advice – the equivalent of more than £1,600 or three weeks’ average earnings before tax.

The research showed younger savers and investors were affected most by this, with nearly one in three (30 per cent) of under-35s believing they were not saving enough because of a lack of advice compared with just 12 per cent of over-55s.

P2P Lender Lendable Signs £300 Million Loan Deal With Castle Trust (Crowdfund Insider), Rated: A

UK-based peer-to-peer lending platform Lendable has entered into £300 million loan deal with investment and mortgage firm Castle Trust.

According to AltFi, the agreement with Lendable is Castle Trust’s second major transaction in the alternative finance industry this year.

City veterans aim for ‘Google of finance’ with new digital bank (The Telegraph), Rated: A

Three senior City bankers are masterminding the launch of a new digital bank focused on shaking up the UK savings market.

The trio is led by Huy Nguyen Trieu, a fintech entrepreneur who led a capital markets team at US bank Citi in London until quitting last summer. He is working on the project with his former colleague Lionel Durix, who remains in a senior Citi role, and Paul Hanks, the former chief technology officer of UK digital bank Atom.

They plan to launch a mobile savings app that uses artificial intelligence to give savers tailored advice and offers “risk-free” products such as Isas and high interest rate savings accounts to help them reach their financial goals.

Open Banking Will Unlock the Door for Digital-Only Banks (AltFi), Rated: A

Yet in parallel to this, there is a growing cohort of digital-only banks that are bucking the trend – the most famous of which include MonzoAtom Bank and Starling Bank. Not only do they have different client service delivery models, they have cultivated a customer base that is highly supportive and engaged.

But while Monzo has acquired over 400,000 customers for its pre-paid card since 2015, as Barclays has seen over 142,000 customers switch from its current account over a similar period – digital-only banks still remain relatively unknown.

Yet Open Banking – set to launch on January 13th – stands to change this.

Addressing the housing shortage is not someone else’s problem (Mortgage Strategy), Rated: A

Last September we launched our first LendInvest Property Development Academy. A year on, it’s fair to say that the response has been overwhelming.

For too long, the housebuilding crisis has been someone else’s problem. It’s been up to the big builders to get on with, or whichever ambitious politician has been handed the housing brief this week. And let’s be honest, that strategy has been an abject failure, lacking in direction and impetus.

No, if we are going to tackle the shortage of homes across the UK, we need to recognise that it is something we can all play a part in. So if the big builders on their own are unable to build the homes the nation needs, we must do more to cultivate a generation of smaller builders, taking on more modest but no less meaningful projects. A wider source of housing developers will inevitably mean more homes are built.

London’s Startups Stress Out Over Brexit—and Ping Pong (Bloomberg), Rated: A

For all of the cheer and hip-hop thumping throughout the hall, there was an unmistakable undercurrent of anxiety this year as London’s tech community reckoned with the coming of Brexit.

“It isn’t just that we’re at risk of losing our engineering talent,” Meekings said, half-joking. “We might lose our ping-pong stars as well.”

More than 30 percent of Funding Circle’s London employees are non-British EU nationals. Ever since the company was founded in 2010, many have gravitated to the ping-pong table that co-founder Samir Desai set up in its lobby, next to a cabinet that has steadily filled up with trophies. Funding Circle is one of four companies Bloomberg is following through the Brexit process.

The deals showed that even as Brexit dents the U.K. economy, the fledgling online-lending industry continues to grow. In the third quarter, Funding Circle arranged 114 million pounds in net lending to its borrowers. That surpassed comparable loans by U.K. banks, on a combined basis, for the first time.

China

Regulator Assessing Custodian Banks for Online Lenders (Caixin), Rated: AAA

A national inspection team, led by the China Banking Regulatory Commission (CBRC), has recently asked local authorities that supervise online lending to assess commercial banks appointed by P2P platforms to provide custodian services for investors’ funds, multiple bank employees told Caixin.

Credit information platform will lift safeguards (China Daily), Rated: A

The National Internet Finance Association of China recently passed a resolution to jointly launch a personal credit information platform with eight third-party credit service agencies.

The NIFA will hold a 36 percent stake in the forthcoming platform, which is expected to have registered capital of 1 billion yuan ($152 million), and it will invest no more than 360 million yuan in the platform within five years.

The platform will mainly serve online personal lending institutions, in addition to other market players including traditional commercial banks, regulators and third-party credit service agencies.

Chinese Online Lender’s IPO On Shaky Ground (PYMNTS), Rated: A

LexinFintech Holdings Ltd., operator of China’s leading online lender Fenqile, was slated to meet with advisers over the weekend to decide if it will go ahead with a proposed initial public offering (IPO) in the U.S.

According to Bloomberg reports, the company is expected to decide soon if it should launch a roadshow for its IPO or wait until a later time to go public.

European Union

Swedish payment services firm Klarna posts profit rise (Reuters), Rated: AAA

Swedish online payment services firm Klarna, one of Europe’s highest-valued tech startups, on Monday reported sharply higher revenues and earnings for the first nine months of 2017.

Klarna said in a statement its sales rose 24 percent year-on-year to 3.16 billion Swedish crowns ($382 million) in January through September while net earnings climbed 75 percent to 349 million.

New EU rules increases competition and security between banks and fintech (Independent), Rated: A

The European Commission approved rules on Monday to increase competition and toughen up security in how people pay for goods and services across the European Union, pitting banks against financial technology firms.

The rules flesh out an update to the bloc’s payment services law and are among the most disputed in recent financial regulation, sparking intense lobbying as banks and fintech firms clashed over access to customer data.

The revised law comes into force on 13 January, though some of the security elements approved on Monday won’t be binding until September 2019 to give banks and fintech firms time to adjust.

Irish P2P Flender Close to Raising Over €2 Million Through Latest Funding Round (Crowdfund Insider), Rated: A

Irish peer-to-peer lender Flender has reported attracted close to more than €2 million through its latest funding round. This news comes less than a year after the lending platform secured £501,700 through its equity crowdfunding campaign on Seedrs.

International

ETHLend and Brickblock team up for lending on the blockchain (Finextra), Rated: AAA

ETHLend and Brickblock are announcing a strategic partnership to explore the possibilities of lending with Blockchain technology.

A primary focus will be on the tokenization of assets to simplify lending and bring secure real-world assets into the lending procedure as collateral.

The application is ideal for token holders who are in need for liquidity and those who want to participate in a free lending market. Instead of selling and closing a token position, a borrower can easily pledge digital tokens to receive Ether. Moreover, ETHLend is introducing token lending, which enables profiting from down market by enabling short selling market.

Tokenizing real-world assets such as real estate achieves three disruptive objectives:

  1. A strong collateral that can be expected to keep its value for a short-medium time period.
  2. An opportunity for people to collateralise their property with Brickblock, and then using it to secure their loan.
  3. New investment opportunities for downside market by enabling short selling for tokenized real assets.
Australia/New Zealand

Everything you need to know about the P2P lending market (Interest), Rated: AAA

Nearly nine in every 100 loans written through New Zealand’s peer-to-peer (P2P) lending platforms are in arrears, according to the Financial Markets Authority (FMA).

Borrowers responsible for 1,469 loans, worth more than $20 million, are overdue on their loan repayments.

While the bulk of lenders are investing smaller amounts of money (IE under $5,000), 48 have lent an average of $1.54 million each. Totalling $73.84 million, this is equivalent to a quarter of the $289.10 million of loans outstanding (loans that were still within their specified term at the end of the reporting period).

Harmoney – the first P2P lender to launch in New Zealand in 2014 – is also the largest, with 83% of outstanding loans in the market written through its platform.

The FMA’s data also shows there are 207,230 borrowers registered with P2P platforms, 843 of which are repeat borrowers, who have repaid their loans and taken out new ones.

Source: Interest
Source: Interest

FMA publishes benchmark P2P lending, crowdfunding figures (Scoop), Rated: A

The figures show individuals took out $121 million of new loans in the year ended June 30 through P2P platforms and businesses borrowed $31.5 million with total loans outstanding at $259.6 million and $29.6 million respectively as at June 30. Meanwhile, crowdfunding platforms raised $74.2 million from retail and wholesale investors, with 34 successful offers out of 50 in the year.

The data show peer-to-peer lending still pales in significance to the established lending channels, with $10.89 billion personal consumer loans with banks as at Sept. 30 and a further $6.88 billion with non-bank lenders. Business loans with banks totalled $101.61 billion as at Sept. 30 and$4.59 billion with non-banks. Peer-to-peer lenders had 16,977 outstanding personal loans and 92 business loans as at June 30. In terms of asset quality, 1,469 P2P loans worth $20.4 million were in arrears, or 8.61 percent of total loans outstanding, while 833 loans worth $8.5 million were written off.

Fintech firm to undertake study into financial advice (SMSFAdviser), Rated: A

Fintech firm Valuiza will conduct an Australia-wide study of the state of financial planning by gathering feedback from existing clients of practices to measure their experience and intentions. It is currently inviting advice practices to participate in the study.

The data for the report will be collected during January and February next year with practices able to review the results in real time, he said. The results for individual practices will be confidential.

 (The Australian), Rated: B

Peer-to-peer lending platforms RateSetter and Bigstone both called for better disclosure of rates and fees, which are currently expressed in a variety of different ways by industry players. RateSetter chief executive Daniel Foggo said borrowers should be told the cost of the loan expressed as an annual …
India

Are You a Credit Risk? Indian Banks Dig Deep in Your Phone to Find Out (WSJ), Rated: AAA

Indian banks have started mining data on customers’ smartphones for fast loan approval, testing out cutting-edge but controversial technology in what is potentially a huge market for such products.

Long hampered from lending to the hundreds of millions of Indians without credit histories, banks are hoping to slash risk-assessment costs and trigger a new wave of consumer lending with apps that look at everything from Facebook connections to online shopping habits to rate potential borrowers.

India’s most sophisticated banks are working with local and international fintech startups to develop, test and launch a version of a technology used by microlenders in Africa, China and elsewhere.

Source: The Wall Street Journal

Commercial banks had around $1.09 trillion of loans outstanding in September, according to the Reserve Bank of India. Of that, about $270 billion were personal loans, a portion whose growth is outpacing the overall loan market.

But about 40% of HDFC’s 8 million and 12 million loan applications a month are from people without credit histories. Most Indians have never had a credit card or taken a home loan.

What does India’s fintech leader of the year have on her mind? (YourStory), Rated: A

Before she co-started one of India’s few digital EMI startups, Lizzie served as the India head for Wonga, the British payday loan company.  She then joined Development Bank of Singapore to help launch ‘digibank’, the new mobile-only virtual bank of India. Very recently, the India FinTech Awards 2017 named her Woman Leader in the Fintech category.

“I think fintech, especially in India, is one of the most exciting and biggest opportunities in the world. The opportunity here is not just to build huge valuable businesses, but also make a real impact on people’s lives and the economy. I think fintech is taking off in such a big way because the timing is right. It’s such a HUGE problem to solve, and we finally have all the pieces of the puzzle in place – whether it is KYC, mobile adoption or digital payments,” she added.

“I am biased of course, but I expect to see a lot more focus on payments coupled with credit in the form of ‘Paylater’ solutions, EMI solutions and all things related to transactional credit. This is such a great solution for this market where credit cards don’t make sense but consumers are keen to shop,” Lizzie said.

Asia

Japan insurer Sompo sets up fintech base in Tel Aviv (Reuters), Rated: A

Property-and-casualty insurer Sompo Holdings Inc (8630.T) has set up a fintech hub in Israel, becoming the first Japanese insurer to do so in a country where it hopes to tap local expertise in digital and cyber-security technologies.

Africa

Fintech firm Ovamba moves into African commodities exports (Global Trade Review), Rated: AAA

Ovamba, a fintech firm that uses blockchain and other new technologies to connect investors with African SMEs, has facilitated a €30mn deal for the purchase and export of cocoa for Cameroonian commodity marketing company Producam.

Authors:

George Popescu
Allen Taylor

Monday November 27 2017, Daily News Digest

fintech TransUnion

News Comments Today’s main news: Ant Financial bans high-interest consumer loan products. Lending Club boosts MPL credit metrics in 3rd self-sponsored ABS. Funding Circle to launch Isa next week. Zopa reforms how returns are displayed. Robo-advisors in China must be licensed. CreditEase to pioneer fund of funds for direct real estate purchases. New Zealand publishes first P2P/crowdfunding statistical returns. Today’s main […]

fintech TransUnion

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Africa

News Summary

United States

Lending Club boosts MPL credit metrics in 3rd self-sponsored ABS (Asset Securitization Report), Rated: AAA

LendingClub’s third self-sponsored securitization of online marketplace loans is benefiting from the company’s recent tightening of credit standards.

The loans backing the $330 million Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P2 involve borrowers with higher FICO scores that have allowed LendingClub to reduce its credit enhancement levels on the deal.

CLUB Credit Trust 2017-P2 has a collateral pool of 22,062 prime, consumer loans with a cumulative net balance of $368 million, or an average balance of $16,681.

TransUnion Study On FinTech Market; PayPal Enters Robo Advice Market (PeerIQ), Rated: AAA

The Federal Reserve Bank of New York reports that household debt totaled $12.95 Tn last quarter – the 13th straight quarterly increase. As a share of GDP however, household debt stands at 66% below a peak of 87% in early 2009.

PayPal continues to expand the range of its consumer offerings. PayPal started with payments initially, moved to personal and small business loans, and is now delivering asset management solutions. The partnership will offer Acorns a unique channel for customer acquisition and allow Acorns to compete with Betterment and Wealthfront. Paypal led a $30 Mn investment round in Acorns Grow in April 2016.

FinTechs are Growing and Taking Market Share

FinTech’s market share has grown from virtually zero in 2012 to 30% in 2016. The outstanding balances on personal loans have doubled to over $100 Bn in 2017 from late 2013, with 128 lenders making more than 10,000 personal loans annually. FinTechs compete with banks to originate loans to prime consumers, and FinTech’s originate 30% of their loans to non-prime consumers where there is less competition from banks.

Source: TransUnion

FinTechs Have The Most Robust, Risk-Based Pricing

Source: TransUnion

Brian Dally of Groundfloor (Lend Academy), Rated: A

In this podcast you will learn:

  • Where the idea for Groundfloor come from.
  • Why Brian decided to start in the real estate asset class.
  • How many states they are operating in today for both borrowers and investors.
  • How they go about sourcing real estate deals.
  • Why they decided to focus on non-accredited investors.
  • How their securities offering is structured.
  • The minimum investment allowed per deal.
  • How returns have been for investors.
  • Which side of the marketplace is constraining growth today.
  • How they differentiate themselves from their competition.
  • The performance of their loan book to date.
  • Their business model and how they make money.
  • Details of their first institutional investor and why this is good for retail investors.
  • Their goal for an institutional/retail investor mix.
  • What the future holds for Groundfloor.

Online lenders pull out the popcorn, as the Trump administration fights to control the CFPB (TechCrunch), Rated: AAA

Republican lawmakers have long sought to reduce the CFPB’s oversight. Now dueling appointments put its immediate future in question. Last night, President Trump named his budget director, Mick Mulvaney, as acting director of the agency hours after its current leader, Obama-appointed Richard Cordray, announced he would leave the job.

To counter the administration’s plans, on his way out the door, Cordray named his chief of staff, Leandra English, as the agency’s deputy director.

Under the law, the appointment should make English the agency’s acting director, though the White House says that Mulvaney plans to show up at the CFSB Monday morning anyway. The White House further says Mulvaney will keep his current job as head of the Office of Management and Budget.

If the Trump administration follows through on its threats, Mulvaney will lead both agencies until a permanent head of CFPB is chosen and confirmed by the Senate.

Nobody Knows Who the Consumer Financial Protection Bureau’s New Boss Is (New York Magazine), Rated: A

On his way out, he appointed his chief of staff, Leandra English, to take over the CFPB, citing the Dodd-Frank Act, which states that the agency’s deputy director will take over the agency if the director leaves. Trump responded by naming Mulvaney as expected, pointing to the Federal Vacancies Reform Act as justification for his move.

The eventual director must be confirmed by the Senate; Trump’s pick is expected within weeks.

3 trends powering the rise of financial robo-advice (VentureBeat), Rated: A

1. Availability of data

We generate more than 2.5 billion GB of data every day.

In one notable example, JP Morgan and Intuit earlier this year announced their companies will make data available via the Open Financial Exchange API. Their goal is to make it easier and more secure for consumers to use their data across various financial apps and websites.

2. Increased power and storage

  • Google Tensor Processing Unit.
  • Nvidia Volta.
  • Huawei Kirin.

3. Advancements in AI

In particular, deep learning and boosting models enable significant leaps forward in the application of machine learning. These include design concepts such as Google’s Capsule Network, which offers an alternative to traditional neural nets, and replicative and transfer learning, which enable pattern discoveries and accuracies impossible by human counterparts.

The results of studies using these ideas are impressive. In one example, University of Mannheim researchers showed how ontologies help some machine learning models validate data 50 times faster. And Google’s AutoAI demonstrated it can create better machine learning code than the researchers who made it.

Student debt relief trumps other benefits (Employee Benefit Adviser), Rated: A

Student loan repayment programs are climbing the pantheon of employee benefits, suggests a recent survey of full-time workers with student loan debt.

Pollfish found that 23% would gladly give up healthcare benefits for a student loan repayment benefit. In addition, 46% would relinquish paid time off and 33% would do the same for retirement benefits in exchange for a repayment benefit. Also, 53% said they’d consider a salary cut in exchange for a student loan repayment benefit.

Of 1,000 college graduates polled by SoFi, an online personal finance company, 90% were more willing to accept a job offer at a new company if their employer offered a student loan contribution benefit. In the Pollfish survey, 84% gave the same response.

The Most Well-Funded Fintech Startup In Each State (CB Insights), Rated: A

State Company Total Equity Funding ($M)
Arizona CampusLogic $ 17.5
Arkansas LumoXchange $ 0.2
California SoFi $ 2,040.5
Colorado IP Commerce $ 54.7
Connecticut PayVeris $ 14.2
DC Fundrise $ 52.6
Delaware College Avenue Student Loans $ 50.0
Florida YellowPepper $ 34.0
Georgia Kabbage $ 490.0
Idaho VisitPay $ 18.4
Illinois Avant $ 655.0
Indiana Allied Payment Network $ 2.6
Iowa Dwolla $ 39.1
Kansas C2FO $ 99.7
Kentucky Inked Brands $ 4.0
Louisiana Zlien $ 7.2
Maryland Regent Education $ 39.7
Massachusetts Toast $ 138.0
Michigan Clinc $ 7.5
Minnesota Bright Health $ 240.0
Missouri Clearent $ 27.5
Nebraska D3 Technology $ 35.6
Nevada Filament $ 31.8
New Jersey Billtrust $ 104.5
New York Oscar Insurance Corporation $ 727.5
North Carolina AvidXchange $ 558.2
Ohio Aver $ 23.2
Oklahoma CreditPoint Software $ 1.1
Oregon NVoicePay $ 21.5
Pennsylvania InstaMed Communications $ 101.9
Rhode Island Upserve $ 191.5
South Carolina Ceterus $ 10.2
South Dakota ReliaMax $ 3.9
Tennessee Digital Reasoning Systems $ 75.6
Texas BigCommerce $ 164.5
Utah MX $ 54.1
Virginia StreetShares $ 18.9
Washington Avalara $ 253.0
Wisconsin Dynamis Software Corporation $ 4.3
Source: CB Insights

Bridge loan helps borrowers as they pursue graduate degrees (SFGate), Rated: B

The sellers wanted to accept the offer but were concerned about the VA financing with an online lender who was unresponsive to the listing agent’s calls. The Realtor advised the couple that if they could find a local lender who could preapprove them with conventional financing, their offer would be accepted.

Wyatt held a video conference with the couple to clarify the structure of the file and learned that both clients were pursuing their graduate degrees and took time off work to attend classes. In addition, the co-borrower had recently received an employment offer for a salaried position.

United Kingdom

Funding Circle Isa to launch next week (Bridging&Commercial), Rated: AAA

Peer-to-peer platform Funding Circle has announced that it will start rolling out its Isa account to all current investors from next Thursday (30th November).

UK peer-to-peer lenders plan to raise millions from ISAs (Financial Times), Rated: A

Britain’s largest peer-to-peer lenders plan to raise hundreds of millions of pounds from savers in the coming weeks even as many of them say they will reduce higher risk lending in case there is a downturn.

“We expect a lot of demand,” Samir Desai, chief executive of Funding Circle, told the Financial Times. “We have done lots of surveys and a huge proportion of the base told us they would like to put all of the money they invest with us through the ISA.”

Zopa addresses default concerns by reforming how returns are displayed (P2P Finance News), Rated: AAA

ZOPA is working on improving the way long-term returns are displayed so investors do not become overly concerned with monthly defaults in their portfolio.

The peer-to-peer lender said it is working on a prototype that would show investors their current portfolio performance, a range of what their returns will be and what their target rate is.

The display, currently in testing, includes a graph showing portfolio growth, and the net cash earnings after losses, a range of what the returns will be that narrows closer to maturity and what the target rate is in comparison to what was advertised.

Welendus launches new £150,000 crowdfunding campaign (P2P Finance News), Rated: A

PEER-TO-PEER payday loan platform Welendus has launched a new crowdfunding round on Seedrs this morning to raise an additional £150,000.

The lender, which raised £100,000 from investors during a Seedrs fundraise in March, has already reached 92 per cent of its target by attracting funding from the existing crowdfunding backers.

NatWest joins the robo-advisers (This is Money), Rated: A

High-street bank NatWest has launched a fully regulated robo-advice proposition charging £10 for customers seeking to invest sums as low as £500.

Unlike some rival robo-advisers that offer guidance based on responses to just a few questions, or simplified advice that doesn’t factor in your complete financial position, NatWest said its process will offer full-fat advice akin to the traditional face-to-face process but online.

57% of SMEs support European Free Trade Agreement (Bridging&Commercial), Rated: A

More than half of small business owners (57%) are supportive of joining the European Free Trade Agreement (EFTA), a new survey has revealed.
Research by peer-to-peer platform Funding Circle has found that the key reasons cited by businesses for wanting to join the EFTA included the ease of exporting and importing (59%), a larger customer base (46%) and lower tariffs (42%).

 

Was the Budget boom or bust for personal finance? (P2P Finance News), Rated: A

PEER-TO-PEER lenders are split about the outcome of the Budget for people’s finances.

RateSetter said there was “a notable absence of measures to help people put away more for the future” in Wednesday’s fiscal event, but Lending Works called it “a boost for personal finance”.

Rethinking bricks and mortar: alternatives for property investors (Your Money), Rated: B

A mismatch of supply and demand has made UK property more unaffordable than ever for would be buyers. Property investors pursuing the buy-to-let route are also facing challenges due to a recent crackdown in tax legislation. Against this backdrop, peer to peer (P2P) and equity crowdfunding have grown in popularity as alternative ways to access the property market.

Key considerations before picking an investment route

 

  • Investment risk
  • Debt or equity
  • Liquidity
  • Who’s the provider

RateSetter Appoints Richard Steele Regional Manager of Midlands (Crowdfund Insider), Rated: B

UK-based peer-to-peer lending platform RateSetter announced on Friday it has appointed Richard Steele as its regional manager for the Midlands. According to the online lender, Steele has more than 15 years of business lending experience and prior to joining RateSetter, he held the relationship manager position at Barclays and business development manager at BCRS Business Loans.

China

WeiyangX Fintech Review (Crowdfund Insider), Rated: AAA

On November 17th, top financial regulators in mainland China (including PBOC, CBRC, CSRC, CIRC and SAFE) released a new set of rules covering the country’s asset management market. It is the first time that the regulators designated one of the articles to Robo-advisors.

According to the article, financial institutions that conduct Robo-advisory services or AI-driven investment programs should be granted license from financial regulator before carrying out any operations.

Here Comes Tencent Credit

Two years ago, Ant Financial, the financial affiliate of Alibaba, launched its own credit scoring system Sesame Credit. This week, Tencent, Alibaba’s main rival in China, finally followed suit by launching a similar and competitive product, Tencent Credit. The credit score ranges between 300 and 850.

Sesame Credit Ceases Cooperation with Cash Loan Platforms

On November 21st, a cash loan platform told the media that they had received a notification from Sesame Credit, the credit scoring services of Ant Financial. According to the notification, Sesame Credit will cease to cooperate with cash loans from December 12th of 2017 due to some of its illegal behavior regarding interest rate setting and debt collection.

Chinese fintech firm CreditEase to pioneer funds of funds as alternative to direct real estate purchases (SCMP), Rated: AAA

CreditEase, one of China’s largest financial technology companies, has set its sights on funds of funds focusing on real estate projects as founder and chief executive Tang Ning anticipates a new property investment scenario.

At present, high-net-worth individuals in China seeking returns from property investment often directly buy and own residential or commercial units, betting on the appreciation of assets.

CreditEase, which specialises in lending to small businesses and consumers as well as wealth management for affluent investors, plans to set up a clutch of funds of funds that will allocate capital to leading global real estate funds managed by big names such as Blackstone and KKR.

China Online Lender Qudian’s Latest Plunge Knocks CEO From Billionaire Ranks (Forbes), Rated: A

Qudian lost 24.3% on Friday to end at $12.22, the worst close since it listed at $24 on Oct. 18.  Friday’s decline left Luo’s fortune at $776 million.

Luo, 34, ranked No. 255 on the 2017 Forbes China Rich List published on Nov. 16 with an estimated fortune of $1.48 billion.

Shares in Qudian, which is 11% owned by Alibaba Group affiliate Ant Financial, and other Chinese online lenders have been falling on reports that regulators plan to tighten restrictions on microlenders. On Friday, Qudian said it would cap charges and costs to customers linked to Alipay at an annual interest rate of 24% (see announcement and details here).  Qudian also said it is working to extend credit through its own app where it can charge up to an annual rate of 36%.

Alibaba Affiliate Bans High-interest Consumers Loan Products (ValueWalk), Rated: AAA

Ant Financial, the financial arm of Alibaba, has barred consumer loanswith an annual interest rate above 24% on its Alipay platform.

Ant Financial stated that it has increased monitoring of the financial service providers on Alipay and its credit platform, Sesame Credit, and found some inappropriate collection methods and interest rates above legal limits, according to Reuters. Further, Alibaba’s Ant Financial stated that it would withdraw cooperation with some cash loan providers. Sesame Credit is a proprietary credit scoring system, which gives Alipay e-wallet users a credit score.

China Fintech Firm Is Said to Mull Fate of $ 500 Million IPO (Bloomberg), Rated: A

LexinFintech Holdings Ltd., owner of Chinese online lending platform Fenqile, plans to meet advisers this weekend to discuss the fate of its proposed U.S. initial public offering, people with knowledge of the matter said.

The company aims to decide whether to imminently start its IPO roadshow or wait for a later date when market sentiment may be better, according to the people.

Yirendai Awarded ISO 27001 Certification (Business Insider), Rated: A

Yirendai Ltd. (NYSE: YRD) (“Yirendai” or the “Company”) announced today that it has been awarded certification to the international standard for Information Security Management (ISO 27001) from British Standards Institution.

The ISO 27001 certification is an internationally recognized best practice framework for an information security management system (“ISMS”) and specifies the requirements for establishing, implementing, maintaining and improving information security management within an organization. It also takes into account risk assessment and risk treatment with regards to security of information.

Tencent to set up fintech lab in Xiongan (ECNS.cn), Rated: B

Tencent Holdings Ltd, Asia’s most valuable firm, is planning to set up a financial technology lab and digitize public medical services in the Xiongan New Area, as part of a broader push to gain a foothold in China’s latest economic zone.

European Union

One Idea to Make Europe Bigger in Tech Is to Pay Employees More (Bloomberg), Rated: AAA

Europe isn’t producing the kind of large, globally-influential technology companies like those coming out of the U.S. and China. A perennial question is why?

One reason might be that European startups don’t give employees as much of a chance to strike it rich, according to a new study by the European venture capital firm Index Ventures. While startup employees in the U.S. are often rewarded with stock options — allowing them to cash out handsomely if a company is sold or goes public — young firms in Europe don’t offer the same scale of incentives.

In an analysis of 73 companies, Index found that European employees own on average about 10 percent of the startup where they work, compared to 20 percent for U.S. workers. European companies often skew stock options to executives rather than rank-and-file employees.

A tech VC explains why Revolut is such a hot ticket as the fintech app hits 1 million users (Business Insider), Rated: A

Revolut announced the milestone on Friday, saying that customers have now completed 42 million transactions on its app worth a combined $6 billion (£4.5 billion). The company began as a foreign exchange app linked to a pre-paid card but has since branched out into broader financial services, such as current accounts, insurance, and investments.

Revolut, which is applying for a full European banking license, said that 42% of its customers are aged 25-35, “a clear indication that traditional banks are no longer meeting the needs of younger, tech-savvy generations.”

Flender closes in on £2m funding round (Independent), Rated: A

Dublin-based peer-to-peer lending business Flender is close to raising more than €2m in its latest funding round.

Some €400,000 of the money has been raised from its own platform – the first peer-to-peer equity investment on an Irish platform. Terms are close to being agreed for the remaining balance of a £2m (€2.25m) round.

CS Invests in Swiss Fintech (finews), Rated: B

Credit Suisse has bought a majority stake in Tradeplus24, a Zurich-based fintech firm specialized in small- and mid-sized business loans. The Swiss bank bought into a series A1 financing through its subsidiary, SVC, the bank said in a statement.

International

2 investment trusts for income investors seeking reliable high yields (The Motley Fool), Rated: AAA

With interest rates still near historic lows, it can be hard to find mainstream investments that will pay out a significant yield.

But for investors who don’t want to go through the trouble of setting up their own account with a peer-to-peer lending platform, P2P Global Investments (LSE: P2P) offers an alternative route to gain access to the sector. It’s an investment trust that offers investors a ready-made and diversified portfolio of peer-to-peer loans, saving time from building a portfolio from scratch and enabling investors to earn income straight away. At its current share price, it has a trailing 12-month dividend yield of 6%.

ETHLend – A Fully Decentralized & Democratized P2P Lending Platform On The Ethereum Blockchain (Chipin), Rated: A

The main feature of ETHLend is the financing options available in ETH, which allows users to borrow or lend ETH using ETHLend’s digital tokens in an efficient manner or by using ENS domains as a collateral.

The ETHLend platform can be also used as a tool for both B2B and B2C transactions.

An interesting aspect of ETHLend is that both borrowers and lenders will receive 0.1 credit tokens (equal to 1 ETH) each for every loan that is repaid successfully.

These credit tokens can then be used as collateral for loans on the platform or sold for profit.

Here are the details of the upcoming LEND token sale:

Token name: LEND

Token base: Ethereum (ERC-20)

Token supply: 1,000,000,000

Token sale duration: 25th November, 2017 – 27th December, 2017

Token sale target: 37,600 ETH (hard cap)

Token exchange rate: 1 ETH = 25,000-27,500 LEND (depending on period of sale)

Celsius – The P2P Decentralized Credit Protocol Built On Smart Contract Technology (Chipin), Rated: A

The modern credit system is a mess, particularly for millennials and the Generation X youths.

Celsius is a P2P and blockchain-powered global credit network designed to improve the efficiency of modern credit and financing systems.

There are 4 types of loans in the Celsius platform:

    • The platform will enable millennials to establish a digital credit score and be issued a credit line; the credit can then be accessed by a sponsored credit card from Celsius.
    • Celsius will also allow the platform’s users to expand their credit limit against their own cryptocurrency asset holdings they have at Celsius. The extended credit can be easily accessed through several options.
    • Members can also choose to lend any cryptocurrencies they own and earn up to 5x the normal interest rates they get from banks. Finally, members can borrow cryptocurrencies in a secure and transparent manner
    • To safeguard the platform’s ecosystem, both lenders and borrowers on Celsius are verified and carefully selected to prevent fraud.

Here are the details of the upcoming DEG token sale:

Token name: DEG

Token base: Ethereum (ERC-20)

Token supply: 1,000,000,000

Token sale duration: 25th of January, 2018 – TBA (pre-sale is currently LIVE)

Token sale target: $100,000,000 (hard cap)

Token exchange rate: $0.20 = 1 DEG

Australia/New Zealand

Why SocietyOne needs more than its billionaire backers (Financial Review), Rated: AAA

The other is it’s in the midst of what is expected to be its last funding round before listing the business, raising up to $20 million in equity based on a valuation of up to $200 million, which is based on a multiple of one times its loan book.

The raising, managed by Venture Advisory and due to close late this month, is part of a long-term, highly anticipated plan to target a sharemarket listing in 2018.

SocietyOne is expected to need a book worth $500 million or so before it starts breaking even.

Chief executive Jason Yetton has said previously the company is eyeing a 2 per cent to 3 per cent share of the $105 billion consumer finance market in the long term, of which credit card debt comprises $42 billion.

Fortress backs $ 120m capital raising by MoneyMe (Financial Review), Rated: AAA

Global credit investor Fortress Investment Group will invest $100 million in debt capital to support MoneyMe’s consumer lending growth as the fintech considers an initial public offering in early 2019.

Fortress’s investment is part of a $120 million asset-backed securitisation deal, which also includes a $20 million bond, issued by Evans & Partners, which was oversubscribed.

MoneyMe, which has made $150 million in personal loans to 70,000 customers in the past four years, is both cash flow positive and profitable, very rare for an Australian fintech.

Of its $150 million in lending, $80 million has been advanced in the past 12 months.

New Zealand’s Financial Markets Authority Publishes First Peer-To-Peer/Crowdfunding Statistical Returns (MondoVisione), Rated: AAA

The Financial Markets Authority (FMA) today published its first statistical reporton peer-to-peer lending and crowdfunding in New Zealand.

The data shows $259.9 million is currently loaned to individuals and $29.5 million loaned to businesses through peer-to-peer lending in the year ending 30 June 2017.

A total of $74.2 million was raised from investors through crowdfunding, including wholesale investors, in the same period.

Tic:Toc to undercut broker distribution in white label play (TheAdviser), Rated: A

Mortgage brokers are facing a double threat from online lender Tic:Toc, which is seeing a surge in demand from consumers and interest from banks and non-bank lenders looking for cheaper distribution.

The fintech started lending four months ago and has received approximately $330 million of applications in that time, with conversions hovering around 17 per cent this month.

Financial regulator shines light on P2P lending, crowdfunding (Stuff), Rated: A

Kiwis have nearly 17,000 loans through “peer-to-peer” lending platforms, but more than one in 12 borrowers were behind on repayments, according to the Financial Markets Authority.

There were 16,977 loans outstanding with P2P lenders at the end of June, it said, of which 1469 were in arrears. The average size of loans being taken out was $8771.

During the year, 833 loans with a total value of $8.5 million were written off.

Why banks and fin-techs need each other (NZ Herald), Rated: B

Chris Russell, HSBC New Zealand chief executive, said history was littered with banks who had spent large sums of money on developing new technology, only to find it had gone in another direction while it was working on it.

Globally Russell said HSBC was setting up innovation labs to work with financial technology firms and it was China and India where it saw the biggest sources of development.

In New Zealand it is also partnering with a local fin-tech, although Russell won’t name who yet.

India

The quick and safe way to build a credit score (livemint), Rated: A

If you are new in the workforce, you can start by getting a low-limit credit card from the bank where you have a salary account, said Sumit Bali, senior executive vice president and head-personal assets, Kotak Mahindra Bank Ltd.

Alternative credit scoring

While the RBI-regulated credit bureaus are currently not allowed to use alternative data for credit scoring; in other developed markets parameters like utility bill payments, insurance premium payments have been used for credit scoring (read more on it here.

However, financial institutions including top public and private sector banks and NBFCs in India, have started using alternative data in multiple verifications and validations across the credit value chain, Agarwal said.

Asia

Considering an ICO… then read this (The Star), Rated: AAA

The ICO euphoria is likely being fuelled by the fact that despite all the negative news surrounding ICOs and cryptocurrencies, the price of bitcoin has generally kept soaring, despite the many mini crashes it tends to suffer.

For sober markets like Malaysia and Singapore, the regulators’ stance is clear. They are not outlawing ICOs but making a simple statement: if fund-raising is your main objective, then please take note of existing securities laws, which have been built and refined over a very long time.

Malaysia should not become a hotbed for dodgy ICOs.

Asian regulators should focus on light touch for ICOs (Asian Review), Rated: A

China banned initial coin offerings in September as “a form of unapproved illegal public financing behavior.” South Korea followed suit a few weeks later. Regulators in Hong Kong, Singapore, the U.S. and other countries have also expressed concerns. What is it that has them so worried?

Africa

A Digital Transactions Takeover right under our nose – Cassava Fintech (Newsday), Rated: AAA

Cassava Fintech is a specialized Pan-African Fintech company that delivers innovative digital transaction solutions across the mobile ecosystem. Sounds fancy right? Not quite. Simply put Econet’s vision has expanded beyond Telecoms and our Zimbabwean borders. Econet’s premise sits within an inclusive connected future that leaves no African behind.

Fintech SMEs to drive 72% of bank innovation (The Star), Rated: A

Financial technology startups, commonly known as fintechs, will be responsible for 72 per cent of financial innovations in the next three years, a new industry report shows.

Financial technology startups, commonly known as fintechs, will be responsible for 72 per cent of financial innovations in the next three years, a new industry report shows.

81 per cent of financial institutions said they are currently partnering with start-ups or intend to in the next 12 months.

Authors:

George Popescu
Allen Taylor

Wednesday October 18 2017, Daily News Digest

personal loans

News Comments Today’s main news: LendingHome surpasses $100M in monthly loan volume, secures $57M in Series C-2. KBRA assigns preliminary ratings to Prosper Marketplace Issuance Trust, Series 2017-3. RateSetter says FCA authorization merely a milestone. Qudian raises $900M in biggest listing by Chinese fintech firm. BBVA focuses on U.S.-Mexico remittances with money-transfer app. New Zealand paves path for robos. SoftBank considering second […]

personal loans

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Middle East

Canada

News Summary

United States

LendingHome Surpasses $ 100 Million Mark in Monthly Loan Volume & Secures $ 57 Million During Series C-2 Funding Round (Crowdfund Insider), Rated: AAA

Less than a week after announcing its new office in Pittsburgh, real estate marketplace lending platform LendingHome announced it has surpassed $100 million in monthly loan volume and secured $57 million during its Series C-2 funding round, which included participation from Sberbank and Noah Holdings Limited.

The online lender also revealed the closing of the LendingHome Opportunity Fund II, which was managed by LH Capital Management, with $100 million in commitments from more than 40 investors including asset managers, international funds, family offices, and high net worth individuals. An additional credit facility of up to $300 million brings the fund’s total potential assets to $400 million.

2017 shaping up to be the year of the venture capital ‘mega-round’ (Biz Journals), Rated: AAA

Georgia companies scored the most venture dollars in the third quarter, since first quarter 2000. Fintech Kabbage and access management technology firm Core Security raised a combined $450 million, or about 60 percent of total venture capital invested in Atlanta companies in the third quarter.

Goldman Attacks Lending Club & Prosper, Courts Main Street (CB Insights), Rated: AAA

As its bond trading revenue plummets, Goldman has undergone a major strategic shift, looking to grow the revenue opportunity from its consumer digital finance operation.

Goldman Sachs has changed a lot through its 148-year history. But as technology continues to roll through the financial services industry, Goldman is one of the few bulge bracket banks today that is staking its reputation and future on new strategic bets in digital finance.

When Goldman announced it would be entering the online lending business in 2015, Lending Club‘s then-COO Scott Sanborn quipped, “We are looking forward to competing with Goldman Sachs on customer experience.” More recently, when Goldman bought $2.8B worth of bonds held by Venezuela’s struggling central bank at a 70% discount to market price, Ribbit Capital founder Micky Malka tweeted, “This is why @GoldmanSachs won’t become a consumer first brand.”

  • 46% of Goldman Sachs job postings are in technology.
  • Goldman Sachs’ online lending arm Marcus lent $1 billion in the first 8 months of operation. Now it is taking its digital finance brands global.
  • Goldman Sachs is one of the top two most active US bulge bracket banks investing in fintech startups.
  • Goldman has pushed investments into Brazil.
  • Goldman made its first fintech acquisition in 2016 and is looking for more.
  • Goldman’s cryptocurrency patent made headlines, but most of its patents have focused on improving its systems.

BACKGROUND ON CORE GOLDMAN SACHS

Goldman Sachs makes money in five primary areas: investment banking, equities, investment management, investing & lending, and FICC client execution.

Source: CB Insights

Digital finance initiatives

Notably, Goldman seems to believe that its digital consumer lending and deposit platform has as large of a net revenue growth opportunity as its FICC trading unit. This is a remarkable shift in strategy that only materialized in the last three years, and the strategy is still in the extremely early innings of its growth potential for Goldman.

Another advantage Marcus has over other bank incumbents looking to launch a competing initiative is its non-legacy IT architecture and the fact that Goldman does not have an existing consumer credit card business for Marcus to cannibalize.

Marcus reportedly passed $1B in loan origination in its first 8 months and is expected to originate $2B by the end of 2017. While data on number of loans doled out is hard to find, Goldman reached its first billion in consumer loans significantly faster than competing online personal loan companies (Lending Club launched in 2007). At the CB Insights Future of Fintech conference, Talwar noted that Marcus’s average loan size was “around $14,000.”

Source: CB Insights

KBRA Assigns Preliminary Ratings to Prosper Marketplace Issuance Trust, Series 2017-3 (BusinessWire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Prosper Marketplace Lending Issuance Trust 2017-3 (“PMIT 2017-3”). This is a $501.05 million consumer loan ABS transaction.

This transaction represents the eighth securitization collateralized by unsecured consumer loans originated through the online marketplace lending platform operated by Prosper Funding LLC (“Prosper” or the “Company”).

Preliminary Ratings Assigned: Prosper Marketplace Issuance Trust, Series 2017-3

Class Preliminary Rating Expected Initial Class Principal
A A (sf) $313,500,000
B BBB (sf) $77,000,000
C B+ (sf) $110,550,000

Quicken Loans and eOriginal Partner on Next Phase of the Digital Mortgage Revolution (PR Web), Rated: A

eOriginal, Inc. and Quicken Loans today announced a partnership to complete the final steps of the online mortgage process – to digitally create an electronic note, and securely store it as an authoritative copy with delivery to both custodians and the secondary market. This advancement accelerates the time between origination and replenishment of capital.

Quicken Loans, the country’s largest online mortgage lender, closed more than $7 billion in mortgage volume through Rocket Mortgage, the nation’s first fully online mortgage process, in 2016 – its first full year in market. The rapid growth of Rocket Mortgage comes from its appeal to a new generation of homebuyers. In fact, two-thirds of Rocket Mortgage clients used the online process to finance a home purchase, and 80 percent of those consumers were first-time home buyers.

eOriginal’s platform delivers a fully digital mortgage and supports every type of digital closing strategy. 

Modo Emerges From Reverse Stealth With New Service For Payment Event Data (Business Insider), Rated: A

Modo, the payments fintech working with Bank of America Merrill Lynch, Alliance Data, FIS, Verifone, and Klarna, today announced they’re ready to break their self-imposed silence and discuss the work they have been doing to deliver innovative payment solutions for their clients in Q4 2017.

Modo has already announced support for three payment event types, in diverse areas of payments with Klarna, Verifone and FIS, and Bank of America Merrill Lynch (respectively):

  • Payout Events: Enable your corporate and commercial customers to send money globally using the ever growing number of digital wallets to accelerate the last mile of disbursements.
  • Checkout Events: Checkout anywhere, using any method of payment. Whether you are a merchant or a payment provider, offer consumers any way to pay.
  • Loyalty Events: Earn and burn loyalty in entirely new ways in entirely new experiences. Combine multiple rewards and loyalty programs to make a purchase or send a gift.

J.P. Morgan to buy payments firm WePay in first major fintech acquisition (Fox Business), Rated: A

J.P. Morgan Chase & Co. (JPM) said that it agreed to buy payments company WePay Inc. in the bank’s first sizable acquisition of a financial-technology startup.

The banking giant plans to roll out WePay’s technology to J.P. Morgan’s four million small-business customers, said Matt Kane, CEO of Chase Merchant Services. WePay, which has roughly 200 employees, helps online marketplaces and crowdfunding websites like GoFundMe process payments.

The two companies didn’t disclose terms of the deal. But a person familiar with the matter said the price was above the roughly $220 million valuation that Redwood City, Calif.-based WePay achieved in a 2015 fundraising.

Bank of America processed $ 4 billion in Zelle payments this quarter (Tearsheet), Rated: A

Bank of America processed $4 billion in Zelle transactions in the third quarter of 2017 alone, CEO Brian Moynihan reported on the bank’s earnings call Friday morning. Digital payments volume increased nine percent to $324 million. Within that, person-to-person payments growth was about 67 percent with the addition of Zelle this summer, reporting 13.6 million transactions and $4 billion in volume. The bank recently processed half a billion dollars in a single week, Moynihan said.

The bank’s digital users grew 5.2 percent to 34.5 million on a year-over-year basis. Mobile banking users grew 10.8 percent to 23.6 million.

Over at Wells Fargo, CEO Tim Sloan said during that earning call that third-quarter peer-to-peer payments increased 46 percent, but didn’t provide a Zelle-specific number.

Source: Tearsheet

Digital growth stands out for Bank of America and Wells Fargo (Business Insider), Rated: A

Although the imminent death of the bank branch is being drastically overstated, if the Q3 earnings of Wells Fargo

  • Active digital customers, which include both online and mobile users, grew 2% YoY to reach 27.8 million.
  • Active digital customers, which include both online and mobile users, grew 2% YoY to reach 27.8 million.
Source: Business Insider

Crowdfunding comes to Arizona real estate (Biz Journals), Rated: A

Crowdfunding ventures raise $34 billion annually in the U.S.

Is There Anything New About New Lenders? (Seeking Alpha), Rated: A

At many times in history there have been finance companies that made loans that banks chose not to make. Such finance companies have thrived in good economic times and tended to fail in major recessions. I predict the same will be true of the newer editions.

But second, let us ask why are the banks not making these loans? The answer is simple. The combination of the costs of marketing and administration and the credit risk is too great to make money on a consistent basis. Therefore the banks are funding a large part of the loans by lending to the lenders and taking a senior position, cushioned by the equity of other investors and shielded from the marketing and loan acquisition costs (as well, perhaps, as some of the consumer regulatory risks). Smart banking, it seems to me. The banks have a lower cost of funds than the new lenders, so they can make money at a lower effective interest rate on the money they lend, so long as it is safer.

I have been shocked at the levels of expenses being incurred by some of the new lenders.

P2P mortgage lending could be a game changer for Millennials (The Mortgage Reports), Rated: A

Not finding a mortgage lender you like? Try borrowing from a friend – or several of them – instead. According to reports, a new platform called Celsius could make P2P mortgage lending a viable option.

Using blockchain technology, Celsius is in the process of building a peer-to-peer lending network specifically aimed at the Millennial market. According to Alex Mashinsky, founder of the company, the platform will allow younger buyers to secure funding using their social circle, rather than big banks and financial institutions.

So how will it work? To start, each user creates a digital profile. They’ll need to upload FICO scores, online transaction histories and other non-traditional financial data. Then, Celsius will assign each profile a credit score that’s unique to the site.

To protect lenders, Celsius will offer insurance that covers a percentage of the principal loan amount in case of default.

$ 40 Million: Digital Asset Holdings Closes Series B Fundraising (Coindesk), Rated: A

Digital Asset Holdings LLC has raised $40 million in a Series B round, bringing the enterprise blockchain startup’s total funding so far to $110 million.

AlphaPoint Utilizes Intel Security Technology to Deliver Enterprise-Ready Blockchain Platform (AlphaPoint Email), Rated: A

Today, AlphaPoint announces the AlphaPoint Asset Digitization solution making illiquid assets liquid by facilitating the digitization of assets and launching new markets. AlphaPoint also announces the release of the AlphaPoint TrustedVM, a trusted virtual machine enabled by Intel Software Guard Extensions (Intel SGX) technology which allows smart contracts and blockchain services to run securely.

The latest release of the AlphaPoint Asset Digitization solution with AlphaPoint TrustedVM adds additional enterprise-class capabilities by securing access to information from intermediaries and network participants, thereby enhancing privacy and security to the AlphaPoint Distributed Ledger Platform. AlphaPoint has been working with some of the largest Fortune 100 financial institutions since 2013 to launch markets on blockchain technologies.

Enterprise-ready Blockchain Platform
In collaboration with Intel, the AlphaPoint Asset Digitization solution as designed at its core to help enterprises efficiently deploy blockchain solutions that implement business initiatives with world-class privacy and security. This solution was architected to create Trusted Virtual Machine, or TrustedVM, that leverages the trusted execution environment (TEE) that Intel SGX enables. AlphaPoint’s solution utilizes the security and privacy capabilities of Intel SGX, thereby allowing customers to benefit from several key technology and business advantages:

  • Faster time to market – Quickly develop and deploy blockchain applications with proven technology.
  • Hardwareenforced privacy and secure consensus – Execution and validation inside the TrustedVM, ensuring data is not visible to any unwanted parties.
  • Lower and predictable costs – With linear scalability, this technology improves total cost of ownership (TCO) and operational efficiencies.
  • Simplified development – Smart contracts and applications may be written in TypeScript and JavaScript, instead of highly specialized languages.

IBM is using the technology behind bitcoin to help businesses in countries with weak banking systems (Business Insider), Rated: B

IBM is using the technology behind bitcoin to help farmers and other small businesses in underdeveloped countries participate in global trade.

The companies will use IBM’s blockchain technology to process financial transactions across borders and currencies — a process which is often prohibitively slow and costly for small business owners, especially when they are in developing regions with smaller banking infrastructures.

The project is focused on what Stellar calls “underdeveloped payment corridors” — countries like Samoa and Fiji, where monetary policies, currencies, and economic instability make it difficult for businesses to move money internationally.

Are fintechs charging minorities more for business loans? (American Banker), Rated: A

Minorities are more likely to turn to a financial technology firm when seeking a business loan, but they may pay higher interest rates, according to the preliminary results of a congressional investigation released Monday.

Retiree robo shuns app, still lands $ 8M funding (FinancialPlanning), Rated: A

A fintech startup with no mobile app does a fundraising round. It secures $8 million. How is that even possible?

True Link, a retiree-focused hybrid advice platform, had a simple pitch to investors: elderly clients like the convenience of digital advice, but want to talk on the phone. The firm claims it received 1.6 million client calls last year.

Silicon Valley Vs. Wall Street: Can the New Long-Term Stock Exchange Disrupt Capitalism? (WSJ), Rated: A

Now they are actually doing something about it, by launching a new framework for corporate governance, investing and trading called the Long-Term Stock Exchange. Backed by top Valley figures such as venture capitalist Marc Andreessen and LinkedIn co-founder Reid Hoffman, the LTSE says it plans to seek regulatory approval by the end of this year to become the newest U.S. stock exchange.

Its key feature: a system in which the voting power of shares increases the longer investors own them.

Source: The Wall Street Journal

Block brands (CB Insights Email), Rated: A

Source: CB Insights

Lending Club Sweetens the United Airlines Frequent Flier Promotion (Lend Academy), Rated: B

A year ago Lending Club launched a deal for new investors with United Airlines. New investors could earn 1 MileagePlus frequent flier mile for every $2 invested in a new Lending Club account.

Well last week Lending Club sweetened the deal. They basically doubled the amount of miles you can receive. So, instead of 1 mile for every $2 invested it is now 1 mile for every $1 invested. This deal is only valid until January 9, 2018 whereas the last deal had a three year expiration date.

whoa: blockchain, blockchain, blockchain (CB Insights Email), Rated: B

First, we’ve teamed up with Fortune Magazine for a joint review of Blockchain Trends & Opportunities. Robert Hackett of Fortune will be joined by CBI Intelligence Analyst, Arieh Levi.

United Kingdom

Peer-to-peer lender RateSetter gets stamp of approval from UK financial watchdog (Business Insider), Rated: AAA

RateSetter applied for full authorisation in October 2015 and cofounder and CEO Rhydian Lewis said in a statement the process has been “a long but positive journey during which we have learnt a lot, improved our infrastructure and implemented important changes, notably making the business more transparent.”

RateSetter has increased the amount of market data it makes public and earlier this month announced plans to simplify early access for investors to their money.

“Authorisation is a milestone but not an end in itself and we look forward to working with the regulator and all stakeholders to continue to deliver good customer outcomes and to grow RateSetter.”

The Growth of P2P Lending: Is It Sustainable? (The Market Mogul), Rated: AAA

According to data gathered by AltFi lending volumes through P2P platforms achieved a staggering compounded annual growth rate of 110% between 2011 and 2016 and shows little sign of letting up this year.

However, there are some indications this honeymoon period for the industry may be over as the UK’s inflation rate hit 3.0% last month piling pressure on the Bank of England to raise interest rates. This is an understandable worry for the industry, as much of the lending it facilitates is higher risk than that of the traditional banking sector.

Furthermore, there are several emerging industry trends, which are likely to boost its resilience to deteriorating economic circumstances.

  1. Consolidation- While nearly 100 platforms are operating in the UK a resilient oligopoly is emerging. This is made up of the markets four largest lenders: Zopa; Funding Circle; LendInvest and Rate Setter who cumulatively facilitate over 70% of lending volume.
  2. Securitisation – Previously, P2P platforms lacked the scale to make securitisation economic and this new trend will likely provide a further edge to the industries established participants.
  3. Diversification

Zopa: more risk, same reward (FT Alphaville), Rated: AAA

Zopa, the world’s oldest “peer-to-peer” lender, has long focused on low-risk borrowers. The weighted average interest rate the 12-year-old company charges its British customers has never gone higher than 10 per cent and was as low as 5.6 per cent in 2013. While startups like Wonga focussed on the high returns available from borrowers who are under-served by financial institutions, Zopa has largely competed at the “prime” end of the spectrum with high street banks. The returns are lower, but so too are the risks, including to its reputation.

In recent years, Zopa has added riskier borrowers to help drive growth. (It’s worth saying that it is still miles from Wonga territory.) The weighted average interest rate across its portfolio has grown from 5.8 per cent in 2014 to almost 8.8 per cent in 2017:

Source: Financial Times

Zopa has been taking on more risk to achieve pretty much the same returns as when it made fewer risky loans.

Source: Financial Times

Starting small: what support do small scale housebuilders need? (Prospect Magazine), Rated: A

Britain has seen its population of small housebuilders shrink by 80% in a single generation as market dominance has passed to an entrenched group of major players – among the top 10 UK housebuilders, none was founded after 1990. The disappearance of small and medium-sized housebuilders from the UK – defined as companies that complete between one and 100 units a year – has seen their numbers fall from more than 12,000 in the mid-1980s to about 2,400 today, according to research by the non-bank mortgage lender LendInvest.

China

Qudian raises $ 900 mln in biggest U.S. listing by a Chinese fintech firm (Fidelity), Rated: AAA

Chinese online micro-credit provider Qudian Inc said it raised about $900 million in an IPO that priced above expectations, underscoring robust U.S. investor demand for fast-growing Chinese companies.

The offering from Qudian represents the biggest-ever U.S. listing by a Chinese financial technology firm. It is also the most high-profile company to take part in a resurgence of U.S. listings by Asian firms this year.

Qudian IPO feeds debt-hungry Chinese millennials (The Star), Rated: AAA

Qudian , an online microlender backed by e-commerce giant Alibaba’s financial unit, priced its U.S. listing above its expected range on Tuesday, says Reuters.

It offers fast growth, low default rates and, unlike many tech startups, is already profitable. At $24 per share, the final price represents a 2018 PE of 13.8, compared to 13.0 for smaller U.S.-listed online lender Yirendai.

China’s household debt relative to income is still low, and consumer credit is underpenetrated at 7 percent of gross domestic product, versus 20 percent in the United States, says Goldman Sachs.

Backed by Alibaba’s Ant Financial, Qudian lends cash to young Chinese consumers such as white collar workers, and advances credit so they can buy goods online and pay for them in monthly installments. The company provided $5.6 billion to 7 million active borrowers in the first half of 2017.

The sale of 37.5 million shares in Qudian has already raised about $900 million, making it the biggest U.S.-listing by a Chinese company this year, the report said. The offering values Qudian at as much as $7.9 billion, the report added.

China’s Qudian is about to go public and it could be the largest Chinese listing in the US this year (CNBC), Rated: A

Online micro-lending company Qudian is about to go public at the New York Stock Exchange on Wednesday, and it’s set to be one of the largest U.S.-listed floats by a Chinese company this year.

In its prospectus, Qudian said it was offering 37.5 million American Depository Shares with a float price range of $19-$22 per share. The company said it could offer up to 43.1 million shares if underwriters exercised an option.

LCQ22: Promoting equity crowdfunding activities in Hong Kong (7th Space), Rated: A

Question:

In recent years, raising funds through crowdfunding activities is becoming increasingly popular among enterprises worldwide, and the governments of quite a number of countries have introduced legislation to regulate raising funds through crowdfunding activities. On the other hand, the Financial Services Development Council (FSDC) released on March 18 last year a report entitled Introducing a Regulatory Framework for Equity Crowdfunding in Hong Kong, which explored options for establishing a framework and a regulatory regime to promote and, at the same time, regulate equity crowdfunding activities in Hong Kong. So far, however, the Government has not yet announced any specific measures to promote equity crowdfunding activities.

Reply:

(1) We note that crowdfunding activities might come in different forms, including equity crowdfunding (ECF) and peer-to-peer (P2P) lending. The regulatory approaches towards these activities vary globally across jurisdictions in view of the nascent nature of the business. While some economies have developed dedicated new regimes, others leverage existing rules to regulate such activities.

(2) At present, parties engaging in crowdfunding activities in Hong Kong (e.g. where the activity involves an offer to the public to purchase securities, including shares, debentures or interests in collective investment schemes, or where the platform offers its own funds to borrowers) may be subject to the provisions of the Securities and Futures Ordinance (Cap. 571), the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) and the Money Lenders Ordinance (Cap. 163), depending on the specific structure and features of the relevant arrangement.

European Union

Citi fosters Israeli fintech to meet changing needs of financial sector (The Times of Israel), Rated: AAA

Israeli startup Innovative Assessments (IA) says financial lenders like banks are missing out on huge numbers of potential clients because their criteria for handing out credit are too stringent and do not take the full picture of the client into account.

As a result, banks are effectively cutting themselves off from lending out money to large segments of the population, and many borrowers are denied access to affordable credit.

IA wants to help solve this problem. Banks should not only look at financial information to assess creditworthiness, IA says, but also at personal character, which is a whole new dimension of data that is missing from today’s credit scores. So, IA has come up with an idea to help lenders do this.

IA has developed patent-pending software that uses advanced psychometrics for credit scoring.

“Our algorithms look at people’s preferences towards certain financial behaviors,” added Fine. “And while there are no right or wrong answers, we can also identify people who may be responding insincerely.”

SeerGate, a real-time payments firm, was acquired by MyCheck in May 2015 while Ramat Gan-based Sling, whose platform allows micro-merchants to accept electronic payments from consumers via smartphones, was snapped up by Avante in July last year.

NSKnox has created a Digital Notary based on cooperative software that allows a secure transaction approval for banks and organizations, the company says. The software, which uses algorithms, allows two or more blind witnesses — who are actually financial or other kind of organizations — to help independently authenticate, authorize and detect fraud while verifying business transactions.

A total of 68 startups, including nine in the latest brew, have taken part in Citi’s Israel Accelerator program since it was set up in November 2013 in Tel Aviv.

Citi provides the entrepreneurs access to experts within the company globally to bounce ideas off of and the opportunity to use the bank’s huge infrastructure as beta sites. The banking giant does its mentoring and fostering pro bono, without taking any stakes in the companies it fosters.

The graduates of Citi’s program, which include startups like Paykey, Paybox and Vatbox, have raised a total of $300 million to date, according to data provided by Citi, and there have been two exits, with Sling and SeerGate having been acquired.

International

Spanish bank launches money-transfer app focused initially on US-Mexico remittances (TechCrunch), Rated: AAA

BBVA, Spain’s second-largest bank that snatched up mobile banking startup Simple for $117 million back in 2014, is now entering the mobile money transfer business with today’s launch of a new app called Tuyyo. The app, which is available on both iOS and Android, is focused on the $73 billion annual market for remittances to Latin America and the Caribbean from the U.S.

However, the service is initially launching with money transfers from the U.S. to Mexico, where the average amount sent by U.S. workers is about $1,900 per year, says BBVA. It also notes that the U.S. to Mexico corridor sees over $27 billion flowing between the countries annually, making it one of the world’s largest.

Ripple & the Gates Foundation Team Up to Level the Economic Playing Field for the Poor (Ripple), Rated: A

Many of the world’s poor in developing countries — nearly 2 billion, according to the World Bank — struggle to lift themselves out of poverty simply because they don’t have a bank account or financial services.

However, a new collaboration supported by the Bill & Melinda Gates Foundation will change that. Ripple, in partnership with Dwolla, ModusBox, Software Groupand Crosslake Technologies, with funding and support from the Gates Foundation, developed a new open-source software called Mojaloop for creating a real-time, interoperable payments platform on a national scale to reach the world’s poor with essential financial tools.

Leveraging the power of the Interledger Protocol (ILP), Mojaloop offers a way for financial providers, governments and mobile network operators to simplify and reduce the cost of developing inclusive payments platforms.

Securities markets: standing at the crossroads (Banking Technology), Rated: A

Financial technology has the potential to radically transform the securities industry. The fast pace of change could lead to disintermediation, according to an Iosco study.

Key trends identified in the report include:

  • Greater availability of data
  • Exponential growth in computing power allowing the analysis of ever larger data sets
  • Broader access to and the decreasing cost of goods and services
  • Increasing disintermediation and re-intermediation
  • Demographic and generational changes

Innovative fintech business models are disintermediating and re-intermediating certain regulated activities. For example, online equity crowdfunding platforms intermediate share placements and disintermediate stock exchanges and underwriters; peer to peer lending platforms intermediate or sell loans and disintermediate banks and lenders, and robo-advisers provide automated investment advice and thereby disintermediate traditional advisors.

Beginning with bitcoin in 2009, cryptocurrencies have also seen their prominence rise due to some of the qualities that they share with gold, the most prominent of which is their scarcity.

With the emergence of today’s digital age, a startup called GoldMint is seeking to alter this trend with a new means of exchange for physical gold, with transactions occurring over a blockchain-based platform.

GoldMint’s platform will leverage the private and individual gold trading market, including potentially the management of larger physical stocks such as those in central banks. It will also deliver an electronic payment solution tethered to physical gold, as well as a gold-backed peer-to-peer lending system.

There are two options for trading GOLD for fiat or cryptocurrencies. First, there is a method for seeking a GoldMint-guaranteed buyback. And second, a loan can be requested. For either option, the process is as follows:

  • Through the use of a special app which is not yet available, GOLD can be transferred as collateral to a designated GoldMint account.
  • GoldMint utilizes the current price of gold, as set by the LBMA, to fix the rate of a loan.
  • GoldMint requires the customer to undergo its know-your-customer (KYC) process as well as consent to GoldMint’s loan terms to receive the loan. Various repayment options for the loan amount and the means of repaying it are then offered.
  • If a customer defaults on repayment, their GOLD cryptoassets are transferred to GoldMint.

GoldMint also has a process for converting gold into GOLD tokens and reconverting these tokens into gold for cross-border passages.

Australia/New Zealand

‘Robo’ financial advice on the way (Radio NZ), Rated: AAA

The Financial Markets Authority has decided to allow financial services companies to provide so-called “robo-advice” to individuals.

Such methods are widespread around the world, but New Zealand law requires any financial advice to be given by a human adviser, and law changes to allow advice to be given by a computer programmes are not expected to be passed until 2019.

Companies wanting to offer robo-advice will have to apply to the FMA for an exemption.

FMA fast-tracks personalised robo-advice with exemption (NZ Herald), Rated: A

The Financial Markets Authority will let Kiwis access personalised automated financial advice, known as robo-advice, with an exemption kicking in before a legislative overhaul of the sector.

The market watchdog sought feedback on the proposal in June and today decided to expand the range of products robo-advice can cover to include mortgages and personal insurance, it said in a statement. Providers wanting to offer the service will need FMA approval on the good character of directors and officers and satisfy the regulator of their capability and competence. Another round of consultation is needed to finalise the exemption and the FMA is aiming to start the process early next year.

Banks readying their roboadvisers (Stuff), Rated: A

Big banks are planning roboadvice services, but only BNZ has revealed how far advanced it is.

Westpac and BNZ have both told the Financial Markets Authority (FMA) they expect to launch roboadvice services, which could close the “advice gap” by using artificial intelligence (AI) systems to give customers advice on things like KiwiSaver, insurance and mortgages.

The banks’ intentions were revealed in submissions on whether the FMA should use its “exemption” powers to allow roboadvice services to operate despite current law only allowing personalised advice to be given by a human being.

ANZ and Kiwibank’s intentions were blacked out in their submissions, released by the FMA.

FMA allows personalised robo-advice; applications open early 2018 (FMA), Rated: B

Submissions to the consultation focused on a number of themes:

  • Strong support for an exemption from the current laws preventing personalised robo-advice.
  • Opposition to financial limits and product exclusions.
  • Robo-advice should meet the same standards as those that apply to authorised financial advisers (AFAs).
  • Exemption applicants should be pre-approved or licensed.
  • Exemption conditions should be aligned with new advice regime requirements.

The FMA has decided not to impose financial limits on personalised robo-advice and the eligible product list has been expanded to include mortgages and personal insurance products.

Companies seeking to offer personalised robo-advice will have to provide the FMA with good character declarations for directors and senior managers as well as information showing they have the capability and competence to provide the robo-advice service. The exemption conditions will also be designed so that the robo-advice service is provided in a manner that is consistent with AFA requirements.

A summary of the submissions can be found here. 49 submissions were received by the FMA. 47 are being published.

India

P2P lending platform Lenden Club gets Rs 3.5 cr in equity investment (India Times), Rated: AAA

Mumbai-based peer-to-peer lending platform Lenden Club has raised $500,000 almost Rs 3.5 crore in equity investment from three major investors Venture Catalyst, Anirudh Damani and an Indian venture capital fund. Venture Catalyst and Anirudh Damani had put in seed investment of Rs 1.5 crore in the company as well in May last year.

Whither P2P lending by NBFC’s (Bar and Bench), Rated: A

The Reserve Bank of India’s notification on peer to peer (P2P) lending issued on October 4 this year (“Regulations”) seems to have only added an element of ambiguity in the minds of stakeholders. Eighteen months since the RBI issued the consultation paper and it is not certain how and whether stakeholder comments have been internalised in the paper.

The definition of a “peer to peer lending platform” as an intermediary providing the services of loan facilitation, may unintentionally bring into the purview, a wide variety of operators. As a literal construct, this does not seem to take into cognizance the various types of business operations in the industry simply because it doesn’t clarify whether this excludes a model that doesn’t provide syndication. Theoretically even an internet search engine, business correspondents and lead generators could fall under this definition.

This must be the first category of Non-Banking Financial Company (NBFC) to not function in the manner in which it has been typically designed. The new Regulations set a precedent to regulate entities as NBFC’s that undertake neither lending nor credit enhancement.

The new Regulations also seem to bring into its ambit, an “off-line” P2P: the very essence for P2P start-ups has been low transaction costs thereby resorting to the online medium for such lending.

Asia

SoftBank in talks to raise second, possibly larger than $ 100b, fund (Deal Street Asia), Rated: AAA

Japanese Internet conglomerate SoftBank is in early discussions to launch another fund that can possibly be larger than its existing $100 billion Vision Fund, Recode reported, citing anonymous sources.

The Information, in its report, noted that SoftBank got the right to prevent online lender Kabbage, in which it led a $250-million investment in August, from selling parts of itself, buying other companies, selling stock below a certain price or borrowing money beyond a certain level.

Middle East

S&P says fintech revolution unlikely to hurt GCC bank profitability (The National), Rated: AAA

The fintech revolution sweeping finance will lessen the profitability of banks in the GCC when it comes to parts of consumer banking – such as money transfers and foreign exchange – but overall it is unlikely to hurt the ability of regional lenders to make money.

The rating agency noted that the GCC banks that it assigns ratings to get about a quarter of their revenues from fees and commissions and foreign exchange gains and, while a big portion that is generated from lending and advisory activities, some of that money comes from transfers and currency exchange.

Investments in technology and digitisation are also timely for UAE banks as profitability has been on the wane in the wake of the biggest oil price slump since the 2008 financial crash. Lenders are fortunate that this country has one of the highest smartphone penetration rates in the world.

Fintech threatens Gulf bank jobs (Arab News), Rated: A

The rising influence of financial technology (fintech) firms in the Gulf could eventually threaten jobs and profitability at the region’s banks, warned ratings agency S&P Global.

“This would push some banks to adjust their operations through increased digitalization, branch network reduction, and staff rationalization,” said Mohamed Damak, S&P Global Ratings credit analyst in the report.

Already, the region’s banks are starting to rethink their business model.

In early October, Mashreq launched one of the region’s first full service digital branchless bank — Mashreq Neo — as well as a new new digital mobile wallet service called Mashreq Pay — that can be used to make purchases around the world.

The Dubai-based bank has also started to use robotics in the third quarter to manage open account trade payments, according to the bank’s Q3 statement.

Canada

Lending Loop invests in Canadian board game cafe chain (P2P Finance News), Rated: AAA

LENDING Loop, a Canadian peer-to-peer lending platform, has agreed to finance Snakes & Lattes, a cafe chain where people can play and buy board games.

Amfil Technologies, which owns Snakes & Lattes, said on Tuesday that the financing will be used to fuel the expansion of the brand across North America.

Amfil Technologies Inc. Provides Update on Audit Completion, Uplisting / Dividend, Franchising and General Company Operations (Marketwired), Rated: A

Snakes & Lattes has entered into an EXCLUSIVE partnership with Lending Loop, Canada’s first fully regulated peer-to-peer lending platform focused on small businesses. This partnership will fuel and facilitate the mass expansion of the Snakes and Lattes brand across North America, while simultaneously preserving shareholder value. This is the first time in history that Lending Loop has made a direct partnership to finance a growing company, and they will be conducting a mass marketing/advertising campaign to promote both Lending Loop and Snakes & Lattes.

In contrast, Amfil is collaborating with financial innovator, Lending Loop, to fuel the subsidiary’s growth at a fair market rate with flexible cash repayment terms.

Web’s creator to fintech players: Beware the blockchain Frankenstein (American Banker), Rated: A

Internet pioneer Sir Tim Berners-Lee looks at the fintech landscape today and sees something familiar — a creative ferment that reminds him of the early web. He also sees some mistakes in danger of being repeated.

Authors:

George Popescu
Allen Taylor