News Comments Today’s main news: OnDeck prices $225M securitization. Prosper is looking for new whole loan contributors for securitizations. Funding Circle lends 123M GBP to businesses in March. Funding Circle SME considers new equity raise. Ant Financial to raise $9B. Today’s main analysis: Competition among lenders worth $27K to borrowers last week. The grad degrees that deliver more debt than […]
OnDeck Capital prices $225M securitization. AT: “It’s good to see OnDeck getting back in the game. I also think 2018 is shaping up to be the year of securitizations, which had a good year last year. It could shape up to be better this year.”
The grad degrees that deliver more debt than income. AT: “This is very interesting. Optometrists pay the more of their income to student loans than dentists, lawyers, scientists, engineers, and nurses. Actually, more than anyone. However, veterinarians have the highest median loan balance as a percentage of annual income. This is a must-read for lenders that offer student loans for graduate study, and for specialist loans based on professions.”
OnDeck announced today that it has priced $225 million initial principal amount of Series 2018-1 Fixed Rate Asset-Backed Notes (the “Notes”) in a private securitization transaction. The Notes, which will be issued in four classes, were priced with a weighted average fixed interest rate of 3.75% per annum. It is expected that DBRS, Inc., in satisfaction of one of the closing conditions, will rate the Notes at closing. The anticipated DBRS rating for the Class A Notes would be the highest rating ever for a class of notes in an asset-backed securitization of small business loans in the online lending industry.
The Notes will be issued by OnDeck Asset Securitization Trust II LLC (the “Issuer”), a wholly-owned subsidiary of OnDeck. The Notes will be secured by and payable from a revolving pool of OnDeck small business loans. The Issuer will be the sole obligor of the Notes; the Notes will not be obligations of or guaranteed by OnDeck or any of its other subsidiaries. OnDeck will act as the servicer of the loans securing the Notes.
The net proceeds from the Notes offering will be used by the Issuer together with other available funds to optionally prepay in full a prior notes issuance (the “Old Notes”) that had a weighted average interest rate of 4.7% at December 31, 2017.
Prosper will continue to issue ABS from its long standing PMIT shelf, but is looking for new whole loan contributors for its securitizations as it eyes the end of a loan consortium agreement inked last February.
Prosper’s securitizations will retain the multi-seller deal format, in which whole loan investors contribute collateral to the securitizations, said three people speaking with GlobalCapital on the sidelines at the LendIt Fintech USA 2018 event in San Francisco.
Former Twitter chief operating officer Anthony Noto just finished his first month on the job as CEO of SoFi, the “unicorn” financial services company whose former CEO was booted late last year after allegations of sexual misconduct.
Axios spoke to Noto about the new job, growth plans, recruitment and that long-rumored IPO. The quick read:
He had always wanted to be a CEO, and felt he had accomplished what he set out to do at Twitter.
He believes SoFi is a cultural reclamation project, but that the core business is strong.
SoFi wants to launch a membership-type credit card.
The firm has no plans to either IPO or fundraise in 2018.
On joining SoFi as CEO, after stops at Twitter and Goldman Sachs:
“This opportunity leverages all of my professional background as a tech person, as a consumer-facing person and from a financial industry perspective.
Coming off one of the worst months in recent memory, March saw big declines in the public equity markets. The SCP SMB Index was the least impacted, retreating 4.1% compared to all other major indices, which declined more than 5% during the month.
The SCP SMB Index declined 4.1% in March. The S&P 500, Nasdaq, and Dow Jones all experienced losses during the month of 5.1%,5.2%, and 6.1%, respectively.
Returns since inception (indexed at Jan 4, 2016)
Since the inception of the SCP SMB Index in January 4, 2016 (where 100% is no change), here are the returns through March 29, 2018:
We calculate the Mortgage Rate Competition Index weekly as the median spread between the lowest and highest APR offered by lenders in our marketplace. By calculating this spread, we hope to show consumers how much they stand to save by comparing rates during the lending shopping process.
Across all purchase loan applications on LendingTree for the week ending April 8, the index was 0.59, up 0.03 from the previous week.
How big of a deal is it to nab a mortgage rate that’s 0.59% lower than the competition? Over 30 years, that could translate to $27,339 in savings on a $300,000 loan (see Mortgage Savings Tracker graphic below).
The index was wider in the refinance market at 0.65, up from 0.63 the prior week.
Borrowers shopping for refi loans could have saved $30,329 by shopping for the lowest rate.
Credible’s analysis of student loan debt levels and salaries across 16 graduate school majors shows that the most important consideration isn’t how much debt you’ll take on to obtain an advanced degree — or how much you’ll earn after graduation — but achieving the right balance between the two.
A Credible analysis of more than 91,000 graduate degree holders with student loans found significant debt and income differences across 16 graduate degree majors.
Dentists, optometrists, and veterinarians tend to have student loan debt that’s the most out of balance with their earnings soon after graduation.
Even years out of school, optometrists, veterinarians, physician assistants, dentists and pharmacists devote more than 10 percent of their monthly income to their student loan payments.
Computer scientists, MBA holders, people with masters in finance degrees (not MBA) and nurses allocate the smallest proportion of their monthly earnings to pay down their student loan debt (between 6.4 and 7.1 percent).
AutoGravity, a FinTech pioneer that empowers car shoppers to buy and finance any new or used car in minutes from their smartphone, today announced a partnership with Westbon, the first lending platform for international students in the U.S. Through this unique partnership, Westbon financing options are now accessible to international students who use AutoGravity to finance their vehicle in the United States.
Finitive LLC (www.finitive.com), a financial technology platform providing institutional investors with direct access to alternative lending investments, announced today the launch of its zero-fee platform.
Finitive, which commenced operations in August 2017, has received commitments for transactions with an aggregate capacity of $1.3 billion. Several asset managers and banks have committed capital for transactions in the consumer, renewable energy and commercial real estate lending sectors.
Lend Core Inc., parent company to NSR Invest and LendingRobot, announced today the close of its first external financing round with FinSight Ventures. The investment will help the company expand its investor outreach, accelerate product development and strategic partnerships. FinSight Ventures General Partner, Alexey Garyunov, and Investment Director, Maxim Nazarov, will join Lend Core’s Board of Directors.
The company’s core technologies drive innovation through interactive analytics, custom modeling, algorithmic investing, order execution, portfolio management, and transparency through blockchain application.
One blockchain startup, Alchemy, is using the technology to create a peer-to-peer (P2P) lending system that ensures transparency and guarantees security to its participants.
Alchemy works by matching lenders and borrowers for the requested amount of capital. Because of the instant, global, and secure peer-to-peer interactions that blockchain facilitates, costs of service are kept incredibly low. Interest rates are kept as close to a free market determination as possible, ensuring a fair consumer experience that often eludes customers of big banks.
Quovo, a data platform that provides connectivity to consumer financial accounts, announced today at LendIt Fintech USA, new products that equip lenders with insights to streamline and improve key processes in the lending value chain, adding to Quovo’s ability to assist with underwriting, funding, and ongoing servicing workflows.
Income + Expense analyzes and summarizes recurring and irregular income and expense streams, creating a fuller picture of cash flow in linked accounts. Balance Estimator uses historical cash flows to predict future account balances up to 30 days in advance, giving loan servicers a key perspective on when customers can most
effectively meet their payment obligations.
Income + Expense and Balance Estimator provide valuable cash-flow-based insights that can be combined with Quovo’s core data products—such as Aggregation and Authentication—to create end-to-end solutions for lending, from the first loan application to the last servicing event.
MoneyLion today announced that it will be expanding its popular MoneyLion Plus membership with a full suite of checking and savings capabilities. With these additions, the new MoneyLion Plus membership will provide a comprehensive banking option for anyone with access to a smartphone, becoming the one and only financial membership consumers need to build wealth, improve credit and manage day-to-day spending.
DebtBench: We are creating an Open Banking marketplace structure where business borrowers can connect and gain access to capital at lower rates, in far less time, than they would by going to a brick-and mortar institution. According to our estimates, banks, credit cards and other lending institutions generate $870B+ each year in fees and interest from over $3.2 trillion in lending activity. The interest rate spreads gained by financial institutions can be minimized.
Intrinio, a fintech company providing access to over 200 financial data feeds, will be releasing their API v2 this quarter.
Intrinio’s API v2 is built on the OpenAPI specification, which is a community-driven, open source, standardized API spec within the OpenAPI Initiative (OAI), a Linux Foundation Collaborative Project. This allows both humans and computers to discover and understand the capabilities of a service without requiring access to source code, additional documentation, or inspection of network traffic.
An Aite Group study finding has the answer. More than 75 percent of 22- to 49-year-old consumers are interested in this kind of advice and guidance around reducing debt, achieving savings goals, and tracking their finances, as well as optimizing their overall financial health.
Although many people turn to credit cards to help them build credit, there are other tools individuals can use to improve their credit scores. Since some people have trouble managing credit card debt and do not want to pay high-interest rates, they often turn to alternatives to help them build a solid credit history. Here are a few of those alternatives.
Loans to Help Build Credit
Some banks and credit unions will offer their members what are known as credit builder loans. The goal is to pay off the loan before the maturity date.
Instead of going through a traditional financial institution, borrowers can apply for loans offered by individual investors. Known as peer-to-peer loans, consumers can apply using a reputable P2P lending website or service. The loans typically offer reasonable interest rates, and this type of financing is completely legitimate.
Liberis, the London-based fintech that provides finance for small businesses, has raised £57.5 million in new funding to help support the company’s growth. The alternative finance provider makes loans against a company’s future credit and debit card sales.
The majority of the new capital being raised by Liberis is debt, which in turn will enable it to issue more loans. The facility is being provided by British Business Investments (the commercial arm of the tax payer-funded British Business Bank), Paragon Bank, and BCI Finance.
In addition, Blenheim Chalcot has made an equity investment into Liberis. The so-called “digital venture builder” also previously backed Clearscore, the credit scoring startup recently acquired by Experian.
■ Peer-to-peer lending is becoming popular in low interest times, but it’s controversial
Peer-to-peer remains controversial, especially since the government approved a new type of Isa, the Innovative Finance Isa (Ifisa), in April 2016 that allows customers to receive income from the peer-to-peer loans they make free of tax.
There are many questions you will need to ask before lending your cash. Here are some of the most important:
What returns can I really get?
When faced with the best-buy rate on an instant access current account (around 1.3 per cent according to Moneyfacts), or on a five-year, fixed- rate bond (2.75 per cent), it’s hard not to find the headline rate you would receive from a peer-to-peer lending site very attractive.
Is the platform a member of a reputable association?
The Peer-to-Peer Finance Association is the main trade body, though not all companies involved are members. Check membership at p2pfa.org.uk. Robert Pettigrew, director of the association, says: ‘Investors should understand the nature and level of risk to which they are exposed, so that they can ensure that it is commensurate with their individual risk appetite.
Ant Financial Services Group, carved out of his e-commerce giant Alibaba Group HoldingLtd.BABA -0.52%seven years ago, is preparing to raise $9 billion in a private funding round, according to people familiar with the matter. That ups a previous fundraising target of $5 billion.
Ant, which owns popular mobile payments network Alipay and is one of China’s largest non-bank lenders, is currently in talks with potential investors and demand for its shares has so far been strong, the people familiar said.
“Fintech is playing animportant role in China. Given the demands for consumer finance are not yet fully satisfied and credit system is not perfect, financial technology has a golden development opportunity in China, which leads the world in data mining and processing capabilitiesin the mobile Internet market.” said Simon Cheng, President of X Financial, a leading fintech company in China at LendIt USA recently.
The popularity of blockchain technology has grown over the last several years as the hype surrounding the cryptocurrency market has thrived. Nearly every industry is currently exploring options on how they can use this disruptive technology to make a difference in the market. Its impact on various sectors has attracted big technology companies like Microsoft Corp. (NASDAQ:MSFT) and International Business Machines Corp. (NYSE:IBM). They ventured into distributed ledger technology architecture to augment their existing businesses while simultaneously trying to exploit emerging opportunities in the industry.
Over the last two decades, the financial services sector has experienced a major technological shake-up, with emerging industries like fintech playing a vital role. PayPal Inc. (NASDAQ:PYPL) disrupted the payments industry by introducing online methods of payment. While some said credit cards and checks would be phased out in due time, they are still crucial products. It remains to be seen how long they will last, though.
On the other hand, peer-to-peer lending platforms like LendingClub Corp. (NYSE:LC) and Zorpa reinvented lending and, in the process, sparked debates on whether they could eventually overtake traditional lending in the credit market. Nothing of the sort has come to pass, yet. In fact, after peaking in the first half of the current decade, peer-to-peer lending may have started to experience a slowdown in growth.
In this article, we explore two areas that have attracted significant interest by FinTech innovators:
Marketplace lenders (MPLs) that are disrupting traditional credit-underwriting models with lower overhead, higher transparency, faster loan approval and higher returns on capital.
Blockchain-based supply chains with the potential to disrupt entrenched payments and credit processes by managing the physical and financial flows associated with commerce. In addition, we discuss approaches to IT spending and innovation that banks can take in response.
Ezira will utilize the delegated proof of stake decentralized consensus algorithm used by Bitshares, EOS, and Steem. Ezira will operate on a new public blockchain, will provide a flagship user application, and a multi-token circular economic model. It will have a fairer token distribution and will share drop 10% of the EZIRA asset onto the cryptocurrency community.
The Ezira network will offer users access to a suite of cryptocurrency and social media features during its release.
Users will receive content rewards for posting according to the number of votes and views that each post receives. Once per day, a content reward payment will be distributed according to the stake weight of the accounts that upvoted and viewed the content.
Payments using Ezira currencies will have zero transaction fees and will receive confirmation within the 3 second block time. Users send EziraCoin to a stealth address and send payments using a ring signature, and use ring confidential transactions to conceal the payment amount.
Users will be able to use peer to peer lending to earn interest by lending their funds to other users, based on collateral, independent verification processes, and established creditworthiness.
Last year Prospa passed a milestone of providing more than A$500m ($385m) in loans to 12,000 businesses.
The company offers loans of between A$5,000 and A$250,000, over a term of three to 24 months, with no security required for amounts of up to A$100,000. Its platform enables business owners to apply within 10 minutes, receive approval on the same day and funding within 24 hours.
Annual interest rates on Prospa loans vary depending on risk but typically start at roughly 12 per cent and stretch into the mid-20s.
Prospa’s growth has been supported by venture capital backers, with AirTree leading a A$25m funding round last year that valued Prospa at A$235m. The funds enabled the lender to boost its staff to 165, build a direct distribution channel and sign up 7,000 intermediary partners.
New survey results from US technology firm Oracle suggest Australians are less open, compared with consumers in other large economies, to engaging with the fintech revolution.
The survey, released on Wednesday, shows only 6.25 per cent of Australians regularly use a “fintech” bank, compared with 10 per cent in the United States, 12 per cent in Britain, and 40.5 per cent in India.
Despite a growing number of digital “robo advisers”, 9.75 per cent of local respondents said they used fintech wealth advisers services frequently, compared with 16 per cent in Britain and 21.5 per cent in United States.
P2P lending firm Faircent.com will soon be opening its API platform for developers. The move will enable new fintech entrants and offline businesses to leverage the company’s technological infrastructure to build new digital lending products, as well as to integrate existing solutions into their offerings.
Faircent.com’s technology stack offers a wide range of solutions pertaining to online lending such as borrower and lender verification, credit evaluation and underwriting, and payment collection and recovery, among others.
Loanzen, a peer to peer business loan marketplace startup, has raised an undisclosed amount of sum from Kae Capital. The Bengaluru-based digital lending platform had earlier raised an undisclosed seed funding from Angels through TracxnSyndicate.
The fintech firm will deploy fresh funds to expand operations. It also holds NBFC licence by RBI.
Fintech firms have exploded onto the financial scene in Singapore and other mature markets in Asia in recent times. Focusing on disruptive technologies like peer-to-peer lending, affordable digital payment solutions, and more accurate risk analysis among other things, these startups are winning over customers by replacing the service delivery model used by traditional banks with user-friendly technologies.
Fintech Companies Are Changing the Process of Loan Offtake
Have you ever heard about Crowdo, Capital Springboard, FundedHere, or MoolahSense? These are peer-to-peer online lending sites through which you can raise funds by sharing your story. These crowdfunding sites are revolutionising the alternative lending space through disintermediation, cost optimisation, quicker delivery, and technology modernisation.
Players like Skolafund provide deserving students a chance to get funded by potential funders for pursuing education in an affordable manner. They can match profiles and ensure that the right student meets the right funder.
SMEs, often ignored by traditional banking channels, have found their go-to source for funds. Crowd Genie, which started in 2016, is helping SMEs get loans through crowdfunding.
After witnessing the 2011 Egyptian revolution, former journalist Ahmed Moor decided to launch Liwwa, a peer-to-peer funding platform that would address the MENA region’s $240bn SME funding gap by lending money to growing businesses.
Together with co-founder and CTO Samer Atiani (former senior software developer at New York-based online retailer Etsy), Moor has managed to lend over $8m to SMEs across the region since the establishment of the Amman-based firm in 2013.
News Comments Today’s main news: Blend lands $100M investment. Funding Circle achieves ISA manager status. Hive raises over $8M. Innovate UK invests 700K GBP in Paybase. China Life, Baidu launch $1B internet fund. Klarna’s profits increase 138 percent. Today’s main analysis: Bank of America Merrill Lynch to implement AI. Today’s thought-provoking articles: Congresswoman asks FDIC to hold public hearing on […]
Congresswoman asks FDIC to hold public hearing on SoFi bank charter application. AT: “This elevates the conflict over SoFi’s application for a bank charter to another level. The bright side is, it could shine a spotlight on alternative lending and bring it to more prominent position within the general culture, which could lead to more business for alt lenders. Even if SoFi’s bid fails, it could benefit the industry as a whole.”
“Throughout the period December 11, 2014 and continuing through May 9, 2016 (the “Relevant Period”), the Individual Defendants breached their fiduciary duties to LendingClub by failing to institute adequate internal controls regarding financial disclosures, related party transactions, and data integrity and security, all while causing LendingClub to represent in the Registration Statement and a series of subsequent filings that such controls were sufficient.”
The suit has been filed by two shareholders; Kelvin Farley and Jay Fink.
Today, Congresswoman Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services, sent a letter to Federal Deposit Insurance Corporation (FDIC) Chairman Martin Gruenberg, calling for the FDIC to hold at least one public hearing on Social Financial, Inc.’s (SoFi) application to establish an Industrial Loan Company (ILC).
In the letter, Ranking Member Waters states that changes in the financial services industry and financial regulation necessitate a public hearing to examine the policy and legal implications of granting federal deposit insurance to ILCs generally, as well as to obtain greater input on the unique risks posed by granting it to a financial technology (fintech) company like SoFi.
I am writing to request that the Federal Deposit Insurance Corporation (“FDIC”) hold at least one public hearing on Social Finance, Incorporated’s (“SoFi”) application to establish an industrial loan company (“ILC”) to provide FDIC-insured Negotiable Order of Withdrawal (“NOW”) accounts and credit card products. As you know, because de novo ILC formations have been affected by regulatory and statutory moratoria for several years, the FDIC has not approved a deposit insurance application for a new ILC charter for some time. Since the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), changes in the financial regulatory regime and financial services industry justify a public hearing to examine the policy and legal implications of granting Federal deposit insurance to ILCs generally, as well as to obtain greater input on the unique risks posed by granting it to a financial technology (“fintech”) company like SoFi, a number of which I will discuss in more detail below.
Appropriate regulatory oversight of any ILC is an essential prerequisite to approving any application for deposit insurance backed by taxpayers. The FDIC has previously acknowledged the importance of strong oversight of any insured bank and its parent company when discussing oversight of ILCs. In reaction to a number of concerns previously raised on the regulation of ILCs, the FDIC even went so far as imposing several moratoria on its ability to approve ILC applications for deposit insurance in 2006 and 2007 to, in the words of former FDIC Chairman Sheila Bair in testimony before the House Financial Services Committee, “allow the FDIC to carefully weigh the safety and soundness concerns that have been raised regarding commercially-owned ILCs. At the same time… the moratorium provides an opportunity for Congress to consider the important public policy issues regarding the ownership of ILCs by commercial companies.”
While some experts have touted the possibility that fintech firms can help promote financial inclusion, others have underscored the challenges posed for our current regulatory regime to oversee these types of companies and have underscored the need for policymakers to carefully evaluate the consequences of allowing them access to deposit insurance and the Federal Reserve discount window. Thus, Federal regulators have taken a varying degree of actions focused on fintech companies and services. For example, while the Office of the Comptroller of the Currency (“OCC”), under its “Responsible Innovation” initiative, has proposed a Special Purpose National Bank Charter for fintech companies (“fintech charter”) questions have been raised about whether the benefits to consumers for this new charter will be widely and fairly shared, and whether there is adequate legal authority, let alone a clearly defined and modern regulatory framework, for such a fintech charter. Indeed, a lawsuit has been filed by state banking regulators challenging the OCC’s authority. As should be the case with the OCC and its proposal to use its authority to federally charter fintech companies, the FDIC should thoroughly consider the implications of offering access to the deposit insurance fund for ILCs that will result in expanding the type of institutions to it, like fintech firms. Fintech firms, whose operations cross state and international boundaries, and may exist entirely online, were undoubtedly beyond original congressional intent in permitting ILCs to access deposit insurance and it is appropriate for stakeholders to weigh in on whether it is appropriate for these firms to have this access without proper oversight of their parent companies.
The chartering of a fintech company as an ILC also raises a number of consumer protection concerns that the FDIC should consider. For example, the California Reinvestment Coalition (“CRC”) has opposed SoFi’s application on the basis of concerns with the institution’s Community Reinvestment Act (“CRA”) plan, as well as its intended approach to financial inclusion, fair lending, and consumer protection. CRC notes that SoFi’s business model targets “students from elite universities that have strong earnings and wealth potential,” and offers products and services “designed to exclude working class households.” CRC also notes that SoFi’s CRA plan is grossly inadequate, considering that: (1) SoFi’s assessment area will be limited to areas in Utah, but the company will accept deposits and operate nationally; (2) SoFi’s current core products are not designed to serve the “convenience and needs” of low- and moderate-income (“LMI”) communities in which the bank would operate, but rather are focused on serving SoFi’s members; and (3) SoFi’s CRA plan does not encompass measurable commitments to lending, investments, and services for LMI communities.
Two student loan refinancing companies, LendKey and Earnest, have changed their student loan refinancing interest rates in recent weeks, according to LendEDU.
Effective August 10th, LendKey’s variable interest rate range for their student loan refinance product was altered slightly. LendKey, a leading lending partner of both banks and credit unions, now offers a variable rate range between 2.67 and 6.31 percent for student loan refinancing.
This new variable rates for LendKey mark an increase on both the low and high ends of the range. Previously, the online lending partner offered a variable interest rate range between 2.52 and 6.16 percent since June.
Blend has landed a significant funding round to the tune of $100 million. The funding was led by Greylock Partners with participation by Emergence Capital. Existing investors joined in the round as well.
The Hive Project, which intends to build the world’s first cryptocurrency-based invoice financing platform, has raised 2,087 BTC, or over US$8.9 million, from 2,234 investors through its initial coin offering (ICO).
Using invoice finance, the business “sells” its outstanding invoices at a small discount to a financier. The business immediately receives up to 85% of the value of the invoice instead of having to wait the usual 30 to 90 days to get paid by customers.
Hive uses the Ethereum blockchain and smart contracts to assign a unique fingerprint to every invoice issued. These invoices are then tokenized and published on a blockchain, and made available as a shared source of liquidity for factoring and invoice financing.
JP Morgan CEO Jamie Dimon in his annual letter would agree that the banking system is safer and stronger today. Nevertheless, Mr. Dimon believes that economic growth and lending is below potential. For instance, JPM estimates $1 Tn in loans could have been generated in recent years generating an additional 50 bps in annual GDP growth thru regulatory reform.
The specific regulatory reform areas Mr. Dimon identified include:
Simplification of the annual stress-testing process
Release or enable banks to deploy excess capital towards small business loans, lower middle market, and near-prime mortgages
Rationalization of supplementary leverage ratios and operational risk capital
National servicing standards for the mortgage servicing market
Federal Housing Administration (FHA) reform
Complete securitization standards to encourage private capital and reduce exposure to taxpayers
Role for 3rd party risk infrastructure to strengthen markets
Large banks are increasingly playing the role of financial intermediaries that connect non-banks to the capital markets. Banks are providing liquidity facilities (“lending to the lenders”) and capital-light securitization programs. Although Yellen is right that lending continues to grow, critically, the nexus of credit formation–including for a majority of personal loans, auto loans, student re-fi loans, and even mortgages–now takes place between a consumer and a non-bank.
Under this new landscape, the soft underbelly of the credit markets has shifted from bank wholesale funding to non-bank wholesale funding. And when investor confidence seizes, the transmission mechanism connecting policy to the real economy can break down. Spreads widen, funding costs increase, and markets freeze exactly when policymakers seek to ease financial conditions.
Recently, Crowdfund Insider published an article about Marqeta signing a partnership with Visa on payments and loans. The marriage is designed boost innovations in commercial and consumer payments and online lending. Visa also made a strategic investment in Marqeta at that time to the tune of $25 million. Total investments in Marqeta now stand at over $70 million.
Isn’t this just all about borrowers getting a better interest rate [and investors earning more]?
Candace: Lenders are looking to increase renewals (repeat borrowers are easier to sell than new borrowers), beat out the stackers (top of wallet, top of mind) and decrease risk (new data on spending reduces risk for future loans). On the heels of 2016, these have become as important as the interest rate for the lender.
For the borrower, speed to funds has become increasingly important, and distributing loan funds to a card allows a way to immediately spend the funds without waiting for the funds to be deposited into the borrower’s bank account.
If Credit Cards drop their rates then they can become competitive. For Visa to partner with Marqeta – isn’t it just how the debt is carried? For the consumer / business, they are indifferent?
Candace: The rates apply to the underlying loan per the agreement between the lender and the borrower, not to a prepaid card that is used to assist with making purchases. The prepaid card bears no interest charge. The terms for the loan (from which the loan proceeds are distributed to the card) continues as agreed upon between the lender and the borrower. That debt does not change.
Ahead of Riskalyze CEO Aaron Klein’s speaking engagement at the Benzinga Fintech Summit in San Francisco, Benzinga caught up with him to learn more about how the company is upgrading financial advice.
BZ: How did you go about identifying this need for financial advisors? What kind of research did you do?
What’s interesting is that we invented a new space. There was no risk-alignment platform that helped advisors do that. There were questionnaire products that answered half the question, there were a few portfolio analysis tools that would answer the other half, but we invented the concept of the risk number. We can help advisors pinpoint the client’s risk number and then we score portfolios using that number.
Klein: I’ll talk about the two different sides of the coin. A lot of the innovation was figuring out those sides of the coin and bridging the two together. On the one hand, we took some concepts that had really never made it out of academia and into everyday use. They’re centered around the economic framework called prospect theory, which won the Nobel Prize for economics in 2002. We took prospect theory and built a bunch of proprietary technology on top of it to understand how to move up and down a client’s personal financial spectrum to understand when they prefer risk and when they prefer certainty.
Once we do that, we built a mathematical formula behind the scenes that lets advisors turn that into the client’s risk number. That’s how the client-side works.
On the flip side, we need to match that up with a portfolio. So, the inputs for that piece of the technology are largely market data. We effectively take daily pricing data for nearly a quarter-million securities — every U.S. stock, ETF, mutual fund, variable-annuity sub accounts, SMA third-party money managers, proprietary non-traded strategies, all kinds of different products. We take all the data for those, we have new data streaming into our systems every night on those securities.
American Express is in the hot seat this week as the Consumer Financial Protection Bureau (CFPB) ordered the credit card company to pay out a very large amount to consumers in Puerto Rico and the U.S. Virgin Islands. It’s being confirmed that over a 10-year period, American Express provided inferior card offerings to people in those territories than what was being offered in the U.S.
Here are the numbers:
$240 million | Amount Prodigy Finance raised in its venture capital equity funding round
$96 million | Amount CFPB ordered American Express to pay out to affected Puerto Rico and the U.S. Virgin Islands consumers
$200 | Starting point for potential Walmart installment loans
According to statistics from the U.S. census bureau, Millennials make up about 83 million of the nation’s current population. The unique experiences of the Millennials will shape the way we buy and sell, forcing companies and businesses to adjust their business strategy for decades to come.
For example, a growing number of Millennials are choosing to live with their parents. They have been reluctant to buy items such as cars, music, and luxury goods. Luxuries that used to be important for previous generations are not as important for Millennials. They are reshaping the real estate market and are responsible for the growth of the sharing economy.
A recent survey of Interns conducted by Goldman Sachs in 2013, found out that 30% of millennials do not intend to purchase a car in the future. 25% said they will only buy one if there is a need for it, otherwise they are indifferent. Another 25% said buying a car is important but not a big priority. 15% said purchasing a car is extremely important. And the last 5% do not feel strongly about it.
A recent report shows that student loans have increased by 84% over ten years with an average student having a loan balance of $29,000.
Online banks are now offering much higher rates on savings accounts — significantly higher than the current rates at traditional, bigger banks. So with that in mind, why not just move your savings to take advantage of the bigger return?
However, the platform has no immediate plans to launch its IFISA product, telling customers earlier this week that it intended to roll out the tax-free investment wrapper “before the end of the tax year.”
Fast forward to today, we’ve originated over £3.2 billion worth of loans through the platform. In the UK, that lending has helped create about 60 thousand jobs, and the £2.5 billion of loans has created about £5 billion of GDP or gross economic value added, according to an independent survey by the Centre for Economics Business Research.
In fact, we think we make up about 2 per cent of the total money that’s going to gross-lending small businesses. And if you actually look at the money going into the economy, we make up about a third of net new lending— which is the preferred Bank of England measure. We did about 300 million versus 600 million in the entire banking system in the first half of this year.
Say a small business decides to come to you: what is it they’re getting that they don’t get with a bank?
We turn around loan applications specifically within 24 hours. We are better in that we give better service; everyone can find an account manager.
We’re cheaper, in that our prices are very, very competitive, and often we’re often providing cheaper loans than businesses would be able to get at the bank. We also don’t have the overheads that banks have.
We all know that Brexit is going to shake up the financial sector. What can Funding Circle do to help businesses rise to the challenge?
Net lending by banks fell by 220 million in Q4 last year. Ours actually rose to 167 million.
On top of that, we’ve also had large insurance companies like Aegon, which is a big Dutch insurer, commit to fund £160 million in year one, but actually committed over a four-year period to purchase our loans. The fact a large foreign insurer would want to do that shows that actually, despite Brexit, there’s a vote of confidence in the UK economy, particularly in small business.
There’s been much collective gnashing of teeth over the last few months at the evolution of peer to peer lending, as practised by Zopa, Ratesetter and most latterly Funding Circle. The big bone of contention has been a shift amongst all three – with FC falling into line just a matter of days ago – to a passive lending model. This means that lenders on said platforms now lend passively to a full slice of borrowers rather than picking their borrowers individually. To the critics this implies that the traditional peer to peer (P2P) model is slowly dying out. If you’re not lending to your peers, don’t you just sound like any other finance business such as a bank?
I’m not convinced by this criticism. Collectively a crowd – many peers – are still lending to another crowd, but just in a format that looks closer to a passive, collective fund basis rather than one on one. There is no bank balance sheet lurking around and the ‘crowd’ still sets the rate at which it’s happy to lend. Credit scoring has always been a feature of all the platforms, whether they be ‘pure’ P2P or passive P2P. Someone, somewhere at the centre of the online marketplace needs to set the lending criteria and make decisions about who to lend to.
It is almost true that borrowing money from traditional financial institutions is a thing of the past.
It has been observed that P2P online lending platforms are not the source of the problem or the risk. However, it seems to be the ease with which loans are available that causes the problems.
Online P2P lenders also offer student loans. It is very important to realize that student loans these days are available everywhere. But what is ultimately the truth is that the loans are burdensome. Any student that avails of such a P2Ponline student loan emerges as a graduate burdened with a heavy debt.
If an individual wants to apply for a P2P online loan, it is best to start with checking credit reports. It is a good idea to fix any errors that may be found on these reports. Otherwise, the interest rates may be hiked up. It is also a good idea to do some research prior to applying for the loan. It is worthwhile to find out as to which lender offers a lower rate of interest even if they fall outside the ring of online P2P lenders. Never decide on which loan to pick up by looking at the monthly amount to be paid. The total amount that you are going to repay and the time period of the repayment are the more important factors to be considered. This gives the total cost of the loan.
Bank of Communications, the nation’s fifth biggest lender, joined with Suning Holdings and its financial affiliate Suning Finance as strategic partners last week, the latest of the big five banks to ally with internet firms.
So far, all big-five banks, accounting for more than one-third of China’s banking assets, have allied with technology giants.
Industrial and Commercial Bank of China allied with e-commerce major JD.com for cooperation in sectors including fintech, retail financing, corporate credit and asset management. Agricultural Bank of China agreed to work together with dominant search engine operator Baidu. Bank of China and Tencent Holdings jointly set up a fintech lab, focusing on cloud computing, big data, block chain and artificial intelligence.
Earlier this month, mid-sized Industrial Bank and JD.com’s financial affiliate JD Finance launched a debit card in Beijing and most cities in affluent Zhejiang province.
China Life Insurance Group Co and Baidu Inc will form a 7 billion yuan ($1 billion) private equity fund, targeting internet and other technology investments, China Life’s listed arm said on Thursday.
The Baidu Fund Partnership will be capitalized by China Life through a special partnership, which will contribute up to 5.6 billion yuan, China Life Insurance Co Ltd said in a Hong Kong Stock Exchange statement.
Baidu, the Chinese language internet search provider, will contribute as much as 1.4 billion yuan.
Alibaba’s Ant Financial Services Group and JD Finance are at loggerheads in the Chinese, and increasingly, global e-commerce scene. In 2015, JD Finance recommended the use of “FinTech.” In December 2016, Ma Yun coined the ”TechFin” as a rebuttal, and as a show of thought leadership.
Ant Financial’s unveiling of “TechFin” shows the firm’s focus on building technology rather than financial products.
Critics believe there is not much difference between TechFin and FinTech. Critics believe Ant Financial coined TechFin to gain a foothold from the conceptual standpoint; a counteroffensive to JD Finance’s aggressive marketing of FinTech. This is inevitable considering “FinTech” as a term already achieved credibility within the finance and other related industries.
Ant Financial and JD Finance are more complementary than competitive
Onlookers see Ant Financial and JD Finance as longstanding rivals. JD.com’s recent sale of JD Finance for US$2.1 billion in cash was seen part of a deal to spin off its burgeoning finance arm and raise its game against Ant Financial.
Ant Financial focuses on the traditional model of the Internet while JD Finance focuses on product innovation, for a start. Each business model has its advantages.
Ant Financial also seeks to leverage on Ant Check Later (花呗), a virtual credit card, to open up a whole new road map for credit distribution in Internet finance. In contrast, JD Finance aims to boost user’s consumption through its products. Its Jingxiaodai (京小贷) appeals to merchants who need fuss-free and almost instant access to credit.
The Swedish e-invoicing giant posted 2,05 billion Swedish crowns ($254,2m) in revenue for the first two quarters of 2017. Meanwhile, operating profits jumped to 228 million ($28m) from last year’s 96 million ($11,9m), reports tech site Di Digital.
Magic Circle law firm, Allen & Overy, has named Corlytics as one of the eight companies selected to move into its Fuse programme. Fuse is a newly launched innovation space where its lawyers and technology firms team up to develop legal, regulatory and deal-related improvements.
There was a time when digital banking was perceived as synonymous with online banking and mobile banking. Financial services industry, along with other sectors, is experiencing an explosion of digitization thanks to smartphones, tablets and access to affordable high-speed internet. The number of smart phone users is expected to equal the number of bank accounts in near future as all mobile users link their bank accounts to their smart phone and get onboard with mobile-based digital wallets and savings platform.
Given this, it is imperative to take a fresh look at whether digital banking means the same as it did a decade ago – both for banks as well as customers – especially since there does not seem to be a consensus on the definition of ‘digital banking’.
Customers today do not have the patience to navigate through multiple screens. They do not want to fill the same KYC details over and over for each product. Presenting paperwork at the branch to support an online application is a big no-no. They expect to resume the application they started on Smart phone on their home computer and may want to talk to the customer care executive on phone while doing that. They do not want to be bothered with cold calls and random sales pitches; they prefer to see only personalized and contextual cross-sell offers with direct purchase links. In short, digital customer today wants one-touch, one-click, personalized and integrated user experience across channels.
On the flip side, while customers enjoy the convenience of digital banking for routine tasks, they also want to continue using the branch when they need some face time with a seamless switch between digital and personal interaction. They do not want to forego the privilege of walking into the local branch despite being able to do all their banking via the web or smartphone.
Since its launch in June, fintech startup Ilumony has reported more than $7 million in financial investments. Of the $7 million, it has charged no fees for advice on $1 million worth of customer KiwiSaver money.
Though Flipkart launched in 2007, it was only in 2013 that e-commerce really took off in India. That was the year Amazon entered India through a marketplace model, and Flipkart too launched its own marketplace model.
From selling smartphones, books, and apparel to customers, the two of them now started offering warehouses, packaging, and logistics to sellers.
When ecommerce companies like Flipkart and Amazon wanted to expand to the nooks and corners of the country, they borrowed the idea and recently started offering “No cost EMI” option on selected products. Taking a step further, you now have many fintech companies that have lined up on ecommerce platforms to offer loans to consumers.
Launched in January 2017, EzCred is an alternate lending startup which offers loans to consumers who walk into shop at offline stores.
“Offline is a much larger play than online. A majority of transactions are still done offline,” says Maheshwari.
The startup now has plans to roll out an app for customers to enable them to apply for loans directly. The platform has a credit assessment system which enables the startup to assess the borrowers’ repayment capabilities. This involves various data sources like the borrowers’ CIBIL score, bank statements, information provided by customers, which are then matched with the credit policy of EzCred.
A draft data protection law, which is at the core of the Indian government’s stance that Aadhaar does not violate citizen privacy, will have user consent as its mainstay with a few exceptions.
The draft legislation is expected to be ready in about a year.
This was revealed in interviews with a member of the committee set up by the government to come up with the draft framework — B N Srikrishna, a former Supreme Court judge who is heading it, and a second person with knowledge of the committee’s thinking.
In a bid to impart vibrancy to the fledgling peer-to-peer (P2P) lending space and also further the cause of financial inclusion, the Reserve Bank of India is believed to be looking at allowing players in the sector to have an offline presence besides an online one.
On-the-ground presence may help the platforms reach out to those who are currently not being served by banks/non-banking finance companies and also help break the vice-like grip of money lenders on local lending, especially in rural areas and small towns.
Peer to peer lending (P2P lending) first entered the wider public’s consciousness when it rose from the ashes of the global financial crisis in 2007. By cutting out traditional intermediaries, such as banks, the lending platforms, were able to offer borrowers lower interest rates and lenders higher returns. They were populist alternatives to the casino capitalism that had brought Wall Street to its knees.
According to a 2015 report by Deloitte, in Indonesia, Malaysia, the Philippines, Singapore and Thailand there exists “a clear disparity between what SMEs want and expect from banks and what the banks can deliver”. In Indonesia, the report found as few as 6% of SMEs were able to access bank loans.
Recent statistics from the Asian Development Bank show that the situation is similar in Myanmar, which the bank says suffers from a $2 billion shortage in available credit, a shortfall that Brad Jones, CEO of Wave Money, attributes to the country’s excessively cautious banking regulations.
According to data from Singapore-based venture capital fund Dymon Asia Ventures, less than 0.1% of loans in the region currently originate from P2P lending sources, compared with 10% in China and 2-3% in the UK and US. There is, therefore, sufficient growth potential for the Southeast Asian P2P lending market.
Despite the rising trend of peer-to-peer (P2P) lending in Indonesia, an economist believes that online-based businesses have increased risk of bad debt if the lenders ignore the importance of supervision.
The credit application mechanism in P2P lending is risky. There is no integrated costumer blacklist data-base like in the banking industry, said Samuel Aset Manajemen economist Lana Soelistianingsih said in Jakarta on Friday.
Moreover, she said P2P lending offered annual interest rates of up to 18.5 percent to investors, adding that such aggressive offers could increase the risk of business failure.
Flinks, a financial API for banks and credit unions, announced a partnership with Merchant Advance Capital, an online lender for small and medium-sized businesses.
Merchant Advance Capital partnered with Flinks to reduce loan approval time for its customers. Flinks will allow Merchant Advance Capital to connect its app directly with customers’ banks, allowing the company to validate account ownership, account balances, and transaction histories.
News Comments Today’s main news: NSR Invest, LendingRobot merge: Now the largest alt lending robo-advisor.LendInvest makes London Stock Exchange debut.Big banks losing ground to China’s fintech giants. Today’s main analysis: Q2 update from LendingClub CIO.MarketInvoice loanbook snapshot. Today’s thought-provoking articles: LendingClub’s surprise comeback.Sanborn looks ahead.Personal financial management apps fold as banks work them into their […]
LendingClub makes a surprise comeback. AT: “There is still a long way to go to get back to those halcyon days of 68%-120% year-over-year growth. However, considering that there has been a downward trend for the past three quarters, a positive YOY growth climb is a positive sign. I can’t wait to see where LendingClub is next quarter.”
NSR Invest and LendingRobot merge to become the largest robo-advisor in the alternative lending space (LendingRobot Email), Rated: AAA
NSR Invest and LendingRobot, two of the largest specialized Registered Investment Advisors in the alternative lending space, announced today that the companies have merged to create the leading independent advisory platform for alternative lending. Lend Core LLC, the parent company of NSR Invest, acquired Algorithmic, Inc. and all its assets, including the LendingRobot website and technology.
The joint team will combine its knowledge in the industry, investment algorithms, machine learning and blockchain technologies with the goal of providing steady investment returns to more than 8000 clients.
The websites, operating, and trading systems of NSRinvest.com and LendingRobot.com will continue to function separately in the short term. In the immediate future, the company is focusing its newfound strength on the LendingRobot Series.
Borrower Performance. Recent vintage performance continues to come in broadly in line with our expectations. As mentioned above, we continue to see lower delinquency rates across most grades and terms than in loans issued in the second and third quarters of 2016, which we attribute to changes made in 2016.
Interest Rates. The overall interest rate environment remains low, though the Federal Reserve raised its Target Rate by 25 bps in June 2017. After announcing its latest rate increase, the Federal Open Market Committee signaled its willingness to raise rates further, as it “expects that economic conditions will evolve in a manner that will warrant gradual increases in the Federal Funds Rate.” Interest rates on the LendingClub platform are not changing at this time.
In Q1 2017, US alt lender Lending Club published disappointing results, which showed a flat performance and seemingly vague turnaround plans, sparking concerns that it could be headed for a dead end. However, the company has now reported its second-highest quarterly revenue to date for Q2 of this year, with analysts pointing outthat it appears back on a growth trajectory.
In Q1 2017, US alt lender Lending Club published disappointing results, which showed a flat performance and seemingly vague turnaround plans, sparking concerns that it could be headed for a dead end. However, the company has now reported its second-highest quarterly revenue to date for Q2 of this year, with analysts pointing outthat it appears back on a growth trajectory.
Importantly, peer to peer lending is the fastest growing industry in lending, and while there are a lot of players in the game, LendingClub is one of the largest. On many occasions over the last year, BNL Finance has told members that banks would come back and that LC stock losses were overdone.
With that said, LendingClub stock has rallied 26% over the last three sessions.
Last week, Level Money, the money management app owned by Capital One Financial, said it will shut down on Sept. 1. Also last week, Prosper Marketplace said it would discontinue the Prosper Daily app and urged customers to bring their PFM needs to Clarity Money. Earlier last month, SoFi said it would nix the services by Zenbanx, just six months after it acquired the online banking company, and would use its technology and personnel for its own online bank.
PFM has never been a prominent feature of consumer bank accounts. For most of banks’ existence people had to balance their own checkbooks based on debits and credits. That’s changing now as banks realize the importance of personal financial management for continued customer engagement. And they’re starting to implement PFM features into their offerings to provide more complete banking experiences. As it is today, PFM is usually a separate entity found in entirely different apps like Clarity Money, Moven or Mint.
For example, one of the biggest nuisances of PFM historically has been the lack of good financial data. Customers using an app would have to hand over their online banking credentials so the third party financial app could access their banking data to be able to provide users with their financial snapshot. The data that appeared on the home screen of their online banking wasn’t always in sync with what they would see in their PFM app.
Wins Finance Holdings Inc., the Chinese loan guarantor that couldn’t explain a 4,555 percent surge in its stock, is set to be delisted from the Nasdaq Stock Market, which cited violations of exchange rules related to its shareholder base.
Nasdaq said Wins doesn’t meet regulations requiring it to have at least 300 shareholders who own 100 shares. The exchange’s decision was also based on “the making of alleged misrepresentations by the company relating to the 300 round-lot shareholder requirement,” as well as public interest concerns, Wins said in a statement Wednesday.
However, as crowdfunding marketplaces are getting bigger and more investors are coming onboard, the power to raise equity through this marketplace is growing, says Tore Steen, co-founder and CEO of CrowdStreet Inc. Initially, many sponsors have been looking to raise $1 million to $2 million as a supplement to their existing base of investors. Those levels are now moving to $3 million to $5 million. CrowdStreet’s largest equity raise on a single offering to date was close to $8 million.
Although it remains a fragmented niche that is difficult to quantify, research firm Massolution had estimated the size of the global real estate crowdfunding industry at $3.5 billion in 2016.
RealtyMogul emerged as one of the early players in real estate crowdfunding. Since the firm launched in 2013, it has raised more than $280 million in equity through its online real estate investing marketplace.
Currently, CrowdStreet has more than 25,000 registered investors on its marketplace. In addition, among its active investors, over 55 percent are repeat investors.
Crowdfunding firms such as RealtyMogul are also fueling growth with online “eREITs” that allow them to target a bigger pool of non-accredited investors. Currently, RealtyMogul has 135,000 registered users on its platform, including both accredited and non-accredited investors.
With that I become the first public witness to the long, irregularly shaped basement office where GreenSky, America’s third-most-valuable fintech company (after Stripe and SoFi), has been incubating in obscurity for the past decade. And it’s Zalik who holds the golden ticket: Last September, GreenSky raised $50 million at a $3.6 billion valuation. The 43-year-old cofounder and CEO still owns more than half of the company, shooting him well into the billionaire ranks.
GreenSky’s real magic, however, is something you can’t see: a model that transfers much of the risk, as well as the work, to other parties–and profits from both sides of each deal. Those 17,000 contractors not only market the loans to homeowners but also pay GreenSky, on average, 6% of the loan amount.
Obviously you’re a believer in online lending, given JPMorgan’s relationship with small-business lender OnDeck. Tell me how you see online lending going.
What the real issue in peer-to-peer lending is that the borrower will need the money in good times and bad, but the lender will not lend the money in good times and bad. The second there’s a recession, they’ll pull back. That’s exactly what you saw in February of last year when all of a sudden people were pulling back in giving money to the peer-to-peer lenders, who couldn’t then make loans. And they all got crushed. Some have been quite bright. So I think Chicago-based Avant has been quite bright, and they kind of anticipated this, and they created permanent capital. There are multiple ways to create permanent capital. Securitizations kind of work. But they don’t work in tough times. They disappear. Bank relationships work. There are ways to fix the problem. But that is an issue: Can you sustain your business model through the cycle? I think some of them will succeed.
Would you ever see banks getting directly into online consumer lending?
Remember, there is nothing online lenders can do that we can’t. ling With Insurance Companies Less Miserable
Quick money transfer apps – Millennials have come to expect such an experience. Many banks and credit unions are starting to realize this, but they’re a little behind the eight ball.
Chatbots and Messenger-Based Payments – Soon, you’ll be able to pay for that used TV you found on Craigslist by texting the seller directly from your phone’s messenger app, including Apple which turned on the Messagespayments functionality in June 2017.
Forget the Card, Pay With Mobile Devices – On its own, this doesn’t seem like much of a Trojan horse for banks, but as more people shift behaviors so too will the expectations of banking customers. And with the global mobile payments market estimated to hit $3.4 trillion by 2022, it’s worth monitoring in relation to banking customers.
Smart Budgeting and Personal Finance Management
Digital Currencies That Don’t Require Central Banks
The New Jersey-based Marketplace Lending Abs Fund, Lp filed Form D for $2.75 million offering. This is a new filing. The Limited Partnership raised $2.75 million. The offering is still open. The total offering amount was $2.75 million. This form was filed on 2017-08-09.
The Online Lending Policy Institute (OLPI), the leading voice for policy analysis, in-depth research, and education for the online lending industry, today announced it will host its Second Annual Summit on Sept. 25 at The Renaissance Hotel in Washington D.C.
The U.S. Department of Labor will give wealth management companies more time to get in line with the new “fiduciary rule,” a regulation that requires financial advisers to put retirees’ interests ahead of their own, the regulator said on Wednesday.
Securities brokerages like Morgan Stanley and Bank of America Corp’s Merrill Lynch now have until July 1, 2019, to present retirement savers with new contracts that spell out the fees brokers make on certain investment products or transition them into accounts that charge a flat fee based on assets.
LendInvest, the UK’s leading online platform for property lending and investing, today listed a £50 million retail bond on the London Stock Exchange’s Order book for Retail Bonds (ORB).
The process to raise LendInvest’s first retail bond was closed early and oversubscribed, thanks to strong demand from retail and institutional investors. About half of the proceeds raised came from major financial institutions including several multi-billion pound asset managers, two global insurance businesses and a major UK state pension fund.
The bond pays a fixed annual coupon of 5.25% for five years, and is secured against a portfolio of property loans and guaranteed by LendInvest. From today, the bond trades under the LSE ticker LIV1.
MarketInvoice, founded in 2010, is the largest UK online P2P lending firm specialising in invoice discounting and invoice factoring. Selective invoice discounting is a facility that allows businesses to sell individual invoices at a discount in order to unlock immediate funding which can be an attractive solution for SMEs periodically strained with cashflow. In early 2017 the platform launched an additional product in the form of MarketInvoice Pro, an invoice factoring product that essentially is a debt facility which businesses can draw on backed by the business’s sales ledger.
MarketInvoice celebrated its strongest origination quarter in 2017Q2 with £161.9m in invoices traded and a healthy 25.3% increase from the previous quarter. Annualised invoice origination growth (2013-2016) for the platform stands at 82.6% and, whilst encouraging, it is clear to see from the oscillation in monthly advanced funding that to-date annualised return performance has been highly influenced by seasonality trends.
Invoice terms exceeding 60 days formed 28.3% of origination in 2016Q2, however, this has significantly increased to 58.2% of 2017Q2 origination.
Invoice originations have shifted away from riskier price grades since the introduction of Market Invoice Pro and this is welcome news for investors.
Rofagha quickly realised that the banks couldn’t help him, a financial advisor was unreachable with his income, and the rise of the robo-advisor hadn’t really taken off yet.
Then there is one of his favourite statistics: “86 percent of millennials save each month but they keep more than 50 percent of their assets in cash, because there is no suitable way for them to get financial advice.” This was his lightbulb moment.
Now Rofagha has launched the next phase, a financial planning platform called Finimize MyLife, which is currently in beta and has a waiting list of more than 24,000 people.
The Finimize MyLife platform is free to use and helps users create a financial plan by answering a few questions about their financial position, setting goals and then selecting from a range of options, be that opening an ISA or investing with a partner like Nutmeg or Moneyfarm.
The next steps for Rofagha will be to invest in data science so that the platform can make more tailored product recommendations for users, once it has built out its data set.
Looking at the ten years to the end of May 2017, inflation as measured by the Retail Price Index (RPI) rose 31.8%, while anyone receiving the Bank of England (BoE) base rate would have made a total return of 13.2%. In other words, cash in a bank account has lost 18.6% of its real value over ten years.
Over several years, the Investment Trust sector has seen huge growth in alternative income products, and here we list six products from sectors that investors may want to consider for inclusion in their investment allocations.
Marketplace or ‘peer-to-peer’ lending can be attractive for family office investors for several reasons:
attractive absolute and relative returns compared to other fixed interest instruments
ability to create some granular/diverse portfolios through investment in loan parts
transparent credit process and loan pricing
ability to match maturity profile to desired outcomes
At present, the lack of a uniform set of standards places some obstacles for investors willing to invest across multiple marketplace lenders. The data structure, terminology, and methodologies differ greatly from platform to platform. However, good platforms are able to clearly demonstrate how loans are underwritten, an expected loss rate and basis for making investment decisions.
How can family offices engage with marketplace lenders?
Firstly, investors need to consider the asset class and risk profile they wish to invest in.
Secondly, investors need to consider how active they wish to be—in its truest form marketplace lender allow absolute discretion to bid on individual loans at whatever size suits.
Glint, a stealthy London fintech startup that promises a new “global currency,” has raised £3.1 million from a plethora of individual backers in the financial services and asset management space, alongside early-stage investor Bray Capital.
However, I understand that Glint will offer a frictionless way to both store and spend your money in gold, including at the point of sale, just like a regular local currency.
Railsbank, a relatively new fintech startup co-founded by CEO Nigel Verdon, who previously founded money exchange and payments platform Currencycloud, has raised $1.2 million in a funding round led by seed investment firm Firestartr.
The company, yet to see its full launch and over a year in the making, offers what it describes as an open banking and compliance platform aimed at other companies, including other fintechs, that have global banking requirements that need to be accessed programatically via an API.
China’s central bank has ordered online payment groups to operate through a centralised clearing house, a move likely to undercut the dominance of Ant Financial and Tencent by forcing them to share valuable transaction data with competitors.
China is the world leader in mobile payments, with transaction volumes rising nearly fivefold last year to Rmb59tn ($8.8tn), according to iResearch. They are now widely used for everything from high-street shopping to peer-to-peer lending.
Now the People’s Bank of China is requiring all third-party payment companies to channel payments through a new clearing house by next June, according to a document sent to payment companies on August 4 and seen by the Financial Times.
Ant Financial, the financial services affiliate of Alibaba Group, is the market leader in mobile payments, with its Alipay unit processing 54 per cent share of all transactions in the first quarter of the year, according to iResearch. WeChat Pay, linked to Tencent’s mobile messaging app, held a 40 per cent share.
“JPMorgan every year, as we speak, processes through our QuickPay 94 million payments,” she said, “But Tencent, the Chinese company, over Chinese New Year, in five days processed 46 billion payments. Basically that means 800 million payments per hour.
“Visa has a maximum capacity of processing 25,000 payments per second. But Alipay can process 50,000 payments, twice as much, per second.”
The rise of online payments through non-bank services, exemplified by Alipay and WeChat Pay – which falls under the Tenpay umbrella – in China, has caused another banking giant, Goldman Sachs, to stand up and take notice too.
The firm recently published a report, led by Mancy Sun, which reveals the value of third-party payments in China grew more than 74 times from 2010 to 2016, from US$155 billion to a staggering US$11.4 trillion.
Of that total, 56 per cent took the form of peer-to-peer transfers while about 16 per cent was consumption-related. Furthermore, payments made via third-party payment companies comprised 40 per cent of all retail sales, a figure that is still growing.
China Commercial Credit, Inc. (NasdaqCM: CCCR) (“CCCR” or the “Company”), a microfinance company providing financial services to small-to-medium enterprises (“SMEs”), farmers and individuals in Jiangsu Province, today announced that, it has entered into a share exchange agreement (the “Share Exchange Agreement”) by and through its Board of Directors and majority shareholder dated August 9, 2017 with the equity holders of Sorghum Investment Holdings Limited (“Sorghum”), an Internet platform specializing in providing peer-to-peer lending services to individuals and small business owners in China. Pursuant to the Exchange Agreement, the Company has agreed to acquire all of the issued and outstanding equity interests of Sorghum in exchange for 152,586,795 shares of the Company’s Common Stock (the “Acquisition”). Upon completion of the Acquisition, the Company will own 100% of Sorghum, and will be a financial services group operating in both smart financing as well as microfinance sectors in China.
Chinese Internet portal Sina Corp said it would establish an Online Finance Fund with a target fundraising size of US$500 million to invest in Chinese fintech companies.
Fintech is one of the most important opportunities in the next three to five years, Chao said during the call. The company believes that it can leverage its own online traffic, data, and microblog services Weibo to attract users and create a strong new brand.
Sina will focus on the business categories where it can obtain its own operating license, such as micro-lending. The company is currently offering micro-lending to users via a partnership with other financial firms, but it is in the process to get its own license.
LendIt, the world’s largest show in lending and fintech, named Omega One the winner of its Lang Di Fintech PitchIt competition in Shanghai on July 16. Out of eight PitchIt finalists (and hundreds of applicants) at China’s largest fintech conference, Omega One, an automated trade execution platform, was chosen as the winner for its innovation in the cryptocurrency markets.
As the winner, Omega One received a RMB 1 million investment from JadeValue and co-working space for six months. The company also received two tickets to LendIt USA 2018 as well as round trip airfare and full accommodations for the duration of the conference. The LendIt team will also curate meetings with fintech companies and investors during Omega One’s trip to the U.S.
Lang Di Fintech was held in Shanghai on July 15 – 16, 2017.
Management and technology consultancy BearingPoint, a leading provider of Risk and Regulatory Technology (RiskTech/RegTech), announced that FinTech Group AG, one of the leading providers of innovative financial technologies in Europe, included BearingPoint’s regulatory reporting solution ABACUS/DaVinci in its product portfolio.
Below are five better places to put your money as a young Australian in 2017.
Another investment opportunity emerging with the rise of fintech is peer-to-peer (P2P) or marketplace lending.
You input a few details into an online form, such as your preferred credit grade, loan term, and maximum amount you wish to invest in any one loan. The algorithm then does the rest on your behalf, and some lenders claim returns as high as 12 per cent per annum.
Online lender Prospa received nods in three categories — Alison Binskin, head of operations, made the cut for Fintech Leader of the Year, Lauren Davidson received recognition for Human Relations Professional of the Year and Anna Fitzgerald for Public Relations/Communications Professional of the Year.
India has many consumer-lending companies, but there are very few consumer-leasing firms that borrow, convert the money into assets and lease them. RentoMojo does just that and says it has discovered the playbook fairly early, which could be used across categories and not just furniture.
There is one weakness in this model – it is capital intensive, and assets have to be bought before they can be leased.
Adukia, who looks after internal finances, says that the company has lines of credit with banks, non-banking financial companies (NBFCs) and high net-worth individuals (HNIs).
There has been no independent study on the market size of the consumer-leasing business, but the company claims it is about $10-12 billion. To stay on top of this market in terms of affordability, RentoMojo does not deal with middlemen and buys directly from manufacturers, says Nain. “We also act like a quasi-bank that takes a call on the creditworthiness of its customers [to protect our revenues].”
Recent developments in the rise of Robo-advisers and investments in digital and P2P lending platforms, however, appear to support arguments on the contrary. Already we are seeing Alibaba dominating the payment scene in China while similar local companies like Go-Pay in Indonesia is also rapidly evolving into a commendable competitor of the banks in the payments scheme locally.
The level of threat does not go unnoticed within the banking professionals’ sphere. Based on a survey by PWC, about 81 percent of the banking and fintech players in Indonesia would see a degree of disruption in the way the banks are doing business, with which roughly 50 percent of them observe potential significant disruptions.
On the payment and settlements front, we have also seen how fintech has exposed the inefficiencies in the banks’ existing business processes. For example, in the cross-border interbank payment, the current average transaction costs for sending remittances abroad through bank average around 10.99 percent of the nominal amount globally, according to a report by World Bank. This is highly efficient and perhaps one of the catalysts for online remittance companies like TransferWise to exist.
Another study estimates suggest that mortgage borrowers in the US and European market could potentially save $480 to $960 per loan and banks would be able to reduce costs in the range of $3billion to $11billion by lowering processing costs in the mortgage origination process. Such figure further highlights the inefficiency in the banks’ current operating structure. The figure would likely be more substantial on the percentage basis if similar survey is conducted in Indonesia.
Mambu, the SaaS banking engine, today announced it will be powering the consumer and business lending products of Fuse, the lending arm of Filipino financial technology firm Mynt, by September 2017.
Mynt is increasing access to financial services through mobile money, micro-loans and technology by leveraging the mobile and store networks of its partners and parent company in a country with 113% mobile penetration but only 31% banking penetration.
Micro, small and medium enterprises (MSMEs), which account for 99.6% percent of total registered companies in the country, as well as individuals face significant difficulty in accessing credit from incumbents due to stringent credit decisioning, limited authentication documentation and lack of collateral.
MODALKU has become the first and only peer-to-peer (P2P) lending company to attain membership at the International Association of Credit Portfolio Managers (IACPM), a forum where financial institutions share and discuss best practices for credit risk management.
Modalku co-founder and CEO Reynold Wijaya stated that his team is focused on attaining international, even global standards.standards.