Thursday May 10 2018, Daily News Digest

Quarterly Originations

News Comments Today’s main news: Quarz Capital Management outlines proposals to unlock >70% returns in LendingClub share price. Sharestates surpasses $1B in loan originations. Funding Circle hires first female NED. Today’s main analysis: Review of LendingClub’s Q1 2018 earnings results. Today’s thought-provoking articles: LendingTree’s monthly mortgage offer report for April 2018. Crowdfunding in the absence of liquidity constraints. Digitization […]

Quarterly Originations

News Comments

United States

United Kingdom

China

European Union

International

News Summary

United States

Quarz Capital Management Outlines Proposals to Unlock Return of >70% in the LendingClub’s Share Price (PR Newswire) Rated: AAA

Quarz Capital Management, Ltd. (QCM), an investment manager, today issued a letter urging LendingClub to take immediate and decisive steps to address the severe undervaluation of its share price and unlock a potential attractive total return of >70% for shareholders.

US ONLINE MARKETPLACE LENDING BEHEMOTH TRADING AT ‘STARTUP’ VALUATION
– POTENTIAL TOTAL RETURN IN EXCESS OF 70% OVER THE NEXT 3 YEARS –

LendingClub is the largest online lending marketplace platform in the US with an estimated ~50% market share1. The firm is projected to generate more than $700million of revenue on ~$11billion of loan originations in 2018E. LC’s substantial loan origination volume of more than $35billion since 2006 and its proprietary credit data increase the effectiveness of credit and risk models and enable the largest institutional investors to undertake the rigorous due diligence required to allocate capital on its platform.

Recommendation 1. Emphasize on cost control to increase profitability

Recommendation 2. Improve alignment of compensation system for top management

Recommendation 3. Increase shareholder return on sizeable cash holdings

LendingClub Q1 2018 Earnings Results Review (Lend Academy) Rated: AAA

During the first quarter, LendingClub is typically affected by the seasonality of the lending business so it’s beneficial to look both at the last quarter as well as the prior year period. In the first quarter of 2018, LendingClub posted originations of $2.3 billion. This represents a 5% decrease from the previous quarter, but an increase of 18% from the prior year period.

Source: Lend Academy

Revenue came in at $151.7 million, down 3% from the previous quarter but up 22% from the prior year period. They incurred a GAAP net loss of $31.2 million which included legal expenses related to legacy issues of $17 million.

Source: Lend Academy

 

Here’s Why Lending Club Is Soaring Today (The Motley Fool) Rated: A

The company called for 20% growth in its 2018 outlook, so 22% revenue growth is even better than expected. And, the company’s full-year outlook calls for total revenue in the range of $680-$705 million. At the midpoint, this implies average revenue of more than $180 million per quarter for the rest of the year. Considering that the first quarter’s revenue was “just” $151.7 million, this represents some impressive growth ahead.

Q1 2018: LendingClub Platform Update (Lending Club) Rated: A

During the first quarter of 2018, we continued to observe that credit performance across the industry is returning to long-term averages and interest rates are rising across fixed income assets.1 On the platform, we continue to see both of these trends in action: investors show higher demand for higher quality assets and are looking for higher interest rates overall.

Sharestates Surpasses $ 1 Billion in Loan Originations; Celebrates With $ 100,000 Giveaway to Investors (PR Newswire) Rated: AAA

Online real estate investment platform, Sharestates, today announced they have surpassed $1 Billion in loan volume – an incredible milestone that showcases their continued growth in the real estate investment space. To celebrate the achievement, Sharestates is giving away $100,000 to mark the occasion.

LendingTree Releases Monthly Mortgage Offer Report for April (PR Newswire) Rated: AAA

LendingTree today released its monthly Mortgage Offers Report which analyzes data from actual loan terms offered to borrowers on LendingTree.com by lenders on LendingTree’s network. The purpose of the report is to empower consumers by providing additional information on how their credit profile affects their loan prospects.

See the full report here.

CRE Crowdfunding Firms Continue to Scale Up Platforms (National Real Estate Investor) Rated: A

Crowdfunding firms have put a lot of effort into educating accredited investors on real estate crowdfunding and real estate investing in general. Those efforts are starting to pay for firms such as CrowdStreet. The firm hit a major milestone in March with more than 99,000 registered investors on its platform. CrowdStreet also is generating a high volume of repeat investors that are using crowdfunding to create diversified real estate portfolios with different sponsors, property types, geographic markets and risk profiles, notes Tore Steen, CEO, CrowdStreet.

The average investor on CrowdStreet has five investments in their portfolio, and over 20 percent of investors on CrowdStreet have invested more than $1 million across 12 unique investments.

Some crowdfunding platforms, such as Fundrise, Realty Mogul and Rich Uncles, have introduced e-REITs as a way to reach non-accredited investors and expand their potential customer base. But for the most part, crowdfunding firms are firmly focused on raising capital from accredited investors.

Groundfloor is one of the few crowdfunding platforms that is providing direct investment opportunities to non-accredited investors.

Banks in constant game of catch-up in combating mobile fraud (American Banker) Rated: A

Even as banks and other financial firms have invested heavily in technology designed to protect customers’ data, fraudsters have become more and more aggressive in trying to steal consumers’ identities to open accounts, take out loans or intercept payments.

According to ThreatMetrix, a global cybersecurity network used by banks and e-commerce firms to help determine the authenticity of digital transactions, 210 million attempted attacks were made on its network during the first quarter of 2018, a 62% increase over the same period last year.

Cohn says starting ‘digitized’ bank one option for next job (American Banker) Rated: A

Gary Cohn, the former director of the White House Economic Council, said he’s still weighing options for his next role but one possibility is a digital bank.

“I do have an idea for a company,” Cohn, who was president of Goldman Sachs before joining the Trump administration, said Tuesday in an interview on CNBC. “It would be an interesting concept playing on the knowledge I know from the banking world, in running a regulated bank, but in a digitized world.”

Where big banks fear to tread (Financial Times) Rated: A

Bank accounts for small businesses is an area of fintech not yet solved; Azlo is looking to fill that void as they believe banks have built their small business offering for the traditional small business owner; the new age business owner doesn’t have years of tax returns to share, providing accounts for them is not a risk banks want to take; Azlo also plans to move into loans later as an alternative to overdraft fees; they believe a straightforward, transparent offering will allow them to serve the type of small business banks have overlooked for years.

How Northwestern Mutual is using LearnVest to build advisory services (Tearsheet) Rated: A

Northwestern Mutual is growing its advisory services, building on the technology and expertise of LearnVest, which is currently shutting down and preparing for a rebrand as a content site this year.

In a statement, Northwestern Mutual said it wants to serve customers wanting an “end-to-end experience” with a human adviser using LearnVest’s digital planning platform, alongside a new content site. The integration also allows the parent company to concentrate on full-scale financial planning — a message consistent with a recent job posting that noted the company is scaling its technology and personal finance approach to reach millions of people across both LearnVest and Northwestern Mutual brands.

Bitcoin Sees Wall Street Warm to Trading Virtual Currency (The New York Times) Rated: A

The parent company of the New York Stock Exchange has been working on an online trading platform that would allow large investors to buy and hold Bitcoin, according to emails and documents viewed by The New York Times and four people briefed on the effort who asked to remain anonymous because the plans were still confidential.

Rebundling the bank: an interview with Renaud Laplanche (AltFi News) Rated: A

It’s clear that Laplanche has designed Upgrade from the start with scale in mind. Little more than a year after launching its first product, the company has 250 staff across three centres, San Francisco, Phoenix, and Montreal, and its series A funding round was no minnow at $60m. Originations are running at $100m a month, having reached a level after a year that it took Lending Club more than six years to reach. Laplanche said in April he expects to originate $2bn of loans this year.

Laplanche is scathing about credit cards, labelling them “fundamentally bad products”. They are expensive – the average interest rate on the US’s $1.03 trillion of balances is 17 per cent, he says, which rises to perhaps 25 per cent once fees are accounted for – and borrowers can run up debts without having to pay down the principal every month as they would with a loan. Many don’t even realise they are taking out a loan, and card issuers never use the word.

California bank goes online competitors one better (Banking Exchange) Rated: A

First Foundation Bank, an 11-year old $4.5 billion-assets bank headquartered in Irvine, Calif., gets that message. Lorrie Asker, senior vice-president, commercial banking, says she’s heard from many clients that they handle their finances and their banking between 10 P.M. and 2 A.M. In the Age of Amazon, everyone, she says, craves immediate online availability of services, including banking.

Marketplace business lenders frequently point out that busy small business owners’ lives often don’t synch with “bankers hours.” Being able to apply for credit with online players like Kabbage or OnDeck any hour of the day is a much touted advantage. It plays to the credit hungry who find their credit by Googling for it.

10 tips to beef up your crowdfunding campaign (Born2Invest) Rated: A

Researchers from Georgia Tech checked out nine million phrases culled from 45,000 Kickstarter campaigns, and they discovered the most-used phrases from fully funded campaigns versus those that failed.

Some platforms to consider include:

IndiegogoA popular crowdfunding platform that is home to mostly technological innovations. Aside from this, the platform also offers initial coin offerings (ICO) of new cryptocurrencies.

SeedInvestThis crowdfunding platform has a selection process for startups it wants to help out. While the company only accepts one percent of startups that apply, it presents a selection of highly vetted businesses.

StraightUpMade for real estate crowdfunding, the company invests along with its clients. If a client finds a project interesting, StraightUp also supports it by participating in the crowdfunding.

LendUp Bolsters Leadership Team Across Finance, Engineering, Credit Card Product, InfoSec, And Legal, (PR Newswire) Rated: B

LendUp, a fast-growing fintech firm for the emerging middle class, today announced a number of executive hires, including a General Counsel and VP of Engineering, as well as new heads of Capital Markets, Credit Card Product, and Information Security. These appointments will help LendUp expand the scope of its affordable, consumer-friendly products, as it becomes a first-of-its-kind destination for responsible spenders, savers, and strivers.

Beyond Spare Change: Debt Payment Startup Qoins Wins Country’s Largest Fintech Prize (Hypepotamus) Rated: B

Qoins, an Atlanta-based startup that rounds up users’ spare change to help them pay off their debt, took home the largest equity-free cash prize for startups in the country as the winner of the Fintech Innovation Award Challenge at this week’s FinTech South conference. The audience was able to vote on which of four finalists would receive the $50,000 check during a live pitch event.

4 Tips for Finding the Best Online Mortgage Lenders (Nerd Wallet) Rated: B

Since not every lender offers a fully digital mortgage and your experience can differ from one lender to the next, it’s a good idea to find a company that offers an online experience that meets your expectations. These four tips will guide you to the right fit.

  1. Know who offers the loan you need with qualifications you can meet
  2. Evaluate the customer service
  3. Find out if an online application is right for your situation
  4. Test-drive online lender platforms by getting preapproved

Laurel Road Named Winner Of Best Consumer Lending Product Category In 2018 Fintech Breakthrough Awards (PR Newswire) Rated: B

Laurel Road, an online lender and FDIC-insured bank, today announced that its online student loan solution has been selected as winner of the “Best Consumer Lending Product” award by FinTech Breakthrough, an independent organization that recognizes the top companies, technologies and products in the global fintech market today.

United Kingdom

Funding Circle, the UK’s biggest peer-to-peer lender, will this week take another step towards a £2bn London flotation by naming its first female non-executive director.

Sky News understands that the company, which is targeting a listing soon after the summer, will announce that former O2 executive Cath Keers is joining its board.

Ms Keers, who is an experienced non-executive director in the retail, technology and logistics industries, will bolster Funding Circle’s public market credentials as well as improving the gender balance in its boardroom.

NatWest fintech investments bear fruit as SME loans platform goes live (Computer Weekly) Rated: A

NatWest has launched a fintech (financial technology) lending platform aimed at small to medium-sized enterprises (SMEs) that cuts the time it takes to apply for a loan to 10 minutes. The project will help the bank fight off competition from peer-to-peer lenders.

The platform, known as Esme Loans, offers SMEs loans of up to £150,000 and makes it easier to apply for them by using the latest technology, including application programming interfaces (APIs).  The entire process is online and paperless, with customers able to apply in less than 10 minutes.

China

Six and the Citi unveil API partnerships in Hong Kong (Fintech Futures) Rated: AAA

Citi has made six API partnerships with corporations in Hong Kong as it looks to improve its digital banking services.

The six partnerships are:

  • HKTVmall integrated with Citi Pay with points API
  • EGL Tours integrated with Citi Pay with points API
  • AIA Hong Kong integrated with Citi Customers API
  • Octopus App integrated with Citi onboarding, cards and money movement APIs
  • Citi Visa Fetch App
  • Zurich Hong Kong integrated with Citi Customers API

China’s peer-to-peer lending hits the skids (Nikkei Asian Review) Rated: A

Peer-to-peer lending is slowing dramatically in China as a looming clampdown on the industry spurs platform providers to throw in the towel — sometimes after just a few months in business.

The balance of peer-to-peer loans, or financing between individuals, came to 1.29 trillion yuan ($202 billion) on April 30, up a mere 6% from the end of 2017. That increase represents a sharp slowdown from the 50% surge last year and the 100% jump in 2016, according to industry information provider WDZJ.com. Less than 200 billion yuan worth of contracts were signed for April, down around 20% year on year.

European Union

CROWDFUNDING IN THE ABSENCE OF LIQUIDITY CONSTRAINTS (All About Alpha) Rated: AAA

A forthcoming issue of the Journal of the European Economic Association will carry a study arguing that crowdfunding in the absence of liquidity constraints is a superior method of equity financing–superior to “traditional financing forms,” that is, unless those traditional financiers are fully competitive and perfectly informed.

By one estimate, global crowdfunding reached $195 billion in 2017. Of that, $13 billion was equity- or reward-based.

The 60 second interview: Lara Oyesanya (The Lawyer) Rated: A

Ahead of her session at the In-house Financial Services Conference, Lara talks to The Lawyer about the legal challenges of digital innovation and the way in which technology is transforming the in-house lawyer’s relationship with external counsel.

What legal challenges are brought forward by digitalisation?

Will AI function within current legal frameworks, do we actually know how it will function to properly assess legal risks, is monitoring required to ensure due legal process? There are then ongoing discussions around data, information and cyber security.Algorithms and Applied Programming Interfaces (APIs) are at the heart of digitalisation. With the continued development of artificial intelligence (i.e. algorithms with learning capabilities), there will be more legal challenges to address.

UniCredit Pushes on Cost, Asset Quality to Affirm Leadership (Bloomberg) Rated: A

UniCredit SpA Chief Executive Officer Jean Pierre Mustier is ramping up cost cuts and improving asset quality to keep his promise of building a leading pan-European bank.

A 5.2 percent decline in operating expense in the first quarter helped the bank increase net income to 1.11 billion euros ($1.3 billion) from 907 million euros a year earlier. That beat the 796 million-euro profit expected by the average of 8 analysts surveyed by Bloomberg.

UniCredit climbed as much as 2.6 percent in Milan trading and was up 2.4 percent at 17.96 euros as of 9:23 a.m. That boosts the bank’s gain this year to 15 percent.

Taaleri records a loss of about EUR 2.5 million from a German geothermal project (Globe Newswire) Rated: B

Taaleri Investments Ltd, part of the Taaleri Group, acquired the majority shareholding in Erdwärme Oberland GmbH (86.42% of shares and votes) from the Italian energy-company Enel on March 12, 2018.

Unfortunately, the tests on the first geothermic production site have proven that the project on the site in question is not commercially doable and, Taaleri Investments Ltd records hence a loss of approximately EUR 2.5 million, visible in Taaleri Groups half year results 2018.

International

Digitization of Money and Finance: Challenges and Opportunities (International Monetary Fund) Rated: AAA

The global economy is experiencing a non-stop digital revolution. Consider this one number: a recent study estimates that by 2025, what is called the “global data-sphere” will grow to 163 trillion gigabytes from 16.1 trillion gigabytes in 2016. That ten-fold increase will encompass data held everywhere from the cloud to our handheld devices.

It raises the prospect of expanding financial inclusion, especially in developing countries. The possibilities are exciting.

Companies working with artificial intelligence are exploring credit scoring based on payment data. Fintech startups in Latin America, Africa, and Asia are moving toward the use of peer-to-peer lending data, and information from mobile phone payments to build reliable credit databases.

Firmo protocol for financial derivatives on the blockchain (Next Big Future) Rated: A

The Firmo protocol executes financial contracts on blockchain technology. Contracts are written using the domain specific language; FirmoLang. FirmoLang provides a secure execution environment for financial contracts on decentralized asset-classes. Similar to software built for airplane coordination, FirmoLang is formally verified, yielding needed security benefits for smart contracts in finance. FirmoLang compiles directly to Ethereum Virtual Machine bytecode. The Firmo Protocol is designed to integrate with and support the advancing decentralized economy, including: Decentralized exchanges, p2p lending platforms, prediction market platforms and more.

Firmo is building the future of financial infrastructure. 1/7 of the world’s economy is derivatives, but these financial contracts are not securely available in the crypto economy yet.

Valorem : Blockchain, Loans, P2P Networks, Investing, Marketplace, Insurance and Charity. ICO is still live! (TechBullion) Rated: A

The Valorem foundation provides a decentralized platform enabled by smart contracts of the blockchain to allow users engage in cryptocurrency-based transactions and exchanges. The transactions between users are facilitated by an ERC20 standard token called VLR token.

Valorem Foundation’s VLR token is the utility token for this ever changing platform. Valorem Foundation is developing a unique platform with the following features: Microloans, Student Loans, Car Loans, P2P Networks, Business Investing, Crowdfunding, Buying/Selling of goods, Insurance and Charity.

Authors:

George Popescu
Allen Taylor