The Summit seeks to create opportunity for responsible industry participants to share insights, propose standards and provide regulators and policymakers with consensus viewpoints on the regulation of online lending. The Online Lending Policy Summit will include participants from across the Online Lending Industry, including: online lenders, academics, lawyers, banks, consumer advocates, servicers and regulatory agencies, […]
The Summit seeks to create opportunity for responsible industry participants to share insights, propose standards and provide regulators and policymakers with consensus viewpoints on the regulation of online lending. The Online Lending Policy Summit will include participants from across the Online Lending Industry, including: online lenders, academics, lawyers, banks, consumer advocates, servicers and regulatory agencies, amongst others.
U.S. Congressman Gregory Meeks
U.S. Congressman Trey Hollingsworth
Paul Watkins, Director of the Office of Innovation, Consumer Financial Protection Bureau
Maria T. Vullo, Superintendent, New York State Department of Financial Services
Joanne Barefoot, CEO, Barefoot Innovation Group & Cofounder, Hummingbird Regtech
Frank Borcher, MD, General Counsel & Secretary, Marlette Funding LLC
Gordon Watson, Partner, Victory Park Capital Advisors
Peter Renton, Founder, Lend Academy
Michael Koenitzer, Director of Business Development, Global Debt Registry
Block & Leviton LLP (www.blockesq.com), a securities litigation firm representing investors nationwide, announces that a new class action lawsuit has been filed against Lending Club Corp. (“Lending Club” or the “Company”) (NYSE: LC) and certain of its officers and directors alleging violations of the federal and securities laws. Class members interested in serving as lead plaintiff are reminded of the July 2, 2018 lead plaintiff deadline.
The lawsuit, filed in the United States District Court for the Northern District of California (No. 3:18-cv-02599), alleges that throughout the Class Period, defendants made false and/or misleading statements when they stated that Lending Club customers would receive a loan with “no hidden fees.” On April 25, 2018, the Federal Trade Commission (“FTC”) filed a complaint alleging that Lending Club knowingly charged consumers hidden fees, contrary to their public disclosures.
Lending Club was fully aware that thousands of consumers applied for loans with no knowledge of the obscure origination fee. In fact, Lending Club received “[a]t least tens of thousands”12 of complaints directly from consumers about the hidden fees. Indeed, Lending Club’s own training materials for customer service representatives listed “I didn’t receive the full loan amount” as one of the two most common complaints that representatives were trained to address.13 Consumers “frequently complained that they only discovered the fee after [Lending Club] disbursed their loan proceeds, when they noticed that the amounts disbursed were smaller than they were expecting.”14 Once consumers became aware of the fee, many elected to cancel their loans, often “preferring a loan from a competitor or no loan at all.”15
We continue to accelerate growth at scale, expanding our ecosystem for sellers and individuals. In the first quarter of 2018, total net revenue was $669 million, up 45% year over year, and Adjusted Revenue was $307 million, up 51% year over year. This is an increase from the fourth quarter of 2017, when total net revenue and Adjusted Revenue grew 36% and 47%, respectively, year over year. Gross Payment Volume (GPV) was $17.8 billion, up 31% year over year. Net loss in the first quarter was $24 million, which is an increase of $9 million from a net loss of $15 million in the first quarter of 2017. Adjusted EBITDA was $36 million in the first quarter of 2018, compared to $27 million in the first quarter of 2017. We achieved an Adjusted EBITDA margin of 12%, which reflects our reinvestment in the business to drive long-term growth.
Goldman’s Marcus has scaled extraordinarily fast having provided $2.4 billion in consumer loans; some analysts have expressed concerns on the credit quality of the loans Marcus has been making; Blankfein on Wednesday noted that a poor credit environment could bring new risks but he isn’t concerned with their timing into the market; the bank has a long-term view on their consumer focused business and believes they can manage it through the ups and downs.
Private lenders hold just a fraction of the outstanding student loan debt in the U.S. — about 7.7 percent as of last year. But those companies have plans to grow their student loan holdings.
The PROSPER Act, House Republicans’ opening bid to update the Higher Education Act, would raise undergraduate lending limits and add new annual limits for graduate student borrowing. Those students would have their total annual borrowing capped at $28,500 annually. Currently, graduate students can borrow up to the cost of attendance.
Graduate loans also offer a higher loan volume for private lenders. As Quinlan noted to investors, grad students make up 16 percent of the borrower market but hold 40 percent of student loan debt. So the average borrower holds more debt, they’re older, and they’re better educated, too, making it more likely that they will pay off their loan.
The recent end of Promise Financial personal loans leaves brides- and grooms-to-be with one less borrowing option. The company, which focused solely on financing weddings through unsecured personal loans, stopped funding new loans in January 2017, reported Bloomberg.
A group in Springfield, Mass., has applied to form a new bank. The group hopes to raise $25 million to $30 million in initial capital. If it opens, Green Apple would become the first new bank in Massachusetts since 2008, according to the state’s Office of Consumer Affairs and Business Regulation.
The application notes that Green Apple, which aims to open by the end of this year, would focus on small-business banking, commercial real estate lending, personal banking, renewable energy, local agriculture businesses and the food security sector.
Credit unions aren’t paving the way. Nor are they pioneering the ability to serve the underbanked. Seriously. Many are doing great things, that’s for sure, yet the fundamental change is originating from tech firms. And they’re not doing it alone (more on that later).
Although CreditCards.com lists the national average APR on a credit card at 16.38% as of January 2018, the rates on three-year unsecured loans are only 9.22% for credit unions and 10.09% for banks as of March 2018, according to the National Credit Union Association.
An online lender might provide an even lower personal loan APR, with FreedomPlus offering rates starting at 4.99% and SoFi at 5.37%.
Virginia alleges one of the nation’s largest online lenders made more than $47 million of illegal, high-interest-rate loans that put Virginians on the hook for tens of millions of dollars in interest and fees.
The state is suing Net Credit, which sells personal loans for up to $10,000 and charges interest rates of as much as 155 percent, for violating the state’s consumer protection laws.
The lawsuit also alleges that Net Credit has lied to Virginians about the legality of its loan terms and that it has continued to automatically debit money from customers’ bank accounts after they’ve filed bankruptcy and won a court-ordered freeze on debt collections.
The Online Lending Policy Institute (OLPI) today announced that it will partner with Detroit-based financial media outlet Benzinga for the Benzinga Global Fintech Awards Gala (BZ Awards) in NYC on May 15, 2018.
Real estate source platform, Infabode, has successfully secured its initial £750,000 funding target on equity crowdfunding platform Seedrs from more than 150 investors. Founded in 2013, Infabode reported that it connects its community of users with industry information from the real estate sector on one customizable online platform. Infabode’s platform has more than 450 content providers and over 17,000 members.
The council identifies only 36% of the population as “white British”. Dalston Junction, a now-trendy part of the borough, buzzes with a down-at-heel sort of cosmopolitanism: a Caribbean bakery; the Halal Dixy Chicken shop; the Afro World wig-and-extensions parlour; dozens of outlets for Lycamobile (“call the world for less”) and for money-transfer firms.
Competing with this last group is a branch of Oakam, a British lender set up in 2006. It advertises itself as an “alternative to doorstep lenders”, the traditional financiers for those beneath the bar set by mainstream banks. Originally aimed at recent immigrants, it extended its reach to the rest of those “lacking access to basic financial services”—a group it puts at 12m across Britain. A report published in March 2017 by a House of Lords committee estimated that 1.7m adult British residents have no bank account; 40% of the working-age population have less than £100 ($140) in cash savings; and 31% show signs of financial distress.
Revenues jumped 41 per cent in the six months ending in March to £74.1m compared with £52.4m over the same period of the prior year. Pre-tax profits rose 86 per cent to £19.5m.
Corporate broking and advisory revenues were up 76 per cent year on year to £50.9m, boosted in part by a growth in fees from M&A advisory work, a growing sector for some City brokers. However this compared with a weak comparative period, and fell 10 per cent below a record performance in the second half of last year.
61% of UK savers acknowledge possibility of higher returns and better interest rates with IFISAs, but majority still don’t understand the service
Over a third (36%) of UK savers would place their money in an IFISA if they had the money available.
While a large proportion acknowledge the prospect of higher returns (61%) alongside the allure of the tax-free wrapper and greater diversification, the IFISA is still a hard sell, according to research undertaken by P2P lending service ArchOver. In truth, the majority of UK savers (57%) still don’t fully understand the service.
Ripio Credit Network (RCN) — a global credit network based on cosigned smart contracts — has released an entirely new version of its NanoLoanEngine, the driving mechanism behind its protocol. The upgrade, which is called Basalt, includes significant improvements that will offer lenders and borrowers more flexibility. The company also claims that the new engine lowers costs.
Basalt changes how interest is applied to the network’s loans and eliminates nearly all maintenance fees associated with those transactions.
What HOLD (HOLD) allows you to do is simple, if you don’t want to sell your crypto or you want to “HODL” but at the same time you need cash, then HOLD is the platform for you. By creating an escrow that will lock up your funds as a collateral, HOLD will then send you a credit card of that amount in fiat, which means that you can have liquidity without selling your crypto assets.
How HOLD (HOLD) can have major advantages over SALT
What you might be thinking is that SALT already provides these types of services but the major advantage of HOLD platform is the almost instant credit card that will be issued for you to use in any store making adoption of crypto as payment a closer reality. This is a very important middle step towards businesses accepting crypto as payment.
Athens-based digital-first insurer Hellas Directhas teamed up with banking alternative Revolutto build “microinsurance, by-the-day products.”
Also, according to the press release, “the partnership will allow Revolut and Hellas Direct to push their offering into new markets and enable them to leapfrog some of the traditional barriers of growth and expansion by using the core competencies of each partner.
BuzzFeed reports that the Commonwealth Bank lost 12 million customers’ data after magnetic tape backups containing their personal financial history from 2004 to 2014 went missing. It just lost them. They may have literally fallen off a truck. And the bank didn’t even bother telling its customers about the incident.
While said losing-of-data was only publicly revealed this week, it took place back in 2016, when the Commonwealth Bank hired a subcontractor to destroy the backup tapes while decommissioning a data center. After it didn’t get a receipt of the tapes’ destruction, the bank investigated and discovered that the tapes were nowhere to be found.
Enter Bamboo, a West Australian startup whose mission is to make a cryptocurrency investment platform for the rest of us.
Bamboo brings together two new ideas. One complicated (cryptocurrency) and one a bit more simple (microinvesting). As platform Raiz (previously Acorns Australia) describes on their site, microinvesting works by transferring “spare change automatically from everyday purchases into a diversified portfolio”. For example, if you were to buy a coffee for $4.80, Raiz would round the sale up to $5.00 and then invest the $0.20 for you.
Noida-based OYE Fintech, which operates a consumer-focused lending platform called OYE! Loans, has raised $2.25 million (about ₹15 crore) from GAIN Credit, Inc. OYE! Loans currently serves new-to-credit and new-to-workforce consumers with simple, timely and affordable One Year EMI loans (hence the brand OYE!), with ticket-sizes ranging between 10K and 1L INR.
The company leverages alternative data to assess risk on customers who have thin or non-existent footprints on the credit bureau. The loan application to disbursal process is largely online, enabling for quick turn-around times of less than 2 business days – an attribute that has strengthened its growing reputation as a lender-of-choice within its target markets.
Interest rates on bank deposits are at a decade low, and those on small savings schemes are close to a 40-year low. This has forced people to look for alternatives, one of which is peer-to-peer, or P2P, lending.
News Comments Today’s main news: KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2018-2. dv01’s Q1 securitization volume hits $2.58B. Revolut releases open API. RainFin acquires stake in 4AX. Today’s main analysis: International P2P lending volumes for March 2018. Today’s thought-provoking articles: Trends on millennials and money. A tale of two fintech sectors. Amazon could become the third largest […]
Trends regarding millennials and money. “Student loan debt is such a burden that 70% of Millennials say that financial circumstances were a key consideration in deciding whether or not to go to college.”
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by SoFi Consumer Loan Program 2018-2 (“SCLP 2018-2”). This is a $544.6 million consumer loan ABS transaction.
This transaction represents SoFi Lending Corp.’s (“SoFi” or the “Company”) 14th rated securitization collateralized by a portfolio of unsecured consumer loans. SoFi currently originates personal loans through its state licenses or complies with certain requirements where a state lending license is not required.
Preliminary Ratings Assigned: SoFi Consumer Loan Program 2018-2
dv01 closed out Q1 with nine new securitizations, totaling $2.58 billion in total issuance. This represents a 141% increase from last year’s Q1 volume, which totaled $1.07 billion.
Deals were originated by six different lenders, including Prosper, Upgrade, LendingClub, CommmonBond, SoFi, and Marlette. Three of the deals (UPT I 2018-1, UPT I 2018-2, and CLUBC 2018-2) were trust certificates. dv01 was loan data agent on eight of the nine deals; loan level data and reporting tools for all the deals are accessible through dv01’s Securitizations portal.
Here are over 30 facts, statistics and insights about Millennials banks and credit unions need to know to serve this essential market segment more effectively.
Millennials want to learn how to feel financially empowered. Nearly three quarters say they feel confident in their ability to make financial decisions, but they still want to learn more. 92% believe that being educated on personal finances is important. (Source: CSpace)
Millennials are so serious about their financial health that more than a third (34%) have a written financial plan, much higher than the 21% of Gen X and 18% of Baby Boomers who have done the same. However, 78% rarely or never make spreadsheets for their finances, and 35% say they’d rather vomit than make a spreadsheet to help them manage their finances. (Sources: Schwab, Varo Money)
Maybe Millennials don’t need help from real human beings. With 85% saying artificial intelligence could help them better manage their finances, banks and credit unions should use digital tools and AI to deliver the financial insights they crave. Nearly half of Millennials say they want their bank to be able to anticipate their financial needs and offer them timely advice (Sources: Varo Money, Segmint).
Millennials’ top savings priorities are emergency funds (64%), retirement (49%), and buying a house (33%). Nearly half already have $15,000 or more in savings, and 16% have a whopping $100,000 or more in savings. (Source: Bank of America)
When it comes to saving, Millennials still have significant headwinds: three in four college graduates today will have a heavy student debt load. (Source: ABA)
The average graduate from the university class of 2016 has $37,172 in student loan debt, up 6% from the prior year. (Source: Student Loan Hero)
Student loan debt is such a burden that 70% of Millennials say that financial circumstances were a key consideration in deciding whether or not to go to college. (Source: Harvard)
Despite what many see as the inevitability of tech giants entering the financial advice business, the economics of doing so — as well as the intensely regulated nature of the business — make their entry unlikely, according to a new report from Cerulli.
The Boston-based research firm says that “companies like Facebook, Amazon, Apple, Netflix and Google (FAANGs) have the tools and data to excel, but face significant obstacles that will likely preclude their entry,”
One major obstacle, Cerulli says, is the relatively small size of the market. The firm estimates that the “digital advice opportunity segment” represents only about 12% of investors, or a segment “that would be difficult to scale to be of strategic interest to the world’s largest technology providers.”
The Credit Junction, the first data-driven, asset-based lender for small and mid-sized businesses, has secured a $150 million credit facility from MidCap Financial, a leading capital provider to the middle market specialty finance industry. The facility strengthens and expands The Credit Junction’s ability to deliver comprehensive capital solutions to businesses across the United States.
The Credit Junction combines traditional credit metrics with data intelligence and partners with business owners to deliver asset-based financing alternatives unique to the needs of each borrower. Since its launch in May 2015, The Credit Junction has helped businesses across the country achieve their growth objectives while supporting job creation and development in the communities they serve.
Sharestates, an online real estate investment platform, announced today the launch of new online user portals that fully optimize the real estate investment process from beginning to end, providing investors with the first ever UX solutions in the real estate investment industry.
Sharestates’ unique solution was designed by the company’s development team alongside CEO and Co-Founder Allen Shayanfekr with UX and functionality in mind – now offering investors a streamlined “one stop shop” in real estate financing.
Peer-to-peer lending platforms such as Prosper and LendingClub(NYSE:LC) have changed the way people can borrow money, and apps such as Venmo and Zelle have made it easier and cheaper to send money.
In this segment from Industry Focus: Financials, analyst Michael Douglass and Motley Fool contributor Matt Frankel talk about the ways that technology is disrupting big banks, and what this trend could mean to the banking industry.
The average student loan payment is $351. Between such a high monthly payment and rent, finding the money to furnish your home or buy a new computer can seem daunting.
If approved, you can now shop. When you’re ready to make a purchase, you can enter the total from your online shopping cart on Affirm’s site. You then choose an amount between $50 and $10,000. You’ll be provided virtual card information to complete the purchase. With some partner retailers, you might select Affirm at checkout instead.
LendingTree, the nation’s leading online loan marketplace, today announced the launch of its Credit Analyzer, a free credit and debt analyzer tool, which was created to help consumers avoid common credit mistakes, improve debt management skills and find the right financial products for their needs.
Credit Analyzer is a free tool that provides a deeper, instant analysis of consumers’ credit and debt situations and offers personalized recommendations based on individuals’ financial goals. The user experience is designed to make it easier for consumers to understand the most important factors that impact credit scores.
The protocol of trust is here to stay, and it’s going to disrupt everything.
While the blockchain has not rendered audits unnecessary yet, I believe we’ll see it happen within the next five years.
Smart Contracts Are In, Long, Paper-Intensive Financial Processes Are Out
As I write this, Lending Robot is raising a private round of growth capital. The closing process, called “papering” for very obvious reasons, is just as onerous and Microsoft Word-oriented as I remember it back in the early 2000s when I was a young VC.
Fintech is Everywhere
Fintechs are enhancing the customer experience along four axes: choice, price, convenience, and predictability. They are meeting the needs of educated, aware, demanding consumers and they are attacking traditional financial institutions at every angle.
Here are five things the winners nailed that newcomers must do to compete:
Build a seamless digital customer experience (CX) customized to each set of eyeballs, across platforms — plus, make financial services ubiquitous, instead of an unfortunate necessity.
Streamline their lead generation and nurturing through automation, machine learning and AI, plus intelligent CRM throughout the customer journey. This powers faster, more accurate processes like loan origination, mortgage underwriting and credit application decisions, among others.
Instead of being scared of increased regulation, embrace it as a driver of innovation.
Upend an established Wall Street business model both by undercutting fees and over-delivering on performance.
Find novel, values-driven ways to increase millennial participation in financial services.
Online business loans are a popular option for financing small businesses. Over the years more small business owners have been turning to online lenders as banks have cut down on loans to smaller businesses.
With the assistance of technology and algorithm, online lenders are able to assess conventional credit standards like cash flow and personal credit score.
The San Diego-based company filed documents with the Securities and Exchange Commission on Monday for Mosaic Solar Loans 2018-1. The ABS-15G forms name Deutsche Bank and BNP Paribas as banks on the deal.
The transaction, Mosaic Solar Loans 2017-2, was priced at 185bp over interpolated swaps for the senior class, yielding 3.854%. Energy related ABS such as solar and Property Assessed Clean Energy (Pace) deals were heavily subscribed throughout last year, with strong issuance of residential Pace bonds and the first ever issuance of commercial Pace ABS from Greenworks Lending.
Laurel Road, an online lender and FDIC-insured bank, officially announced today that Darien Rowayton Bank and its national online lending division will rebrand under the integrated national Laurel Road brand. The new, unified Laurel Road brand represents a deep understanding of its customer base, best-in-class technology and industry-leading compliance and risk management.
Think Finance LLC, a financial technology firm that critics say uses Native American tribes to skirt payday lending laws, failed to convince a Pennsylvania federal judge on Tuesday to move an action brought by the state’s attorney general to Texas, where it has filed for bankruptcy.
The company has been hit with lawsuits over its alleged role in several “rent-a-tribe” schemes, where a high-interest lender affiliates itself with a Native American tribe to shield itself from legal challenges.
Millennials rank as the key target in the economic development world setting sights on future prosperity. A new study casts a pall over efforts to build the Sarasota and Manatee population of this prized demographic. Out of the largest 100 U.S. metropolitan statistical areas in the country, Sarasota-Manatee ranked dead last among cities favored by millennial homebuyers.
The study, conducted by LendingTree, focused on the percentages of all loan requests to the online loan marketplace that came from millennials. That figure for Sarasota fell far from top-ranked Des Moines, Iowa — 17.9 percent versus 42.4 percent. Fort Myers ranked just above Sarasota, with 19.8 percent.
Robert J. (Bob) Mullenbach, CRCM, Managing Director – Compliance Division Deputy at ProBank Austin – has been appointed as the Online Lending Policy Institute’s (OLPI) new Deputy Director. Mr. Mullenbach brings 25 years of regulatory compliance experience in billion-dollar financial institutions, regional and community banks, fintech’s, and leading consulting firms. In his current position, Bob audits clients on the myriad of regulatory requirements associated with consumer/commercial lending, bank secrecy act/anti-money laundering, privacy, and non-deposit investment products.
Central Ohio chapters of the St. Vincent dePaul Society, an international charity run by Roman Catholic volunteers, give needy folks a better option through the society’s microloan program. Information is available through the organization’s website at svdpcolumbus.org.
Anyone of any faith who needs up to $500 for car repairs, school, home repairs or medical bills, can apply for a quick loan with a low interest rate and 12 to 15 months to pay it off.
Contrast that with the typical payday-loan operation, which loans a couple-hundred dollars and demands payment in two weeks. Many borrowers who are strapped enough to go to such a lender in the first place can’t pay it back that quickly. This leads to loans on top of loans, with tacked-on fees that can lead to an effective interest rate of nearly 600 percent.
SunTrust Banks in Atlanta is teaming up with another fintech upstart to expand its reach in consumer lending.
The $202 billion-asset company said Wednesday that it has struck a partnership with the online lender Microf to offer point-of-sale loans to homeowners looking to replace aging residential heating, ventilation and air conditioning systems.
SunTrust will hold the loans on its books and a pay a fee to Microf for the referrals. Microf, based in Albany, Ga., offers the loans through its nationwide network of HVAC contractors.
APIs and open banking are hotter than a freshly tarmacked road in summer, and Revolut joins the mad-for-it crowd.
On its blog, the bank, which was launched in mid-2015 and offers a money transfer app, says account owners can generate sandbox and production keys, and set whitelisted IPs as an “extra layer of security”.
Away from these API days, the firm adds that over the last few months it’s been making updates to its business accounts.
Augmentum Fintech was launched by Augmentum Capital, a venture capital (VC) firm backed by Lord Rothschild’s RIT Capital Partners, last month. The VC firm already had a 7.4 per cent holding in P2P giant Zopa worth £18.5m that has been transferred into the investment company portfolio and its founder Tim Levene, who is acting as investment adviser to Augmentum Fintech, said that the firm is well geared to the P2P sector.
THE FINANCIAL Conduct Authority (FCA) has revealed that it intervened in the administration of Collateral because the peer-to-peer lender failed to seek its approval when it appointed an insolvency practitioner.
March saw the introduction of tax wrappers from peer-to-peer property platforms The House Crowd and Safe as Houses, while EasyMoney, part of Sir Stelios Haji-Ioannou’s easy family of brands, launched its second IFISA offering.
Safe as Houses
The Safe As Houses ISA, which invests in loans made to Safe as Houses Group to develop, regenerate and sell on distressed properties, offers investors a return of six per cent.
The IFISA has a five-year term and requires a minimum investment of £5,000.
The House Crowd
The House Crowd’s IFISA invests in secured P2P loans and property development investments and offers a target return of seven per cent.
The House Crowd requires a minimum investment of £1,000, and new investments can be added to the IFISA in £1,000 increments, up to a maximum of £20,000 across an investor’s entire ISA portfolio.
Investors will get a fixed return paid in twice a year in October and April.
The latest IFISA to hit the market before the deadline came from EasyMoney, offering target returns of 7.28 per cent. This eclipses the 4.03 per cent returns offered by its first product that launched in February.
The P2P lending platform said its new ‘balanced’ IFISA allows individuals to invest in a broader range of property-backed loans, limited to 75 per cent loan-to-value (LTV).
With just a month to go until the General Data Protection Regulation (GDPR) is implemented throughout Europe in May. We look at how the new regulatory regime will affect the nascent Digital Advice industry. Some of the upcoming regulatory changes issued from the EU and its commissioners should be positive for fintech asset managers.
With a clear focus on transparency, robo-advisors should look forward to the new era of information portability and openness.
The digital advice sector has from inception attempted to gain a competitive edge with clear transparent product engineering and pricing, but it won’t all be plain sailing and there may be headwinds ahead.
2017 was once again characterized by the significant growth of Banco BNI Europa’s activity, increasing 41% in assets (from € 362M in 2016 to € 509M in 2017), 16% in customer deposits (from € 262M in 2016 to € 305M in 2017) and 379% in banking income (€ 2,8M in 2016 to € 13,2M in 2017).
Net income reached € 2.3M, increasing regulatory capital to € 23.3M and the solvency ratio comfortably above the statutory limit at 13%.
According to Citigroup consumer banking currently generates around $870bn in revenues across Europe and North America, with digital innovators accounting for just 5% of that total. But if the report’s predictions are correct, by 2023, disruption by fintech companies will account for 17% of a total earnings pot of $1.200bn
Follow the Money
CitiGroup cites figures showing that global investment has risen from around $0.5bn in 2019 to just under $20bn today. And most of that investment – Citigroup puts it at 70% is focused on the key areas of personal and SME banking.
ROSCAcoin is a new decentralised autonomous and self-regulating platform built on the Ethereum blockchain. The project aims to develop an innovative financial infrastructure that allows creating solutions for people with little or no access to financial services. ROSCAcoin is set upon an ancient model of borrowing very popular in third world countries.
ROSCA, or Rotating and Saving Credit Association, is defined by a method of borrowing where a group of individuals agree to cooperate for saving and borrowing purposes within a pre-established period; is also a form of peer-to-peer banking and peer-to-peer lending. ROSCAcoin strives to introduce this method using the blockchain technology.
The platform is powered by its own currency RCA, which will be the engine of the whole ecosystem. By using smart contracts, ROSCAcoin is trying to build the ultimate financial solution for the unbanked.
The Dollar has risen 4.4% versus the Swiss Franc since mid-February and could be about to accelarate the move suggest analysts; this despite the sizeable global stock market sell-off which would normally be expected to support the safe-haven Franc.
Safe-haven currencies usually strengthen in times of fear, such as the present, however this does not appear to be the case with USD/CHF which has risen due to the USD outperforming CHF – not the other way round.
White Oak Global Advisors, LLC on behalf of its institutional clients (collectively “White Oak” or the “Company”), announced today that White Oak has agreed to expand its asset-based lending platform to serve clients in the U.K. and Europe through the acquisition of LDF Group (“LDF”), a U.K.-based finance company providing asset finance, business loans, commercial mortgages and education leases to small and middle-market companies. Established in 1986, LDF is an industry leader and one of the largest independent finance providers for small businesses in the U.K.
Leading Peer-to-peer (P2P) lending company Faircent on Thursday announced that the company has hired Shalabh Gupta as national sales head – lending.
As an industry veteran with over 17 years of extensive sales experience with brands like the Times Group, Reliance Capital, HDFC Bank, and ITC Limited, Shalabh will play a crucial role in furthering the company’s impressive growth plans and vision as a part of its leadership team.
Since the Supreme Court extended the deadline for linking of Aadhaar to host of services, the fintech segment has been riddled with burdens of limited Aadhaar-based eKYC. The companies have been unable to access Aadhaar database for verification of their customers.
Impact Of Aadhaar KYC On Fintech Startups
According to reports, fintech startups across the insurance, lending and broking sectors are being denied access to authentication agencies for eKYC to verify customer antecedents on the Aadhaar database amidst rising concern over data privacy.
In a move that seems to have left fintech players scrambling, the Unique Identification Authority of India (UIDAI) revoked on Tuesday their access to a dozen agencies that provide e-KYC verification and authentication services. Some of these agencies – KUAs (e-KYC user agencies) and AUAs (authorised user agencies) – will no longer be able to provide e-KYC verification to onboard new customers or authenticate financial transactions affecting e-wallets, online lenders, NFBCs and smaller fintech players.
Fintech company RainFin has announced the conclusion of a transaction with 4 Africa Exchange Proprietary Limited (4AX), which will see the company sell to 4AX its corporate debt marketplace, in exchange for a strategic shareholding in 4AX.
RainFin’s credit marketplace technology has been utilised by companies to raise debt funding from both tradition and non-traditional sources since its formation in 2002.
Accra, Ghana’s capital city will host the forthcoming Startupbootcamp (SBC) Africa Accelerator program. The SBC sponsors include the Old Mutual, BNP Paribas, RCS, PwC, and Nedbank. During the event, startups present to the panelists for about two hours.
News Comments Today’s main news: SoFi’s lawsuits not affecting brand. Zopa to reopen to investors. Funding Circle revenue hits 50M GBP. CFPB sues over illegal online lending in Canada, Malta. Today’s main analysis: Why Square is entering the banking business. Today’s thought-provoking articles: Prosper loses unicorn status. Banks tell Equifax to get it together. Job loss concerns amid digital disruption […]
SoFi lawsuits don’t seem to be affecting its brand. AT: “This is either because of the quick reaction to the news by Cagney and the SoFi board of directors to have the CEO step down as soon as the news hit or it may be because millennials don’t care about such things if they don’t affect their finances. More likely, its a combination of the two.”
Prosper loses unicorn status. AT: “Not much new here, except the observation that the $50M raise that sealed the company’s devaluation is a sign of the state of MPL.”
Banks tell Equifax to get it together. AT: “What would the world of credit look like with only two credit bureaus? Not very good, and it could hasten the development of alternative credit scoring models.”
The resignation of the company’s co-founder and former CEO, Mike Cagney, amid lawsuits from employees stemming from sexual harassment allegations and other workplace issues has thrown into question whether the brand can continue to be known as a “different kind of finance company,” as it markets itself. But despite the bad news so far, the damage to the company’s standing seems to have been contained — the result of being in the shadow of bigger scandals in Silicon Valley and the company’s actions in the aftermath of the scandal.
Based on online sentiment expressed on Twitter, Facebook, Instagram, blogs, forums and news sites between Aug. 12 and Sept. 23 (when the news of lawsuits first emerged), 71 percent of categorized mentions of the brand were positive, according to social media analytics firm Brandwatch. While sentiment dips Sept. 12-16 (reaching the level of 86 percent negative on Sept. 16, coinciding with Cagney’s resignation), feelings quickly rebound by Sept. 19, showing a certain resilience despite the negative press.
In addition, the quick timing of Cagney’s resignation reduced the effects of the negative news, said Crenshaw.
“I guess I don’t really care as it pertains to my loan,” said Alex Nocella, 27, a SoFi customer since 2013. “It damages my view with the way they’re operating their business, but it doesn’t change the relationship I have with them. It wouldn’t stop me from getting another loan with them.”
In addition, he said, the company was proactive about informing customers of Cagney’s resignation prior to the news becoming public by giving them a heads-up on the customer-only Facebook group.
Square Capital has distributed more than $1.8 billion in loans to over 140,000 merchants since its inception in 2014. In 2Q17, Square Capital loan volumes rose at 68% year-over-year to $318 million.
In the business of supplying alternative financing to merchant customers, Square competes with PayPal (PYPL), Amazon (AMZN), and LendingClub (LC). PayPal says it has distributed $3.0 billion in small business loans through its credit arm, while Amazon says it has supplied more than $2.5 billion in credit to its merchant clients.
Why Square Is Pursuing a Bank Charter
Square is pursuing its application for a bank charter because it’s seeking more independence in its financial services business. Square Capital head Jacqueline Reses told the Wall Street Journal, “As we scale, it’s becoming increasingly important that we have direct relationships with regulators.”
While a partnership with Celtic Bank has helped Square Capital grow, Square prefers running a financial services operation that it controls. The US (SPY) small business alternative lending market is forecast to originate $52 billion in loans by 2020 compared to $5.0 billion in 2015, according to BI (Business Insider) Intelligence.
Why Square Opted for an Industrial Bank Model
Square (SQ) is seeking an industrial bank license rather than a traditional bank license. Why? In deciding to go for an industrial bank license as opposed to a traditional bank license, Square chose the easy way out.
How SFS Could Change Square Capital
Square has applied for an industrial bank charter so that it can take its lending business to a higher level and potentially unlock more growth.
However, Square intends to keep its consumer-facing financial services separate from its main bank unit.
Through Square Cash, Square is targeting the multibillion-dollar P2P (peer-to-peer) payments market. According to Forrester Research, global P2P transactions will reach $17 billion by 2019. According to Javelin Strategy and Research, the number of Americans using the P2P payment service will increase to 126 million by 2020 from 69 million in 2016. $1 trillion alternative financing market
SFS, to be capitalized with $56 million in cash, will provide credit and offer deposit account services to merchants. The Polsky Center estimates that US (SPY) alternative loan volume rose to $34.5 billion in 2016 from $28.3 billion in 2015. Globally, the alternative financing market is forecast to grow to $1.0 trillion in the coming decade.
Square’s bank CEO will be Lewis Goodwin, an executive who recently joined the company from Green Dot (GDOT). Goodwin was CEO and president of Green Dot for several years.
Green Dot is a provider of prepaid debit card services. In 2016, Goodwin’s last full year as the company’s head, Green Dot’s revenue grew to $718.8 million from $694.7 million in the prior year.
Equifax has been the Bad News Bears of financial services lately. First there was the massive data breach that sent the personal information of most of the U.S. adult population to the dark web for exploitation. Then there was the fake phishing site to which the credit rating agency accidentally referred a bunch of recently breached people, as they could not distinguish their own site from a cloned version of it. Thankfully, that site was actually set up by a security researcher to illustrate a flaw, not a real cybercriminal – but still, it hasn’t been a good fortnight for Equifax.
And now the banks – i.e. the lenders who supply credit rating agencies like Equifax with the data they need to feed their scoring model – are making loudly discontented noises in Equifax’s direction.
“If there’s only two players, then they have less ability to play them against one another” in negotiating prices for credit reports, Thomas said.
But the willingness of lenders to support Equifax is damaged by the firm’s handling of the hack so far, which has failed to impress anyone.
The U.S. Consumer Financial Protection Bureau (CFPB) is seeking the BC Supreme Court’s help to compel a group of former employees of a Langley company that allegedly ran an illegal online payday loan business through a web of affiliated companies in Canada and Malta.
The U.S., on behalf of the bureau, filed a petition in BC Supreme Court on September 8, naming Roo Chang, Annie Wang, Juila Zhu, May Chan, Doug Patton, Andrew Hung, Michelle Duncan and the Bank of Montreal as respondents.
The petition is related to a lawsuit filed by the bureau in New York in July 2015 over alleged violations of the Consumer Financial Protection Act “by using a series of interrelated Canadian and Maltese companies … to operate an illegal online payday lending business targeting U.S. consumers in all fifty states.”
Yesterday, I attended the second annual Online Lending Policy Summit in Washington DC. It was headlined by the Acting head of the OCC, Keith Noreika, Congressman Greg Meeks (D-NY), Congressman Tom Emmer (R-MN) and William Isaac, the former head of the FDIC.
William Isaac was the head of the FDIC under President Reagan and he painted a stark picture of the US today where 60% of the population cannot get a bank loan. He said that we have to do better and figure out a way to lend to a broader cross section of the population.
I found Congressman Meeks to be the most engaging speaker of the day. His enthusiasm for financial innovation was infectious. He said that fintech should focus more on being an enabler than a disruptor. We need to enable more access to credit through partnerships with traditional financial institutions. He brought up the idea that fintech platforms could partner with black-owned banks that are struggling to keep up with the technological changes happening today.
In Madden, the Second Circuit ruled that a nonbank that purchases loans from a national bank could not charge the same rate of interest on the loan that Section 85 of the National Bank Act allows the national bank to charge. Yesterday, at the Online Lending Policy Summit in Washington, D.C., Acting OCC Comptroller Keith Noreika advocated a Madden “fix” as an example of an action Congress could take “to reduce burden and promote economic growth.” Mr. Noreika stated that the OCC supports proposed legislation that would codify the “valid when made rule” and provide that a loan that is made at a valid interest rate remains valid at that rate after it is transferred.
Mr. Noreika also was asked whether, as we have previously suggested, the OCC would address the risk posed by the theory that a bank making loans is not the “true lender” if a nonbank marketing and servicing agent acquires the “predominant economic interest” in the loans. Unfortunately, Mr. Noreika stated that “true lender” guidance might be unnecessary at this time due to prior guidance issued during the tenures of former Comptrollers Hawke and Duggan.
With regard to the OCC’s special purpose national bank (SPNB) charter proposal, Acting Comptroller Noreika stated that the OCC is continuing to consider the proposal and intends to defend its authority to grant an SNPB charter to a nondepository company in the lawsuits filed by the NY Department of Financial Services and the Conference of State Bank Supervisors.
Mr. Noreika also indicated that the OCC intends to revisit its guidance on deposit advance products, observing that its views on such products are not necessarily consistent with those of the CFPB.
An innovative new online golf club upgrade and financing program, developed by TaylorMade Golf (www.taylormadegolf.com) in collaboration with Klarna (www.klarna.com), provides golfers access to the newest and most advanced equipment as soon as it is released.
In the first five months since its inception, the program has experienced significant success, with a 30 percent overall lift in conversions and a five percent increase in average order value.
‘The Turn’ is a first-of-its-kind upgrade program for purchasing golf clubs. It is named for when golfers finish the ninth hole of a round of golf and then ‘turn’ for home. The program allows TaylorMade Golf fans to finance their purchases over 18 or 30 months on the TaylorMade Golf website, and keep or exchange their clubs for the latest models toward the end of the payment period. If a customer chooses to upgrade, payments on the existing clubs will stop and payments on the new clubs will begin.
The program is powered by Klarna, a global leader in providing instant financing solutions to e-tailers and customers. Customers opt-in to the program by applying for financing at the point of checkout through a simple, instant credit approval process that provides them with an open line of credit that may be used wherever Klarna is accepted.
Commercial real estate crowdfunding platform ArborCrowd announced on Tuesday it is now offering a $40.8 million multifamily real estate deal to investors. The property, Quarry Station Apartments, is located in San Antonio, Texas.
Another hack: Deloitte said Monday it suffered a cyberattack. But the hacker accessed data affecting only a “very few” of the big accounting firm’s clients and “no disruption has occurred to client businesses, to Deloitte’s ability to continue to serve clients, or to consumers,” the firm said.
ReliaMax, the complete private student lending solutions provider for banks, credit unions, schools and alternative lenders, today announced it has acquired the assets of FUTR Corporation, a San Francisco- and Texas-based private student loan servicing provider. The acquisition brings over 40 new lenders and $55 million in borrower servicing to The ReliaMax Solution, the only fully-integrated private student loan solution that includes borrower acquisition, origination, servicing, insurance, and capital markets/portfolio liquidity support.
The participants’ claim that Fidelity breached its fiduciary duties by selecting and hiring Financial Engines—an online financial advice provider commonly known as a robo-adviser—also fails, Burroughs wrote. The allegations were premised on the notion that Fidelity, rather than the plan sponsor Delta, hired and selected Financial Engines, but the plan’s language contradicts this premise, Burroughs concluded, granting Fidelity’s motion to dismiss.
LEND360 announces LendingTree, the nation’s leading online loan marketplace, will award a $10,000 prize to the winner of the LEND360 Startup Innovators Program, an on-site competition where fintech startups will present cutting-edge solutions that are propelling the online lending ecosystem forward.
Startups in the fintech space will pitch solutions on the LEND360 Innovation Floor Spotlight Stage. Each company will have approximately five minutes to make their pitch followed by a brief Q&A session. All LEND360 attendees are invited to attend.
Members of the LEND360 Investor Advisory Board will judge all presentations and attendees will submit their choice via our conference app. The winner will be announced on Friday morning, October 13, and will have the opportunity to pitch their solution on the mainstage.
But after NFL players and coaches challenged President Donald Trump and many took a knee during the national anthem played before their games over the weekend, Jones said he is through sponsoring the wardrobes or advertising on stations that air the National Football League.
“Our companies will not condone unpatriotic behavior!” said Jones, CEO of the payday lending chain Check Into Cash and owner of Hardwick Clothes — America’s oldest suit maker.
Envestnet (NYSE: ENV), a leading provider of intelligent systems for wealth management and financial wellness, today announced that it will acquire FolioDynamix, a provider of integrated wealth management technology solutions.
According to SoFi’s own refinancing calculator, people who refinance with SoFi save on average almost $23,000 total, or $288 a month — not an insignificant chunk of change. (Other lenders boast similar returns.) “If you’re paying an 8 or 9 percent [interest rate], and you can refi down to 4 percent, and you can lower the term — take it from 15 years to 10 years — you’ve cut the interest rate, you’ve cut the length, you would have been paying double the interest for a longer period of time,” Bradford explains.
By combining your all federal and private loans into one new private loan, you lose out on certain protections that come with federal loans, like income-based repayment or student loan forgiveness, according to the Consumer Financial Protection Bureau.
Research by LendEDU found that 57 percent of applicants qualify, so there’s little excuse not to at least try. And according to Student Loan Hero, across the top six student loan refinancers, it takes on average less than 20 minutes total to check your rates and apply online (or even on an app).
Zopa, the UK’s first peer-to-peer lender, is aiming to reopen to new investors by the end of this year following a long-running imbalance between those who want to lend money via the platform, and those who want to borrow.
Zopa’s website offers annualised projected returns of up to 4.5 per cent to those prepared to lend money to individuals via its platform for five years. However, high demand meant Zopa stopped taking new client money last December. After re-opening temporarily, it stopped again in March, and started a waiting list which has details of 15,000 potential investors waiting to lend.
Andrew Lawson, Zopa’s chief product officer, said the company was growing its book of new loans at 50 per cent year-on-year but was finding it harder to lure appropriate borrowers due to declining credit quality and fierce competition among peer-to peer lenders.
The platform’s existing investors have also been hit by long delays after a surge in demand for Zopa’s Innovative Finance Isa, which allows peer-to-peer loans to be held within the popular tax-free wrapper.
Earlier this year, a series of media reports highlighted a report from auditor BDO which stated that Wellesley & Co was “dependent on raising further capital to continue to operate for 12 months”. This statement referred to the firm’s performance as at December 2015.
However, Graham Wellesley told Peer2Peer Finance News that these reports were misleading as they referred to the firm’s mini-bonds only, and not its peer-to-peer lending platform.
LendInvest has launched its first property development course for brokers, in partnership with the NACFB.
Aimed at providing brokers with a better understanding of how to add more value to clients that require development finance, the courses outline in detail what it takes to make sure small-scale developments run smoothly.
A leading UK financial technology company has strengthened its position in the market with the appointment of new chairperson, Lazaro Campos, and chief technology officer, Scott Leckie.
The Edinburgh headquartered business, established in 2010, has won some major clients in the UK and North America. These include a large UK retail bank, Prosper Marketplace, Marlette Funding, OakNorth Bank, eMoneyUnion, and Fair Finance. Over the last 12-months alone, the volume of transactions facilitated by the company has grown by 15% month over month.
New chairperson Lazaro Campos brings over 30-years C-level experience in banking technology, having previously served as a non-executive director of The ID Co. from 2014. He is also co-founder of innovation ecosystem company FinTechStage, member of the advisory board of financial services company Payoneer and Senior Advisor to management consulting firm Booz Allen Hamilton. Elsewhere Lazaro served at SWIFT, the global banking network, in various executive roles and was its CEO from 2007 until 2012.
Avalon Capital Group, Inc. has announced that it is inviting investors from around the world to make investments in its initial coin offering. With a well-established base of research, development and operations, the company is introducing cryptocurrency and initial coin offerings as a new way of transaction for its valued customers. In addition, the rising private investment company is backed by HSBC bank with 4,000,000 USD investment already.
This blockchain based crypto lending model will open new possibilities of lending money online safely and easily. Furthermore, this decentralized peer to peer lending platform will enable anyone to lend and borrow money is a safe and secure environment online.
The SME business opportunity in India can be seen in possibly every sector – financial services, telecom, education, automobiles, media, food, real estate and so on. SME businesses are the biggest contributor to the economy of any country and the same goes with India. After agriculture, small business in India is the second largest employer of human resources. Also, in recent years, this sector has been weaving some of the most inspiring business success stories. In fact, MSMEs were found to account for 46% of the industrial production and 95% of the total industrial units.
From inefficacy of measures in credit flows (such as credit scoring for SMEs) to information asymmetry faced by banks and financial institutions, there are plentiful challenges that have impacted the contribution and performance of small and medium enterprises in the Indian economy. More than 80% MSME entrepreneurs are forced to resort to other unorganized avenues of financing to obtain credit assistance.
Although still in its infancy as a market, P2P lending firms in the US and UK in 2010 generated cumulative lending of USD 1.5m and this increased to USD 7bn in 2015 so unprecedented rise in the demand. In the US alone, in 2015, P2P platforms issued approximately $6bn in loans and based on our global analysis, this is expected to grow to $150bn by 2025 (25 times or 2400% over 10 years).
The estimated P2P lending to be generated in India over the next 5 years is pegged at circa USD 4bn (160 times the current lending size). Still this is way too low compared to China where there are circa more than 2000 P2P lending firms with a lending book size north of circa USD15bn indicating the potential to grow exponentially in India.
What are the risks involved in P2P lending?
1. Weak underwriting process resulting in bankruptcy of the P2P firm due to poorly executed business model resulting in granting loans to scrupulous borrowers with poor credit history
4. Data privacy laws could be breached if the platform firms disclose the names of the borrowers and lenders in their website.
5. If KYC and AML checks are not carried out robustly, the platform firms could be used for money laundering and routing illegal sources of funding.
1. Platform based lending will invariably gain huge momentum over the next 3-5 years due to competitive interest rates and ease of making finance available.
2. Secured lending may have a better preference from a risk averse investor stand point due to the fact that this business has progressed very well since the past 5 years and there are established RBI regulations governing this type of lending.
4. Over a period of time, if unsecured P2P lending is well established like in the developed markets (e.g. Funding Circle in the UK), banks and institutional investors will potentially look to buy blocks of P2P loans to add to their portfolios.
Online consumer lending platform CrediFiable, which is operated by Bengaluru-based OneFiable Technologies Pvt. Ltd, has raised an undisclosed amount of funding from Kae Capital, the startup said in a statement.
Disruptive innovation in digital technology is on the horizon, with bankers and toll road operators beginning to replace manual jobs with digital machines, raising concerns that millions of jobs in the finance and service sectors will be replaced.
Meanwhile, banks are opening fewer physical branches, putting more money into developing digital banking and digital offices.
State lender Bank Mandiri, the largest bank in terms of assets, has announced that it plans to open only 100 branches this year, far fewer than the annual plan of 400 to 600. Such a move will lead to a reduction in the number of new recruits taken on.
Other lenders joining the digital wave include private lender BTPN, which spent 1.3 trillion rupiah (S$131 million) on developing a digital platform, dubbed Jenius, over the past three years, while DBS Indonesia launched Digiland, an entirely paperless and signature-free banking experience.
But southeast Asia isn’t China. While Ant Financial knows China like the back of its hand, and vice versa, the company recognizes the limits in its abilities outside the country. Because of that, Ant Financial and Alipay’s work in southeast Asia is done through local partners.
It’s the Facebooks and Googles of the world that really keep the banks up at night, not the explicit fintech companies, says Yew.
CIMB says more than 90% of its total banking transactions are done through digital and self-service channels at this point.
Specifically, 72% of investors surveyed said they feel financially secure in the current economic climate and 68% said they are comfortable taking risks to get ahead. However, if investors were forced to choose between safety and performance, 83% would choose safety.
76% of investors surveyed believe that some fund managers charge high fees for just tracking an index, which investors say they can also do and at a lower cost.
Another area in which investors could benefit from good advice is alternative investment strategies that go beyond stocks and bonds. Although many investors are open to alternative investments, the Natixis study suggests a lack of education in this area may be a roadblock. For example, 71% of investors believe alternative investing is too complex and 65% say these investments are riskier than traditional asset classes.
News Comments Today’s main news: CFPB issues first no-action letter to online lender. SoFi defends its mortgage underwriting standards. Was SoFi’s FICO-free zone really FICO-free? RealtyShares raises $28M for commercial real estate investing. Betterment partners with Goldman Sachs, BlackRock. JustUs receives full FCA authorization. Raisin offers term deposits to businesses. Earthport partners with Cross River Bank. Reserve Bank of India waiting for government […]
SoFi defends mortgage standards denying Fast Company’s allegations. AT: “These allegations put SoFi on the defensive and will likely be a bigger public relations bruise for the company than the sexual harassment allegations that recently came to light. In fact, there seems to be a shift away from the salaciousness toward the actual business practices of the company, and that’s a good thing. But not for SoFi.”
SoFi’s FICO-free zone may not have been so FICO-free. AT: “This is an interesting allegation and may not actually be as bad as it seems. Depending on the timing of SoFi’s announcements to revert back to using FICO scores, it could have just been the case of a company changing its mind. However, erasing all evidence of making the announcement in the first place is a bit suspect. I have a feeling this is going to be in the news cycle for a while.”
Betterment partners with BlackRock, Goldman Sachs. AT: “The portfolio partnership with Goldman Sachs is interesting given the larger company’s interest in online lending through Marcus. I wonder why they didn’t just roll out a product of their own to compete with Betterment and Wealthfront.”
The imperative of self-sovereign identification. AT: “This is one of the most interesting ideas I’ve read on data security yet. I’m suspicious of biometrics. I can’t really see that they’re a lot more secure than passwords (maybe a little). And, of course, with digital technology, there is no 100% secure solution. I’m sure some smart hackers will figure out how to break the blockchain. Nevertheless, this idea seems much more practical on the surface. If we could just get widespread adoption of the blockchain.”
The Consumer Financial Protection Bureau on Thursday issued its first no-action letter to online lender Upstart Network Inc., allowing the company to continue using alternative credit data to evaluate borrowers in exchange for providing data to the federal consumer finance watchdog.
SoFi, also known as Social Finance, adamantly said it doesn’t shy from criticism, stepping up to defend itself amid the recent negative news coverage on the company’s alleged toxic workplace environment.
Included in Fast Company’s coverage of the fintech company is a bold claim that “in the first round of SoFi mortgages, some homes lacked appraisals.”
According to a SoFi spokesperson:
In late 2014, we tested a simplified version of our home mortgage product that used paystubs for income verification and did not require home appraisal. The test did not proceed into a launched product, and we launched our mortgage product with requirements for full income verification and home appraisal, which is still the case today. All of these mortgages met the ability-to-repay standards promulgated by Dodd-Frank and none of these pilot mortgages were ever sold to investors, and we continue to hold those loans on our balance sheet.
According to conversations with numerous former SoFi employees, the company’s “FICO-Free Zone” loan product actually relied quite heavily on evaluating applicants by their FICO score. After very publicly announcing in early 2016 that SoFi would no longer use FICO scores to evaluate loans, sources tell Dealbreaker that the company saw defaults tick up and made the internal to decision to reintegrate FICO data. No announcement of the shift back was ever made, the “FICO-Free” language disappeared from the website and some evidence of the SoFi’s move away from FICO was even scrubbed from the company’s blog.
I’ve sat on panels that discuss all the benefits the aforementioned Silicon Valley approach brings to housing. Having SoFi around isn’t one of them, if their underwriting standards are as bad as some claim.
Ainsley Harris writes: “In the first round of SoFi mortgages, some homes lacked appraisals.”
Why on earth would a lender not get the value of the collateral it was lending to? Did SoFi think in-depth valuations where unnecessary? Do investors know that SoFi doesn’t know how much these homes are worth in the event of an REO?
Let me say this, whatever the reason to potentially forego appraisals, SoFi’s investors will disagree with that decision. The Fast Company revelation is so baffling that SoFi’s plan for an IPO will be delayed, perhaps indefinitely.
Let’s hope so. A company that plays fast and loose with its own people is shameful. A company that plays fast and loose with prudent lending practices is downright dangerous.
SoFi has published a public letter addressing the allegations leveled by NYT.com earlier this week.
The letter is republished in its entirety below. (Ed. Note: Excerpted by Lending-Times)
Mortgage: The story cites unnamed sources saying there was some period where we were “not doing enough” to validate income for mortgage borrowers. This is an incredibly vague claim, and we have no idea what this means. We underwrite our mortgage loans consistent with market standards, which includes rigorous income verification, and consistent with the ability to repay requirements put in place by Dodd-Frank.
Personal Loans: The story implies that our personal loans business grew in part because of a change in the way loans were approved: that customer service reps were approving loans rather than underwriters. That view reflects a lack of understanding of our business. We underwrite loans using a highly automated platform where all credit decisions are made by a pre-defined algorithm that analyzes each applicant’s credit profile and ability to pay.
A Thriving Business: The story did mention our business performance, and indeed, SoFi is thriving. Since inception, we have funded more than $20 billion in loans, $3.1 billion in the second quarter alone. In Q2, we had $134 million in revenue, up 67% year over year, with adjusted EBITDA of $61.6 million, up 60% year over year. We have more than 350,000 members, and they like what we do – our products run Net Promoter Scores in the 60-80 range, among the highest in financial services.
RealtyShares is raising a $28 million Series C round led by Cross Creek Advisors, with participation from existing investors including Union Square Ventures, General Catalyst Partners, and Menlo Ventures.
Founder and CEO Nav Athwal says that RealtyShares has over 120,000 users on the platform. The startup says it has deployed over $500 million across more than 1,000 properties since it was founded in 2013.
In a recent op-ed in American Banker (derived from a longer blog post), professor Adam Levitin argues that the recent legislative proposals to “fix” the repercussions of the United States Court of Appeals for the Second Circuit’s Madden v. Midland Funding decision are “overly broad and unnecessary and will facilitate predatory lending.” The legislation Levitin opposes would restore the ability of banks to sell loans to nonbanks and have the loans remain valid on their original terms, the type of transaction on which the Madden decision has cast doubt. I disagree, at least with regard to marketplace lending. There are compelling legal and policy arguments to undo the Madden decision that Congress should consider.
Levitin is certainly right that the Nichols case and the similar 19th-century cases reflect a different fact pattern than was presented in Madden. It does not necessarily follow, however, that the principle of valid-when-made should not also apply under the Madden facts.
The issue at question in Madden, the interest charged on the loan, was set by the bank at the loan’s inception. The borrower got the benefit of the federal regulatory regime, which includes the incorporation of the bank’s home state usury law, when the loan was created, and the relevant characteristics did not change. So why is there suddenly a problem?
The impact of Madden on innovative credit is harmful to borrowers
Madden also appears, as would be expected, to be reducing access from marketplace lenders to credit for borrowers with lower credit scores. Contrary to Levitin’s argument, a recent study shows a reduction in credit availability not just for borrowers with FICO scores under 625 (though that is where the reduction is most pronounced). The study indicates that borrowers in New York and Connecticut with FICO scores under 700 saw a reduction in availability relative to comparable borrowers outside the Second Circuit.
For example, it is important to keep in mind that the majority of marketplace loans are used to pay off bank-issued credit cards (which are not subject to borrower state usury laws) or consolidate existing debt. Denying borrowers access to these loans does not leave the borrowers unencumbered by debt; it leaves them in the situation they view as worse than taking out this new loan. This is especially true given that there is evidence that marketplace lenders can help provide expanded access and competition, services in areas that have few banks, and better pricing for some borrowers than they would receive from banks. Cutting off access isn’t protecting borrowers, it is leaving them with fewer, perhaps inferior, tools to protect themselves.
Usury caps can lead to loan arrangements being distorted in ways that make the loans legal but worse for the borrower. We see examples of this in the shift from payday to “payday installment” and subprime auto loans, where lenders bound by interest rate caps change the loan principal amount or repayment schedule to make the loans viable. These loans can actually be more expensive in total because the lower interest rate is applied to a higher principal over a longer time period. Larger loans also can be more expensive for borrowers if they pay them off early or go into default. Borrowers also could be forced into using suboptimal options like pawn shops or illegal loans, or find themselves without credit altogether.
Betterment, the largest roboadviser with $10 billion under management, has enlisted the support of financial juggernauts Goldman Sachs and BlackRock for two new portfolio options.
The portfolio managed by Goldman Sachs is a smart-beta option, providing users with a more aggressive alternative to Betterment’s core portfolio, which allocates money to stocks and bonds, according to Arielle Sobel, a spokeswoman for the firm. It will be more exposed to emerging markets and REITs, according to a press release.
The other portfolio option is an income-based portfolio, managed by BlackRock, the largest fund manager in the world with $5.7 trillion under management. It provides investors a more conservative option and delivers target income.
As we have known for a long time now, it is no longer good enough to use customer’s personal information for account access. After Ashley Madison and so many other incidents (Tesco Bank, Lloyds Bank, JPMorgan Chase, SWIFT, the Federal Reserve, the IRS, the Department of Homeland Security eBay, Yahoo, Google, Adobe, Target, Neiman Marcus, Home Depot …), surely we should be moving away from this antiquated system. Bear in mind it’s been used for almost two decades, it’s no wonder the system is no longer working.
So the banks add second-factor authentication (2FA) with secure entry pads and PINs, but they still rely on personal information for account access when you ring their call centres, and this is just annoying.
Is there a solution?
First is biometrics and TouchID, voice, eyes and more can easily be used for authentication via a smartphone. Why banks aren’t incorporating these into their onboarding and access mechanisms beggars belief …. or maybe not, as banks would need modern systems to use such radical authentication techniques, and that’s a big ask. Far easier to rely on name, address, date of birth and all the information the hackers stole from Equifax.
Emerging technologies (particularly blockchain, although not exclusively) are making the development of “self-sovereign identity” a real possibility.
The basic idea behind self-sovereign identity is that rather than have our information held by third parties (often without us even knowing what that information is) and used to guarantee our identity and make decisions that affect us; we could turn the entire model on its head and give each individual control over their own digital identity.
With self-sovereign identity, you would hold all of the different elements of your online identity in a “box” or “wallet”, and would then be able to choose which of those elements to reveal in any given context.
PayPal’s global head of product communications Anuj Nayar has left to become head of communications at peer-to-peer investment company Lending Club.
In his new role that starts on Monday, Nayar will be in charge of the team running all internal and external communications, as well as social media, for the $2.5 billion publicly-traded fintech company.
Last night we learned that Goldman Sachs is poaching roughly 20 employees from online lender Bond Street, which seems to have paused making new loans, according to The Wall Street Journal.
It is indicative of Goldman’s strategy that the bank has forced its way onto the AltFi (“Alternative Finance”) homepage three times this week. Those incursions were tied to its £100m investment in UK employee benefit lender Neyber, its $300m deal with home solar financing firm Mosaic, and the announcement that it plans to launch an online bank in the UK.
So its latest decision, to nab 20 workers from the dormant Bond Street, is not without precedent. But Bond Street is not a consumer lender. It offers term loans of up to $1m to small businesses. Could Goldman, then, be sizing up an expansion into small business lending for Marcus?
Year-to-year, community financial institutions have become more conservative about consumer lending. So as to not open themselves up to additional risks, many of these institutions tend to only service consumers with prime and super prime credit. However, consumers with non-prime credit make up a solid portion of the consumer lending market, so this desire to stick with “safer” loans leaves quite a few loan opportunities on the table. And when many community financial institutions are dropping their rates to as low as 0% in order to compete with large national lenders for prime and super prime consumers, missing additional revenue opportunities for your loan portfolio is not a small matter.
Market disruptors like retail lenders (i.e. Costco), mobile lenders (i.e. AutoGravity), and peer-to-peer lenders (i.e. Lending Club) are finding ways to bypass the existing banking system, credit bureaus and financing requirements to lend to this highly sought after demographic.
Fidelity Investments introduced a program Thursday that will let employers make regular payments to their employees’ student loan accounts, much the way companies already pay into their workers’ 401(k)s or health care savings accounts.
Some smaller financial services companies already facilitate this type of benefit program, such as First Republic Bank and startups like Student Loan Genius and SoFi.
But the entry into the market of Fidelity Investments — one of the country’s biggest mutual fund, money management and financial planning companies — is a sign that student debt relief may soon become a mainstream benefit that employers will have to offer to remain competitive.
If you’re living paycheck to paycheck, on the other hand, even small unexpected expenses can put you in the red. The two weeks between paychecks is an eternity for an hourly worker whose credit card is already maxed out, or who doesn’t have one to begin with. Every parking ticket and hospital co-pay is a potential crisis. By the time payday comes, it’s too late — the next crisis has already arrived.
Financial technology startup DailyPay thinks giving people in this situation more frequent access to wages would go a long way toward solving this problem and putting them on the path to financial security.
DailyPay’s solution works like this:
1) The startup integrates with a company’s established payroll and time-tracking systems. Instead of going directly to an employee’s bank account, paycheck deposits are set up to go through DailyPay first.
2) An employee can withdraw wages he or she has earned but not yet received throughout the two weeks or month before formally getting the paycheck. DailyPay fronts the money for a small fee, and keeps the expense on its balance sheet.
3) Come payday, DailyPay deducts whatever money the employee has already withdrawn, and sends the rest of the paycheck through to the employee’s bank account.
Perhaps Lee likens his service to an ATM because the more obvious comparison — a payday loan provider — is often considered predatory.
One key difference is that DailyPay interfaces directly with employers, positioning itself as an HR benefit. DailyPay’s pitch to other companies is that flexible payroll reduces turnover, which is good for the bottom line, and the service is free to implement. One internal study of 20 DailyPay clients found that turnover shrank by 40 percent on average after they adopted it.
Since I run an opportunistic portfolio that seeks out high upside “Fat Pitches” (soon to be a subscription service), it may seem as though I, too, would be stumped; however, I continue to find opportunities, albeit in sectors a bit off the beaten path.
While “value” and “high-growth tech,” may seem anathema to each other (wait till you see the next section), the three public fintech companies – Lending Club, Ondeck, and Elevate Credit – all seem undervalued today relative to their potential, and each have posted strong results in the recent quarter.
Ondeck, which lends to small and medium businesses, also recently decided to scale back its growth, raise rates, and cut staff. The company lowered orginations last quarter by 19% sequentially last quarter, but loss provisions as a percentage of revenues also fell from 8.7% to 7.2%. After implementing a $45 million cost reduction program, the company’s losses declined to only $1.5 million, down from $16 million in losses a year ago.
Speaking of acceptance, it may seem on the that the company that serves the subprime market – thought to be the riskiest of all – is the most profitable of the three. Elevate Credit has been doing everything right – though you wouldn’t know it by its languishing stock price. Last quarter, Elevate grew originations 29% and revenues by almost 19% (due to a higher mix of lower rate, but higher-quality loans), expanded its core RISE product to the state of Kansas—its 16th state, and was able to lower its interest rate on its high-cost funding from Victory Park Capital.
The teams at FinTech startup LendUp and Oakland-based Beneficial State Bank think very differently about that relationship. As LendUpCEO Sasha Orloff and Beneficial State Bank Co-CEO Kat Taylor told PYMNTS in a recent interview, banks and FinTechs need each other, and a very large segment of the population living on the margins of financial services in the United States need these two groups to work together as well.
That constituency, Orloff noted, isn’t always easy to serve – or to serve profitably – without relying on a business model that counts on its customers to fail and then charging sky-high fees for those failures. LendUp and Beneficial State Bank have a different approach: They want to invest and make money on their customers who are succeeding financially and are able to participate in the full spectrum of the financial system.
Fifty-six percent of Americans have a sub-prime credit score, meaning mainstream banks likely can’t approve them for their products; more than half of all Americans could not find $400 in the event of an emergency; and two-thirds of millennials have not started building any kind of credit score, in a system in which having no score or a poor score can cost a person $250,000 over their lifetime.
Lending money beyond what people can bear is the hallmark of predatory lending, she emphasized, and that’s not going to help the customer.
That alternative – the L Card, issued by Beneficial State Bank in partnership with LendUp – is a low annual fee card (starting at $0 and capped at $5 per month or $60 per year) that offers consumers a grace period for payments and even caps late fees (at $7). It has a higher interest rate – 19.99 percent to 29.99 percent – for a credit card than the national average, but according to The PEW Charitable Trusts, is a fraction of the payday lending rate, which is around 400%. Credit limits range from $300 to $1,000 based on credit score, and a year of timely payments and responsible behavior allow customers to double the limits.
Jay Coleman, a Wall Street banker focused on equity raises and initial public offerings, has joined online lender CommonBondas chief financial officer, according to the company’s co-founder David Klein.
While still small, the company had lent about US$1bn to 12,000 borrowers as of May 1, according to Moody‘s Investors Service.
eOriginal, Inc., a rapidly growing financial services technology company, has named Timothy Wall Chief Revenue Officer (CRO).
As CRO at eOriginal, Wall will be responsible for all aspects of the company’s sales organization and revenue development, including direct sales, channel sales, sales engineering and customer success.
Former Iowa Congressman Jim Nussle today said Iowa’s 94 not-for-profit credit unions have filled a void as banks throughout the country and in Iowa continue to consolidate.
More than 1.1 million Iowans are members of a credit union and the state’s credit unions have about $16 billion in assets, according to Nussle.
Nussle indicated the “speed of change” and stress in the industry has been rather dramatic, not only because of the “Great Recession,” but because of incidents like Wells Fargo’s admission that its employees created fake accounts without customers’ permission. The recent growth of on-line “peer to peer” lending presents credit unions with an opportunity rather than a challenge, according to Nussle, because credit unions are member-driven.
GDS Link, a global provider of credit risk management solutions and consulting for multiple verticals within the financial services industry including marketplace lending, retail finance, alternative financial services, credit card, auto, and business leasing, announced its role in bringing the fourth annual LEND360 to Dallas.
“The LEND360 Dallas host committee, co-chaired by Ken Rees, Chief Executive Officer of Elevate Credit, Inc. and Paul Greenwood, President and Co-founder of GDS Link, and supported by other influential members of the fintech community, has been meeting since late 2016 to ensure a valuable attendee experience for the upcoming conference, assist with speaker development and engage innovative industry leaders to take part in the event,” according to a LEND360 press release.
The Online Lending Policy Institute (OLPI), the leading voice for policy analysis, in-depth research, and education for the online lending industry, today announced its roster of speakers for the Second Annual Summit on Sept. 25 at the Renaissance Hotel in Washington D.C. The Online Lending Policy Summit provides an opportunity for industry participants to share insights, propose standards, and have an open dialogue with regulators and policymakers to build consensus viewpoints on the regulation of online lending. Keynote addresses will be delivered by the following four policy leaders:
Keith Noreika, Acting Comptroller of the Currency. Mr. Noreika advocates for the need to embrace innovation while ensuring that new products and services do not present undue risk to the financial system. He will discuss how regulators and industry can work together on “responsible innovation” and with principles for governing the rapidly growing financial technology sector.
Congressman Gregory W. Meeks (D-NY-5), now in his tenth term, serves one of the most diverse constituencies in the nation. Mr. Meeks is known for being an effective, principled, and commonsense leader. Congressman Meeks is a senior member of the U.S. House Financial Services Committee, and is the lead Democratic sponsor of important legislation dealing with the Madden v Midland Funding court case.
Congressman Tom Emmer (R-MN-6) represents Minnesota’s 6thDistrict in the U.S. House of Representatives. He began his congressional career on January 6, 2015 and serves as a key member of the U.S. House Committee on Financial Services. Prior to his congressional service, Mr. Emmer practiced law for several years, and followed his entrepreneurial calling and opened his own law firm. In 2004, he was elected to the Minnesota House of Representatives and re-elected by overwhelming majorities in 2006 and 2008. After a narrow loss in the 2010 gubernatorial race, Tom entered the radio business as a conservative radio host.
Peer-to-peer lending platform JustUs announced this week it has received full authorization by the Financial Conduct Authority (FCA). The online lender revealed that the full authorization is a pre-requisite to offer the JustUs Innovative Finance ISA (IFISA) and registration forms have been submitted to HMRC with a planned launch of the ISA in October.
Crowd2Fund, a relative newcomer to the alternative finance industry, is accusing Funding Circle, one of the market leaders, of turning its back on the whole ethos of peer-to-peer lending.
The row follows an announcement last month by Funding Circle that it will no longer allow investors on its platform to choose which specific companies they want to lend their money to. Instead, the platform will automatically spread investors’ cash across a group of businesses looking for funds – much as a professional collective fund manager in any other asset class chooses investments on behalf of its investors.
Crowd2Fund said Funding Circle’s move reflected the larger platform’s increasing focus on large institutional investors in peer-to-peer lending, as well as concern about the growing regulatory scrutiny of the sector.
ARCHOVER’S chief executive Angus Dent (pictured) has urged small business owners to be more confident in taking on debt, after new figures showed that 80 per cent of small- and medium-sized enterprises (SMEs) are refusing to apply for new finance.
The boss of the peer-to-peer business lender said that while their caution was understandable, it is the “wrong attitude” for SMEs that want to scale up.
LendInvest has received public support from three major industry bodies for its property development academy.
The Centre for Entrepreneurs, Homes for Scotland, and the Home Builders Federation have each praised the academy, which was established in 2016 to help develop the skills of aspiring and new small-scale housing developers.
Birmingham, the site of LendInvest’s latest Property Development Academy, is a perfect example of this. Time and again we heard from attendees of just how exciting the city is for property development currently, and why they are so desperate to get cracking with their own development projects.
It’s notable that in last year’s Emerging Trends in Real Estate report from PwC and the Urban Land Institute, which looked specifically at which European cities present the best opportunities for investors, Birmingham was the best performing UK city. It ranked 22nd, ahead of cities like Manchester, Edinburgh, London, Brussels and Rome.
All of this has led to a thriving rental sector. Our most recent Buy-to-Let Index found that the city currently boasts a rental yield of a very strong 5.03%, with capital gains of 4.97% over the last year.
The latest UK Economic Outlook report from PwC named the West Midlands as one of the housing hotspots, predicted to see house price growth of 4.5% this year, compared to a UK average of 3.7%.
Democratic Progressive Party Legislator Lin Chun-hsien (林俊憲) yesterday urged the Financial Supervisory Commission (FSC) to curb bad debts stemming from fraud and loan sharking on Internet-based peer-to-peer lending platforms.
Online lending platforms have existed for years in other nations and have caused many problems, Lin said, adding that in China they are blamed for generating an estimated 60 billion yuan (US$9.2 billion) of bad debt.
Like electric cars, whose era of global dominance has yet to arrive, the app-driven insurance industry is more of a concept than reality. That doesn’t mean investors should dismiss the Hong Kong initial public offering of ZhongAn Online P&C Insurance Co., despite its hefty price tag.
Bankers are currently sounding out investors for an IPO that could raise as much as $1.5 billion, giving ZhongAn a valuation of $11 billion. That’s well above CLSA’s $8 billion estimate, which already ranks the online insurer as China’s third-most valuable fintech company after Ant Financial, an affiliate of Ma’s Alibaba Group Holding Ltd., and Lufax, the peer-to-peer lender owned by Ping An Insurance (Group) Co.
ZhongAn is the world’s sixth-most-valuable e-finance company, at about $8 billion.
So here’s the bad news. ZhongAn is tiny. Its net written premiums were a mere 3.4 billion yuan ($520 million) last year, or 0.5 percent of China’s insurance industry, according to Bernstein Research analyst Linda Sun-Mattison.
It’s also expensive. The $11 billion valuation implies an adjusted price-to-book level of 4.3 times, Smartkarma analyst Ke Yan estimates.
Pan-European marketplace Raisin continues its trailblazing expansion. Having penetrated new geographies with international and localized services in 2016, the Berlin-headquartered startup is now broadening its offering to address a new customer segment: small and medium-sized enterprises (SMEs). Starting September 14, businesses can open term deposit accounts on Raisin’s German site www.weltsparen.de, or more precisely, on www.weltsparen.de/geschaeftskunden.
Earthport (AIM: EPO), the leading payment network for cross-border transactions, is pleased to announce its partnership with Cross River, a US-based bank, to provide inbound cross-border payment services across the US market, adding to its existing capabilities to process payments in the US.
The partnership will facilitate the execution of inbound ACH payments through Cross River, and further strengthen Earthport’s global payment network, enabling high volumes of low-value payments originating outside the US to be serviced more efficiently.
Half the world is unbanked. That’s the provocative title of a 2009 research paper published by the Financial Access Initiative (FAI), a consortium of researchers from New York University, Harvard, Yale and Innovators of Poverty Action.
Their study also provided an empirical grounding that, although it is possible to serve low-income communities at scale with financial services, there are still billions left to reach. According to figures from the World Bank, as of 2015 there are still 2bn people who lacked access to any formal financial services.
The advent of mobile technology along with increasing smartphone penetration, especially in developing countries, has opened up a new portal of possibilities.
This newfound access in countries across South East Asia and Africa has provided the perfect ecosystem to initiate financial inclusion.
Nick Ogden – founder and Executive Chairman, ClearBank
The number one thing that’s going to occur in 2018 is fragmentation of the marketplace as we know it today. The days of big banks delivering everything and being specialists in everything are over. Some of them might still not accept that but the reality is that it’s happened.
Karen Kerrigan – Chief Legal Officer, Seedrs
Rather than looking at a specific technology, have a look at a particular sector. There are a lot of challenger banks out there at the moment – Starling Bank, ClearBank, Monzo, Tandem – and they’re all vying for the same space. They’re all doing things slightly differently, but ultimately are taking on the banks.
Tokens may not be available to all persons in all jurisdictions as certain offering restrictions may apply. In particular, no tokens will be available in the US, Singapore or the EEA. Offering and trade restrictions, as well as the rights of holders of FundCoin, will be set out in further detail in the offering memorandum.
That little snippet is from the last page of the “whitepaper” for FundCoin, which deserves a spot in the pantheon of initial coin offerings (ICOs) to which regulators should be paying more attention. FundCoin is “the first private equity token ICO” and is the creation of Finles, a 40-year-old Dutch fund of hedge funds manager that has decided to turn to the crypto markets to raise money.
Cryptocurrencies are the most undervalued asset class in the world, says Farzam Ehsani, leader of Rand Merchant Bank’s blockchain initiative.
The combined market capitalisation of all cryptocurrencies was only about $120bn, Ehsani said on Thursday at the Business Day/Financial Mail Investment Summit, held in partnership with Old Mutual Wealth.
By comparison, the market capitalisation of all stock markets is about $68.5-trillion, according to figures from the World Federation of Exchanges.
The Reserve Bank is waiting for a gazette notification from the Government on getting the peer-to-peer lenders under its regulatory ambit before coming out with guidelines on the sector, a senior official said on Wednesday. “Following up on the consultation paper we did last year, we are shortly going to come up with guidelines on peer to peer lending,” RBI’s executive director Sudarshan Sen said at an industry event here.
According to the official, the P2P lending interface will come under the purview of RBIs regulation by defining these platforms as NBFCs under the RBI Act by issuing a notification in consultation with the Government.
Indonesian peer-to-peer (P2P) lending platform Investree announced that it has been appointed by the country’s Ministry of Finance to run a pilot project that aims to develop online transaction system of state securities for retail investors.
According to a DailySocialreport, through the project, users will be able to purchase state securities through the Investree platform.
India’s demonetization experiment has been declared a failure by economic pundits. However, it has expanded India’s tax base and fast-tracked the digitization of payments, which is a good thing.
Some nine-million-odd new taxpayers came into the fold thanks to the scheme. Around 20 million new bank accounts were created by Indians panicked by the possibility of having their cash holdings voided.
Second, the scheme accelerated the digitization of payments in India, with a vast swathe of merchants forced to accept digital payments in lieu of cash.
The global crowd-funding industry generated about USD 34.4 billion in 2015.
Apart from raising capital, crowdfunding is also a way to create awareness among the masses and support for a project from the people around you.
Crowdfunding has exploded new ways to raise funds for start-ups, social sector, real estate, inventions and so on.
In India, transaction value in the “Crowd-funding” segment amounts to a meagre USD 6 million in 2017.
Transaction value is expected to show an annual growth rate (CAGR 2017-2021) of 24.8 percent resulting in the total amount of USD 16 million in 2021.
The most used method for real estate crowdfunding is “equity crowdfunding” which helps individual become partial owners in distinct properties, allowing them to participate alongside real-estate companies who acquire, redevelop, or build.
Another type of crowdfunding used for real estate is syndicated debt crowdfunding. This fast growing platform takes some or all of an existing real-estate loan, secured by a deed on the underlying property, and syndicate it out to a network of individual investors at a fixed rate of return.
IOU FINANCIAL INC. (“IOU” or “the Company”; TSX-V:IOU), a leading online lender to small businesses (IOUFinancial.com), announces today that Canadian Business and PROFIT ranks IOU Financial as the fourth-fastest growing company on the 29th annual PROFIT 500, the definitive ranking of Canada’s Fastest-Growing Companies. Published in the October issue of Maclean’s magazine and at CanadianBusiness.com, the PROFIT500 ranks Canadian businesses by their five-year revenue growth.
IOU Financial makes the 2017 PROFIT 500 list as the fourth fastest growing company with five-year revenue growth of 8,600%.
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.
News Comments Today’s main news: Misys, D+H team up to launch Finastra. Fundrise intros first real estate robo-advisor. UK businesses find it harder to get a loan. Singapore Life gets insurance license. Faircent offers online lenders ‘What-If’ scenario simulations. Today’s main analysis: Does anyone remember how to make a subprime mortgage? The most up-to-date numbers for Prosper, RateSetter. Today’s thought-provoking […]
Finastra launch. GP:”I would like to see more information on how Finastra is going to stay ahead through innovation. The bigger the company the harder it is especially when it will have to spend a lot of ressources and attention merging. For the best environment it is better to have numerous smaller companies then 1 large one as over time the incentive to keep innovating is low and eventually the large company falls behind. “AT: “48 of the top 50 banks worldwide are customers. Finastra exits the gate the third largest fintech company in the world, which puts it in a great position globally and could very well rise to be the largest fintech worldwide with the right management.”
Bank branches are closing in droves. AT: “Is it a matter of time before one of these banks closes its doors for good? Remember when Blockbuster said Netflix hasn’t impacted their business at all. Then, bam! No more Blockbuster. The same thing happened with Border Books. Thanks Amazon. I think we’ll someday read the headline – ‘National Bank Chain Goes Out of Business, Can’t Compete With Online Banks’. It could be within a decade.”
Fundrise revamps service with real estate robo-advisor. AT: “No one should be surprised by this. First, it’s Fundrise, the company that introduced the first eREIT. Secondly, it was just a matter of time before somebody introduced the first real estate robo-advisor, so why not Fundrise? Disclosure: I have in the past written for Fundrise.”
Today Misys and D+H have joined forces to create a diversified global financial software provider, unmatched in terms of depth and breadth of solutions. Operating under the new company name Finastra (www.finastra.com), the combination will create the third largest financial services technology company in the world. The company has approximately 10,000 employees and over 9,000 customers across 130 countries, including 48 of the top 50 banks globally. This follows the acquisition of D+H by Vista Equity Partners, which already owns Misys, creating a merger of two highly complementary financial technology providers.
Finastra will be led by Nadeem Syed in the role of Chief Executive Officer. Mr. Syed was previously CEO of Misys and has over 27 years of experience leading global technology companies through transformation and growth. The company has U.S. $2.1 billion* in revenues and has offices in 42 countries around the world. It will be headquartered in London, UK, maintaining North American headquarters in Toronto, Canada.
Finastra offers the broadest set of retail banking, transaction banking, lending, and treasury and capital markets software capabilities available in the world. The company’s open architecture and approach enable financial institutions to harness the power of software ecosystems and will be delivered on premises, hosted or via the cloud. With the increased scale and geographic reach, Finastra will be able to serve customers better, regardless of their size or geographic location – from global banks, to community banks, credit unions, and corporations. Using the company’s secure and reliable solutions, customers will be empowered to accelerate growth, optimize cost, mitigate risk and continually evolve to deliver a superior customer experience, both now and in the future.
Having long pursued a progressive vision of innovation within both businesses, Finastra will strive to further unlock the potential of people and businesses by executing the product strategy of ‘Protect, Extend and Innovate’. This includes protecting our customers’ investments in all of our solutions; extending the value of our solutions by integrating new products and services; and innovating to create the best-in-class solutions. Finastra will work in partnership to help customers transform their business, and become more agile, innovative, and resilient to better meet their evolving needs.
There may be no physical institution as historically revered as a bank.
Nice try. Banks these days are hardly elegant or imposing. Most have shrunk in size thanks to rising costs of real estate, and many have disappeared entirely, according to data from the Federal Deposit Insurance Corporation. Chase reduced its branch presence by 190 locations, a 3.4 percent decline, from 2012 to 2016. Wells Fargo closed 98 branches, a 1.6 percent decline in the same period. Its peers are even more aggressive. Bank of America closed 243 branches (16 percent) in that period and Citi closed 302 (28.5 percent).
Branches are consolidating locations with lower servicing volume, opening in higher growth areas and renovating existing branches and ATMs. More importantly, they’re evolving into more compact, digitally oriented spaces that incorporate new technology and help branch employees focus on improving the customer experience.
While those in the banking industry feel there will always be brick-and-mortar branches, in large part because the business of banking is grounded in trust, and in knowing the person with whom you’re working, the move to digital technologies is expected to grow exponentially.
Fundrise, one of the leading online investment platforms for real estate, has launched the “2.0” version of their platform. Fundrise has created a Robo-Advisor focused on real estate thus providing an investing tool to match individual investor needs.
The Fundrise Robo-advisor enables individual investors to create a highly diversified real estate portfolio accessing Fundrise’s growing number of eREIT’s. The service provides an estimate based on submitted variables to extrapolate potential returns. Fundrise estimates users will save up to 40% on fees versus traditional services.
Brokers willing to learn the lost art of making risky mortgages are in demand again.
Mr. Boyd, a 25-year-old account executive at FundLoans in a beach town outside of San Diego, is at the cusp of efforts to bring back an army of salespeople who once powered the mortgage industry and, some say, contributed to the housing crisis.
Brokers are a key part of a mortgage chain that starts with a borrower going to a broker for a loan. The broker surveys lenders for the best loan to fit the customer. The lender then funds the borrower’s loan.
While brokers before the crisis served banks and independent lenders, today they are working largely for nonbank lenders who make up a critical part of the mortgage market.
In the first quarter, nonbank lenders accounted for about half the mortgages originated in the U.S., according to industry publication Inside Mortgage Finance.
In the first quarter, nearly a decade after the start of the housing crisis, lenders originated just $6 billion in loans to borrowers with less than stellar credit scores or who are using alternative documentation to prove income, a category now known as “nonprime,” according to Inside Mortgage Finance.
In all of 2016, they originated $22 billion in loans, according to Inside Mortgage Finance. Back in 2005, at the peak for such loans, lenders made about $1 trillion of these mortgages.
Meanwhile, the volume of loans produced by mortgage brokers dropped to $37 billion in this year’s first quarter, down about 34% from the last three months of 2016. Loans from brokers peaked at around $1.1 trillion in 2003.
All your life, you’re told that an education will set you up to fulfill the American dream. But once you graduate, you’re faced with onerous payments that seem to hardly dent the principal. You need a steady job, stat. It’s terrifying to forgo a salary to start something new, let alone invest your assets, when you’re obligated to make monthly payments that can reach thousands of dollars.
One startup is helping its users get ahead of their debt and start the new ventures that our economy needs to thrive. SoFi (short for Social Finance) is largely known as the startup that will refinance your student loans, though it aspires to encompass its members’ entire financial lives.
Nevertheless, student loans are SoFi’s bread and butter, a reflection of the generation of Millennials saddled with insurmountable-feeling debt. That’s why, in addition to its unemployment support and career coaching, SoFi has an entrepreneurship program. The benefits include six months of loan deferment, mentorship resources such as connections to investors, and networking with other entrepreneur members.
Of course, SoFi can’t single-handedly revive American entrepreneurship, not least because the cohorts of accepted entrepreneurs are limited, and the types of businesses that SoFi favors skew toward scalable tech startups rather than conventional small businesses. But student loan relief has a definite impact on the participating SoFi members’ ability to launch companies.
We are offering up to 5,000,000 shares of our Class B Common Stock to the public at $5.00 per share. This offering commenced on February 1, 2017 and as of May 30, 2017, we had settled approximately 2,884,129 shares of our Class B Common Stock of the 3,000,000 shares that we had previously qualified for sale. We are including in the offering an additional 2,000,000 shares of our Class B Common Stock to be sold pursuant to this offering circular.
Square(NYSE:SQ) has disrupted the mobile payment market, and could still be in its early innings of growth. Over the past year, Square’s stock has more than doubled, thanks to its impressive and better-than-expected growth and optimistic forecast.
Over the past year alone, Square’s payment volume increased by 33% to over $13.6 billion, and the company is on the verge of becoming profitable. Plus, Square’s services and subscription revenue more than doubled year-over-year, and has tremendous long-term growth potential.
P2P lenders aren’t the only players in the unsecured lending space anymore — some of the biggest names in the industry are getting involved, which could certainly shake things up in the years to come.
One in particular I have my eye on is Goldman Sachs(NYSE:GS).
Goldman first announced its intention to get into the consumer lending business in 2015, and after a couple of years of development, the company recently launched Marcus (named for Marcus Goldman, one of the bank’s founders), its new lending platform that offers personal loans of up to $30,000.
According to a report by TransUnion, nearly 16 million people took out an unsecured loan in 2016, the highest on record. With an average balance of $7,640 and average interest rate of 12%, this translates into a billion-dollar revenue stream if Goldman can build its market share to just 7%.
Cadre, an online investment marketplace providing access and insight into institutional quality alternative assets, today announced a $65mm Series C financing round led by Andreessen Horowitz, with additional participation from Jim Breyer of Breyer Capital, Ford Foundation, General Catalyst, Goldman Sachs, Khosla Ventures, and Thrive Capital. Cadre’s existing investors include DST, Founders Fund, SL Green, and others.
Envestnet | Yodlee (NYSE: ENV), a data aggregation and data analytics platform powering dynamic, cloud-based innovation for digital financial services, today announced the launch of its Personal Financial Wellness Solution at the Digital Banking Summit. The Envestnet | Yodlee Personal Financial Wellness Solution is a suite of applications and APIs that leverages enriched data and artificial intelligence to move beyond organizing historical financial data, helping financial institutions and fintech developers provide actionable, financial guidance to their customers across a spectrum of devices, user interfaces and platforms.
The Envestnet | Yodlee Personal Financial Wellness Solution enables financial institutions and fintech developers to provide actionable tools to help consumers identify their projected OK to Spend balance and easily Save for a Goal. By applying Envestnet | Yodlee’s advanced data intelligence to its enriched transaction data of over 15,000 data sources, financial service providers can derive actionable information from consumers’ financial data in order to measure, guide and improve consumers’ financial health.
OK to Spend
Core to the Personal Financial Wellness Solution is OK to Spend, which synergizes predictive analytics and user feedback to deliver smart financial forecasting. OK to Spend can be consumed as a financial application or a fully RESTful API framework that enables financial service providers to create forward-looking forecasts that organize and predict recurring income and financial obligations along with personalized notifications for financial events and projected balances. OK to Spend analytics is run across the consumers’ primary spending accounts (cash and credit card) regardless of which financial institution they primarily bank with, in order to provide a holistic view of their finances.
Patent-protected machine learning and data analytics enable the OK to Spend algorithms to identify sources of recurring income and accurately predicts future income, accounting for anomalies. Similarly, OK to Spend identifies recurring and forecasted financial obligations, while accounting for fluctuations determined from historic data.
Save for a Goal
The Save for a Goal application allows consumers to easily set and track savings goals. The application facilitates money movement across different accounts at a specific time frequency and allows customers to better track their goals by allowing consumers to allocate multiple goals to a single account, or spread a single goal across multiple cash and investment accounts. Save for a Goal provides visual data and notifications such as progress bars, charts, graphs and alerts, engaging customers with the option to flex and prioritize between goals.
The role of the individual and institutional single-family residential investor is highly undervalued and tremendously under-appreciated. About 10 million individuals, businesses and institutions provide secure housing and jobs for millions of average Americans. 67 million souls live in single-family rentals, a million more properties are added each year employing millions of individuals, to buy, renovate, lease and maintain as safe housing for tenants in affordable to luxury markets. Single-family rentals have been discovered as a low-risk passive income revenue source and a growth asset in a balanced portfolio or personal retirement plan.
Using Harris Poll, single-family real estate investors were surveyed nationwide to understand why, where, what and how they invest and manage these properties to provide stable housing and realistic returns on their personal and company investments.
The report touches several other critical components that shape this market. Key among these are how the single-family real estate investor effects the economy, how investors view their properties (as added rental income or as an intentional business goal), investor decision points, and the investor as a customer,” says Steve Murray, Founder & CEO Real Trends.
To download your free copy of the Iceberg Report Executive summary, please go to
These days, there are few “typical” CPA firms left. As they seek to diversify, differentiate and grow by offering their clients value added services, firms are engaging in a much wider range of activities.
With the rise of a new generation of B2B financial technology companies, or Fintechs, the opportunities for CPA firms to offer new services have never been better.
Fintechs are infiltrating every aspect of B2B financial services, and venture investment continues to pour in. Where people used to look to QuickBooks, Oracle and SAP, now there are cloud-based accounting and ERP options like Xero and Freshbooks and NetSuite and Workday. But you probably know about those.
What you might not know is that Fintechs are moving into e-invoicing, expense reporting, data sharing and protection, compliance, tax management and fraud control. They’re executing specific parts of the banking value chain better, cheaper and faster, including lending, trade finance, and payments. Some are even considering becoming banks themselves.
Fintech solutions solve the whole thing– all types of payments and all the work that goes along with the payments. Companies can make 80 percent or more of their payments electronically, and that saves a lot of resources, especially if you’re a BPO writing hundreds of thousands of checks on behalf of your clients. You could be helping them get a lot more card rebates instead.
But what visibility really does is open up more opportunities for CPA or audit or BPO firms down the road. If you’re a BPO, visibility into payments could potentially help you work better with vendors.
The more you can help clients automate, the more nimble they are and the more nimble you are.
So, I did a bit of research on what Goldman Sachs Bank is offering compared to others in the market. I looked at Bankrate and Nerdwallet to see who were the top offerings for savings accounts and CDs of various duration. What was interesting to me is that Goldman Sachs was at or near the top in every category.
For savings accounts there were a couple of small regional or local banks that had slightly higher rates but no major national banks were higher. If you look at 3-year CDs with a minimum investment of $500 (the Goldman Sachs minimum) I could not find an offering anywhere in the country that came close to matching Goldman’s 1.90% rate. In fact, the second highest rate available anywhere for a $500 3-year CD was 1.65% from Barclays.
All sorts of interest groups are flying in this week to nab some time with lawmakers before the July 4 recess.
The Marketplace Lending Association, a trade group that represents digital financial and lending startups, is in town this week for its first-ever fly-in, meeting with lawmakers and regulators. “The goal is to bring Washington up to speed on the growth of the sector, as well as the emerging partnerships between the fintech member firms and banks,” according to the group. Its member companies include Lending Club, Prosper, Funding Circle, Avant, Marlette Funding and Affirm.
On June 13, 2017, The Financial Industry Regulatory Authority (FINRA) declared the establishment of the Innovation Outreach Initiative, in order to properly assess FinTech‘s industry impact.
FINRA’s Innovation Outreach Initiative comes after the launch of its FinTech site that’s dedicated to emergent topics in the field, and literature on blockchain technology and digital investing.
The initiative will consist of program elements, such as enhancing FINRA’s processes, timely publication of regulatory technology applications, regional outreach roundtable discussions (comprised of FINRA members and nonmembers), and the creation of a FinTech Industry Committee. The committee will help to assist with ongoing discussions about how FINRA’s programs and rules will intersect with FinTech innovations.
Online Lending Policy Institute Names Board of Governors (OLPI Email), Rated: B
The Online Lending Policy Institute (OLPI), a voice for policy analysis, in-depth research, and education for the online lending industry, today announced its Board of Governors, a group of industry experts ranging from academics to lawyers to executives from twelve leading organizations. This newly elected group joins founding members of OLPI: Cross River Bank, Boston University’s Center for Finance, Law & Policy, and RocketLoans.
The Board of Governors are:
Frank Borchert, General Counsel, Marlette Funding/ Best Egg
Colin Darke, General Counsel/Chief Compliance Officer, RocketLoans
Dr. Michael Dooley, Chief Economist, SoFi; professor of economics UC Santa Cruz
Marc Franson, Managing Partner, Chapman and Cutler LLP
Michael Freedman, General Counsel, BorrowersFirst, Inc.
Gilles Gade, CEO, Cross River Bank
Adam Goller, Chief Credit Officer, Cross River Bank
Cornelius Hurley, Director, OLPI; professor Boston University
John Kromer, Partner, Buckley Sandler LLP
Robert Linderman, General Counsel, Freedom Financial Network, LLC
Tim Li, CEO, Kuber Inc.; professor Fintech School
Marshall Lux, Senior Fellow, Harvard Kennedy School
Marty Mitchell, Managing Director, ProBank Austin (formerly Professional Bank Services)
DiversyFund, Inc., a fast-growing full-service online real estate investment platform, announced the next ground-breaking real estate investment project that their partnership with Roman James Design Build will undertake. DiversyFund and Roman James will be building a new ultra-luxury in Hollywood Hills, one of the most exclusive neighborhoods in Los Angeles.
This investment opportunity is located at the end of Granito Drive in the prestigious Hollywood Hills community of Los Angeles, California, home to Hollywood celebrities, professional athletes and Fortune 500 CEOs.
Van Valkenburg called on Congress to “rationalize the chaos of financial regulation,” pointing to the horrifying reality there exists a byzantine environment of state and federal regulators that, well simply put, doesn’t make sense.
London-based fintech companies attracted more than three times as much capital in the first quarter as Berlin – Europe’s second largest fintech investment hub – and maintained its market share despite moves by other cities in the region to gain from the UK’s departure from the EU.
New research from data provider FinTech Global found six cities that stand out in Europe’s fintech arms race, with companies based in London, Berlin, Stockholm, Paris, Barcelona and Amsterdam raising $823m in the first three months of 2017.
Overall European investment stood at $1.2bn, with London claiming a 36% share at $421m — more than treble the $140m investment in Berlin-based companies, according to the research.
Over the previous three years, London accounted for 39% of European investment, suggesting that the impact of last year’s Brexit vote has been slight.
With the UK in the early stages of Brexit and now facing a General Election, new research conducted by RateSetter Business Finance reveals how credit conditions look to be tightening again, with over 400,000 small businesses now interested in finding an alternative to the banks for a loan.
When asked, 32 per cent of SMEs that had considered raising finance said that it was now harder than six months ago.
As banks are progressively closing their branches and cutting back on front-line staff, businesses now need to go elsewhere to benefit from face-to-face contact before borrowing money. With over a third of small businesses preferring to seek advice in person, the move to online-only offerings and the closure of physical branches is a concern.
Hive claims it will be the first crypto currency invoice financing platform for SMEs, with its ICO opening in 4 days and closing at the end of July.
From what I can gather – and I’d say you’re best to verify this yourself – Hive tokens give holders the right to participate in the network and generate a return by funding invoices. The carrot for small business owners is the speed of execution of the financing element.
And while I was lucky enough to get a master class in person, if you haven’t yet got your head around tokens and ICO, these articles are worth a read:
This announcement is made by Credit China FinTech Holdings Limited (“Company”) on a voluntary basis.
Reference is made to the announcement of the Company dated 26 April 2017 in relation to the Investment in Singapore Life (the “Announcement”). Unless otherwise defined, the capitalised terms used herein shall have the same meaning as those defined in the Announcement.
The board of directors of the Company is pleased to announce that Singapore Life has been approved as a fully licensed direct life insurer by the Monetary Authority of Singapore.
Singapore Life will also soon offer life insurance solutions to customers through its online platform www.singlife.com and financial advisers.
On the other hand, as Grossman points out, ‘since Macron has publicly stated that innovation and disruption is key for France’s growth potential, his intention for closer integration with Europe has been broadly welcomed by the fintech industry.’ Macron seems to be pro-PSD and has invited those affected by Brexit to work in the technology sector in France, all are welcome under En Marche. The French president is also very supportive of SME growth and is interested in helping French Tech.
Macron’s initiatives so far are clearly in favour of the development of fintech in France and with billions promised for innovation, the president is returning to supporting this space, as he did with The Family in Paris, as Grossman points out.
Prosper is currently lending significantly more than it is being repaid for the first time in roughly a year.
In March, the platform posted its first positive monthly net lending figure ($200k) since May of last year. April saw net lending growth to c. $15m.
RateSetter has posted back-to-back months of negative net lending in April and May (roughly £-700k and £-4m respectively). There are no other negative net lending months in the platform’s 6-7 year history.
Gargantuan sovereign wealth portfolios are increasingly turning to private debt exposure with almost two-fifths of portfolios now actively investing in the asset class due to its potential for stable risk-adjusted returns and portfolio diversification benefit.
The report found that 39 per cent of sovereign wealth funds now invest in the asset class, an increase of five percentage points over the past 12 months. The majority of sovereign wealth funds with over $10bn in assets now allocate to the asset class, including two-thirds of those managing $250bn or more, and all of those managing $100-249bn.
Libyan Investment Authority is one such investor in private debt that allocates to the asset class as part of its private equity portfolio. The fund targets distressed debt and mezzanine funds in Europe, North America and MENA.
Mezzanine investments are the private debt fund type most appealing to sovereign wealth funds, with 70 per cent targeting the strategy over the next 12 month and direct lending is sought by 53 per cent.
The Australian Securities and Investment Commission (ASIC) has signed an agreement with the Hong Kong Securities and Futures Commission (SFC) to provide mutual support to fintech businesses from Australia and Hong Kong seeking to operate in each other’s markets.
Under the agreement, ASIC and SFC will refer fintech businesses to each other for advice and support via ASIC’s Innovation Hub — aimed at helping fintech businesses navigate Australia’s regulatory framework without compromising investor and financial consumer trust — and its Hong Kong-based equivalent, SFC’s Fintech Contact Point.
India based Peer-to-Peer lending website, Faircent, has announced the launch of what it claims to be a first-of-its-kind Portfolio What-if Analysis (PWA) tool on its platform. According to the company the tool will allow lenders to simulate different loan scenarios and understand how multi-loan portfolios in peer-to-peer lending operate through a ‘What-if’ analysis.
Using the tool lenders can create a test portfolio and specify the amount they would like to invest, along with the duration, interest rates, and tenure. The Portfolio Simulator will then perform advanced algorithm-based calculations based on the input, generating projected portfolio returns by following a standardized method using the concept of Net Annualized Return (NAR).
Rupaiya Exchange received the award for Best Peer-to-Peer Lending Platform in India in The Asian Banker Financial Peer-to-Peer Audit Awards Programme 2017. The awards ceremony was held in conjunction with the prestigious Asian Banker Future of Finance Summit 2017, the foremost annual meeting for decision makers in the financial services industry in the Asia Pacific region, held at the Asian Civilisations Museum, Singapore.
The awards evaluation criteria were based on multiple dimensions including financial performance, risk management processes, technology, innovation and strategy.
Facilitating simple, fast, and tech-enabled banking services, the emergence of fintech is forcing banks to rethink old business models and delivery mechanisms to adopt a more technology-driven and consumer-centric approach to retail banking.
Leading this ‘uberisation’ of financial services is the online P2P (peer-to-peer) lending sector, which is driving disruption in the institutional lending space through its simplified, tech-enabled approach. What this also means is that online P2P lending will play a significant role in driving the Indian economy.
The adoption of technology means that loan approvals and disbursals can be facilitated in as little as 24 hours from the request origination, whilst digitised operations and processes allow for minimisation of overhead costs. This translates to greater benefits for all stakeholders; while borrowers pay lower interest rates and processing fees, lenders earn higher margins and returns on their investments.
Dubai SME’s financial arm and peer-to-peer lending platform Beehive had signed a memorandum of understanding (MoU) to aid financing for small and medium enterprises (SMEs).
The MoU between Beehive and the Mohammad Bin Rashid Fund (MBRF) will make it easier for SME owners in Dubai to obtain loans for development and expansion at competitive rates through the Beehive Group Finance Platform.
Under the deal, MBRF would act as a guarantor for credit of up to Dh500,000 on SME financing for a period up to 36 months.
LendingArch, a Calgary-based online and point-of-sale lending platform, announced its expansion to Quebec. LendingArch has partnered with medical clinics and home improvement contractors in Quebec to offer POS financing options, enabling LendingArch to become a fourth in-store payment method by applying online to finance products or services for up to 36 months.
News Comments Today’s main news: Goldman Sachs now highest-interest paying bank for savers. Zopa to build challenger bank in Barcelona. KBRA releases comprehensive surveillance report for American credit acceptance receivables trusts. CreditEase Wealth Management expands to Singapore. Today’s main analysis: Funding Circle June review. Today’s thought-provoking articles: OCC posts FAQ on fintech questions. Addepar raises $140M in quiet […]
Goldman raises interest rates for savers. GP:”This is a validation that their new model of using savings accounts as source of capital is working. The spreads must be sufficient and they are seeking to increase volumes and potentially have other usages of this capital. I also expect other investment banks to launch their own savings-account capital intake solutions.”AT: “Kiplinger predicts the inflation rate for 2017 to be above 2%. As of April 2017, inflation was at 2.2% for the previous 12 months. So, Goldman’s savings interest rate is still going to cause savers to lose money. Still, it’s exciting to see the bank get competitive, and it appears they’ll be chasing this business online.”
Cadre is now worth $800M. GP:”A valuation is just an indicator of the price the last investor was willing to invest in or the last price a share was sold at. It is often just an illusion, and often an overvalued illusion.”
Funding Circle’s June review. GP:”April 2017 was a particularly low volume month and we are glad May is back”AT: “Over 8,500 customers borrowed more than 610M GBP in June.”
Zopa to build challenger bank in Barcelona. GP:”A very interesting choice and surprising. Perhaps it’s cheaper to build a bank in Spain than in London and the rules still allow you to use the capital to lend to the British market. A very smart move.”
U.S. savers who routinely scour personal finance sites for the best deposit rates are soon going to see an unusual bank at the top of the list: Goldman Sachs Group Inc.
The Wall Street bank’s consumer arm, Goldman Sachs Bank USA, plans on Wednesday to raise the rate it offers customers on deposits to 1.2 percent, slightly higher than rivals Synchrony Bank, CIT Bank and New York Community Bank’s My Banking Direct.
Goldman had previously offered savers 1.05 percent. The average national rate for savings accounts is currently 0.06 percent, according to the U.S. Federal Deposit Insurance Corporation.
The move makes Goldman the highest interest paying bank, according to personal finance website Bankrate.com. The firm is aggressively trying to boost its deposit base and attract Main Street clients.
Goldman’s online deposits from individuals total $12 billion, a small but growing fraction of the $128 billion in overall deposits on the firm’s overall balance sheet.
Kroll Bond Rating Agency (KBRA) takes rating actions on 8 American Credit Acceptance Receivables Trust. In total, 15 notes were affirmed and 15 were upgraded. The data used are as of the April 31, 2017 collection period. No rating actions were taken on American Credit Acceptance Receivables Trusts 2017-1 and 2017-2, since these transactions have less than 6 months of seasoning. The rating actions reflect the fact that losses are in-line with KBRA’s initial loss expectations and credit enhancement has built for each class of notes. The breakeven loss multiples for each class of notes were sufficient for their respective affirmations and upgrades.
Credit enhancement for each transaction consists of overcollateralization (“OC”), subordination of junior notes, cash reserves, and excess spread. Each transaction has either met or is building to their respective target OC. The collateral for all the transactions has amortized from their initial pool balance since closing.
The Office of the Comptroller of the Currency (OCC) is out with an FAQ to supplement a Bulletin (2013-29). Several of the items address Fintech specifically, as well as marketplace lending.
9. How can a bank offer products or services to underbanked or underserved segments of the population through a third-party relationship with a Fintech company?
Banks may partner with Fintech companies to offer savings, credit, financial planning, or payments in an effort to increase consumer access. In some instances, banks serve only as facilitators for the Fintech companies’ products or services with one of the products or services coming from the banks.
10. What should a bank consider when entering a marketplace lending arrangement with nonbank entities?
When engaging in marketplace lending activities, a bank’s board and management should understand the relationships among the bank, the marketplace lender, and the borrowers; fully understand the legal, strategic, reputation, operational, and other risks that these arrangements pose; and evaluate the marketplace lender’s practices for compliance with applicable laws and regulations. As with any third-party relationship, management at banks involved with marketplace lenders should ensure the risk exposure is consistent with their boards’ strategic goals, risk appetite, and safety and soundness objectives. In addition, boards should adopt appropriate policies, inclusive of concentration limitations, before beginning business relationships with marketplace lenders.
In May, real-estate investing start-up Cadre found itself in the limelight when The Wall Street Journal reported that Jared Kushner, President Donald Trump’s son-in-law, had failed to disclose his investment in the three-year-old company when he became a senior adviser to Trump. Jared and his younger brother, Josh, are both listed as the company’s co-founders, along with Ryan Williams, who met Josh Kushner at Harvard. Before Trump’s inauguration, Jared Kushner stepped down from Cadre’s board and sold some of his stake in the company, Bloomberg reports.
Now, the company has raised $65 million in funding, valuing Cadre at $800 million. The biggest firm to invest in the new round of funding is Silicon Valley heavyweight Andreessen Horowitz, which joins a number of institutional investors, including Vinod Khosla,David Yu,George Soros, and Trump adviser Peter Thiel in backing the real-estate tech start-up.
Cadre is just one Kushner-connected start-up in the tech world. Before he divested from his assets, Kushner had a $30 million stake in Thrive, his brother’s venture-capital firm, which invests in companies that include Slack, Glossier, Juicero, and, of course, Cadre.
Statement by Con Hurley, Executive Director, Online Lending Policy Institute (OLPI) (OLPI Email), Rated: A
“At a time when some are calling to reimpose the strictures of the Glass-Steagall Act on banks, no one is calling for a return to the days on interstate restrictions on banking activities. Yet, this is precisely what the misguided federal court decision in the Madden case would achieve.
The U.S. House of Representatives is expected to ratify the longstanding law and custom of banking in the U.S. that a loan, once made, is valid regardless of subsequent buyers or assignees of that loan. The Online Lending Policy Institute salutes this action. Further, OLPI urges the Senate to make this part of its reform legislation.”
The CHOICE Act 2.0 introduces amendments to the National Bank Act, Federal Deposit Insurance Act, Home Owners’ Loan Act, and Federal Credit Union Act to clarify that the interest rate of a loan that is valid when made by a national bank, state-chartered insured depository institution, federal savings association, or federal credit union shall remain valid regardless of whether the loan is subsequently sold, assigned, or otherwise transferred to a third party. These amendments would overturn the 2015 decision of the Second Circuit Court of Appeals in Madden v. Midland Funding, which suggested that loans held by non-bank entities may be subject to state usury laws even where the loans were originated by national banks for which such laws are preempted. The Madden decision has created some uncertainty in the secondary markets for bank-originated loans.
Today, InstaLend announced successful growth of its real estate crowdfunding platform, expanding to Pennsylvania, Illinois, and Georgia. As of June 1, 2017, investors in these three states, as well as New Jersey, will be able to participate in passive residential real estate investments through InstaLend’s online crowdfunding platform.
For any given project, InstaLend funds between 80 and 90 percent of the total project’s cost (acquisition + renovation) in the form of a senior debt loan. The capital provided by InstaLend is sourced through its network of crowd investors, and borrowers commit between 10 and 20 percent of total project cost as common equity.
RealtyeVest lowered their required minimum investment amount today to just $5,000 for all offerings on their real estate crowdfunding platform for accredited investors. Previous minimum investment amounts ranged from $15,000 to $50,000, depending on the real estate project. The new $5,000 threshold is intended to draw first-time investors to experience RealtyeVest’s high-caliber performance with a nominal financial commitment.
RealtyeVest connects commercial and residential real estate owner-operators with investors. Their one-stop platform, realtyevest.com, provides a simple, secure, and transparent digital dashboard for accredited investors to partake in exclusive high-yield investment opportunities. New investors can complete the simple accreditation process right on the RealtyeVest website and become accredited within approximately 24 hours.
Payments to the people — it’s the motto and guiding principle behind Payscape, an Atlanta-based Fintech company that provides small to mid-size business owners with technologies that help them accept payments, streamline business, and increase cash flow. Payscape has grown exponentially since its inception in 2004 — their commitment to consistently developing and iterating new products that serve their customer base has allowed them to expand to 14 offices. They’ve processed 125 million transactions to the tune of $7 billion.
CEO Jeremy Wing and his team have had a busy 2017 thus far. The company invested $50 million to expand their operations, add 200+ jobs, and relocate to Midtown for access to talent and strategic partners. Most recently the team launched a new software product — Payscape Registration, an online registration management system with integrated payments. It’s already on the wish list of a few major universities, including Cornell University.
Q2 2017 was big for Payscape. Tell me more about your product launch and how it will add to Payscape’s current features.
Our new product includes a mobile app for event registration and payments, enhanced communication features such as text and an integration marketplace that will make it easier to connect other SaaS technologies with our platform.
You’re investing $50 million on an expansion and relocation to Midtown. What prompted your decision?
Midtown is the center of the Atlanta Fintech hub. It’s near Tech Square and Georgia Tech, and strategic partners like NCR, ParkMobile, Equifax, TTV, TechSquare Labs and Flashpoint. We not only look to partners to grow businesses, but as a major talent acquisition tool.
We also love the infrastructure for live/work/play. Most of our team will be using alternative transportation to get to our new headquarters.
Here’s what you need to know to score a mortgage in today’s market:
Start the process early. You can make the process easier by having your financial documents — including tax returns, bank statements and pay stubs — in order and ready to share with your lender. More than half of borrowers recently surveyed by FreeandClear.com said that the paperwork was the most challenging part of the mortgage process. Pull your credit report, too, to make sure that there aren’t any errors or surprises that could haunt you.
Shop around. Get quotes from at least three lenders, including a national bank, a local bank or credit union and an online lender.
Understand private mortgage insurance. Any time you have a down payment of less than 20 percent, you’ll need to pay mortgage insurance on the loan, which will push up your monthly bill.
Ask about all your loan options.
Consider locking in your rate. On a median-priced home, an increase in mortgage rates from 4 percent to 5 percent would add $100 to the monthly bill, according to Zillow.
Summer has arrived, and it’s been another exciting month. We’ve been given full authorisation from the UK regulator, the Financial Conduct Authority – another step forward to offering industry-leading, tax-free returns with the Funding Circle ISA, which we plan to launch later this year. You can read the full story in this article.
You’ve helped more than 8,500 small businesses access finance in the last 6 months…
P2P Lending marketplace Assetz Capital today announced the launch of another account type. The Property Secured Investment Account (PSIA) is marketed as a way to invest exclusively in property backed loans with automatic diversification intended to help investors spread their risk across a diverse range of lending.
The target rate for the Assetz PSIA account is 5.5%.
Specialist business peer to peer lending platform Folk2Folk has hired a new Chief Marketing Officer (CMO) and four Business Development Managers (BDM). Folk2Folk specializes in secured loans for businesses across the UK. The platform matches local businesses looking for finance with investors looking for a great return.
Leading Chinese Fintech and wealth management company, CreditEase announced today the opening of its new Singapore office in the Asia Square Tower. The new office opening was hosted by CreditEase Founder and CEO Ning Tang, CreditEase senior executives, distinguished guests from Blackstone, KKR and Tishman Speyers and other strategic partners.
Tang forecast an explosive development in crowdfunding, robo-advisor, insurance tech and blockchain innovations in the coming decade, while reiterating the company’s willingness to share its Fintech achievements and the “development dividend” to continuously create value for clients.
CreditEase Wealth Management opened its Singapore office in October 2014 with a focus on global real estate finance and investment. Its global property FoF products have been very popular among high-net-worth Chinese clients. When it obtained an asset management license from the Monetary Authority of Singapore (MAS) in 2016, it marked the cornerstone for further business expansion in the country.
In addition to Singapore, CreditEase operates overseas offices and affiliate offices in Hong Kong, New York, and Tel Aviv. Domestically, the CreditEase wealth management network covers over 40 mainland cities, and in in 2016 the company was awarded “Best Non-Bank Private Wealth Product” by The Asian Banker.
The Hong Kong Monetary Authority (HKMA), the defacto central bank, is co-operating with the neighboring city of Shenzhen in China over developments in financial technologies or FinTech.
Given the geographical proximity between the two cities, the bilateral co-operation is certain to promote FinTech activity and adoption in two of the most prosperous cities in the region. Shenzhen is among the largest and the wealthiest cities in China, one that links Hong Kong to the Mainland.
National Internet Finance Association (NIFA) launched the Information Disclosure System on June 5th, and the first 10 P2P lenders were known to disclose financial data in the system, including Wei Dai Network, Lufax, Souyidai.com, etc.
Now, we can search for basic and operating information of the above P2P lenders on the website of NIFA. And 8 of them have disclosed financial information as follows.
Zopa, the innovative finance company, today announces the opening of a development centre in Barcelona, Spain.
The new hub will initially focus on building the technology to support the launch of Zopa’s next generation bank and developers will work on developing payment gateways, credit card processing, and deposit systems.
Martin Saidler has built Centralway Numbrs with a considerable personal financial investment, achieving a most respectable response from investors. The firm is a global distribution platform for banking products, a super market for customers of retail banking services ranging from loans to car insurance and funds.
Centralway Numbrs in the final week of May abruptly terminated the contracts of about 50 of its staff. The people affected are programmers and other technical staff. Reason for the cuts are high development and personnel costs.
The company still doesn’t generate significant revenues with its banking app and the platform. Therefore, the fintech has to cut costs, eliminating jobs in Zurich or moving them elsewhere.
Centralway Numbrs says the reduction of jobs in Zurich is part of a restructuring process. Jobs will go in Zurich, but the company continues to hire programmers across the world who work from home – so-called remote workers, the company told finews.com.
Centralway Numbrs says the reduction of jobs in Zurich is part of a restructuring process. Jobs will go in Zurich, but the company continues to hire programmers across the world who work from home – so-called remote workers, the company told finews.com.
Centralway Numbrs has reached its first agreements with three companies this year, generating an initial return: Postbank, Norisbank and SWK Bank, three German companies which make their products available via the platform. These contracts aren’t enough to make the platform viable though.
Payments startup Klarna is ramping up its valuation again as it picks up a new, strategic investor. Last valued at $2.25 billion in 2015, the company today announced that Brightfolk, controlled by fashion tycoon Anders Holch Povlsen, is becoming a “qualified owner” of Klarna — that is, buying up at least 10 percent of the company.
At Klarna’s $2.25 billion valuation, Brightfolk’s 10 percent+ stake is valued at $225 million or more. But while the company is not commenting on any of the financial terms of today’s deal, TechCrunch understands that this is an “up” round, with the valuation now higher than $2.25 billion.
Poland’s most popular mobile payments service was not created in a garage or innovation lab. It was designed around a conference table by the heads of country’s six biggest banks, who had decided the market needed a new service.
Poland’s most popular mobile payments service was not created in a garage or innovation lab. It was designed around a conference table by the heads of country’s six biggest banks, who had decided the market needed a new service.
In 1989, when communist rule ended, the country had just two retail banks, both of which were state-controlled. International banking groups and new private Polish banks quickly joined the fray.
Today, services such as free real-time online payments are standard, contactless payment is available in almost every shop throughout the country and customers have a choice of apps for organising their finances.
Suretly is a unique crowdvouching platform that offers an alternative to conventional P2P lending practice. The crowdvouching model followed by Suretly works in conjunction with microfinancing organizations where investors can vouch for a borrower by offering assurance to repay a portion of the loan amount in case of default. In return for their guarantee, they will receive compensation based on the borrower’s credit rating.
Suretly mainly targets short-term loans and the platform is already dubbed as the “Tinder for Microloans.”
The company has already set up its operations in Russia and has plans to enter the US market in Q4 2017.
SUR Token ICO
Suretly is planning to raise between $1.5 – $8 million USD in the next round of financing by selling 15% of its existing shares. Funds raised through the crowdsale will be used to accelerate integration into new markets and countries, spearheaded by a new, soon to be set up legal entity in Singapore.
AEVIandMorokutoday announced a partnership to bring their all-in-one small merchantPOS softwareMarrakashto AEVI‘s Global Marketplace; a B2B app store for smart Point of Sale (SmartPOS) devices.Marrakashis designed with the next generation of banks in mind,delivering a single solutionfor theirsmallretail and hospitalitymerchantsthatseamlesslyintegrates their business,products,customers andpayment systems into one easy-to-use platform.The partnership willleverage AEVI‘s open solutions and global support infrastructure to target multiple vertical markets including the hospitality,food and drink, retail andfinancial service industries.
Based in Sydney, Australia, Moroku is a pioneering Fintech firm that is providing the finance industry with engaging banking and payment experiences through gamification. AEVI’s Global Marketplace will now also feature Moroku’s Marrakash, POS software that enables small mobile merchants to grow and run their business entirely from a single SmartPOS device.
Marrakash is already in operation today with merchants in Australia, India, North America and the UK. Voted runner-up at the New Zealand Payment Innovation awards, Marrakash enables businesses to display a full product catalogue, create bespoke customer loyalty schemes and take secure card payments on the go. This gives merchants the control and freedom to run their business and take payments however, and wherever, they need. Having Marrakash available on AEVI’s Marketplace will allow vendors across the globe using AEVI-enabled POS hardware to download and add the app directly to their SmartPOS device. The strategic partnership will increase Marrakash’s speed to market in key US and European territories where AEVI already have a strong, and ever-growing, presence.
Sancus Finance, a specialist financial services provider, has launched a new funding platform for businesses looking to participate in financing on their site. The new platform is part of a series of developments designed to improve the overall service offered to both funders and businesses. Sancus is part of AIM listed GLI Finance.Sancus BMS Group, the parent of Sancus Finance, has provided in excess of £578 million of funding to SME’s and their owners and has operations in the UK, Ireland, Jersey, Guernsey, Gibraltar & the Isle of Man.
It was announced recently that Australia-based P2P lender, Credit Crowd, has joined Othera’s Blockchain Lending Platform and Digital Asset Trading Exchange. By joining Othera’s platform, Credit Crowd is seeking to evolve its P2P lending market by digitizing the trading of P2P loans on the block chain.
Founded in 2012, Credit Crowd provides short-term mortgages to borrowers as well as a marketplace for retail and institutional investors. The company claims to have originated over $100 million in loans to finance over 50 projects for its borrowers since being founded.
Addepar, a B2B fintech company that offers a data-driven operating system for wealth advisors and other financial professionals, has raised $140 million in a VC round led by Valor Equity Partners, 8VC and Harry McPike. Valor Equity Partners is an existing backer, and 8VC, the venture firm led by Addepar co-founder Joe Lonsdale, previously invested in the company through its predecessor firm, Formation 8. Addepar had raised about $67 million prior to this round and was most recently valued at $292 million in 2014.
Much of the new funding will go toward research and development.
Among the other companies in the financial services industry that have raised significant equity funding in 2017 are online lender SoFi ($453 million in March) and Robinhood, the provider of a mobile stock-trading app ($110 million in April).
Overall, funding in the fintech industry is on pace for a
Roll up, roll up, there’s a new fintech VC fund in Southeast Asia town. Today, Thailand-based Kasikorn Bank announced its inaugural tech fund which is 1 billion THB, just shy of $30 million, in size.
Kasikorn, which was founded in 1945 and is one of Thailand’s major banks, is calling the fund Beacon — think lights on top of lighthouses — and it is aimed at giving the firm first-mover advantage on global tech through startups based in Thailand and overseas. Thanapong Na Ranong, formerly with InVent, a VC affiliated with mobile operator AIS, will lead Beacon VC.
The capital, which is 100 percent from the bank, will go towards direct investments in startups and also contributions into VC funds as an LP. Kasikorn said today that it has already backed Dymon Asia, a fintech fund headquartered in Singapore that is targeting a $50 million final close, and put money into Bangkok-based FlowAccount, its first direct investment in a startup.
Going forward, it is targeting three to five deals per year ranging from seed-plus to Series A stage with a target across all aspects of fintech. The firm aims to lead or co-lead investments with a typical check size of $500,000 to $3 million. It did not disclose what portion of the fund is reserved for follow-on deals, but the capital itself is anticipated to last between four and six years.
Peer-to-peer lending startups Investree, Amartha, and KoinWorks are among eight Indonesian fintech startups that have been officially registered under the Financial Services Authority (OJK) in May 2017.
As of June 5, 2017, Investree claims to have successfully disbursed Rp 148 billion unfunded loan with 592 total loans, 17.5 per cent average rate of return, and zero default.
Amartha started in 2010 as a micro-finance institution. Six years later, it changed into a P2P lending marketplace. Today, Amartha claims to have facilitated over $6 million in loans to over 30,000 women micro-entrepreneurs while maintaining a 7-year long 0% default rate.
Indonesia’s fintech sector is currently the second biggest in the region after Singapore.
News Comments Today’s main news: Huge spike in deposits after Lending Works launches IFISA. Public-private partnership forms Online Lending Policy Institute. Today’s main analysis: How private debt/alternative credit boosts income, risk-adjusted returns. Today’s thought-provoking articles: What roll-back of Dodd-Frank means for MPL. An end to P2P wholesale lending. BondMason calls for end to provision funds. United States Private-public […]
Private-public partnership forms OLPI. AT: “This is an interesting approach to dialogue concerning MPL innovation, regulation, and growth. Where the Marketplace Lending Association exists primarily for the benefit of lenders, the OLPI seems to have its focus on consumers. Both attempt to influence public policy, but they different paths.”
What rollback of Dodd-Frank means for MPL. AT: “I completely agree that regulation legitimizes the industry, but I am concerned that over-regulation can kill innovation. On the other hand, there is a real danger that protectionist policies can lead to banks reverting back to risky lending practices, hurting consumers, and making it difficult for marketplace lenders to compete. I hope we can strike a fine balance that encourages innovation, fosters competition, and provides more options for consumers.”
Huge spike in deposits reported after Lending Works IFISA launches. GP:” I expect the huge spike to be investors who were warned and were waiting for the IFISA approval. I doubt 166k GBP per hour is the steady rate of investment now. It would be interesting to compare a 3-months moving average of the investment capital intake speed before and after IFISA approval.” AT: “So the question now is, can we expected similar results as other platforms roll out their IFISAs? I think we can.”
The Online Lending Policy Institute (OLPI) today announced its formation and the appointment of its first Executive Director, Professor Cornelius Hurley. OLPI will provide a one-stop resource for those interested in Fintech generally and marketplace lending specifically. The OLPI will provide research and education to ensure informed policy and best practices.
The OLPI provides policy analysis, in-depth research, broad educational initiatives (like the successful MPL Policy Summit), and relevant and engaged thought leadership to foster responsible growth of online lending (providing a strong bridge between established financial services and technology knowledge). To that end, the OLPI convenes various stakeholders, facilitates industry consensus, and encourages the development of a regulatory framework that protects borrowers while promoting innovation.
Key activities of the OLPI will include:
Substantive research that affects the online lending industry
Publishing white papers, studies, and reports
Engaging policy makers and industry stakeholders in the creation of forward-thinking public policy
Commissioning studies to ensure policymakers and those studying the industry have accurate data to rely on
Hosting the annual MPL Policy Summit to share, educate, and exchange ideas
Acting as the one-stop solution for all who seek to understand legal and regulatory landscape of online lending
Providing the tools necessary to ensure responsible innovation in Fintech– OLPI will be a valuable research resource for the various associations that have already formed to advocate for Fintech
To reach its goals, the OLPI knew it was important to be led by an expert in financial services thought leadership that has built a reputation of integrity and innovation with the banking community at large. The OLPI is pleased to announce the appointment of Professor Cornelius Hurley as the first Executive Director of the Institute. Professor Hurley brings more than 35 years of diversified legal, entrepreneurial, and academic experience in the financial sector.
OLPI’s growing roster of members includes founding members Cross River Bank, Boston University’s Center for Finance, Law & Policy, and RocketLoans, among others. OLPI will announce its broader membership, including many leading industry players at LendIt 2017, where OLPI will host a day of legal and regulatory panels.
For marketplace lenders, the industry has matured despite a relative lack of federal regulation and uniformity. While it has thrived due to reduced oversight from lending authorities, a wave of deregulation in Washington could be a curse rather than a blessing as it can further erode the legitimacy fintech pioneers have started to garner since the great recession.
While reactionary regulations can hinder economic recovery, Dodd-Frank was structured in a way that made enacting new rules a heavily vetted process.
Bank lending has increased at a rate of 6 percent a year since 2013, reaching a record high of $9.1 trillion in commercial loans in 2016 and JPMorgan increased core loans more than 10 percent across all categories. If the banking sector has struggled under Dodd-Frank, it hasn’t curtailed profits.
Dodd-Frank has made it much more difficult for consumers to gain access to mortgages and other loan products and raised some costs, in turn affecting profitability, particularly among smaller community banks.
Regulation For Marketplace Lenders Creates Legitimacy
Without smart regulation, fintech companies will continue to be at a disadvantage when compared to brick and mortar counterparts, making it more difficult for a still-developing industry to establish itself as a legitimate entity.
Disruptive innovation can often flourish in this vacuum, but there’s a cost. Without the legitimacy that regulation offers, marketplace lending could struggle to be taken seriously as a direct competitor of the established banking system.
The danger lies in overregulation, but we are a long way from that.
Zoot Enterprises has announced that it has formalized an agreement with XOR Data Exchange to provide Zoot clients access to multi-industry data predictive of identity theft and fraud risk. With the rise in online fraud, clients rely on Zoot to identify new ways to support their business strategy and quickly react to new fraud trends.
The partnership will bring a wider variety of predictive data sets and analytics to institutions that rely on Zoot for their platform needs across a wide variety of industries including financial services, merchant services, telecom, insurance, and healthcare. By sharing data through XOR, businesses are reducing credit and fraud losses, while providing additional insight into fraud rings that may target several different industries and establishing the creditworthiness of businesses that may not be identified using traditional providers.
Lending Works CEO Matthew Powells reported an influx of more than 500K GBP deposits within 3 hours after launching the Lending Works Innovative Finance ISA (IFISA). Lending Works’ IFISA product offers 4% (up to 3 years) or 4.7% (up to 5 years term) tax-free for investments on the p2p lending marketplace.
A recent survey of Lending Works’ existing investors found that 88% plan to open an IFISA, with around a third expecting to invest between 10,000 GBP and the maximum threshold of 15,240 GBP of their annual ISA allowance into the IFISA before the end of the tax year in April.
Last weekend, the Mail on Sunday reported that lending money to businesses that in turn lend that money on — aka wholesale lending — is something the regulator reckons doesn’t count as P2P lending. According to the Mail, the FCA thinks P2P lenders doing this “would mimic banking – but without the same protection for individuals or regulations for the firms involved”.
Good news for fans of clarity. Less good news for fans of Ratesetter, a leading P2P lender with a boundary blurring business model and a wholesale lending operation that has historically made up around 15 per cent of its loan originations, as we showed in March last year.
The FCA’s views on wholesale lending in the P2P sector are not entirely clear. One advisor to P2P lenders said “different platforms have been getting different messages”, but suggested the practice might raise the question of whether deposit taking was going on. As they explained it, a lending business borrowing from a P2P lender would, in effect, be borrowing money from ordinary people for the purposes of lending it on, which is not a million miles away from what a bank does. In short, the P2P lender might be viewed as a channel for attracting deposits.
PEER-TO-PEER lenders should not use provision funds, a P2P investment manager has argued in a new report.
BondMason claims the funds, used by platforms such as Zopa and RateSetter, are just a tool to attract lenders.
The investment firm, which aims to get clients a seven per cent return by selecting P2P loans across approved platforms on their behalf, argues that provision funds “do little (nothing) to improve returns for well-diversified investors.”
Looking at the wider market, the BondMason report found lending in the P2P market grew by 39 per cent in 2016 to £3.2bn but warned that this was down from the annual growth of 91 per cent between 2014 and 2015.
BondMason has published its Market Report 2017 reviewing the trends in the UK peer to peer lending market. BondMason is a platform that provides investors a method to diversify their investments across many P2P lending platforms.
According to BondMason’s research, P2P lending is beginning to see a flight to quality as the industry matures and weaker platforms exit the market. BondMason’s numbers indicate that the UK direct lending market totaled £3.2 billion of lending in 2016. This is an increase of 39% versus 2015 but a drop in growth as the industry grew by 91% from 2014 to 2015.
BondMason believes there is significant room for growth of the online lending sector. While P2P lending accounted for £3.2 billion during 2016, the total addressable market is between £100 to £120 billion in the UK.
NatWest is unveiling a service for customers to access investment funds online through the bank for the first time, ahead of plans to launch a “robo-advice” service later this year.
The service, called NatWest Invest launches later this month and will allow bank customers who do not wish to pay for financial advice to choose their own funds and invest with a minimum of £500.
Other banks in the UK are planning to follow suit by offering robo-advice. Santander is among the lenders in the process of developing an automated advice service and has invested in robo-adviser provider SigFig.
And finally, Mastercard has launched a mobile marketplace for East Africa’s agricultural sector. The digital platform, called 2KUZE, meaning ‘let’s grow together’ in Swahili, will enable farmers to buy, sell and receive payments for agricultural goods via their phones.
Quantitative easing has caused a significant distortion of asset prices and market dynamics. It has had an enormous impact on the price of most publicly-traded liquid assets, causing yields to drop below a level any return can historically justify. In this context, investors are looking for alternative solutions and private markets offer significant investment opportunities and value enhancement.
Alternative Investments and Alternative Credit have asset solutions that are very different from each other with very dissimilar drivers. Understanding these asset classes requires specialization and expertise. For example, in banks, sub-asset classes such as shipping, trade and commodity finance, infrastructure finance, leverage loans, and leasing are executed by specialized departments and treated as asset classes on their own merits.
Firstly, the active asset managers and institutional investors are providing the alternative sources of credit either directly or through their clients. This began the growth of a credit market along with the traditional bank lending in some sectors. The shrinking balance sheets of banks presented a tremendous opportunity for investors who were jolted by traditional fixed-income securities and needed options for diversification and higher yields.
Secondly, many new so-called Fintech companies in Alternative Lending have entered the market and established business models which are challenging the traditional status quo. They are still small in size in comparison with incumbent players; however, their business model is addressing many current challenges in the financial sector (inefficiency, information asymmetry, maturity transformation).
The increasing participation of the institutional investor market and new platforms are likely to bring more transparency regarding the actual return contribution of different asset classes in the future.
How Does Alternative Credit Enhance Risk-Adjusted Return and Income?
Currently, most liquid fully “institutionalized” asset classes do not offer the appropriate balance between risk and return. Monetary interventions themselves over the past few years have caused a positive return on the most liquid public assets solely as a result of artificial demand pressure.
Contrary to public traditional fixed-income markets, Alternative Credit offers a private pricing differential (PPD) of 0.5% to 5% over the fixed income market, which is an attractive level.
In these uncertain times, Alternative Credit offers a plausible answer: “Going for the safest part in the capital structure and going for shorter tenors.”
Credit investments currently the highest safety in capital structure.
Alternative Credit can enable exposure for shorter tenors to self-liquidating assets (trade finance, factoring, supply chain finance).
Alternative Credit offers a floating rate exposure.
The best feature of Alternative Credit is its due diligence.
Alternative Credit offers portfolio construction opportunities to diversify other asset classes traditionally owned by banks (not mark to market) and segments that are not yet on the public market’s radar.
As equities became too volatile after the financial crisis of 2008, Private Debt became a surrogate for high-yield bonds. In addition, there was a contraction of more than 70% in the AAA-rated bonds and many of them lost their triple-A status (Preqin, 2014). This provided the cornerstone for the development of Alternative Credit, which enhanced the return of the portfolios by offering a combination of higher rates of return and lower risk.
Alternative Credit has already become the cornerstone of investments in many institutional portfolios and has become a regular source of income. It can be concluded that Alternative Credit is the new form of asset class that is expanding quite rapidly, in part due to the shortage of credit created by the credit crisis.
The first article, titled “Success drivers of online equity crowdfunding campaigns” addresses the research question that Andrea so aptly formulated. The question is highly relevant, as a large part of crowdfunding campaigns – both on Invesdor and on other platforms – have not reached their funding targets. Could something be done to increase the probability of a campaign succeeding?
Based on sixty campaigns that had been conducted via Invesdor, we found the following:
1. Campaign characteristics that are pre-determined by the target company – with assistance from Invesdor – are relevant in determining the campaign’s success:
The lower the minimum investment requirement, the more investors and funds a campaign can be expected to attract.
Campaign duration is negatively associated with the number of investors.
Higher funding targets seem to attract larger numbers of investors.
The availability of financials in the pitch is positively associated with the number of investors.
2. The use of the entrepreneur’s (and Invesdor’s) networks is important for campaign success.
The more money the target company can raise through its and Invesdor’s private networks during the hidden phase, the more investors and more funds it is likely to attract in total.
Posting the campaign on social media is a strong predictor of success.
3. The understandability of the target company’s products may play a role in success
The results indicate that companies that offer consumer products, rather than products targeted to other businesses, may be more likely to conduct successful campaigns.
The results presented here are based on an aggregate assessment of campaigns and investments.
2016 was a year of rapid growth for Fellow Finance. The number of platform users grew 220% and the total amount of intermediated consumer and business loans in Finland and Poland was above 50 million euros. This growth resulted in the overall loan volume exceeding 90 million euros which strengthened Fellow Finance’s position as the leader of the crowdfunding platforms in the Nordic countries and with 4,3% market share in continental Europe (source: Liberum Altfi Index). In Finland, Fellow Finance’s market share was over 30% of the whole crowdfunding market (source: Ministry of Finance of Finland). The average of annual yield for investors was 11%.
The government has dismissed a research report ranking Hong Kong only fifth last year among leading fintech hubs, saying the study did not directly compare financial technology development but rather financial and business environments as a whole.
During a Legislative Council meeting on Wednesday, finance sector legislator Chan Chun-ying asked the government why Hong Kong ranked three spots behind rival Singapore – which ranked second – in the report by global accounting firm Deloitte.
Fintech complements rather than threatens banking institutions. In my experience, banking has always been about technology, so today’s fintech innovation boom represents evolution rather than revolution for traditional banking. It is supplementing and diversifying the existing financial system – not replacing or disrupting it.
If we look closely, fintech is currently only focusing on a mere fraction of the financial services spectrum. To date, much of the focus of fintech has been on retail banking services – lending and financing along with payments-related products and services, where mobile and e-commerce has led to real demand from consumers.
Similarly, peer-to-peer lenders appear to be more focused on small businesses and higher-credit-risk borrowers than on mainstream banked clients.
From the second quarter, the government plans to toughen watch and scrutiny on peer-to-peer (P2P) lending service in burgeoning demand in South Korea.
Currently, moneylenders with assets worth at least 12 billion won ($10 million) fall under the broad state regulation. Smaller lenders can run money business upon registering with local governments.
Under a new act that would go into effect in the second quarter, small lenders also would have to comply with state regulation and watch.
Kelvin Teo erases borders with an online lending platform (Asian Review), Rated: A
In January last year, Riza Fansuri was in a quandary. The 37-year-old, who runs a small food supplier in a Jakarta suburb, wanted to develop new products, but that would take money. He tried applying for loans at banks, but they all turned him down because he could not provide sufficient collateral.
Desperate for help, he turned to a website for peer-to-peer lending, a method of debt financing that allows individuals to lend and borrow money directly from each other online instead of borrowing from banks. Half in doubt, he applied for a loan, and a week later, he managed to secure the 100 million rupiah ($7,485) needed to carry out his plan. His company successfully created two new products — instant ice cream and pudding mixes — that now account for 40% of its sales.
The website Fansuri used is run by Funding Societies, a fintech startup that operates in Indonesia, Singapore and soon in Malaysia. The company was founded by Kelvin Teo, a graduate from Harvard Business School, and Reynold Wijaya, an Indonesian classmate from the school. In less than two years, the company has arranged more than 360 loans worth a total of $19 million.