Tuesday October 2 2018, Daily News Digest

delinquencies by vintage

News Comments Today’s main news: Renaud Laplache banned from securities industry for 3 years. Varo Money pulls bank charter application. Funding Circle completes IPO. Marcus enters the UK. OnDeck Australia expands equipment finance. Today’s main analysis: Delinquency/Loss Trends, yield curve. Today’s thought-provoking articles: Americans prefer humans over robo-advisors. Global P2P lending market expected to reach $898B by 2024. AltFin’s path to […]

delinquencies by vintage

News Comments

United States

United Kingdom

China

International

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News Summary

United States

Lending Club founder settles; banks fear weak third quarter (American Banker), Rated: AAA

Renaud Laplanche, the co-founder and former CEO of online lender LendingClub, agreed to pay $200,000 and be banned from the securities industry for three years to settle Securities and Exchange Commission fraud charges. In addition, LendingClub Asset Management (LCAM), an investment management unit of LendingClub, will pay a $4 million fine while Carrie Dolan, the company’s former chief financial officer, will pay $65,000.

LendingClub Responds to DOJ and SEC Settlements (PR Newswire), Rated: A

“We are pleased to have resolution and closure,” said LendingClub Chairman Hans Morris. “Following an internal review in 2016, LendingClub’s Board of Directors accepted the resignation of Renaud Laplanche as Chairman and CEO of the Company. The Board’s decision was not made lightly but the violation of the Company’s business practices, along with a lack of full disclosure by Mr. Laplanche during the review, was unacceptable. The allegations made by the DOJ and the findings of the SEC further support the Board’s decision to take swift and decisive action. We have full confidence in our new management team and we are a better company today.”

Why this fintech pulled its FDIC charter application (American Banker), Rated: AAA

Varo Money is inching closer to having a bank — the next step will require a major leap.

The fintech, which aims to offer consumer banking services with no fees, applied for a national bank charter over a year ago. While it recently received preliminary and conditional approval from the Office of the Comptroller of the Currency, Varo has been unable to secure the blessing of the Federal Deposit Insurance Corp.

Delinquency/Loss Trends; Yield Curve One Hike from Inversion (PeerIQ), Rated: AAA

The range of Fed Funds Rate is now between 2% – 2.25%. A super-majority of committee members indicated that they would like to hike rates by another 25 bps in DecemberUS GDP growth of 4.2% in the 2nd quarter was the fastest since 2014 Q2, and US consumer confidence reached an 18-year high in September.

 

Source: Federal Reserve, Bloomberg, PeerIQ
Source: PeerIQ, Bloomberg

Delinquencies by Vintage

Source: PeerIQ

Bank of America is luring top talent from Apple and Disney to fuel its billion digital ambition (Business Insider), Rated: A

Like its competitors, Bank of America Merrill Lynch is spending a colossal amount of money to stay competitive in the financial tech race: Its $10 billion annual tech budget sits just behind JPMorgan’s $10.8 billion and ahead ofCitigroup’s $8 billion.

A large chunk of that spending goes to the firm’s profit-driving consumer-banking operation, which accounts for $34.5 billion in revenue and $8.2 billion in net income, which is 38% of the firm’s total.

SoftBank Invests $ 400M in Home-Selling Startup Opendoor (Coverager), Rated: A

Online real estate marketplace Opendoor  has announced a $400M investment from the SoftBank Vision Fund, bringing its total funding to date to over $1b. The company also announced it has secured access to more than $2b in debt financing from top banks.

Governor Brown Signs Bill That Expands Access to Capital for the Underbanked (BusinessWire), Rated: A

INSIKT, a CDFI-certified fintech company disrupting the predatory lending industry, today celebrated a major step forward for working families and small businesses in California with the signing of Assembly Bill 237 (AB237), following unanimous approval by the CA Legislature. Sponsored by Lorena Gonzalez Fletcher (D-San Diego), this new law significantly expands access to lower cost loans for Californians who are part of the 66 million underbanked in America ensnared in endless cycles of predatory debt.

AB237 builds on the success of California’s Pilot Program, established in California in 2010 to provide affordable credit for loans below $2,500. The Pilot Program has many consumer protections, including rate caps, mandated underwriting, credit education and reporting of payback information to credit bureaus so that consumers can build their credit score.

The Pilot Program has been working, with the volume of payday lending declining in California by almost 7% from last year, the third consecutive annual decline. AB237 extends all of the Pilot Program’s consumer protections to larger loans of up to $7,500. It also adds new protections, including a 36% maximum debt-to-income ratio, minimum loan terms of one year, and mandatory rate reductions on second and third loans for borrowers in good standing.

Compass Raises $ 400M in Series F Funding (Finsmes), Rated: A

Compass, a NYC-based real estate technology company, raised $400m in Series F financing round.

The round – which will bring the total capital raised to nearly $1.2 billion – was led by the Softbank Vision Fund and Qatar Investment Authority (QIA), with participation from Wellington, IVP and Fidelity.

Americans Prefer Humans over Robos for Financial Advice (Wealth Management), Rated: AAA

Americans are relatively comfortable with automating financial advice but the majority still want a human to consult, according to Charles Schwab’s latest Consumer Digital Demands report.

The report, which surveyed 1,000 U.S. adults this summer, including 391 current robo advisor users, showed Americans are more open to technology performing some tasks than others. For example, 75 percent of respondents said they’re comfortable with more human assistance than automation when it came to performing surgery. They also are overwhelmingly more comfortable with humans over technology when it comes to driving a car (74 percent), diagnosing a major health issue (73 percent) and flying an airplane (66 percent).

Source: Charles Schwab

Read the full report here.

46 percent of millennials think it takes $ 1,000 to start investing—here’s how much you actually need (CNBC), Rated: A

recent survey from financial services app Twine found that 46 percent of millennials believe they need at least $1,000 to start investing. Another 17 percent believe they need at least $10,000 before they’re able to invest.

Overall, 56 percent assume they don’t have enough money to become investors themselves.

It’s simply not true. There are plenty of ways to get into the market with as little as $1, including contributing to an employer-sponsored 401(k) plan, opening a Roth IRA or using a robo-advisor such as Betterment, Wealthsimple or Ellevest, which offer $0 account minimums.

CREDIT WITH A CONSCIENCE (Petal Email), Rated: B

We’re thrilled to announce today that the Petal credit card is now publicly
available on our website at www.petalcard.com.

Meet Klarna (Missy Farren & Associates, Ltd. Email), Rated: B

We’re excited to let you know we are now working with 

Real Estate Mogul And Owner of Flipnerd.com, Mike Hambright, Has Been Published In Forbes (MENAFN), Rated: B

Flipnerd.com continues to grow and make its mark in the real estate world due to the versatility and expertise of its owner, Mike Hambright. In recognition of his expertise, business acumen and dedication to succeeding in his carved niche, the founder of this real estate company has been published on one of the greatest platforms in the world, Forbes.

United Kingdom

Funding Circle Goes Public on the London Stock Exchange (Lend Academy), Rated: AAA

It was a landmark day for fintech in London as Funding Circle became the first UK marketplace lender to complete an IPO.  The company raised £300 million at a valuation of around £1.5 billion. They began trading on the London Stock Exchange (LSE: FCH) this morning with an initial price of 440 pence (at the lower end of the forecasted price range of 420p to 530p). While rising early in the day to 460p it closed the exactly flat at 440p.

Funding Circle valuation ‘reflects brand and growth opportunity’ (P2P Finance News), Rated: A

The peer-to-peer business lender, which listed on the London Stock Exchangeon Friday, was originally targeting a market value of £1.8bn. But after narrowing its IPO price range, it subsequently priced at 440p, implying a market capitalisation of £1.5bn.

Some market commentators argue the company is overvalued as it is still loss-making, although revenues surged from £51m in 2016 to £94.5m last year.

Goldman Sachs Enters U.K. Savings Market, Continuing Consumer Push (WSJ), Rated: AAA

Goldman Sachs Group Inc. entered Britain’s £700 billion ($922 billion) cash savings account market Thursday with the U.K. launch of its consumer bank Marcus, adding a fresh source of funding for the U.S. investment bank.

Online-only Marcus offers savings accounts paying interest of 1.5%, the highest rate for instant-access savings products, according to price-comparison websites.

Zopa customers vote Bond’s Aston Martin as most iconic screen car (P2P Finance News), Rated: A

THE ASTON Martin DB10 driven by Daniel Craig in the James Bond films has been voted the most iconic car in film and television.

The car won 35 per cent of votes in a poll conducted by peer-to-peer platform Zopa.

Inspector Morse’s maroon MK II Jaguar followed in second place with 14 per cent, while Dominic Toretto’s Dodge Charger from The Fast and The Furious came third.

Relendex increases max loan size to £5m (Development Finance Today), Rated: A

Relendex has announced that it has increased its maximum loan size from £3m to £5m.

Loans will also be available on commercial and industrial assets, where circumstances allow, as Relendex plans to reach a lending target of £100m in 2019.

UK in debt: how it looks in figures (London Loves Business), Rated: A

The research briefings provided by the UK Parliament itself show that student debt stands at £105 billion by the end of March 2018.

The Guardian reports that only 5% of the graduates remain unemployed six months after graduating. In addition to that, 74% of professionals who enter the workforce are full-time first degree graduates. In terms of the pay that they get, males more than females tend to benefit from getting a degree. The men’s average pay rise to £24000.

The Guardian reports that by the end of July 2017, unsecured credit had risen to a level not seen since September 2010. Specifically, unsecured debt has reached £201.5 billion.

70% believe low credit scores or zero hour contracts would prevent borrowing (Financial Reporter), Rated: A

Just 31.6% of the 2,400 respondents recognised that none of the reasons listed automatically prevent someone from getting a mortgage.

A massive 47.5% believed a low credit score could stop someone getting a mortgage, 33.4% thought a zero hour contract would be a barrier and 15.6% said a payday loan would stop an application from being accepted.

Fintech iwoca responds to £775m RBS competition package briefing (iwoca Email), Rated: B

The CEO of one of Europe’s fastest growing business lenders has a cautiously optimistic outlook for the £775 million RBS Alternative Remedies Package following a briefing by Banking Competition Remedies this morning.

“Funds from Pools C and D of the package’s Capability and Innovation Fund, would enable iwoca to bring innovative new technology to the market, making it easier for small businesses to secure finance on their terms, whenever and wherever they need it. What’s more, we would be that much closer to achieving our target of funding 100,000 small and micro businesses in the next five years.”

China

China Rapid Finance Announces Submission of Regulatory Report and Board Change (Markets Insider), Rated: AAA

China Rapid Finance Limited (the “Company” or “XRF”) (NYSE: XRF), operator of one of China’s largest consumer lending marketplaces, today announced that it submitted its P2P Compliance Self-Inspection Report (the “Report”) to its local P2P regulatory office. The Report is the first of three steps mandated in the inspection process, a key element in demonstrating compliance with industry reforms being promulgated by the National P2P Rectification Office.

Golden Bull Reports 75% Revenue Rise for First Half; Up 6% on Wall Street (Capital Watch), Rated: A

The stock of Golden Bull Ltd. (Nasdaq: DNJR) rose more than 6 percent by Monday afternoon after the Chinese P2P lending company posted a 75 percent increase in revenue for the first half of 2018.

Revenue jumped to $4.9 million compared with $2.8 million during the first six months of 2017, the Shanghai-based company said, thanks to an increase in borrowers. According to its statement, Golden Bull has facilitated 3,000 loans with total volume of $77.8 million during the first half compared with 2,200 loans in the amount of $53.7 million processed a year ago.

Chinese Household-Debt Levels Reach Record High (The Epoch Times), Rated: A

While its overall household wealth has increased, China’s household debt-to-GDP ratio reached a record high of 49.1 percent in 2017, according to a new report on global wealth by German insurance giant Allianz. Since the beginning of 2008 to the end of last year, Chinese household debt jumped an average of 27 percent annually, according to separate but corroborating data from the Bank of International Settlements.

Samoyed Holding Files For $ 80 Million U.S. IPO (Seeking Alpha), Rated: A

Samoyed Holding (SMY) intends to raise gross proceeds of $80 million from a U.S. IPO, according to an F-1 registration statement.

The firm provides technology-driven credit services to credit-proven millennials in China.

SMY is growing revenues and weighted-average APR but is also seeing sharply increased charge-off rates for its credit card balance transfer marketplace.

European Union

Younited Credit expands to Portugal (AltFi), Rated: A

The Paris-based consumer lending platform Younited Credit has increased its potential customer base by launching in Portugal, its sixth European market. Already distributing loans in Germany and Austria, it has 35 per cent of its loans in Italy and Spain.

Telia Sweden overhauls organisational structure, brings in Klarna customer service head on 01 January (Telecompaper), Rated: B

Johan Andersson will lead the strategy division, Fredrik Sidmar will be in charge of professional services, Piero Trivellato will be responsible for digital and analytics, and Sandra Alenius will lead customer service delivery. Alenius will join Telia from Swedish payments specialist Klarna.

International

Global peer-to-peer lending market set to reach $ 898bn by 2024 (P2P Finance News), Rated: AAA

THE GLOBAL peer-to-peer lending market will grow to $898bn (£688bn) by 2024, according to new research.

The report predicted that this will allow the P2P market to achieve a compound annual growth rate of 48.2 per cent over the next eight years.

AltFin’s Inconsistent Path To SMB Adoption (PYMNTS), Rated: AAA

In the U.K., $248.9 million was lent to SMBs via alternative lending platforms in Q2, according to the U.K. Peer-to-Peer Finance Association (P2PFA). The P2PFA highlighted that the statistic means net lending to SMBs, via member alternative lending players, surpassed that of high-street banks, which lent about $169.4 million to SMBs during the year’s second quarter. New lending to small firms, among member marketplace lending portals, increased by nearly $130.3 million, the association noted.

In the U.K., 30 percent of small firms need external financing simply to survive, according to new Liberis data.

In the U.S., 63 percent of SMBs sought a loan for working capital needs last year, including payroll, inventory and supplies, according to new data from S&B Global Market Intelligence.

In Mexico, 44 percent of small businesses that have been in operation for five years haven’t seen their incomes rise, according to Moody‘s Senior Credit Officer Felipe Carvallo in an interview with Euromoney. According to Moody’s data, small businesses accounted for just 9.1 percent of all loans in Mexico as of last March — equivalent to only 2 percent of total GDP, reports said.

Skynet Controversy: Similarly Named Tezos dApp Promises Enhanced Peer-to-Peer Lending (BTC Manager), Rated: A

Skynet Open Network seems to promise all things to all people – fastest blockchain implementation, AI on Blockchain, Healthcare on Blockchain and more. Some of the 17,000 people on the SkynetOpen telegram channel were understandably furious about the similarities in the name when Skynet World announced their project on September 26, 2018.

According to the Skynet World whitepaper, they are the first DAPP on the Tezosblockchain.

Skynet World aims to disrupt the bank lending space by offering peer to peer lending through their app. According to Skynet World:

“Banks are the major source of debt finance for both households and businesses, accounting for about three-quarters and two-thirds respectively of all debt finance provided to those sectors… Banks charge most of the interest up front, a practice known as amortization. Through amortization, 70% of the total interest is paid by the halfway point of the mortgage period.”

Australia

SME lender expands equipment finance (AustralianBroker), Rated: AAA

An online lender has expanded its offering of equipment finance, saying it is providing a solution for the “underserved” market of small business owners.

OnDeck Capital Australia said it had received feedback from small businesses and brokers about the length of the loans.

India

MODI OPERANDI (All About Alpha), Rated: A

What’s your liquidity M.O.? If you are less than certain, it is time to look east toward the country of India and the land of Modi. After all, when 1.3 billion people cough there is a decent chance the rest of the world just might get sick, or maybe just sick of being gated, PIK-ed, or having their holdings marked down 10% or more in a single trading session.

In September an unlisted India company that relied on debt funding for various infrastructure projects defaulted and the spillover into the listed equity markets was contagious and quick. The poster child this time around was Dewan Housing Finance Corp. Their commercial paper, which was issued to fund their longer term capital needs, ticked up 50 basis points when a mutual fund went to liquidate some of that holding, and the stock ended up dropping by more than half in a single trading session. Despite management claims of good health and solid liquidity, many investors could not process or hear it as they ran from the fire. Some other names in this sector suffered similar fates, and the damages (or buying opportunities) are still being sorted out. In India, the publicly traded mutual funds are estimated to own 60% of the commercial paper issued by these non-bank finance companies.

Uttam Prakash Agarwal joins PaisaDukan as independent director (Business Standard), Rated: B

Former Uttam Prakash Agarwal has joined NBFC-lending major as 

APAC

Belt Road Capital invests $ 3m in Vietnamese P2P lending startup Tima (Deal Street Asia), Rated: AAA

Mekong-focused venture capital firm Belt Road Capital Management (BRCM) has injected $3 million in a Series B funding round of Tima, a Vietnamese P2P lending platform incepted in 2015.

The latest investment values the company at $20 million. Tima raised a series A round in 2016 from Dunearn Singapore Fund and G Capital.

First Circle, a Philippine-based Fintech, Preps to Launch New SME Targeted Credit Facility with Support of Government (Crowdfund Insider), Rated: A

First Circle, a Philippine Fintech, is expected to announce a new credit facility for SMEs nationwide. This new facility has gained the support of the Philippine Department of Trade and Industry (DTI) and the Bangko Sentral ng Pilipinas (BSP).

First Circle is an online lender that provides supply chain financing to SMEs.

Authors:

George Popescu
Allen Taylor

Monday July 24 2017, Daily News Digest

Amazon Square PayPal

News Comments Today’s main news: SoFi loses another senior executive. Prosper performance update for June 2017. Lending-Times listed as #3 P2P lending website. Zopa’s lent 2.46B GBP since March 2005. Zopa sees 35% rise in home improvement loan originations. Revolut partners with robo-advisor. Today’s main analysis: A closer look at Amazon’s lending business. Today’s thought-provoking articles: 5 ICO platforms in China. A […]

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News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Canada

News Summary

United States

SoFi loses another senior executive, as chief revenue officer Michael Tannenbaum departs (TechCrunch), Rated: AAA

Online finance startup SoFi has lost yet another senior executive, the company has confirmed. Chief revenue officer Michael Tannenbaum is the latest exec to leave, following a string of departures in the company’s senior ranks.

Tannenbaum joined SoFi as VP of finance in 2014, but quickly moved up the ranks over the last few years. After the company moved beyond its student loan refinancing business to also include mortgages, he took over that business.

Most recently, Tannenbaum served as CRO, where he was responsible for driving the company’s growth strategy across all of SoFi’s core lending products, including student loan refinancing, mortgages and personal loans.

Tannenbaum is reportedly looking to work on his own startup in the finance space, according to a person familiar with the matter.

A Close Look at Amazon’s Lending Business (Market Realist), Rated: AAA

Amazon (AMZN) has disbursed more than $1.0 billion in small business loans in the past 12 months, implying that the company has supplied about $2.5 billion in loans to sellers on its marketplace since it launched its credit business in 2011. These loans, in the range of $1,000 to $750,000, have gone to more than 20,000 sellers in the United States (SPY), the United Kingdom (EWU), and Japan (EWJ).

The consumer interest in low-cost or free shipping, as highlighted by the survey, could embolden Amazon to add even more perks to Prime to make it more attractive. Prime is vital to Amazon as it fends off competition from the likes of eBay (EBAY), Wal-Mart (WMT), and Target (TGT). According to research company Consumer Intelligence Research Partners, there are more than 80 million Prime subscribers in the United States (SPY).

Prosper Performance Update: June 2017 (Prosper), Rated: AAA

Today we are sharing performance data from the Prosper portfolio for June 2017.

  • The weighted average borrower rate for Prosper’s June 2017 vintage is similar to May 2017, a continuation of a platform rate which is the highest since 2013.
  • Delinquencies for 2017 originations are tracking near 2016 H1 and are in line with expectations based on a materially riskier ratings distribution.
  • Prepayments continue to edge up for 2016 H2 and 2017 vintages.
  • When viewing the U.S. consumer through a macro lens and looking more granularly at Prosper’s loan performance, our risk team expects to continue tightening credit over the remainder of the year.

Top 100 Peer to Peer Lending Blogs and Websites for P2P Borrowers and Lenders (Feedspot), Rated: AAA

#1 Lend Academy

About Blog – Lend Academy is the leading resource for people interested in peer to peer lending. Lend Academy has been bringing you all the news and information about peer to peer lending since 2010. Founded by Peter Renton, Lend Academy not only has the most active news site, but also the largest online forum and the first and most popular podcast in the industry.
Frequency – about 5 posts per week

#2 P2P-Banking

About Blog – P2P Lending Marketplace News and Reviews
Frequency – about 2 posts per week

#3 Lending Times 

About Blog – Daily News, Analysis and Data for the Alternative,Peer-to-peer (p2p) and Marketplace lending space. Lending Times provides daily News, Analisys and News Digest for the Peer to Peer and Alternative Lending industry. We also provide data for the industry.
Frequency – about 9 posts per week

Robo-advice pioneers target ethical investors (AltFi), Rated: A

U.S.-based platforms Wealthfront and Betterment are joining the green investing trend, giving users the option to invest in socially responsible companies.

The rivals are approaching the green investment options differently. Betterment is investing in ETFs that track socially responsible indexes. Wealthfront will allow users to invest directly in stocks and screen out four areas that might not match their socially conscious criteria, including fossil fuels, deforestation, tobacco and weapons.

The Amazon Model: Can New-Age Technology and Local Touch Co-Exist in Lending? (Forbes), Rated: A

Online lending has doubled in size every year since 2010, and the global marketplace lending space is expected to reach $290 billion by 2020, a 50 percent growth year-over-year, according to a Morgan Stanley report.

SurveyMonkey study released this month found that millennials (defined as 18- to 34-year-olds) tend to adhere to traditional methods of banking. In fact, 80 percent of millennials surveyed say they want to be able to visit a brick-and-mortar bank branch, and more than half reported visiting a branch at least once in the last month. Even the most digitally connected generation in history values personal touch when it comes to financial transactions.

Fed panel puts faster payments on three-year track (American Banker), Rated: A

A panel convened by the Federal Reserve has established an ambitious new goal: By 2020, anyone with a bank account in the United States should be able to receive payments that are highly secure and delivered in something close to real time.

The three-year target is disclosed in the final report of a task force organized by the Fed two years ago.

Ben Miller of Fundrise (Lend Academy), Rated: A

Non-accredited investors have always had fewer investment options than accredited investors. That is starting to improve as some companies take advantage of a law called Regulation A+, created as part of the JOBS Act, to do offerings to the general public.

In this podcast you will learn:

  • The story behind the founding of Fundrise.
  • How the financial crisis shaped the way Ben thought about raising capital.
  • How Fundrise put together their investor deal before the JOBS Act.
  • Why the non-accredited investor is core to Fundrise’s mission.
  • How Fundrise has evolved since doing those early deals.
  • How their eREITs work.
  • The differences between a publicly traded REIT and a Fundrise eREIT.
  • How Fundrise sources their deals.
  • Details of their successful Reg A+ equity fundraise early in 2017.
  • Why Ben thinks Fundrise can be the Blackstone of the internet age.
  • And more

Robo-advisors: The future of investing or the latest financial craze? (Tennessean), Rated: A

Technology has undoubtedly created, destroyed and changed countless industries in the last 20 years.

The financial services has not been immune to this disruption. In 1980, there were approximately 5,500 people working on the floor of the New York Stock Exchange. Today, that number has dwindled to around 700.

In the United States, there are currently over 200 robo-advisors and more are launching every single day. In general, the fees associated with this new way of investment advice range from free to about 0.75 percent. There is normally not a minimum that is needed to start investing, unlike many financial advisors.

Crowd Invest Summit (CIS) has announced that Indiegogo and their equity crowdfunding vertical has joined it’s roster for CIS West 2017.

Applied Data Finance, iHeartMedia, announce marketing agreement (Bankless Times), Rated: B

Fintech lender and asset manager Applied Data Finance (ADF) has signed a marketing agreement with iHeartMedia which will see ADF promote its online lender Personify Financialacross the iHeartMedia series of networks.

‘Fedcoin’ Strikes Again: Fintech Companies Propose Use of Crypto to US Fed (Coin Telegraph), Rated: B

In a report by the Faster Payment Task Force, fintech companies have outlined how Blockchain technology can be used to make payments faster for the US Federal Reserve.

The companies that submitted their proposals include Ripple, Eccho, Xalgorithm, Hub Culture, Kalypton Group, Nanopay Corporation and Thought Matrix Consulting.

United Kingdom

Zopa Has Lent £2.46 Billion Since March 2005 (Crowdfund Insider), Rated: AAA

While revealing a “refresher” of its lending policies, UK-based peer-to-peer lender, Zopa, announced that as of July 20th it has lent £2.46 billion and is lending around £80m per month.

Zopa also noted that it believes diversification is a key tool for the individual investor risk mitigation. The lending platform notably spreads investments across multiple loans, starting in £10 chunks, so that no one borrower has more than 1% of the overall investment.

Zopa sees 35pc rise in home improvement loan originations (P2P Finance News), Rated: AAA

ZOPA said it has seen a 35 per cent year-on-year increase in home improvement loan originations in the first half of 2017, equating to over £92m in funding.

The world’s oldest peer-to-peer lender said on Wednesday that it has now helped over 70,000 people to renovate their home and increase the value of their property.

P2P lender joins bank lobby group (AltFi), Rated: A

ArchOver is now a member of UK Finance, a recently created trade body for the banking and financial sector.

Other P2P lenders, including Landbay, are already part of UK Finance.

HLnot selling new Lendinvest Retail Bond at launch (Money Forums), Rated: A

Lendinvest have issued a 5.25 percent ORB Retail Bond.

Hargreaves Landsdown have decided not to participate in the IPO so unless investors who use that platform set up an account elsewhere, e.g. Interactive Investor, it isn’t possible to buy at launch as the bond has to be in a nominee account.

A New Era in Fintech Payment Innovations? (Law.ox.ac.uk), Rated: A

forthcoming paper in Law, Innovation and Technology laces payment innovations within a payment system. The payment system comprises the initiation of payments, transfer, as well as clearing and settlement. We argue that existing payment systems are defined by certain institutional tenets that serve commercial objectives, but, more importantly, deliver public goods and public interest objectives for users and policy-makers.

Three types of payment innovations have been hailed to have disruptive potential in recent developments. First, innovations in retail payment interfaces or options at point of sale, such as mobile or app payments, may displace the use of cash and cards. Second, virtual currencies, such as Bitcoin, may come to be accepted as legitimate forms of payment by merchants and businesses. Third, new ledger technologies, such as the distributed ledger or autonomous organisation technologies, may replace existing infrastructure in payment clearing and settlement systems.

Flender puts its faith in the crowd (The Business Post), Rated: A

If you are a start-up, or an SME, you know that money does not come easy. In the early days, you might need to tap up your savings, your family or even friends to get started. Even more established companies can fall between the cracks when it comes to bank loans or government funding. For all of these reasons, peer-to-peer lending was created.

Credit scoring startup Aire raises $ 5m; wins Zopa deal (Finextra), Rated: A

AI-based credit scoring startup Aire has raised $5 million in a Series A funding round and won deals to work with P2P lending pioneer Zopa and the UK arm of Toyota Financial Services.

Young people face barriers in farming as report shows 13% of farmers are under 45 (Farming UK), Rated: B

A report has been released showing the barriers young entrants into farming face in today’s often uncertain times.

The report said that only 13% of farmers were under the age of 45 in 2015, but while fewer young people are entering the sector, their ideas are still needed to harness the technologies that can make farming an up-to-date industry.

Finance is seen as the biggest obstacle to growth; 28% are trying peer-to-peer lending and one fifth have tried crowd-funding to help with projects.

China

Information about Five ICO Platforms in China (Xing Ping She), Rated: AAA

Recently there comes a wave of ICO (Initial Coin Offering) around the world. Many people are enthusiastic about the investment on ICO. So, here is the information of five well-known ICO platforms founded in China, which was collected by Nan Gongyuan, a famous Internet finance columnist as well as special commentator on Xing Ping She.

1. Bizhongchou
Founded time:In 2015
website:Bizhongchou.com
background:Affiliate ICO website of block chain media Babbitt
Registered Capital:$ 1,481,613 USD
Legal person:Zhi-Peng Liu(the well-known science fiction writer, Changjia, a consecutive Galaxy Award winner from 2006 to 2008.)
Location:Zhejiang, Hangzhou Province

2. Bitouzi
Founded time:In 2017
website: /> background: Affiliate ICO website of Blockchain asset trading platform BTC9.COM
Registered Capital:$740,795 USD
Legal person:Liu Jingchao
Location:Nanchang, Jianfgxi Province

3. Icoage.com
Founded time:In 2017
website:Icoage.com
background:Affiliate ICO website of Shanghai Qukuai Information Technology co. LTD
Registered Capital:$ 17,996 USD
Legal person: Fu Xiaoqi
Location:Shanghai

4. Ico365.com
Founded time:In 2017
website:Icoage.com
background:Affiliate ICO website of Shenzhen Kedian Technology co. LTD
Registered Capital:$148,161 USD
Legal person:Ye Peifeng
Location:Shenzhen

5. Ico.info
Founded time:In 2017
website:Ico.info
background: Affiliate ICO website of Beijing Yunbi Technology co. LTD
Registered Capital:$ 1,481,613 USD
Legal person:Qiu Liang
Location:Beijing

The World is Paying Attention (Lend Academy), Rated: A

In China there are more than a billion consumers that are generally underserved across a broad spectrum of financial services, making for a diverse and exciting array of opportunities to address. Yet China is dominated by giants – institutions like Bank of China and technology firms like Alibaba –companies that have tens of thousands of employees and hundreds of millions of customers. The scale of the opportunity is enormous, and so is the size of the companies trying to address it.

When 90% of the world’s data were created in the last two years, it is obvious that our ability to create data has far outstripped our ability to measure and analyze it.  This is why companies like ZhongAn (online insurance), Phoenix Finance (wealth management), Lexin (green finance), Wedai (car finance), Credit Karma (financial education), Upgrade (consumer lending in the US), and Lufax (consumer lending & wealth management in Asia) all tout AI/ML as a cornerstone of their strategies.

In the end, fintech is leading us to a more inclusive financial system, which is to say that financial services will be more accessible, more comprehensive, more affordable, and more sustainable.

Dianrong and marketplace lending in China (Enterprise Innovation), Rated: B

At the FINTalks forum, held on July 17, 2017 at KPMG in Hong Kong, Renaud Laplache, co-founder and CEO of Upgrade, described online lending as a massive improvement over lending as offered by banks and traditional lenders. “Online lending generally helped lower costs by about 400-500 basis points – massive cost reductions coming from the ability to use technology to automate tasks that were manual at many banks and also to do away with the branch network – a very costly infrastructure,” he explained in simplified terms.

European Union

Fintech startup Klarna taps Permira for around $ 250M at $ 2.5B valuation (TechCrunch), Rated: AAA

Klarna, the Swedish startup that works with e-commerce businesses and retailers to provide financing and other payment services, today announced that it has picked up yet another large investment, its third inside of two months. Permira, the private equity firm and prolific late-stage tech investor, has taken a minimum 10 percent stake in the fintech business. Klarna and Permira are not confirming the exact amount getting invested, or the valuation. But TechCrunch understands that it is more than $225 million, and the FT is reporting a value of $250 million.

Klarna the startup was last valued at $2.25 billion in 2015 and a source confirmed to us that this valuation has gone up as the business has grown. If a $250 million investment works out to 10 percent of its valuation, that would mean Klarna’s overall value has ticked up to $2.5 billion.

Added up, this means that Klarna has raised somewhere in the region of $500 million in the last 7 weeks.

July 21, 2017 – Funding Round Private Equity (Crunchbase), Rated: A

  • Funding Type: Private Equity
  • Money Raised: $225M
  • Valuation: $2.28B Pre-Money
  • Announced On: July 21, 2017
  • Investors: 

Revolut’s robo-advice dance partner revealed (AltFi), Rated: AAA

App-based banking disruptor Revolut intends to partner with its first robo-advisor. A report in this morning’s Citywire suggests that Revolut has already partnered with ETFmatic to roll out its wealth offering. Revolut has confirmed that this is its intention.

Revolut, however, is yet to formally announce the ETFmatic partnership, and it is possible that the proposition that ultimately emerges will look somewhat different.

Bank of Finland: Household debt accumulation poses mounting risk (YLE), Rated: A

Bank of Finland reports that household debt grew five percent in May on the previous year, with so-called unsecured consumer credit, via international online credit providers and peer-to-peer lending services, up by 13 percent in the same period.

As the selection of loan alternatives grows, increasing numbers of Finnish consumers are now moving beyond traditional new home and housing cooperative loans to secure expensive consumer credit from sources that Finland’s central bank says are difficult to monitor.

Figures show that every fourth Finnish resident now holds some kind of consumer debt. Cars, trips abroad, boats and appliances are the most common purchases behind the loans.

The good news in this scenario is that regulators and credit ratings agencies agree that Finnish banks are very stable.

Kickstart Accelerator’s 10 Most Promising Fintech Startups (Forbes), Rated: A

AAAccell (Switzerland)

Converts and develops top research achievements into trusted solutions and tools for the financial services industry.

Fjuul Vision Oy (Finland)

Offers a Software as a Service (Saas) platform for insurers to grow their business at lower risk.

PriceHubble (Switzerland)

Enables smarter real estate decisions by bringing the latest in machine learning, big data analytics and data visualization to market participants along the entire real estate value chain.

International

Fintech’s Wealthy Elder Statesmen (Bloomberg), Rated: A

Shares of U.K. company Paysafe Group Plc — whose businesses include payments processing, digital wallets and money transfers — are trading at an all-time high after an approach from private-equity bidders Blackstone and CVC.

In December, Paysafe’s shares suffered a nasty blow because of fears about its exposure to China’s crackdown on gambling, although they recovered. This is not your run-of-the-mill Worldpay-style payments giant, even if that may be the goal of its prospective private equity buyers.

5 Facts About the State of FinTech — and Why They Really Matter (Mimeo), Rated: A

The rapid innovation in the financial technology, or FinTech vertical, shows no signs of slowing down. In the past year, global investments in FinTech increased 11 percent to a staggering 17.4 billion USD.

1. The Majority of Executives Are Worried

A recent report from Pricewaterhouse Cooper (PwC) revealed that a staggering 80 percent of executives globally feel their business is at risk due to the rate of innovation in the FinTech sphere.

2. Governments Are Getting Behind FinTech

Per KPMG’s recent report on the pulse of FinTech, governments worldwide are beginning to show visible support for innovation in financial technology. The UK, Australia, Singapore, Malaysia, and Thailand have all debuted sandbox programs for regulatory innovation.

3. Blockchain Is Predicted to Take Over in 2017

4. 30 Percent of Consumers Love FinTech

PwC reports that 30 percent of today’s customers plan to increase their use of nontraditional ways of payments, fund transfers, finance, loans, and saving.

5. Robot Bank Tellers May Not Be a Far-off Fantasy

Australia/New Zealand

Non-bank lenders support fast-forwarding Robo-Advice access (Scoop), Rated: AAA

Robo-Advice, Digital-Advice, Automated-Advice. Whatever you choose to call it, the appetite to access financial advice online is growing, and New Zealand’s legislation is yet to catch up.

The law is currently hindering the development of personalised robo-advice models in New Zealand, as it states financial advice must be given by a natural person.

The Financial Services Federation (FSF) has submitted in support of the Consultation Paper: proposed exemption to facilitate personalised robo-advice, which could accelerate the provision of personalised robo-advice services ahead of law reforms which aren’t likely to take effect until 2019.

Fintech the future (SMH), Rated: A

​According to Kate Carnell, there have been less than 10 complaints about fintech operators in Australia since March 2016.

There are an estimated 600 fintech operators in Australia. The industry is burgeoning and continues to attract new players, so receiving less than double-digit complaints in 16 months isn’t a bad track record.

“So the growth rate is quite phenomenal and there’s more to come. We know of at least another 20 to 30 that are yet to launch.”

Small business lender expands BDM team (Australian Broker), Rated: B

Small business loan specialist OnDeck Australia has announced two new appointments to foster growth in its broker channel.

The firm has hired two new business development managers (BDMs), Adrian Dodson in Melbourne, Victoria and Tim Kwast on the Gold Coast, Queensland.

India

P2P players plan to widen lender base (Telangana Today), Rated: AAA

With the Reserve Bank of India guidelines on peer-to-peer lending firms likely to be released in a few weeks, city-based companies are getting ready to increase their registered lenders. They are optimistic that demand for loans will rise significantly as the haze surrounding the lending platforms will be cleared.

For instance, city-based i-lend says there is loan demand of about Rs 500 crore in one year while another firm Oxyloans says there could be a demand for Rs 600 crore in the same time.

Another player, Oxyloans, has 1,300 users including 264 lenders and 1,000 plus borrowers. “We see a loan demand of Rs 600 crore and are hoping to achieve Rs 200 crore in six months or so,” said Radhakrishna Thatavarti, founder and chief executive officer of SRS Fintech Labs, which operates Oxyloans.

Axis Bank to deploy tech solutions of three startups from Thought Factory accelerator (VC Circle), Rated: A

Private sector lender Axis Bank has selected three fintech startups from the first batch of its accelerator programme ‘Thought Factory’ whose solutions it will commercially deploy at its business units, it announced at an event in Bangalore on Friday.

Six startups, namely S2Pay, Pally, Perpule, FintechLabs, Paymatrix and Gieom graduated from the first batch. Axis Bank will collaborate with Pally, FintechLabs and Gieom for their tech solutions.

Using AI, Pally enables businesses in the financial domain to deliver better customer experiences. It has created a chatbot that creates an investment portfolio for tax savings when it is fed an image of a salary slip.

S2Pay’s solution forms a layer over any payments app and users can make secure payments from their mobile app, even when they are offline.

A Kalaari Capital-funded startup, Perpule allows users to scan products from their mobile app and pay from within the app once the list is complete.

Sunil Kalra, Rajan Anandan back fintech startup Monsoon CreditTech (VC Circle), Rated: A

Monsoon CreditTech Technologies Pvt Ltd, a fintech startup that has been in stealth mode till recently, has raised an undisclosed amount of funding from marquee investors, the startup said in its statement.

The investors include independent angel investors Sunil Kalra and Aditya Singh, former senior Microsoft executive Rishi Srivastava, and Google India’s Rajan Anandan, the statement added.

Asia

Ron Suber Says P2P Lending is Daylight Banking (Not Shadow Finance) (Crowdfund Insider), Rated: AAA

Ron Suber, perhaps the most prominent global Fintech Ambassador and President Emeritus of Prosper Marketplace, is on an extended swing across Asia visiting various platforms and presenting at events. Visiting with CNBC Asia this week, Suber explained how important transparency is for online lending and how both sides win: investor and borrower.

Startup Modalku Launches Mobile App for Individual Lenders (Jakarta Globe), Rated: A

Mitrausaha Indonesia Group, a homegrown marketplace that provides peer-to-peer lending, introduced a new mobile application that will allow individual lenders to offer loans to small businesses using a crowdfunding scheme.

Mitrausaha, which flies the Modalku flagship, offers small and medium enterprises (SMEs) access to non-collateral loans with interest rates ranging from 12 percent to 26 percent.

Modalku had launched a mobile app in January called “Modalku Dana Usaha,” customized for prospective debtors looking to replenish their working capital. The app is available on Android and iOS.

Lenders can start investing with Rp 1 million ($75).

New individual lenders need to deposit Rp 10 million into their account before giving out loans.

Early days for alternative funding (The Star), Rated: A

Two years ago, the Securities Commission gave out licences to operate equity crowdfunding platforms and last November, it gave out the licences for peer-to-peer lending.

pitchIN, one of the six operators of the equity crowdfunding platforms, has raised the most among the operators since end-2015, raising more than a third of the RM16mil raised by issuers up until this June.

Funding for early stage start-ups has become much harder due to grants becoming bleaker and investors looking for quality deals.

Awareness remains an issue, with entrepreneurs who want to raise funds through either ECF or P2P lamenting the lack of awareness or understanding.

Collapse of branch banking in 1 century (Korea Times), Rated: A

Throughout paradigm shifts, banks’ operations have changed dramatically. Many global lenders are now setting up branchless and digital operations as the way to go ― a move that is in stark contrast to the strategy they took over the past century.

According to a 1932 Federal Reserve report, the Bank of Italy had 25 offices by the end of 1919 and it rapidly increased to 292, 10 years later. Except for 40 branches in San Francisco, home to its headquarters, 252 were out-of-town branches, scattered literally all over California.

JPMorgan Chase is scaling down its branch networks, Citigroup is accelerating its move to transform into a digital bank globally and Wells Fargo is downsizing its branches so it can hire fewer employees and sit in a smaller space.

A CNN Money report said the number of the bank’s branches in the U.S. dropped by 10 percent to 4,789 as of the end of the second quarter of 2015.

Korea’s homegrown banks are also joining global giants’ moves.

According to six banks ― KB Kookmin, Shinhan, Woori, KEB Hana, NH NongHyup and Industrial Bank of Korea (IBK) ― the total number of their branches across the country declined to 5,493 at the end of May this year, down 442 from 5,953 at the end of the first quarter of 2013.

Liftoff enters Japan with former Criteo exec as country manager (e27), Rated: B

California-based mobile app marketing and retargetting platform Liftoff announced its official launch to the Japanese market today with the appointment of Country Manager Kota Amano, former Senior Director of Partner Development, APAC at Criteo.

In a press statement, Liftoff said that it has opened a data centre in Tokyo and is hiring a team of Sales and Customer Success Managers.

Canada

HOW TO NAVIGATE CANADA’S TANGLED REGULATIONS AND BUILD YOUR FINTECH STARTUP (Betakit), Rated: AAA

Our team at Ferst Digital is building a mobile-first banking platform that helps startups and small businesses. Our platform will let them bank, manage their finances, and integrate all of their financial productsand services in a simple and intuitive way.

To empower ourselves, we decided to own our regulatory know-how.

We decided to categorize our regulators around three common forms of purpose: protection, behaviour, and permission.

Authors:

George Popescu
Allen Taylor

Friday June 23 2017, Daily News Digest

fintech Australia

News Comments Today’s main news: KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2017-4. Lending Club closes $279.4M self-sponsored securitization. Wellesley directors paid over 900K GBP last year. Renren’s Q1 results. Harmoney hits $500M. Vindi, Smartbill merge. Today’s main analysis: Recent Fed credit survey exposes clear small business financing opportunities Today’s thought-provoking articles: How the P2P sector has fared […]

fintech Australia

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

Asia

Africa

Latin America

News Summary

United States

Kroll Bond Rating Agency Assigns Preliminary Ratings to SoFi Consumer Loan Program 2017-4 (BusinessWire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to two class of notes issued by SoFi Consumer Loan Program 2017-4 LLC (“SCLP 2017-4”). This is a $499.5 million consumer loan ABS transaction that is closing on July 5th, 2017.

Initial credit enhancement levels are 22.69% for the Class A Notes and 12.77% for the Class B Notes. Credit enhancement consists of overcollateralization, subordination (in the case of the Class A Notes), excess spread and a reserve account funded at closing.

Preliminary Ratings Assigned: SoFi Consumer Loans Program 2017-4

Class Preliminary Ratings Principal Balance
A AA (sf) $443,000,000
B A (sf) $56,500,000

LendingClub Closes $ 279.4 Million Self Sponsored Securitization (Crowdfund Insider), Rated: AAA

LendingClub (NYSE:LC) has announced its first first self sponsored securitization deal had closed. Announced after the market closed, Lending Club issued $279.4 million in notes backed by consumer loans originated on the LendingClub platform. The Consumer Loan Underlying Bond (CLUB) NP Credit Trust 2017-NP1 (CLUB 2017-NP1) was described as marking the start of LendingClub’s securitization program as Sponsor, Servicer and Administrator.

Kroll rated the securities that included $162.4 million of Class A notes rated “A- (sf)”, $41.2 million of Class B notes rated “BBB (sf)” and $75.7 million of Class C notes rated “BB (sf)” backed by approximately $337 million of collateral.

In a separate note, LendingClub also announced that Brad Coleman, Principal Accounting Officer and Corporate Controller, will be resigning from his position as Principal Accounting Officer to pursue other opportunities, effective on August 10.

There’s A New Way To Pay For IVF, But No Guarantee It’ll Pay Off (BuzzFeed), Rated: AAA

Future Family, which officially launches on Thursday, aims to make the complicated, expensive, and emotionally fraught world of fertility treatments “accessible and affordable,” in the words of CEO Claire Tomkins, a former SolarCity executive. “We think of it as modern insurance for a woman,” she told BuzzFeed News.

Because most insurance plans don’t cover these services, fertility patients tend to have high incomes to begin with. In one survey by FertilityIQ, an online advice resource for patients, 42% reported yearly earnings between $100,000 and $199,999. But not everyone has necessarily saved enough to comfortably afford IVF, which costs around $20,000 on average, according to FertilityIQ. In a 2015 Prosper-commissioned survey of 213 US women, 84% said they had financial concerns about their treatments, and nearly half said that those concerns affected how much treatment they pursued.

Future Family’s standard IVF plan, which covers one cycle, is $250 a month, with no down payment. Customers can sign up for a minimum of 5 years and a maximum of 10 years, making the total cost at least $15,000. That would be cheaper than the national average cost of $20,000. The top-tier plan, which covers one cycle as well as egg storage, costs as much as $33,000 ($275 a month for up to 10 years).

Meanwhile, Future Family’s top-tier egg-freezing plan costs as much as $21,000, at $175 a month for up to 10 years of storage. FertilityIQ’s Anderson-Bialis estimates that, nationwide, egg retrieval and freezing costs average $16,000, while storage costs about $3,700 for five years.

Two years ago, Prosper, a peer-to-peer lending service, purchased, for $21 million, a lender with loans for fertility and other non–insurance-covered medical procedures. And in 2014, LendingClub spent $140 million on a similar acquisition. Its fertility loans range from $2,000 to $50,000, while Prosper’s go as high as $100,000.

One year in: How JPMorgan is transforming small-business lending (Tearsheet), Rated: A

For JPMorgan Chase, small business is big. The bank is among the third top lender of Small Business Administration loans by unit in the U.S.

As of May, Chase approved 2,375 loans in 2017 for a total $679 million. But beyond SBA loans, the bank also extended more than $24 billion in credit to 4 million small business customers in 2016 through its business banking, Ink from Chase credit card and commercial term lending. In each of the last four years, it’s extended more than $19 billion in new small business loans.

After the recession, the largest U.S. banks, Chase itself included, halted most of their small business lending, later creating the opportunity for online lenders to enter the market — like Bond Street or OnDeck. Last year, JPMorgan began using OnDeck’s technology for its Chase Business Quick Capital product, a  short-term, quickly funded small business loan. It was one of the first banks to embrace a partnership-type relationship with a fintech startup, at a time when the industry narrative still focused on startups’ potential to displace banks.

Lending Club Decision Provides Guidance For Bringing Section 11 Claims Based on Weaknesses in Internal Controls (National Law Review), Rated: A

We have been following defendants’ motions to dismiss in the In re Lending Club Securities Litigation class action, No 3:16-cv-02627-WHA, in the United States District Court for the Northern District of California (“the Lending Club Litigation”).

As the Supreme Court noted in Omnicare, generally a plaintiff pursuing a claim under Section 11 “need not prove . . . that the defendant acted with any intent to deceive or defraud.”  However, defendants in the Lending Club Litigation argued that plaintiffs’ claims under Section 11 sounded in fraud because they employed the same factual allegations to allege fraudulent conduct under Section 10(b), and therefore needed to satisfy the heightened pleading standard of Rule 9(b), which requires plaintiffs alleging fraud to state with particularity the circumstances constituting fraud.

Plaintiffs argued that their Section 11 claims were not grounded in fraud and therefore did not need to satisfy the heightened pleading standard of Rule 9(b).

Despite this holding, the Court found that lead plaintiff had “met that heightened pleading standard with respect to three of its Section 11 claims.”  Id.  In particular the court held that lead plaintiff adequately pleaded its Section 11 claims relating to representations at the IPO regarding (1) the strength of Lending Club’s internal controls and financial reporting, (2) its relationship with Cirrix, and (3) its data integrity and security.[1]

Henry W. Ramsey Acquires 9,500 Shares of Elevate Credit Inc (ELVT) Stock (Transcript Daily), Rated: A

Elevate Credit Inc (NASDAQ:ELVT) insider Henry W. Ramsey purchased 9,500 shares of the stock in a transaction on Friday, June 2nd. The stock was acquired at an average cost of $7.17 per share, for a total transaction of $68,115.00. Following the completion of the acquisition, the insider now owns 9,500 shares of the company’s stock, valued at approximately $68,115.

Banks Going Digital – Transforming Branches, Apps and a Focus on Customer Experience (Lend Academy), Rated: A

The big banks have all started to understand that the traditional way of banking is a thing of the past. Keynote speaker Yolande Piazza, CEO, Citi Fintech talked about disrupting from within, changing how they operate to enable the customer and move to a mobile first approach. She explained how this approach is radical for a bank and the layers of compliance did not make the transition smooth. They have completely rethought how they hire, 50 percent of their fintech talent is from outside the company.

Other interesting areas to note while at the event were BioCatch’s innovations in cyber security with keystroke and mouse analysis along with behavioral biometrics. New payments provider Zelle launched with 40 partners, including 34 top level banks, to allow consumers to send and receive money in minutes. Banks are starting to become innovation hubs and fintech companies, once seen as competitors in the past, are helping the banks make this transformation.

Leading fintech companies like SoFi, Lending Club and OnDeck provide a template for a better customer experience and banks are taking notice.

Recent Fed Credit Survey Exposes Clear Small Business Financing Opportunities (Forbes), Rated: A

The Federal Reserve just published its 2016 Small Business Credit Survey examining the current small business conditions and credit environment. The Fed found that although big banks are still the major lenders, small business owners are having trouble accessing credit and are therefore looking elsewhere. However, while many small businesses are turning towards online lenders, SBA loans are largely underutilized.

Overall, 10,000 surveys were completed by employer firms across all 50 states. Of those surveyed, roughly half were profitable and almost two-thirds expected their revenues to grow over the coming year. Even job growth looked good, with 39% of small businesses expecting to add jobs within the next year.

PayPal has jumped into the alternative lending game and now finances as much as $3 billion in total small business capital. What’s more, PayPal recently increased its maximum financing limit to $125k, meaning that a majority of small businesses who applied for credit in 2016 could fulfill their financing needs with PayPal.

Online lenders like SmartBiz have a 62% approval rate, on average.

The Fed’s survey found that CDFIs had a 77% approval rate and small banks had a 67% approval rate. Both of these rates higher than many online lenders that are known to typically have some of the easier qualifications.

By comparison, the overall approval rate among larger banks is 54% and 46% among credit unions.

Banks should avoid replicating their millennial strategy for Gen Z (American Banker), Rated: A

Facebook chatbots (kids love messaging apps!), smartphone-enabled ATMs (they spend so much time on their smartphones!) and an on-demand ATM on wheels that will come to you (Uber is the only way to get around!). Not only are these investments failing to resonate with millennials, but the money spent is also failing to plan ahead for the next generation: Generation Z.

Born between 1995 and 2010, Gen Z consumers are looking for something more than simple digital updates: They are looking for a partner that offers them solutions for all pieces of their financial life, including their pressing concern over mounting college debt. In fact, offering “digital” solutions to traditional banking products will not be enough to impress Gen Z, as they are the first to grow up in the post-digital era, giving them high standards for technological capabilities.

Gen Z is also a highly skeptical generation with little brand loyalty; if they see a well-researched, proven option available to them, they will have no hesitation jumping ship or avoiding traditional providers altogether. Whereas 45% of millennials favor loyalty programs, only 30% of Gen Z consumers do. In fact, 41% of Gen Z say they would consider banking services from digital power players like Google, Amazon, Apple or Facebook because they are brands that they interact with daily and trust.

Acting comptroller’s wish list echoes long-held demands by banks (American Banker), Rated: A

In his first testimony to Congress, acting Comptroller of the Currency Keith Noreika is set to submit a laundry list of detailed proposals to loosen regulatory restrictions on financial institutions of all sizes — recommendations that appear to jibe with those made by the Treasury Department this month.

Noreika is offering 17 specific legislative proposals that echo the banking industry’s wish list for regulatory reform.

LendingTree Subsidiary Purchases MagnifyMoney (Crowdfund Insider), Rated: A

LendingTree, Inc. (NASDAQ: TREE) announced on Tuesday its subsidiary, LendingTree, LLC, has acquired the company behind consumer-facing media property platform, MagnifyMoney. This news comes just days after LendingTree announced it acquired DepositAccounts.com.

According to LendingTree, the acquisition purchase has a possible total consideration of $29.5 million, which consists of 29.5 million in cash at closing, and contingent consideration payments of up to $10 million.

A former cohead of tech at Goldman Sachs has joined a startup that wants to be the iOS of Wall Street (Business Insider), Rated: A

Paul Walker, the former cohead of technology at Goldman Sachs, has joined the board at OpenFin, a startup that helps electronic-trading firms build their desktop applications.

Bain Capital Ventures, Pivot Investment Partners, and Nyca Partners have already invested in OpenFin, as have the likes of Cris Conde, former CEO of SunGard, and Tom Glocer, former CEO of Thomson Reuters.

Walker retired from Goldman in 2016 after 15 years with the Wall Street titan. Walker joined the firm in 2001 as a vice president in FICC strategies. He made partner at the firm in 2008.

OpenFin is looking to become Wall Street’s version of what the iOS and Android platforms are to the mobile application space.

Orchard Platform Pivot? Not So Fast. (Crowdfund Insider), Rated: A

Earlier this week there was note circulating the Orchard was in the midst of a pivot.  Specifically, the report said Orchard was pivoting from a data/analytics platform to a loan trading platform. This was interesting as the secondary transaction platform for securities based on online loans has been in the works for quite some time.

“We have wanted to have a trading platform for years now,” said Matt Burton, CEO and co-founder of Orchard. “I am not certain where that came from. We have always wanted to facilitate [secondary] transactions. We still have the same vision.”

LENDonate Changes The Game of Nonprofit Financing by Creating Swift Access to High Quality Loans (PR.com), Rated: A

LENDonate, a fintech company, today announced the launch of its distinct hybrid, online lending platform for 501(c)(3) nonprofits. The first-of-a-kind, hybrid platform uses an innovative process that lets nonprofits source loans and donations simultaneously. LENDonate unites nonprofits with lenders, including financial institutions, philanthropic organizations, and accredited investors for quick funding of high-quality, low cost loans. LENDonate is the only marketplace lending platform that enables nonprofits to effortlessly expand their donor base while financing major projects or smoothing out uneven cash flow.

LENDonate was founded by Vivienne Hsu, CEO, a seasoned investment professional and nonprofit fundraiser. She was motivated by a desire to improve nonprofits’ access to the low-cost funding, while providing high-quality, socially impactful investment opportunities for banks and philanthropists.

Which Loans Can Help You Expand Your Small Business? (NASDAQ), Rated: A

Below is an exhaustive list of documents that your lender may request. Online lenders are less stringent and may ask for less, while traditional banks will want the entire suite. Also expect lenders to pull your personal credit score and your business credit score as part of the approval process.

  • Personal financial statement: This SBA form requires you to list your personal assets (cash, investments, real estate and cars) and liabilities (mortgages, other debts and unpaid taxes). Private lenders may ask for a similar statement.
  • Business certificate/license
  • Business plan
  • Loan application history
  • Income tax returns
  • Resumes
  • Business lease

The Small Business Administration (SBA)—which guarantees a percentage of the loan amount to banks rather funding directly—is particularly helpful for expansion loan options. The SBA will guarantee up to 85 percent of loans for as much as $150,000 and up to 75 percent of loans over $150,000. A small SBA loan of $25,000 or less can get an 8% interest rate with a payment term of fewer than seven years. The rate on a loan over $50,000 can drop to as low as 6.5% with the same payment terms. Some banks may offer private loans, but their requirements are even stricter than those of the SBA.

Online lenders offer loans with higher rates. But the online lenders often have a faster approval process than banks originating SBA loans.

Another borrowing source on the rise is peer-to-peer lending, or marketplace lending, for businesses.

OCC, CSBS Exchange Views on OCC’s Special-Purpose Charter (Banking Journal), Rated: A

The OCC’s proposed limited-purpose charter for fintech companies was the subject of a lively discussion at the American Bankers Association’s Payments Forum today, as regulators from the OCC and Conference of State Bank Supervisors exchanged at-times opposing views.

Margaret Liu, SVP and deputy general counsel at CSBS reiterated her organization’s view that in moving forward with the limited-purpose charter, the OCC overstepped its authority under the National Bank Act (the CSBS previously filed a lawsuit against the OCC on those grounds).

Kathy Oldenborg, director of payments systems policy at the OCC, emphasized that under the limited-purpose charter, fintech companies would be held the same high regulatory standards as banks, based on the products and services they provide to consumers. She added that while much of the focus around the OCC’s work on innovation has centered on the charter proposal, “the broader initiative was… the ability to signal to banks that it’s okay to innovate. You can work with fintech companies, you can partner with fintech companies, you can buy one if you want. There’s nothing that says you can’t work with fintech companies outside this whole chartering discussion.”

Home Point Financial Establishes Institutions Group (Marketwired), Rated: B

Home Point Financial Corporation (“Home Point”) a national multi-channel mortgage originator and servicer, today announced the formation of its new Institutions Group. This group will include Correspondent Lending, Capital Markets and Home Point’s wholly-owned warehouse lending subsidiary, NattyMac. Led by Maria Fregosi, Chief Capital Markets Officer, the Institutions Group will be able to efficiently and effectively serve correspondent clients with services and products that capitalize on the financial resources, technology and expertise of Home Point Financial.

Cross River on OCC Comptroller’s testimony calling on clarification of the applicability of the “Valid when Made” doctrine (Cross River Bank Email), Rated: B

Cross River Bank, a marketplace leading originator and pioneer in the banking financial technology space, released the following statement on the recommendation by acting OCC Comptroller of the Currency Keith Noreika to clarify the applicability of the “Valid when Made” doctrine.

It is of the utmost importance to deliver regulatory certainty and foster innovation while providing access to credit to all consumers in a compliant, safe, and sound environment. We commend Comptroller Noreika for his testimony this morning recommending clarification of the applicability of the “Valid when Made” doctrine. Cross River remains a steadfast supporter of the Comptroller’s, and the entire regulatory agency community’s, efforts to bring clarity to the regulatory framework and advance the interests of the consumers while ensuring their protection.

Aspire Retains SenaHill (Aspire Email), Rated: B

“Aspire Financial Technologies Inc. (“Aspire”) is announcing today that it has retained SenaHill Advisors LLC (

Crowdfunding Becoming Viable Way to Fund Real Estate (Realty Biz News), Rated: B

It’s estimated that by 2025 the crowdfunding real estate industry will be worth more than $300 billion. One of the reasons for this prediction is that it provides individual investors the opportunity to participate in large real estate deals even if they only have a small amount of capital to invest. Just a few years ago things were very different as crowdfunding had yet to gain traction. In 2010 the crowdfunding industry was worth $880 million but is now worth $34.4 billion which is an incredible rate of growth.

CFPB details complaint process at Comply2017 Conference (JD Supra), Rated: B

At the Comply2017 conference held earlier this week in New York City, Scott Steckel, a member of the CFPB’s Office of Consumer Response, gave a presentation in which he detailed the CFPB’s complaint process and how the CFPB shares complaint data through its complaint database.

United Kingdom

Wellesley directors were paid more than £900,000 last year (P2P Finance News), Rated: AAA

WELLESLEY & Co’s directors collectively pocketed £923,000 last year, while the property lender reported a full-year loss of £210,288.

Chief executive and founder Graham Wellesley was awarded the highest salary of £342,000, while co-founder Andrew Turnbull took home £244,000, according to the latest annual report filed with Companies House earlier this month.

Former Lloyds Banking Group chief executive Eric Daniels, who stepped down as non-executive chairman at the end of May 2016, received £50,000. Daniels has now joined the board of Funding Circle.

How has the P2P sector fared in the year since the Brexit vote? (P2P Finance News), Rated: AAA

Funding Circle, which received full FCA authorisation last month, has seen new lending grow each quarter since the referendum, from £151,803 lent in the second quarter of 2016 to £182,854 in the third and £305,970 in the fourth. It lent £328,059 in the first three months of this year.

Similarly, Zopa, also now fully authorised, has seen lending increase each quarter, from £154m in the second quarter of 2016, to £175m in the third. There was £194.3m of lending in the fourth quarter and £246.4m at the start of the year.

RateSetter, the last of the big three still awaiting full FCA approval, has seen both consumer and business lending increase.

New business lending was at £59.8m in the second quarter of 2016, rising to £73.8m in the following three months before dropping to £60.5m at the end of the year. It bounced back to £72.5m at the start of 2017.

Landbay has been more mixed, with new lending dropping from £5m in the second quarter to £282,820 in the third and £193,800 in the final three months of the year. New lending was back up to £833,300 at the start of the year.

RateSetter has seen the biggest increase, taking on 9,573 up to the first quarter of 2017 to 44,402.

Funding Circle was a close second, taking on 8,604 to 59,740, while Zopa took on 6,091, taking the total number of lenders to 60,755.

Only MarketInvoice saw a drop by 47 to 220.

Zopa has taken on the most new borrowers at 41,310 since the referendum to 171,607 while RateSetter has taken 30,286 to 203,994.

Landbay and Thincats have taken on the least, at four and 34 respectively.

The FCA received 77 submissions for the second phase of the regulatory sandbox, more than applied for cohort one. 31 applications met the sandbox eligibility criteria and were accepted to develop towards testing. The current cohort consists of the 24 firms that are ready to begin testing shortly.

AssetVault

AssetVault enables consumers to catalogue all of their assets in a secure online register and better understand their total value. AssetVault then works with insurance providers to protect the consumer and their assets with appropriate insurance products.

Beekin

Leverages artificial intelligence and data sharing to build transparency and liquidity in alternative assets (real estate, angel investments), and offers risk management and analytics services to small investors.

Experian

A mortgage eligibility tool that can be used to help consumers who are in the research phase of buying a home by increasing awareness of their eligibility, based on the lender’s affordability criteria.

FloodFlash

FloodFlash provides event-based flood insurance, even in high-risk areas.

Insure A Thing

An alternative insurance business model where the consumer makes payments at the end of the month, based on the exact cost of claims settled during that period.

Nimbla

Nimbla provides flexible trade credit insurance and credit and invoice management tools to UK SMEs, via an online platform

Paylinko A DLT-based payments solution enabling users to send and receive payments using a link.

We are now accepting applications from firms to be part of our third sandbox phase. Firms have until 31 July 2017 to submit their applications.

Departing Bank of England rate-setter takes swipe at Mark Carney in final speech (Belfast Telegraph), Rated: A

A departing rate-setter at the Bank of England has taken a final swipe at dovish Governor Mark Carney, saying record-low interest rates are no longer justified.

In her final speech as an external member of the Monetary Policy Committee (MPC), Kristin Forbes questioned the continued need for “emergency” level interest rates, as well as the “substantial amount of stimulus” rolled out in the wake of the Brexit vote, stressing that forecasts for a recession and higher unemployment after the referendum have failed to materialise.

No sign of decreasing P2P appetite, claims lender (Bridging & Commercial), Rated: A

There has been no sign of a decrease in demand for peer-to-peer finance, online platform RateSetter has told Bridging & Commercial.

“…We’ve seen steadily increasing demand from advisers, and the value of IFA-administered accounts on our platform has doubled over the last year.

“Although there are clearly hurdles – for example, direct investments in peer-to-peer lending are not currently available through investment platforms commonly used by IFAs to buy products on their clients behalf – we see no signs of decreasing appetite.”

Jane Dumeresque, CEO at Folk2Folk, explained that the FCA process was extremely tough and was not too surprised that some had withdrawn.

Peter McDermid: help to build (The Scotsman), Rated: A

Today marks the Scottish launch of the LendInvest Property Development Academy, an adult education course that puts development skills at the fingertips of aspiring house builders.

The first London course was ten times oversubscribed and to date more than 120 “students” have completed our courses. Now we’ve rolled out countrywide to satisfy demand.

Sessions are led by experienced and, as importantly, local advisers who know what it takes to get small-scale property developments delivered on time and on budget.

Development issues

Access to finance continues to be the biggest hurdle. A severe lack of lenders in Scotland is problematic.

Any experienced developer knows that applying for and awaiting planning permission can be a long, exhausting and expensive process. This is where it pays to do your research.

Structuring a professional team is one of the most important aspects of planning for a development, and a task that can be more complex than it first appears. There are various questions that a developer needs to ask: what are the key development costs? How long will a project take?What consultants are involved in a development project and how should they all work with one another? How do developers insure their teams against delays and accidents?

Sales and marketing are commonly regarded as an afterthought, something to worry about “later”, when in fact marketing needs to be in the forefront of a developer’s mind from the very beginning.

Three out of four investors refuse to pay for financial advice (Money Observer), Rated: A

A survey conducted by investment management company Legg Mason has found that only 24 per cent of investors would be prepared to pay the typical hourly fee for financial advice – which works out on average at £150 per hour, according to unbiased.co.uk.

Just 10 per cent of those who answered said they would be willing to pay £150 or more, while an additional 11 per cent agreed that they would pay between £50 and £149.

Over a third of respondents (36 per cent) said they would refuse to pay for financial advice outright, while 15 per cent said they were unsure what they would be happy to pay.

Why Financial Advisers Won’t Succumb To The Robots Any Time Soon (Huffington Post), Rated: B

Add to this, low levels of financial education, low levels of trust in financial services generally and overwhelming product choice (e.g. 2,000+ investments) and engaging customers without a human adviser is tough. That’s why, according to the industry’s regulator the FCA, of the £208 billion invested by consumers last year 78% was through advisers.

The vast majority of investment advice consumers now get from advisers is supported by online, model driven, financial technology (FinTech) which helps advisers more scientifically assess their risk profile and develop probability based investment strategies which give them a higher chance of meeting their goals at an acceptable risk level.

There are four developments now emerging, which will almost certainly change the game:

  1. Simple, automated advice
  2. Account aggregation
  3. Social networks
  4. Artificial intelligence
China

Renren Announces Unaudited First Quarter 2017 Financial Results (PR Newswire), Rated: AAA

  • Total net revenues were US$20.9 million, a 94.3% increase from the corresponding period in 2016.

    • Advertising and IVAS net revenues were US$11.6 million, a 90.2% increase from the corresponding period in 2016.
    • Financing income was US$9.3 million, a 99.7% increase from the corresponding period of 2016.
  • Gross profit was US$6.4 million, a 172.6% increase from the corresponding period in 2016.
  • Operating loss was US$17.6 million, compared to an operating loss of US$19.2 million in the corresponding period in 2016.
  • Net loss attributable to the Company was US$16.2 million, compared to a net loss of US$23.2 million in the corresponding period in 2016.
  • Adjusted net loss(1) (non-GAAP) was US$11.0 million, compared to an adjusted net loss of US$15.9 million in the corresponding period in 2016.

P2P Industry News (Xing Ping She Email), Rated: AAA

Internet Finance Giants Ant Financial, Baidu etc., working with bank for new opportunities on fintech. 

It seems a trend that internet financial giants working with traditional banks in China. Recently, Baidu built a strategic partnership with Agricultural Bank of China (ABC). The cooperation focuses on fintech areas, including co-building of financial brains and portraits of clients , precise marketing, customer credit evaluating, risk monitoring, robo-advising, etc.

Previously, both Jingdong Finance and Ant Financial Services Group have announced partnerships with banks. On 16th June, Jingdong signed a framework agreement on financial business cooperation with ICBC, planning to conduct cooperation in fintech, retail banking, enterprise credit, etc. While in the late of March, the CCB has signed a tripartite cooperation agreement with Alibaba and Ant Financial. According to the agreement, Ant financial would help CCB to boost the online credit card business. They are going to strength cooperation in offline & online channel and electronic payment business, so as to open up the credit system.

Bank of China Set Up the Inclusive Finance Division

On 20th June, the Inclusive Financial Division of BOC was founded officially. The new division aim at providing financial services in comprehensive coverage of rural and urban. According to reports, China Construction Bank (CCB), Industrial and Commercial Bank of China (ICBC) and Agricultural Bank of China (ABC) have all set up their Inclusive Financial Division at the general bank level.

Baidu and the Agricultural Bank reached a strategic cooperation in the layout of intelligent finance (Sina), Rated: A

In accordance with the strategic cooperation agreement, the cooperation mainly focused on the field of financial technology, including the construction of financial brain and customer portrait, precision marketing, customer credit evaluation, risk monitoring, intelligent investment, intelligent customer service and other specific applications, Around the financial products and channel users and other areas to start a comprehensive cooperation.

Bank of China Begin Fintech Move (AI Topics), Rated: B

Bank of China (BOC) and Tencent have established a joint financial technology laboratory, the lender said in a statement this week. The lab will work on cloud computing, big data, blockchain and artificial intelligence to promote financial innovations.

European Union

IDA ‘confident’ of Brexit investments pipeline, banking event told (Irish Times), Rated: A

IDA Ireland’s head of international financial services, Kieran Donoghue, has said he is “confident” that the Republic will secure a number of wins as his organisation “aggressively” pursues the opportunity to lure financial activity from London following Brexit.

Luxembourg’s politicians pin economic hopes on fintech drive (Financial Times), Rated: A

Britain’s planned departure from the EU has provided policymakers with an incentive to build a fintech hub in Luxembourg that could attract UK technology companies looking to maintain a foothold in the EU.

Prime minister Xavier Bettel has made the country’s digital transformation a priority since succeeding the long-serving Jean-Claude Juncker in December 2013. Mr Bettel launched the Digital Lëtzebuerg [Luxembourg] initiative the following year as a platform for encouraging new technology in the financial industry as well as society as a whole.

The flagship project to encourage fintech is the Luxembourg House of Financial Technology, opened with much fanfare in April with backing from the government and business groups.

Its focus is on insurance, banking and fund technology in areas such as digital investment and portfolio management, blockchain applications, payment platforms, data analytics, artificial intelligence, security and authentication.

International

How Fintech is Disrupting Banking for Businesses Around the Globe (Due), Rated: A

Same day bank transfers were rolled out in the United Kingdom almost a decade ago. NACHA, the regulatory organization responsible for the ACH system, announced efforts for faster transfers two years ago. However, very few banks are actually implementing faster transfers.

Digital wallets are a key concept in bringing financial services to the unbanked and underbanked.

Multiple large banks have added bot features to their customer service toolset, and there is no limit to how far it can go. Just a few months ago at LendIt I captured a video of someone asking a computer for help picking a credit card.

Over $36 billion were poured into FinTech ventures in 2016 alone, and about a quarter of that went to banking related ventures. Payments, investments, and wealth management were other major categories for 2016 FinTech investment.

Australia/New Zealand

Harmoney’s Marketplace Hits $ 500,000,000 (Scoop), Rated: AAA

Peer-to-peer lending marketplace Harmoney announced today that $500,000,000 in lending has been transacted through the platform in just under three years of operation. 30,000 Kiwis have made the choice to join the Harmoney community with additional support from two challenger NZ owned banks TSB and Heartland.

Kiwis have borrowed for all sorts of reasons;

  • 12,000 to pay off debt, mainly expensive Credit Card debt
  • 4,000 have completed home improvements and renovations
  • 3,000 have taken a special trip or holiday
  • Almost 2,000 have upgraded their car and;
  • 10,000 have borrowed for a vast array of other reasons, from dream weddings, book publishing to achieving their dreams at the Paralympics.

Consultation on personalised robo-advice (JD Supra), Rated: AAA

There is a clear demand, from both industry and the regulator, to allow personalised robo-advice to be provided ahead of the FAA reforms. As a result, the FMA is consulting on an exemption to allow this to happen – the exemption consultation can be found here.

The exemption will be subject to conditions but these are very similar to those that regulators have imposed in other jurisdictions (such as Australia) where our offices have been advising on for some time. We don’t expect there to be too much objection to these.

Limits:

  • Service: The exemption will be limited to financial advice or investment planning services and won’t cover the provision of DIMS under the FAA or the FMCA.
  • Product type: The robo-adviser will be limited to advice on financial products that are highly liquid or easily transferable. The FMA’s over-riding concern here is that consumers should be able to easily unwind their holdings if the robo-advice is poor or unsuitable. The proposed product list for robo-advice will be:
  • KiwiSaver and managed funds that are continuously offered and redeemed at a price based on the value of the scheme property
  • Listed equities and listed debt
  • Government bonds
  • General insurance products (home, contents and vehicle) and
  • Savings products and credit contracts (other than mortgages).

Conditions: 

  • Pre-notification procedure: A robo-adviser will need to give prior notice to the FMA setting out ‘good character’ declarations in relation to senior managers and directors and giving details of any criminal convictions in New Zealand or overseas. The FMA will need to issue a no objection confirmation in relation to the good character declarations before the robo-adviser starts business.
  • Status disclosure: The robo-adviser will need to clearly disclose that it is relying on the exemption and that the FMA has not in any way endorsed, approved or reviewed the service.
  • Disclosure: Before giving advice to a client, the robo-adviser will need to give the client sufficient information to make an informed decision, including:
  • The nature and scope of the service and whether the service is limited to a particular range of products. This will need to include:
  • Clarification of the extent of human involvement
  • Clarification that the advice provided will depend solely on the information provided by the client
  • An explanation of any limits on the advice or portfolios generated by the algorithm
  • A concise explanation of the benefits and risks of the service.
  • An explanation of the fees that must be paid.
  • Details of how the robo-adviser is paid and disclosing any actual or potential conflicts of interest that may influence the services provided.
  • An explanation of how complaints can be made.

Regulator seeks feedback on robo-advice exemption (NZ Adviser), Rated: A

The Financial Markets Authority (FMA) is seeking feedback on its proposals that would enable entities to provide robo-advice.

The current law, passed in 2008, did not contemplate digital advice, meaning that personalised advice, or advice that takes into account an individual’s financial situation or goals, can only be given by “a natural person”.

The purposes of the Financial Advisers Act (‘FA Act’) are aligned with the Financial Markets Conduct Act, which include “promoting innovation and flexibility in financial markets.”

Global Credit Investments gives OnDeck Australia A$ 22.5m financing (AltFi), Rated: A

Asset manager Global Credit Investments has hit up its network of rich Australian families and raised A$22.5 million to refinance OnDeck Australia’s small business loan book.

A press release issued by both companies said the capital raise was “significantly oversubscribed”, with wealthy Australians attracted to the returns offered by OnDeck‘s loans, typically in the high-single-digits.

FinTech Australia releases fintech ecosystem map (Fintech Australia), Rated: A

Australia’s fintech industry body today released its first member ecosystem map, which helps build domestic and international understanding of the nation’s fintech strengths and diversity, particularly in wealth generation and lending.

The ecosystem map shows that wealth and investment, and consumer and business lending, are Australia’s two largest fintech sub-sectors – an outcome that is consistent with findings from last year’s.

Online Lender Prospa Appoints Damon Pezaro as Chief Product Officer (Crowdfund Insider), Rated: B

Prospa, an Australian online lender for small businesses, has appointed Damon Pezaro as its first Chief Product Officer.

Pezaro joins Prospa from Domain, where as CPO he led major transformation across the business and, apparently, a dramatic period of growth.

Asia

Asian Fintech Scene ‘Leapfrogging’ Over US In Innovation (Benzinga), Rated: A

While fintech companies proliferate in the United States, driving the expansion of a well-established financial sector with flourishing credit card and personal banking industries, Orchard Platform CEO Matt Burton is turning an eye to the east.

“In a lot of Asia, that doesn’t exist whatsoever,” Burton said at Benzinga’s 2017 Fintech Awards. “The population there are getting loans for the first time ever. There’s no credit bureaus there, so any data set that you’re able to acquire is completely proprietary.”

Matt Burton, CEO of Orchard Platform, at the 2017 Benzinga Global FinTech Awards

Africa

End of the road for mobile money loan defaulters (Standard Media), Rated: AAA

Credit reporting firm TransUnion yesterday said it had introduced into the Kenyan market a mobile score card that profiles borrowers using mobile lending platforms, which it will be sharing with banks and other lenders.

TransUnion Kenya Chief Executive Billy Owino said the Mobile Score Card would enable lenders access predictive and customised risk views while offering consumers alternative access to credit and an opportunity to build a positive credit score.

This wil be made possible by making use of mobile lending platforms. He added that the mobile money ecosystem has outgrown necessity-based transactions and peer-to-peer lending and is now transiting into mobile credit and loans.

Latin America

Two Brazilian Companies Merged to Create a Super Fintech (Crossroads Today), Rated: AAA

Vindi, a Sao Paulo, Brazil-based provider of subscription/recurring billing and payment solutions, merged with Smartbill, a Sao Paulo, Brazil-based provider of a subscription management system.

The financial terms of the deal were not disclosed, but the merger of the two companies aims to consolidate the market of payments focused on the service sector in Latin America.

Companies like Thomson Reuters, Movile, B2W, Empiricus, Serasa Experian, Buscape, Smartfit, Editora Abril and the most important subscription businesses are using Vindi and Smartbill solutions.

Authors:

George Popescu
Allen Taylor

Thursday February 16 2017, Daily News Digest

Lending Club investors

News Comments Today’s main news:  Lending Club Q4 results: the banks are back. NatWest and  Royal Bank of Scotland set to launch digital lending platform. Auswide Banks takes control of MoneyPlace. Indonesia allows on-balance-sheet lending for FinTech startups. Today’s main analysis: Lending Club Grows Auto Refinance. Lend Academy proud to have banks back at LC. Today’s thought-provoking articles: BondMason responds to […]

Lending Club investors

News Comments

United States

  • LC Q4 earnings review — the banks are back. GP:” Lending Club’s banks being back on the platform are a great sign of trust and comfort. I think everybody can now claim the Lending Club crisis was over. So now that the crisis was over, it wasn’t that bad, wasn’t it? If this is the types of crisis our industry will face I would be comfortable saying that it is safe to invest in our industry.” AT: “Lending Club has made a nice comeback. 2017 looks very promising, as Lend Academy points out.”
  • How the CFP Board is court next generation of planners. AT: “Since Millennials are the largest living generation and have very different attitudes about saving and investing than previous generations, it only makes sense to encourage more of them to enter into the financial planning field.”
  • How investors can cash in on soaring student debt. AT: “Not a whole lot new here, this article is geared toward investors not familiar with student loan investing.”
  • Why lending startups like Float want to ditch FICO. GP:” The only reason not to look at FICO in my eyes is cost. Otherwise why not use an indicator that is correlated? Perhaps once can use more then FICO but ignoring it completely all the time seems unwise.” AT: “As the article points out, not all alternative lenders are ditching FICO, but those that are do so for practical reasons.”
  • Lending Club grows auto refinance gradually. GP: “We continue to look for ways for Lending Club to resume growth. Auto Lending was their best bet until the crisis hit. I hope this turns into a valid channel and it allows them to diversify beyond credit card debt refinancing. As we learned with the capital sources it’s not healthy to be concentrated in one market segment.”

United Kingdom

European Union

Australia

Asia

News Summary

United States

Lending Club Q4 Earnings Results Review – The Banks Are Back (Lend Academy), Rated: AAA

Lending Club has released their Q4 2016 and 2016 year-end results. The company originated $1.987 billion in loans, up 1% from Q3 2016 of $1.972 billion. The most significant news of the earnings release was that bank participation totaled 31% of the platform in Q4 2016, up 18% from the previous quarter which shows that the banks are back. In the Q & A section of the earnings call, CEO Scott Sanborn stated, “We’ve got back on a bank by bank level all of the people we were hoping to have back.” This also happened quicker than Scott had expected. Also worth noting is that the company achieved this goal without investor incentives in Q4 unlike in Q2 and Q3 2016 where loans were offered to investors at a discount.

What you’ll also notice looking at the chart below is that the Other Institutional category dropped 5% sequentially, from 18% to 13%. This category of investor includes investment banks, hedge funds and fund managers who typically seek higher yields. Lending Club has tightened credit and adjusted pricing which has had an effect on these investors.

Now the question is whether they can spur some growth in 2017 on the borrower side of the equation. The company also provided guidance for the first time in several quarters which should give investors some idea of what to expect going into 2017.

How the CFP Board is courting the next generation of planners (On Wall Street), Rated: AAA

Amid growing worries that there are not enough new advisers to replace those who are retiring, the CFP Board’s Center for Financial Planning is rolling out a host of new initiatives aimed at expanding and diversifying the workforce.

In the coming weeks, the center will launch an internship program aiming to place workforce re-entrants at planning firms, and a social media campaign geared for students highlighting the diversity of the profession.

The center is also looking expand and solidify financial planning as an academic discipline.

How Investors Can Cash In On Soaring Student Debt (Forbes), Rated: A

In Q4 2016, total outstanding student loans topped $1.4 trillion—that’s more than auto loans or credit card debt. The student loan debt market is now only second to the mortgage market in terms of size.

While the consumer price index climbed 44% since 2000, tuition has soared 151%. Students now graduate with an average of $33,000 in student loan debt.

SoFi and CommonBond, the two-main P2P platforms that service students, have issued $8.5 billion in loans. Around $6 billion of that has been securitized by the likes of Goldman Sachs and Morgan Stanley.

It’s worth noting that the total potential refinance market for P2P student loans is really about $480 billion. The headline $1.4 trillion is reduced because around 40% of loans are too small, and 42% have rates that are too low to be refinanced using P2P.

Students who refinance with SoFi save an average of $288 per month and $22,359 in total. Variable rates range from 2.35%–6.28% and fixed rates from 3.37%–6.74%.

CommonBond offers variable rates from 2.35%–6.27% and fixed rates from 3.37%–7.74%. Borrowers enjoy average savings of $15,114 when they refinance loans through the platform.

In comparison, the interest rate on Federal Direct Loans for undergraduates is currently at 3.76%. Borrowers also pay an additional 1.069% on each disbursement they receive. While this rate is below those offered by P2P lenders, the majority of student loans were made when interest rates were higher, with many students paying up to 8.25%.

Why Lending Startups Like Float Want To Ditch The FICO Score (Fast Company), Rated: A

Last year Social Finance, or SoFi, started using its own proprietary underwriting score in place of FICO when evaluating applications for its student loan, personal loan, and mortgage products.

And now they’re joined by Float, a Los Angeles-based lending startup, whose founders also say they have no plans to use FICO. The platform is launching today, and a look at its business model reveals why it thinks it can survive without it. Float is an app designed for lending small amounts of cash to customers in a pinch. If you’re facing the possibility of an overdraft, for example, a Float credit line, ranging from $50 to $1,000, can help you stay in the black. As with a classic American Express charge card, repayment is due in full the following month. Float also levies a flat 5% transfer fee.

Instead of pulling a FICO score, Float looks at two years’ worth of transaction history in an applicant’s bank account.

It’s also cheaper: Pulling credit reports adds enormous expense to the underwriting process.

Float has also noticed that customers who arrive via Instagram are better borrowers than those who arrive via Facebook.

Lending Club Grows Auto Refinance Gradually (Auto Finance News), Rated: A

Lending Club continues to grow its newly-launched auto refinance product and is investing $5 to $10 million in its expansion, Chief Financial Officer Tom Casey said during the company’s fourth quarter earnings call yesterday.

Early customer feedback has been positive, and refinancing is saving consumers an average of 2.5% off of their rate, or $1,200 in savings over the life of the loan, Sanborn added.

United Kingdom

NatWest unveils online lending platform for SMEs (Finextra), Rated: AAA

UK bank NatWest has launched a digital platform that lets small and medium sized businesses quickly apply for and obtain unsecured loans of up to £150,000.

The platform, dubbed Esme Loans, has been developed by the bank at is innovation unit with fintech firm Ezbob as a direct response to the emergence of specialist direct and P2P lending platforms, says NatWest.

LendInvest completes its first official auction finance loan in five days (Bridging&Commercial), Rated: AAA

It is the first loan that has been completed since the online mortgage lender launched its auction finance proposition in December last year after a significant proportion of the deals that brokers brought to LendInvest were for purchases agreed at auction.

LendInvest’s loan is based on 75% gross LTV and lasts for nine months with an interest rate of 0.94% per month.

Five Steps To Manage Business Borrowing (Minute Hack), Rated: B

Our advice at Hudson Weir is:

  1. Releasing equity – Selling a stake in your business is an effective, yet often overlooked, method of raising cash.
  2. Alternative methods of finance – Asset-based lending or invoice factoring can be helpful ways to release funds and gain a cash injection. Peer-to-peer lending has also gained momentum and popularity and gives business owners a way of raising funds on their own terms. Platforms like Funding Circle also allow SMEs access to loans and funding from a marketplace of investors – and the process is quick and simple.
  3. Talking to your suppliers – Even if the price your supplier charges looks competitive, never be afraid to ask if they can do better.
  4. Looking into your lease – Do not be afraid to negotiate with your landlord as they’re unlikely to want a vacant property – they may accept a reduced offer on the rent.
  5. Keeping on top of your payments – As obvious as it sounds, this is the difference between successfully financing your business in order to see it grow and becoming entrenched in a level of borrowing you can no longer afford to honour. Once you have found ways to keep your outgoings to a minimum during lean times, you must make sure that your monthly repayments are a priority.
European Union

RBS offers fast lending (Herald Scotland), Rated: AAA

ROYAL Bank of Scotland is set to launch a digital platform that it said would allow small and medium sized businesses to quickly obtain unsecured loans of up to £150,000.

Market response to RBS direct lending launch (BondMason), Rated: AAA

by Stephen Findlay, BondMason CEO

It is encouraging to see that banks are rolling out direct lending services to their customers, whether it be via an in-house offering or through a collaboration with an established P2P platform. This is especially good news for borrowers, particularly SMEs as it enables them to access much-needed investment more easily.

We’ve seen the direct lending market grow in leaps and bounds since its inception, as volatile stock markets and declining returns on ‘go-to’ investment products has led to an influx of investors looking for the middle ground between high risk and low returns.

Banks are responding to this investor demand and evolving their traditional models so they can take advantage of the direct lending space. We see this as the continuation of a trend towards the blurring of boundaries across the direct lending landscape – encompassing both traditional financial companies and more recent start-ups.

At BondMason, we don’t view this as negative competition to the P2P platforms already in this space, or vice versa. Rather, we think these different offerings will complement the industry and encourage improved standards and better self-regulation as more participants enter the market – a ‘flight to quality’ which we certainly welcome.

The move by the banks also supports the growth of what is becoming a mainstream asset class, demonstrating that P2P lending is now recognised and being embraced by the traditional banking and finance sector.

As this move by the banks comes some 10 years after the commencement of P2P lending, it is a great example of how innovation in established industries, such as banking, is often best done by smaller, new entrants. This further supports the requirement of the regulator to ensure, through its programmes such as the Innovation Hub and Regulatory sandbox, that SMEs and innovative companies are supported and fostered, and that barriers to entry are kept low for new, emerging business models.

Interview with Frédéric Dujeux, Co-Founder of Mozzeno (P2P-Banking), Rated: A

mozzeno is a Belgian fintech founded in December 2015. We have just launched the first digital platform to enable private individuals to participate indirectly in the funding of loans to other private individuals. Loans are granted by mozzeno, acting as a regulated lender. mozzeno then finances or refinances these loans thanks to the issuance of Notes (financial instruments).

The company has been initially founded and funded by my partner, Xavier Laoureux, and me.

Some fintech business angels and W.IN.G (a Belgian seed fund) have taken part to a seed round in Q2 2016. A further funding round should take place in the course of 2017.

Well, actually p2p lending as such is forbidden by law in Belgium. On one hand, the European prospectus law has been adapted locally very strictly, preventing individuals to raise funds publicly, even through an intermediary platform. This means that a borrower candidate cannot invite other people publicly to lend him money. On the other hand, one needs to be a regulated lender to grant loans and to get access to the Central Individual Credit Register. There is a new regulation as from November 2015, this regulated lender status now being supervised by FSMA.

Our regulatory model is then two-sided. We were the first Belgian regulated lender approved by the FSMA as per the new regulation, and this allows us to grant loans for Belgian residents. We also published a base prospectus, also approved by the regulator, allowing us to issue Notes on a continuous basis. These Notes are the financial instruments subscribed by the investors, similar to bonds, and mimicking the repayment behaviour of the underlying loan.

Crowdlending, a trend among large companies (Impulsando Pymes Digital), Rated: A

The profile of companies that rely on crowdlending to obtain financing has been changing considerably since this alternative financing method landed in Spain in 2013. The companies financed by Arboribus are solvent companies that could be financed with other banking entities, on average have about 20 years of life and most have experienced sales growth in recent years. We are talking about the segment of audited companies that resort to crowdlending to finance and that has grown 160% in 2016.

Not only is the profile of companies looking for financing alternatives changing, but there is also a growth in the volume of companies financed and their volume of loans requested. This is indicated by data provided by Arboribus, a crowdlending platform pioneering companies in Spain, which has financed 90 companies with more than 130 loans in 2016, reaching a total of 5.8 million euros funded in a year, 65% More than in 2015.

However, the most relevant data linked to these figures is the increase in audited companies with invoices in excess of 10 million euros, a figure that reaches 15 percentage points of the total portfolio of the platform, including some invoicing more than 20 Million and have a team of more than 200 workers.

Australia

Auswide Bank Takes Over Controlling Majority of P2P Lending Service MoneyPlace in Australia (P2P-Banking), Rated: AAA

Auswide Bank Ltd (ASX:ABA) is increasing its equity stake in peer-to-peer lender MoneyPlace Holdings Pty Ltd (MoneyPlace). Auswide Bank will have a controlling interest of at least 51% in MoneyPlace with the prospect of increasing that interest up to 75% dependent on the final take up of other MoneyPlace shareholders in a capital raising initiative being undertaken by MoneyPlace.

Business lender narrows in on brokers (TheAdviser), Rated: A

The appointment of Michael Burke as national sales manager this week coincides with OnDeck announcing a partnership with the Commercial Asset Finance Brokers Association of Australia (CAFBA).

Mr Burke joins OnDeck with over 20 years of sales and leadership experience in the banking and financial services industry. Most recently, he held the position of general manager – consumer and commercial finance at Flexigroup.

Asia

Indonesia authority to allow on-balance-sheet lending for fintech startups (e27), Rated: AAA

Senior officials at the Indonesian financial services authority (OJK) announced on Tuesday that the agency is preparing a regulation that would allow local fintech companies to lend money directly to their customers, a practice known as on-balance-sheet model.

Fintech companies offering on-balance-sheet model are required by regulation to convert into the P2P lending scheme.

M360 Advisors Registers Fund with South Korea Financial-Industry Regulator (Benzinga), Rated: AAA

A commercial real estate debt fund managed by Money360-affiliate, M360 Advisors, successfully registered with the South Korea Financial Supervisory Service (FSS), Money360 announced today.

FSS registration allows South Korean hedge funds, corporations, pension funds, insurance companies and other institutional investors to participate in the fund. Since becoming registered, the fund has received more than $65 million to date from one of South Korea’s oldest and largest financial institutions, and M360 anticipates receiving more than $250 million in aggregate throughout the first half of 2017.

“FSS registration opens M360 Advisors to an entirely new country of institutional investors, which will allow us to substantially increase our assets under management,” said Evan Gentry, M360 Advisors CEO. “This gives us a considerable competitive advantage that has been heightened significantly with an anticipated $250 million investment in our fund from one of South Korea’s most reputable financial institutions.”

M360 Advisors currently works with foreign investors from South Korea, China, Singapore, South Africa, Europe, Canada, the Netherlands and Kuwait, with further expansion underway.

South Korea is the latest in the company’s strategic business plan to bolster its global reach, with an intensified push into South Africa and China planned in the near future.

The fund provides investors with a short-duration, high-yield fixed-income alternative to traditional fixed-income investments. The fund invests in bridge loans collateralized by U.S. commercial real estate property secured with a first-priority lien at conservative loan-to-value ratios.

Gentry said the level of scrutiny going into the application process for FSS registration is high, and Money360 is one of the only marketplace lending platforms with an affiliated private debt fund to be sanctioned by the FSS.

“The registration of the fund with the FSS speaks to its institutional caliber,” Gentry added.

“The fund was designed for universal appeal to various types of investors throughout the world with significant consideration given to international tax efficiency,” added Money360 COO and M360 Advisors President Dan Vetter.

Vetter cited the extended period of low interest rates throughout the world caused by unprecedented central bank intervention as an impetus for launching the fund.

“Equity markets are overvalued and traditional fixed income investments offer minimal yield, making this type of private debt fund attractive relative to more traditional asset classes,” he added.

P2P LENDING: PEAKS TO PITFALLS (BFM), Rated: A

P2P lending has emerged as a new source of financing and may soon emerge as its own asset class. We speak to Kristine Ng, CEO of Fundaztic, about the pitfalls of the P2P system and how Securities Commission-approved lenders could help you enhance your short-term returns.

 

Cambridge Centre for Alternative Finance, Monash Business School & Tsinghua University Partner On Asia Pacific Alt Finance Study (Crowdfund Insider), Rated: B

The Cambridge Centre for Alternative Finance at University of Cambridge Judge Business School, Australian Centre for Financial Studies at Monash University and Tsinghua University Graduate School at Shenzhen have teamed up to launch the 2016-2017 Asia-Pacific Region Alternative Finance Industry Survey.  The consortium has gained the support of more than 20 major industry organizations across the region. The Cambridge Centre for Alternative Finance (CCAF) says this is the largest regional study to date focused on crowdfunding, peer-to-peer lending & other forms of alternative finance.

This benchmarking survey, opening today (February 15, 2017) aims to capture the key trends including the development, size, transaction volume and growth of alternative finance. The study will also gauge the impact of changing regulations on innovative finance in markets across Asia in 2016 – building on last year’s inaugural study.

The research will be made publicly available in Q2 of this year.

Authors:

George Popescu
Allen Taylor

July 5th 2016, Daily News Digest

July 5th 2016, Daily News Digest

News Comments United States According to the bond market yield-curve there is 60% chance of recession. However, the equity market doesn’t agree. Interesting times. A short survey on the different US regulators’ interaction with the marketplace lending space. New Capital Rules likely to be imposed on wall street will likely push bank-dealers to shut down […]

July 5th 2016, Daily News Digest

News Comments

United States

  • According to the bond market yield-curve there is 60% chance of recession. However, the equity market doesn’t agree. Interesting times.
  • A short survey on the different US regulators’ interaction with the marketplace lending space.
  • New Capital Rules likely to be imposed on wall street will likely push bank-dealers to shut down trading units in debt-securitization due to insufficient return on equity. This change could have a huge impact on marketplace asset backed securitization.
  • Wells Fargo continues to push FastFlex, their own quick SME financing product competing with OnDeck, Kabbage, CAN Capital and all other SME marketplace lenders.
  • Morgan Stanley is pointing out all the positive data coming out of Lending Club: higher origination than predicted in Q2 2016 and much more.
  • Lending Club’s CIO unvailing the future plans for Lending Club : Point-of-Sales, offline and a cloud-base micro-services platform.
  • CFPB’s monthly report points out the most-complained-about companies in consumer loans. It would be interesting to plot company size vs number of complaints.
  • Square analysts believe that more regulation in marketplace lending will favor Square vs its competitors.
  • Last week news, worth a reminder after the long weekend: Avant is downsizing, again.
  • Boston, feeling left behind in fintech, is launching a fintech hub initiative supported by Fidelity, Putnam, Santander Bank, U.S. Bank and Boston Private Financial.

United Kingdom

  • An interesting way to leverage your p2p investments: buying discounted P2P public fund shares at the present 20% discount, and relying on stock buy-backs to bet on up side in yield + equity appreciation.
  • Brexit: in short, fintech firms fear for staff shortages and lost EU customer access.

European Union

  • Insurer Aviva France, in partnership with Eiffel Investment Group and AG2R La Mondiale launching a €100 million fund to invest in “crowdlending SME debt” in France and elsewhere.
  • A list, without any transparency on the inclusion criteria,  of the top 11 p2p lending platforms in Europe, (Pre-Brexit), per Fintechnews.ch. And a very interesting map of relative p2p lending market size in European countries.

Australia

  • Public p2p lender DirectMoney preparing a new share issuance to finance loans as loan demand outstrips funding.”DirectMoney chief Peter Beaumont yesterday defended the fintech company’s stockmarket listing and expressed disappointment over losses worn by shareholders.”
  • OnDeck Australia and Commonwealth Bank (CBA) receiving the Fintech-Bank Collaboration of the Year Award.

India

  • P2P players are moving towards institutional capital for growth. Following in the footsteps of their US cousins, we hope the Indian p2p lenders have learned their lessons from Prosper, Lendnig Club and Avant’s experiences with institutional capital.

China

  • P2P lenders exiting office space in Shanghai have brought office space vacancies supply to a 10-year-high level.

Korea

  • Interesting data and information on one of the 1st Korean p2p lending companies we learn about.

News Summary

Unites States

Bond Markets Have a Message About the Economy That Stock Investors Might Not Want to Hear, (Bloomberg), Rated: AAA

There’s a big disagreement brewing in global markets.

There’s 60 percent chance of recession, according to a Deutsche Bank model.

While risky assets including equities have surged following the U.K. electorate’s historic vote to leave the European Union, government bonds have also rallied; two things that ought to suggest different outlooks for economic growth. Soaring bond prices have sent yields on the perceived safe havens of government debt plumbing fresh lows, even while expectations of looser monetary policy produce a burst of animal spirits in stock markets.

The flight to safety has prompted some analysts to question the durability of the rally in equities, where the S&P 500 was up 3.5 percent last week and the FTSE 100 has erased its post-referendum dip — at least, in local-currency terms. Still others say that money is pouring into stocks as lower bond yields force investors to search for returns in alternative asset classes.

The spread between the yield on 10-year and two-year U.S. Treasury notes narrowed in the immediate aftermath of the June 23rd referendum, widened briefly, and is now shrinking again as investors continue to flock to the perceived safety of U.S. government debt. A model maintained by Deutsche Bank AG’s Steven Zeng, who adjusts the spread for historically low short-term interest rates, suggests the yield curve is now signaling a 60 percent chance of a U.S. recession in the next 12 months — up from a 55 percent probability as of mid-June, and the highest implied odds since August 2008.

“This relentless flattening of the curve is worrisome,” Deutsche analysts led by Dominic Konstam said in their note on the model. “Given the historical tendency of a very flat or inverted yield curve to precede a U.S. recession, the odds of the next economic downturn are rising.”

The 10-year yield is currently at 1.44 percent, making a recession just about 40 basis points away according to this particular interpretation of the bond market’s moves.

Rundown of Regulator Interest in Marketplace Lending, (Lend Academy), Rated: AAA

U.S. Treasury

The Treasury first publicly showed interest in marketplace lending with a request for information(RFI) back in July 2015. Over 100 companies responded to the RFI and the Treasury reported on their findings in May 2016 where they shared their response in the form of a white paper. It did not provide any recommendations for new regulations and was generally quite positive on the industry.

Office of Comptroller of the Currency (OCC)

On March 31, the OCC released a white paper titled Supporting Responsible Innovation in the Federal Banking System: An OCC Perspective. More recently, the head of the OCC, Thomas Curry, reaffirmed his commitment to responsible innovation in a speech just last week. He brought up the idea of a “regulatory sandbox” – a place where fintech companies can have a conversation about what the rules of the road are for their new ideas. He also brought up the idea of a limited purpose charter for fintech firms as a possible way forward.

Federal Deposit Insurance Corporation (FDIC)

The FDIC first addressed marketplace lending in a paper titled Supervisory Insights. They are concerned about the impact on banks as well as the general risk to financial services.

Consumer Financial Protection Bureau (CFPB)

Early this year, the CFPB made two announcements impacting marketplace lending. They said that they would begin accepting complaints directly from consumers about marketplace lending companies. Around the same time they issued a new No-Action letter policy that was designed to encourage innovation in financial services.

According to the Wall Street Journal the CFPB is planning to supervise marketplace lenders and will release a proposal some time in the fall. The CFPB has not commented publicly on this news so right now it is just a possibility but it makes sense.

Securities and Exchange Commission (SEC)

SEC involvement in marketplace lending goes back to the early days of Lending Club and Prosper. In 2008 the SEC decided that the notes issued by these companies were securities and should be registered as such. The result was Lending Club and Prosper filing a S-1 registration and becoming quasi public companies with quarterly financials being filed with the SEC.

Now that Lending Club is a public company it is has more responsibilities to both equity and debt investors both of which come under the purview of the SEC. The reality is while the SEC keeps a close eye on marketplace lending it is unlikely there will be much in the way of new developments here.

Federal Trade Commission (FTC)

The FTC recently hosted a financial technology forum on marketplace lending. The forum sought to look at consumer protections in marketplace lending and fintech more broadly. According to Jessica Rich, director of the FTC’s consumer-protection bureau marketplace lenders haven’t done enough in borrower protection.

United States Congress

In May 2015, the House Small Business Committee held a hearing on Capital Hill.

In January, in the wake of the San Bernardino shooting tragedy, the House Financial Services Committee held a hearing on terrorism financing that included a discussion of marketplace lending. But no new initiatives have come yet from these hearings.

Financial Stability Oversight Council (FSOC)

The FSOC most recently included their thoughts on marketplace lending in their annual report. Although the report highlights the lower cost and efficiencies of marketplace lenders they also discuss risks and concerns. One of the main concerns listed are the new and untested underwriting models used by platforms.

Conclusion

This list is only a start of the involvement we are likely to see from regulators as it pertains to marketplace lending. Due to the attention, we’ve seen many industry associations created to ensure a productive dialogue is being undertaken in Washington with all the organizations discussed here. We sincerely hope that any new regulation to come is thoughtful and comes from a well informed view of the industry.

Capital Rules Stifling Securitized-Debt Trading Profit: JPM, (PeerIQ), Rated: AAA

New layers of regulatory capital expected to be imposed on Wall Street are likely to further pressure banks to exit trading of securitized-debt, JPMorgan analysts John Sim, Kaustub Samant, Carol Zhang wrote in client note Friday.

NOTE: Reports of dealers paring or shutting down trading units have grown; banks include Barclays, DB, MS, SocGen, Jefferies, RBS, Nomura, CS

  • There’s “no path to profitability” under current and recently released capital rules
  • JPM analysts calculated ROE (return on equity) for hypothetical RMBS portfolio based on impact from Basel’s Fundamental Review of the Trading Book
  • Concluded ROE of ~4%, “clearly not attractive enough to entice dealers to enter the space and make markets”
  • Adjusted model to various hypotheticals, such as reallocation, bid-ask, turnover rates
  • Concluded the “cumulative effect of all of these realistic and unrealistic changes would only increase the return to 7%, which is far short of our 10% to 15% ROE threshold”
  • “Running ROEs for hypothetical ABS and CMBS businesses would not result in markedly different results”
  • Primary market and business of underwriting new-issue securitizations can still be attractive, however, contingent  underwriting volumes
  • Revenue derived from underwriting fees without consuming much capital; when balanced with secondary trading, ROEs for the business can become attractive, depending on volumes
  • Liquidity will continue to be constrained for non-agency RMBS, particularly in legacy space where dealers have no commensurate underwriting
  • CRT deals will also suffer from limited trading activity relative to market size; expect limited liquidity for Jumbo RMBS and SFR deals

How Wells Fargo Aims to Satisfy ‘Need for Speed’ From Millennial Borrowers, (The Street), Rated: AAA

Known as FastFlex, the San Francisco-based bank’s product offers customers with a business checking account a one-year loan of up to $100,000. Wells Fargo is considering expanding the availability of the loan next year, Lisa Stevens, the company’s head of small business, said in an interview.

FastFlex is designed for businesses with under $5 million a year in revenue who have “quick short-term needs to do some type of expansion or cash management,” Stevens said.

Some 67% of millennials are willing to take some financial risks to grow their businesses, compared with just 54% of older owners.

The FastFlex loan is one effort to meet that demand, he said, by providing a digital service with a rapid turnaround, two of the qualities that millennials have said they value most highly in financial services products. “We wanted to design our own product that would compete well in the marketplace-lending environment,” Case said.

Lending Club Corp : Positive Updates from the Annual Meeting, (Morgan Stanley), Rated: AAA

2Q16 originations down ⅓ from 1Q equates to ~$1.8bn in originations or -4.4% YoY,vs. our $1.4bn (-25% YoY) estimate.Assuming volumes for the first five weeks in the quarter (prior to

Assuming volumes for the first five weeks in the quarter (prior to announcement of irregularities and CEO resignation) were consistent with the 1Q run rate, this suggests volumes over the remaining 8 weeks were down ~50% sequentially and 37% YoY.

LC has had dialog with hundreds of investors,and none have outrightly refused to come back as an investor on the platform. Most investors need to go through a due diligence process and LC appears confident in its ability to bring them back to prior levels of investment over the long term.

While investors from every category have returned to the platform, banks and large investors are taking longer with their audits, which is in-line with our expectations.It is unclear if 2Q represents the trough in terms of origination volumes, but management commentary on investor appetiteand conservativeapproach on origination expectations suggests 3Q and

It is unclear if 2Q represents the trough in terms of origination volumes, but management commentary on investor appetiteand conservativeapproach on origination expectations suggests 3Q and
4Q volumes should be similar to 2Q with potential for upward bias.

LC expects to incur $9mn of investor incentives (to be booked as contra-revenues) in 2Q , which are likely to continue in 3Q with a plan to eliminate these by 4Q.

LC expects to “resume revenue and EBITDA growth in 1H17” though it remains unclear to us if this comment suggests sequential or YoY growth.We expect LC to return to origination, revenue,and adjusted EBITDA growth by 2Q17, though we expect 1H17 to remain below 1H16 given tough comps on 1Q17e.

2016 Bay Area CIO of the Year Innovation/Transportation finalist: A conversation with LendingClub’s John MacIlwaine, (Silicon Valley Business Journal), Rated: AAA

How do you predict your company will be different in two years, and how do you see yourself shaping that change?

We’ll also have a wider set of financing products that will be accessible online, offline, and at point of sale, while expanding our partnerships with banks and other non-financial institutions. We’re enabling that change by building our cloud-based micro-services platform, which simplifies integration of our solution for our partners and allow us to quickly and efficiently scale our core business and expand our product set.

What do you feel has been your biggest impact/success at this company? My biggest impact on LendingClub has been building a world-class team of engineers, scaling our technology platform to support the company’s incredible growth (compound annual growth rate of 124 percent Q4 2009 to Q4 2015 and well over $16 billion in loan originations to date), and setting a clear vision for a technology platform that is flexible and adaptable enough to handle future loan origination growth, partnership integration, and regulatory compliance updates.

What are your top three priorities for 2016-2017?

  1. Transform our current technology platform into a suite of cloud-based micro-services;
  2. Move our platform hosting environments to AWS (Amazon Web Services);
  3. Double the size of our world-class technology team.

CFPB June 2016 complaint report highlights consumer loan complaints, complaints from Arkansas consumers, (JDSupra Business Advisor), Rated: AAA

The CFPB has issued its June 2016 complaint report which highlights complaints about consumer loans and complaints from consumers in Arkansas and the Little Rock metro area.

The report does not specifically identify any complaints as involving marketplace lending.  Unlike prior monthly complaint reports, the June 2016 report includes a “Sub Product spotlight” section that highlights auto lending.

  • The most-complained-about issue involved managing the loan, lease or line of credit.  Other complaint issues included problems arising when the consumer was unable to pay, such as issues relating to debt collection, bankruptcy, and default.
Source: CFPB June complaint report.

General findings include the following:

  • Complaints about student loans showed the greatest percentage increase based on a three-month average, increasing about 61 percent from the same time last year (March to May 2015 compared with March to May 2016).  As we noted in our blog posts about the April and May2016 complaint reports, rather than reflecting an increase in the number of borrowers making student loan complaints, the increase most likely reflects that in March 2016, the CFPB began accepting complaints about federal student loans.  Previously, such complaints were directed to the Department of Education.
  • Payday loan complaints showed the greatest percentage decrease based on a three-month average, decreasing about 15 percent from the same time last year (March to May 2015 compared with March to May 2016).  Complaints during those periods decreased from 479 complaints in 2015 to 405 complaints in 2016.  In the March, April, and May 2016 complaint reports, payday loan complaints also showed the greatest percentage decrease based on a three-month average.

Square Inc Better Risk Reflection Leads to Upgrade: Wedbush, (Bidness Etc), Rated: A

Helmed by Twitter CEO, Jack Dorsey, the Square’s lending business encountered a substantial obstacle in May, in the form of new and strict scrutiny from regulatory authorities. In a comprehensive study, the US Department of Treasury along with several other government agencies put forward recommendations, to safeguard the access and growth to credit through the continued developments of online marketplace lending.

Wedbush analysts believe that regulatory scrutiny is likely to increase the company’s lending business.

For the 2Q, Square projects revenue to fall between $151–156 million. Wedbush expects the company to surpass its own expectations — reporting closer to the sell-side firm’s own $168 million estimates — but foresees considerable downside to the financial services company’s shares, if it reports within its given guidance range.

Interestingly enough, in a research note published yesterday, Morgan Stanley lowered its prices target on Square stock from $12 to $10, following a meeting with the company. The sell-side firm also raised its Stock-Based Comp estimates, in light of the company’s transition from private to a public entity and higher comp to select personnel vs. prior expectations.

Why Online Lender Avant Is Cutting Down Its Workforce Again, (Fortune), Rated: A

After also deciding to pull back in May from new verticals such as auto loans to concentrate on its core personal loans business, Avant is now cutting its lending target for that unit by 50% to about $100 million per month, Bloomberg reported.

Avant’s problem, like much of the so-called peer-to-peer lending market, isn’t a lack of demand from potential borrowers. Instead, the company and other online lenders are having increasing difficulty raising money to lend out as hedge funds and other investors outside the usual banking circles that backed the industry have grown wary.

The company had grown quickly for the past few years, reaching $3.5 billion in total loan volume. But with less access to capital, business has slowed recently, and loan volume declined 27% in the first quarter from the fourth quarter—the first such quarter-to-quarter drop since Avant started in 2012.

LendingClub’s Negative Press Blitz Continues, (Yahoo Finance), Rated: A

An $800 million LendingClub Corp (NYSE: LC) fund that invests in the company’s online consumer loans is expected to report its first monthly loss in the past 64 months in June. According to a letter to investors from LendingClub CEO Scott Sanborn, LendingClub’s Broad Based Consumer Credit (Q) Fund’s June return “is likely to be negative.”

The fund is LendingCub’s largest and has regularly returned around 0.5 percent per month throughout its five-year history. However, default rates on the fund’s loans have begun to rise in recent months and returns have dropped, prompting a number of investor redemption requests

The Wall Street Journal’s Peter Rudegeair reported that as of June 17, LendingClub had received $442 million in redemption requests representing about 58 percent of the value of the fund. In response to the large number of redemption requests, LendingClub announced it was placing restrictions on withdrawals and would be considering winding down the fund entirely.

Group led by State Street, Putnam launches fintech initiative, (Boston Business Journal), Rated: A

The Boston Financial Services Leadership Council and the business consulting group Mass Insight have created Financial Technology Boston, under which they will host networking events and possibly job fairs involving fintech professionals from the corporate, startup, government and higher-education worlds.

In addition to State Street (NYSE: STT), Fidelity and Putnam, the BFSLC includes Santander Bank, U.S. Bank and Boston Private Financial (Nasdaq: BPFH).

Boston is already home to fintech-focused incubators FinTech Sandbox and the DCU Center of Excellence in Financial Services, as well as a monthly meetup for fintech professionals.

United Kingdom

Why investors should scoop up discounted P2P funds before putting cash into platforms, (AltFi News), Rated: AAA

Analysis by AltFi Data shows loan origination has more or less been static across the UK P2P lending industry in 2016. This somewhat contrasts with the rapid growth seen in 2015 and 2014. Any number of explanations are given for this including a broad risk-off attitude from markets as well as the ongoing fiasco at the major US platform Lending Club.

However, for professional and private investors alike who are not dissuaded from the adverse headlines, and attracted by the high yields on offer from investing in the market, there is a clear argument to avoid investing directly on platforms. While this is the normal route for many, buying shares in the investment trusts offering exposure to loans originated from the platforms that are heavily discounted at present arguably makes more sense.

Over time in addition to the 7.4 per cent yield on offer, a narrowing of this discount or perhaps even a move to a premium could significantly bolster returns.

The table below shows what will happen to the share price following a 20 per cent return in net asset value alongside changes in the discount/premium. It clearly shows that buying at a premium massively adds to the total return.

Of course there is always the risk that the discount moves out further. This could be caused by investors going off the trusts even more. Or it could be broader negative sentiment towards equity markets that sees index level selling of the FTSE 250 – in the case of P2P GI – or FTSE All Share selling in the case of VPC Specialty Lending. This would add to weakness in both trusts’ share prices, and potentially widen the discount.

However, as AltFi reported last week P2P GI has started to defend its discount by buying up its shares using spare cash. Last week it bought £2m of its shares at an average price of 827p, says Monica Tepes, analyst at Cantor Fitzgerald.

This did temporarily lower P2P GI’s discount to 17.5 per cent although it has since moved back to over 20 per cent.

Brexit: FinTech firms fear for staff shortages and lost EU customers, (Tech Republic), Rated: AAA

London is a major player in the international FinTech market, with startups in the UK capital securing more venture capital funding last year than their European counterparts.

That status won’t necessarily change after Britain leaves the EU but FinTech firms have said it will complicate the picture, particularly when it comes to their ability to sell services to Europe and attract new talent.

Controlling migration was the second most important reason for quitting the EU, according to those who voted Leave in last week’s referendum.

Access to the single market allows goods and finance to be moved between EU countries without tariffs. However, full access also requires free movement of workers between European countries, something many Leave voters oppose.

Nevertheless, for peer-to-peer (P2P) lending platform MarketInvoice, as for many other London-based FinTech firms, free movement of European labor is essential to meet its demands for skills.

“Here at MarketInvoice we have a super-diverse team from all corners of the globe. Most notably within our software-engineering and data-science teams. Many FinTech founders themselves come from outside the UK,” said Anil Stocker, CEO of MarketInvoice.

European Union

Insurer Aviva France to Lend €50 Million to SMEs Through Crowdlending Platforms, (Crowdfund Insider),Rated: AAA

Aviva France, together with two partners, alternative asset management firm Eiffel Investment Group and insurer AG2R La Mondiale, is launching an investment fund called “Prêtons Ensemble” (Lending together) dedicated to financing loans to small and medium-size enterprises (SMEs) provided through crowdlending platforms.

Starting with an initial endowment of €50 million from Aviva France and €20 million from AG2R La Mondiale, the fund is expected to quickly grow to €100 million by rallying other institutional investors around the project.

The goal is to invest in the French real economy by financing SME loans granted through regulated crowdfunding platforms. Eiffel Investment Group is a specialist with more than eight years of experience in investing on crowdlending platforms, notably in the more advanced UK and US markets. Eiffel Investment will be in charge of the due diligence on the platforms and their loan portfolios. Currently, they have identified around 100 platforms and have made contact with 50 of them. Eventually, in five years from now, the fund should be invested to 70% in lending to SMEs and minimum to 50% in France. At the onset, we’re starting with a dozen platforms, mostly, but not only from France as the market is still emerging here. The (soon-to-be published) list includes names such as Younited Credit, Finexkap and Lendix.

The fund will be diversified in terms of the platforms’ business model and of the type of credit provided to SMEs. This means that it will include both unsecured and secured loans, short-term invoice financing as well as mid-term loans. On average, the loans are expected to have a maturity of 2.5 years.

Our decision was made long before the Lending Club problems surfaced. Upon hearing about them, we conducted a thorough analysis of their actual causes and impact. We were quite reassured to find out that the scale of the financial issue was small, that it had been fixed, and that a subsequent audit did not uncover any other impropriety.

Europe’s Top 11 Peer-to-Peer Lending Platforms, (Fintech News), Rated: A

Comment: As author chose to label the article Europe’s top 11, and includes UK companies, we chose to do the same.

In Europe today, although the vast majority of the P2P lending activity is concentrated in the UK – which accounts for over 84% of the whole European market –, Germany, France and Nordic countries are experiencing strong growth and development in the P2P lending space with a number of homegrown startups starting to emerge as regional leaders.

Australia

Fintech losses blamed on rerating, (The Australian Business Review), Rated: AAA

DirectMoney, which writes personal loans, slid to 4.5c a share after coming to market last year at 20c via a backdoor listing. On Friday, the company unveiled a $5.7m non-renounceable capital raising at 4.2c a share on a one-new-share-for-every-two-held basis.

The raising, underwritten by Bell Potter, opens on July 11.

It follows a mixed ride for investors, with the stock exchange in February querying its financial position and DirectMoney subsequently unveiling a deal with Macquarie, which bought $5m of the company’s personal loans and took shares in the company in exchange for advisory services.

In May, DirectMoney revealed loan demand was outstripping funding as the company slowly gained traction for its personal loan fund for retail investors. In the interim, the company turned to two “large financial institutions” for funding facilities, signing a non-binding term sheet with one for $20m.

Part of the cash from the $5.7m raising will be used as upfront collateral for the funding facilities. “We’ve proven our ability to originate loans; that is difficult for some organisations and what we are now doing is establishing committed funding programs of sufficient size so we can leverage the assets we’ve built,” Mr Beaumont said.

DirectMoney has written $17.6m of unsecured personal loans up to $35,000 for three to five years. Revenue in the financial year to the end of May was $1.19m, compared to $435,513 in the six months to December 31.

DirectMoney chief Peter Beaumont yesterday defended the fintech company’s stockmarket listing and expressed disappointment over losses worn by shareholders, arguing there were many benefits and the sector globally had suffered a de-rating.

“We’re disappointed there were investors that came in at higher prices and have had capital losses at this point, but marketplace lending globally has experienced a resetting of valuations, whether it’s LendingClub in the US or others, since last year,” he said.

The inaugural Australian Fintech Awards regonised innovation in the finance industry, with OnDeck Australia and Commonwealth Bank (CBA) receiving the Fintech-Bank Collaboration of the Year Award. OnDeck entered the Australian market last year with CBA and online accounting software provider, MYOB, as distribution partners.

India

P2P players bank on institutional lenders for growth, (Economic Times), Rated: AAA

I-lend has stitched a partnership with Hyderabad-based non-banking finance company Star Finserve, becoming the first peer-topeer online lending platform to join hands with an institutional lender while several other players including MicroGraam, Faircent and LenDenClub are in talks for similar pacts.

“The cost of loan origination is going up steadily for NBFCs and banks, the number of successful applications is declining and through these partnerships the institutional lenders can cut down on incurring origination of loan and administration costs,” said VVSB Shankar, founder of i-lend.

Shankar said the decline in the number of applications could be attributed to several factors such as competition among institutional lenders, quality of borrowers or involvement of non-performing assets. The company’s loan book size is about `1.5 crore and lenders on the platform can opt for borrowers who pay 18-21% interest.

Peer-to-peer platforms have reported an increase in the number of high net worth individuals or HNIs they have attracted over the past six months. “HNIs and family offices are showing interest in the peer-to-peer space. Since there is a criterion for lenders to have an income of over `10 lakh, this is bound to happen. Our top lenders have invested more than `40-50 lakh each, with the highest being around Rs 60 lakh,” said Rajat Gandhi, founder of Faircent, which has a loan book size of Rs 6.5 crore.

Smaller players including LenDen-Club said they have also seen increasing interest from HNIs, specifically from Maharashtra and Gujarat, spending about Rs 15 lakh individually. Since retail investors are central to how such platforms function, the companies aim to firm up a select few partnerships with institutional lenders over the next one year.

China

Exit of P2P lenders from Shanghai office market poses a challenge, (South China Morning Post),Rated: A

The recent collapse and exodus of numerous peer-to-peer lending (P2P) companies in China after a government crackdown on fraud has rattled the Shanghai CBD office market and may “pose a challenge for landlords”, experts say.

In the second quarter of the year, supply spiked to a 10-year high, according to real estate firm Colliers International, as overall vacancy rates in the area increased 3.2 per cent quarter on quarter to 7.2 per cent.

Korea

8PERCENT: Men in 30s Major P2P Investors, (The Korea Bizwire), Rated: A

8PERCENT, a P2P (peer-to-peer) lending company, revealed on July 4 that 30-something men who live in metropolitan areas are their primary investors.

As of June 30, top P2P lending company 8PERCENT’s total accrued loans summed up to 26.6 billion won ($23 million), with a total of 8,283 investors investing 3.21 million won ($2800) on average per person.

The average age of the investors was 34.3, and more than 90 percent of the investors were between the ages of 20 and 40. 8PERCENT also revealed that 77 percent of the investors lived in metropolitan areas, and that 67.5 percent were male and 32.5 percent, female.

The largest investment made so far was 453 million won ($395,000) diversified into 1,115 different bonds.

“Until last year, 90 percent of investors were from metropolitan areas, but the portion from non-metropolitan areas increased to 23 percent this year. Investment from women also increased from the low 20s to 30 percent, and we’re seeing growth in the number of investors in their 50s as well,” said Kang Seok-hwan, chief marking officer of 8PERCENT.

Small credit loans of 24.2 billion won ($21 million) comprise more than 90 percent of the total investments. Out of the total amount, 13.4 billion won ($11 million) was loaned to individuals, and 10.8 billion won ($9.4 million) to corporations.

Besides credit loans, borrowers also obtained real estate mortgage loans of 2.4 million won ($2 million).

 

Author:

George Popescu