Over the last half decade, rates of account takeover have multiplied significantly. According to a PYMNTS.com report, account takeovers jumped 300% in 2017, and have been rising ever since. The trend was particularly pronounced in the lending space. Lenders lost $4 billion from account takeovers last year, according to Javelin Strategy and Research. In order […]
Over the last half decade, rates of account takeover have multiplied significantly. According to a PYMNTS.com report, account takeovers jumped 300% in 2017, and have been rising ever since. The trend was particularly pronounced in the lending space. Lenders lost $4 billion from account takeovers last year, according to Javelin Strategy and Research.
In order to combat this type of fraud with innovative technology, lenders must learn what account takeover entails.
Online Lending Fraud: What Is Account Takeover?
Account takeover is a form of financial identity fraud. It’s when a fraudster uses a victim’s identity and financial accounts to fraudulently secure a loan and then steal the funds. Fraudsters apply for a loan in the victim’s name, transfer the funds into the victim’s account, withdrawal the money, and then disappear.
Account takeover is riskier than other forms of identity fraud, but it comes with several advantages for fraudsters who want instant gratification. The fraudster does not need to build a fake identity or financial infrastructure to commit the fraud. The fraudster is essentially taking over a person’s identity, pre-existing accounts, and credit history to illicitly funnel money into a safe haven.
Account takeover is facilitated like most other kinds of identity fraud. A bad actor obtains sensitive information, such as bank account numbers, usernames and passwords, and other key credentials from personal contacts, malware, phishing, or other violations of a victim’s privacy. The fraudster takes out a loan in the victim’s name, and routes the funds into the victim’s account.
Once the funds are in the victim’s account, the fraudster moves the funds into an intermediary account by circumventing bank security protocols. These circumvention methods include SIM swaps, associating new phone numbers with the bank account, SMS-grabbing malware, cloning phone identifiers, and other methods.
After the money is in the intermediary account, the fraudster cashes out the funds by making ATM withdrawals, purchasing cryptocurrencies, transferring funds to online payment platforms, or buying e-commerce goods, among other methods. The fraudster might try to hide the origin of the money by employing “mules,” or agents who transfer illegally obtained money, either wittingly or unwittingly.
Combating Account Takeover with Technology Solutions
Account takeover poses unique challenges to online lending, but novel technologies can help lenders fight back against this form of fraud.
ThreatMetrix by LexisNexis Risk Solutions provides data that detects suspicious behavior or compromised devices before fraudsters can initiate account takeovers. ThreatMetrix’s Digital Identity Network analyzes millions of transactions across billions of devices for thousands of leading global businesses. This data allows organizations to verify that customers are who they say they are.
RSA Web Threat Protection uses behavioral analytics to separate fraudulent activity from legitimate transactions. The solution tracks a large variety of fraud threats, such as new account fraud, fraudulent money transfers, password guessing, credential harvesting, mobile and web session hijacking, and other behaviors that suggest potential account takeover attempts.
Fraud.net has an award-winning AI-powered suite of enterprise tools to manage risk for clients such as online lenders. Fraud.net’s AI, analytics, and data mining platform can quickly identify common schemes and attack methods, including account takeover. The suite’s ‘early-warning’ monitoring, powered by multi-dimensional risk analytics, helps to uncover account takeover fraud before it happens.
Account Takeover: A Manageable Issue With the Right Technology
Account takeover is one of the most expensive and fastest growing forms of online lending fraud. However, with the right solutions, lenders can combat account takeover and minimize the negative impact it has on profit margins, platform security, public image, and the customer experience.
Author:
Kevin Bartley is the content manager at Ocrolus.
About Ocrolus:
Headquartered in NYC, Ocrolus is an intelligent automation platform that analyzes financial documents with over 99% accuracy. By eliminating manual reviews, Ocrolus empowers companies to reinvest human capital and automate processes with industry-leading speed and accuracy. Ocrolus services hundreds of customers in the financial sector and analyzes millions of data points every day. The company has raised over $30 million in venture capital, backed by Oak HC/FT, FinTech Collective, Bullpen Capital, and QED Investors, among others. For more information about Ocrolus, visit www.ocrolus.com.
News Comments Today’s main news: Prosper launches HELOCs with BBVA. LendingClub beats profit estimates. Pennsylvania fines SoFi subsidiary $110,000. Kabbage partners with GoDaddy. Zopa makes banking debut. RateSetter rolls out investor self-certification. Today’s main analysis: LendingClub Q3 earnings. International P2P lending volumes. Today’s thought-provoking articles: The hot stuff at Money 2020. China’s slowing economy. International […]
Prosper launches HELOCs with BBVA. This is one of the more prominent bank-fintech partnerships we’ve seen to date. It looks like a bow over the stern of Figure.
Kabbage, GoDaddy partner on providing capital to SMBs. This is an interesting partnership, and it should be a boon to Kabbage’s already thriving business. Partnerships, the right partnerships, have a way of propelling a business forward and Kabbage understands this.
China’s economy is slowing. I can’t help but think a part of this is due to the crackdown on P2P lending, but there are other factors–such as the U.S. trade war. Will the economy go so low it crashes?
It was last November when we first heard that Prosper had plans to expand their offerings from personal loans into HELOCs. In 2018 David Kimball noted that they would be partnering with banks on the new product and loans would be available both directly through Prosper.com and also as a white-labeled offering. Now we know their first bank partner is BBVA.
Online lending pioneer LendingClub Corp (LC.N) beat analysts’ estimates for third-quarter profit on Tuesday and forecast current-quarter largely above estimates, sending its shares up 4% in after-hours trading.
Transaction fees jumped 17% at the company, which helps connect customers looking for loans to individuals or institutional investors, such as banks, through its online marketplace.
Loan originations soared 16% to $3.35 billion in the third quarter, with total revenue rising 11% to $204.9 million.
Revenue also topped records at $204.9 million, up 11% year over year. Losses narrowed to a GAAP net loss of just $400,000 compared to the prior year period where they lost $22.8 million. Adjusted net income came in at $8 million, up from a loss of $7.3 million in the prior year period.
A subsidiary of Social Finance Inc. has agreed to pay a $110,000 fine in Pennsylvania after operating as a mortgage servicer for nearly a year without the required state licensing.
SoFi Lending Corp. is one of several mortgage companies that has been hit recently with enforcement actions in Pennsylvania after a change in state law in December 2017.
The new law required mortgage servicers that were operating in Pennsylvania to be licensed. Companies had until June 30, 2018, to apply without being penalized for unlicensed activity.
SoFi and Prosper are two companies that offer personal loans with competitive interest rates and no prepayment penalties. However, there are some major differences between the companies that could affect your decision on which one to choose.
Attendance was at record levels. Here’s our view on the areas attracting the most attention at Money 2020:
Lending-as-a-Service: lenders that enable non-banks, banks and credit unions originate loans (e.g., loan origination software, digital experience, bank workflow software, etc.). Examples: Better, nCino, Happy Money (backed by CUNA Mutual), Alchemy, Splash Financial, Blend, Roostify
International Lending: Non-banks expanding access to credit, particularly in the LatAm markets. Examples: CrediJusto (Mexico SME), Addi (Colombia POS), Nova Credit
The healthy Friday jobs report supports the ‘wait and see’ Fed view (although it is a backward looking indicator). The report indicated growth in employment of 128K in October and a tick-up in unemployment to 3.6%.
The partnership: Kabbage’s online lending platform is now available to GoDaddy’s U.S. customers to access a business line of credit in minutes.
Customers can access flexible lines of credit of up to $250,000 in minutes after filling out a short application.
Existing GoDaddy customers can get $100 off their first month’s fees
“We know that a lack of capital for marketing and other core activities remains a major roadblock to accelerate growth. Our partnership with Kabbage is key in our ongoing mission to empower our customers and provide them with the resources they need to fuel their business needs,” said Melissa Schneider, GoDaddy’s vice president of global marketing operations.
Ron Suber is one of the better-known names in the Fintech sector. Originally, Suber’s role as the President of the marketplace lending platform Prosper Marketplace brought Suber’s name to prominence as the Fintech emerged as an early leader in the US online lending market. Since departing Prosper’s management team several years ago, Suber has been associated with multiple Fintech’s as an investor, advisor or, perhaps, a board member. Today, Suber has invested in more than a dozen Fintech companies
CrowdStreet, a Portland-based commercial real estate crowdfunding startup, has raised a big new funding round, with a twist. Instead of relying solely on venture capital investors, the startup turned to its own community of real estate investors and developers to raise the bulk of the money for its Series C round.
The result: CrowdStreet this morning announced it has raised $12 million, primarily from the users of its platform, bringing lifetime funding to $25 million.
Robert Stiles, former chief financial officer at LendingHome, joined as CFO/COO. Londa Quisling was named chief technology officer, after serving as chief product officer at Treehouse. And John Havens, previously of BNY Mellon, joined as vice president of capital markets.
Many consumers do not have funds readily on hand to make big purchases like electronics or furniture and prefer turning to instant loan apps like Affirm, a point-of-sale installment lender established in 2013, rather than going into debt with a bank or credit card provider. Customers may feel thankful to be able to pay off a purchase over a year, but not at the cost of losing their identities to fraudsters or scammers.
A new digital banking platform promising to help reward people for positive financial behaviour has closed a $3.5 million seed round led by Accomplice Ventures and Walkabout Ventures nd joined by PayPal founder Max Levchin’s startup studio.
According to Moody Analytics, an average person under the age of 35 saves -1.8% of their income. HMBradley is promising to tackle this by increasing awareness and rewarding people for saving more.
Add HMBradley to the list of Los Angeles-based startups looking to shake up the world of high finance typically dominated by East Coast giants with names like JPMorgan Chase, Citigroup, Morgan Stanley and Goldman Sachs.
Minus the CEOs at the top-10 largest banks in the U.S., whose main concern is probably figuring how to deal with their trillions of dollars’ worth of assets, nearly the entirety of bank CEOs outside that tier have one primary concern, according to Bruhnke: How do they grow deposits? Meanwhile, he noted, bank customers also have a singular desire: How do they make the most money on the funds they have deposited?
Goldman Sachs’ upstart digital consumer bank, Marcus by Goldman Sachs, will help boost the reputation of its parent company, one of its leaders told Yahoo Finance recently.
The Office of the Comptroller of the Currency (OCC) recently faced another setback in its attempt to issue a special purpose national bank charter tailored to fintech companies (fintech charter). A federal district court in New York held that the OCC does not have the authority to grant charters to companies that do not accept deposits. The ruling is a blow to the OCC’s efforts to provide new avenues for innovation in financial services. The fintech charter would allow fintech companies, which do not accept deposits like traditional banks, to benefit from the same preemption of state laws and licensing requirements as national banks.
The other is Varo, which initially considered going for an OCC special purpose charter but then decided to apply for a full-service charter. Varo has preliminary approval from OCC and awaits approval of its FDIC deposit insurance application. Below, we look at how Lending Club, the online marketplace consumer loan platform, is exploring chartering options.
The Trading APIs service provides one Unified API that has integrated multiple crypto exchanges. Thus, users will now be able to link multiple exchange accounts to their profile, collect data and execute their portfolio management trades from a single point.
Crypto APIs is used by thousands of developers to create products like Crypto exchanges, Crypto wallets, Trading bots, Crypto PSP, Arbitrage solutions, Crypto Lending solutions and many more.
Brex, the fintech credit card startup, is teaming up with Bank of the West, the subsidiary of BNP Paribas, to roll out a co-branded credit card. It marks the first co-branded credit card to come out of Brex which caters to startups and entrepreneurs.
In one instance, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency angered borrower advocates by siding in court with a high-cost business lender. In the other, the Consumer Financial Protection Bureau signaled its intention to move forward with a small-business lending rule that has languished for nine years amid sharp disagreements over its proper scope.
On the global fintech scene, the US has been amongst the top leaders, accounting for 57% of the fintech market in 2018, according to a Mordor Intelligence research.
Fintech continues its momentum this year, with investment in US fintech companies surging to US$12.7 billion in the first half of 2019. That represents a 60% increase in value of deals and signals a trend of larger deals in already the world’s biggest and most active fintech market, according to data from Accenture.
Legitimate Shoppers Take Advantage of Deals, Outpacing Seasonal Growth in Fraudsters (Riskified Email), Rated: A
Elevate Credit, Inc. (NYSE: ELVT) today announced that its Interim Chief Executive Officer, Jason Harvison, and Chief Financial Officer, Chris Lutes, will attend the Stephens 2019 Nashville Investment Conference on November 14th at the Omni Nashville Hotel. Mr. Harvison and Mr. Lutes will be available for 1×1 meetings with investors.
Zopa, one of the UK’s three largest names in peer-to-peer lending, is to launch its first foray into banking after receiving partial authorisation last year.
RATESETTER has begun asking its customers to confirm their investor status ahead of the Financial Conduct Authority’s (FCA) new marketing and disclosure rules that come into effect on 9 December.
UK business lender nearly doubled its lending last year to £330m, helping the startup announce it has now reached a cumulative lending milestone of over £1bn.
The news comes as iwoca’s headcount has jumped 50% in the last 12 months, boosted further by the £10m BCR grant which the company secured in August to further expand its customer base.
Year-on-year growth has fallen by 0.2 percentage points per quarter this year, from 6.4 per cent in the first quarter to 6.2 per cent in the second quarter and to 6 per cent in the most recent quarter.
Recent data showed that the number of online P2P platforms plummeted to just 427 – a 59 percent drop compared to 2018-end. The total outstanding loan value and the number of borrowers also dropped correspondingly by 49 percent and 55 percent, respectively.
China is making rapid inroads towards reducing peer-to-peer lending risk to meet the 2020 target deadline but expects to keep alive the few remaining with strong fintech expertise and shareholder support.
China has been warned to avoid the same mistakes with blockchain that it made with its peer-to-peer lending, as the government vowed a “thorough revamping” of the controversial lending platforms as part of a continuing battle against financial risk amid the domestic economic slowdown and the trade war with the US.
From adopting unique business models to routing investments through Singapore, Chinese lenders are trying every trick in the book to win the Indian fintech-lending space. But getting money to India, deploying it, and dealing with stringent KYC norms is easier said than done.
The wave of closures of P2P platforms in China in the summer of 2018 garnered national attention. The latest blacklist for P2P lending published by “P2PEYE.COM” ( shows that as of the end of March 2019, the number of problematic P2P platforms reached 5,388.
Klarna, a popular BNPL provider used by over 4,000 UK retailers, offers three types of BNPL service:
delayed payment up to 30 days after purchase. This incurs no interest or fees, providing the payment is made within the timeframe.
instalment options whereby the purchaser can pay in three equal, interest-free payments every 30 days.
flexible financing, which spreads the cost of larger purchases into manageable monthly payments. The term for this repayment option ranges from six to 36 months.
On Wednesday 6th November at 05:00 CEST, we will perform an important technical maintenance which will prevent customers from seeing some order details within the Klarna app for a short time. We expect this maintenance to take approximately 15 minutes, after which time full details of orders will become accessible again.
Chinese firms have raised just $3 billion from American exchanges so far this year, less than a third of the 2018 total. In the last week of October, however, half a dozen companies filed for initial public offerings in New York, bringing the total backlog of Chinese floats to 24, according to data from Refinitiv. Rising trade uncertainties, tougher listing requirements on the NASDAQ and an upcoming U.S. presidential election have sparked fears that 2020 may prove even more volatile for debutants.
SMEs make up 97 per cent of Vietnam’s enterprises, but only account for 22 per cent of total bank lending. To meet a US$21 billion SME financing gap in the country, Validus Vietnam will partner corporates to provide SME growth financing to their vendors and subcontractors.
Joey Kim, chief executive officer at PeopleFund, discusses what his company does, the growth drivers for his company, his latest funding round, P2P lending in South Korea, regulation, the possibility of consolidation in the industry and how the Korean economic headwinds are impacting his business. He speaks exclusively on “Bloomberg Daybreak: Asia.”
Vietnam’s fintech industry is expected to reach US$7.8 billion in revenue by 2020. A rising middle class, growing internet usage, and a young population present a great combination for the fintech sector to thrive. An estimated 120 companies and brands cover a wide range of services, from digital payments to wealth management and blockchain.
Instead of competing against each other, banks and financial technology (fintech) companies are joining hands and combining their resources to tap into the country’s growing financial services market.In an effort to keep up-to-date with recent technology and stay relevant amid the latest changes in financial services, many banks have signed partnership deals or bought into nimble start-ups as an alternative to building costly technology projects.For the banks, the logic behind a partnership with fintech companies is simple: It gives them the opportunity to reach a wider customer base, unlock their technological capabilities without having to buy one of their own and penetrate the country’s unbanked population — all without having to spend too much money.“We are partnering with 12 fintech companies from peer-to-peer [P2P] lending and payment apps to SME [small, middle, enterprise]…
Temenos has concluded the LatAm results for its annual retail banking survey, conducted by the Economist Intelligence Unit (EIU). The survey titled ‘A whole new world: How technology is driving the evolution of intelligent banking in Latin America’ stated that 35% of retail bankers prioritize investments in digital technologies along with cost-cutting or margin improvement for furthering their financial inclusion goal.
News Comments Today’s main news: Judge says OCC cannot issue fintech charters. Kabbage ends Q3 with nearly $100M in revenue. Funding Circle shares up over 10% while loans under management up over 30%. Balboa competes $409M securitization. FundingSecure enters administration. Today’s main analysis: Q3 bank earnings. Today’s thought-provoking articles: 2019 financial fears infographic. Why there […]
Judge says OCC can’t issue fintech charters. This is not a huge surprise, but the fight is not over yet. The OCC still has an appeal option. This could go to the Supreme Court.
Kabbage almost reaches $100 million in revenue in Q3. Kabbage has grown into one of the major players in SMB lending. The number of loans issued is growing, and that means revenues are growing–as long as the economy remains strong.
Q3 bank earnings, Venmo and AmEx cards. Anyone who thinks fintech is not making a dent in traditional banking needs to read this. Fintech and alternative lending platforms are forcing banks to change their business models, or go out of business.
2019 Financial Fears Survey. 78 million Americans refer to their finances as a “horror show.” People are most fearful of medical bills, but credit card debt and car loans also make the list. Oh, and they’re afraid the economy will turn sour, but that’s no surprise.
Financial technology unicorn Kabbage finished the third quarter with just shy of $100 million in revenue as the company continued to grow its small-business lending platform.
The decade-old company told MarketWatch that it generated $99.4 million in third-quarter revenue as loan originations ticked up 43% on a year-over-year basis. The company said it extended $715 million in loans to customers during the quarter.
Kabbage, a US fintech backed by Softbank which uses AI-based algorithms to help work out the terms of small business lending, is launching a payments service which it says will cut the time it takes small businesses to get paid from 90 days to 24 hours.
Yesterday, a federal judge ruled that the OCC does not have the legal authority to issue bank charters to non-banks. Judge Victor Marrero ruled on the fact that a clause in the National Bank Act’s business of banking requires that only firms which take deposits can receive a national bank charter.
Fintech firms continue to face a murky path into the banking system after a federal court ruling that threw out the Office of the Comptroller of the Currency’s special-purpose charter, observers said.
The charter has already been on unsteady ground. No firm has yet applied with the OCC facing legal challenges. But the decision Monday out of the U.S. District Court for the Southern District of New York shines an even brighter light on potential alternatives for fintech companies seeking a national licensing solution.
Investors Bancorp has formed an alliance with a subsidiary of global online small business lender On Deck Capital to use its loan origination platform.
In striking down the OCC’s interpretation of Section 5.20(e)(1), Judge Marrero reasoned that the National Bank Act “unambiguously requires that, absent a statutory provision to the contrary, only depository institutions are eligible to receive national bank charters from the OCC.”
Kabbage Heads to Court (Again)
Non-bank marketplace lender Kabbage joins the growing number of online lenders who are defending Madden and “true lender” claims in New York’s federal courts. Unlike prior lawsuits, such as those recently filed against Capital One and Chase Bank,2 the putative class action against Kabbage targets small business loans, not credit card or other consumer loans.
PayPal is launching a Venmo credit card (expected 2H 2020). Venmo’s credit card launch follows a flurry of launches from Avant, Upgrade, Ollo, Brex and others in recent years. PayPal has a unique edge – the breadth of customers on its payment network. Relatedly, PayPal and Synchrony extending their overall 15-year consumer credit relationship.
Bank Earnings Season Underway
JPM
Industry leading ROE of 18% driven by consumer banking ROE 30%+ [!!]
Source: PeerIQ, JPMorgan Chase & Co
Citi
Strongest 35% YTD share price gain in KBW index (stock trading below book value)
ROE in the 12% range, profit drops 26%. ROE will be low for the foreseeable future while GS pours billions in investing in building a consumer franchise
CEO David Solomon: “In three short years, we have raised $55 billion in deposits on the Marcus platform, generated $5 billion in loans, and built a new credit-card platform and launched Apple Card,” adding “which we believe is the most successful credit card launch ever.”
Bank of America
Profits up 8% YOY; NIM robust at 244 bps just shy of recent peak of 251 bps
#1 in mobile banking and online banking. Digital banking users have increased by 5% over the past year and number of active mobile users has increased by almost 11%. – Number of branches has decreased by 1.9
Online lender Balboa Capital successfully completed a $409 million asset-backed securitization (ABS) of small and mid-ticket equipment loans and leases, its sixth and largest transaction to date.
A Capital One survey conducted at ABS East 2019, a conference convening professionals from across the asset-backed securities (ABS) industry, found more than one-third (38 percent) of professionals plan to engage with new financial partners and implement new technologies, over the next 12 months, to prepare for the changing economic landscape. Additionally, 34 percent of respondents plan on reviewing or reshaping their credit and underwriting risks over the next 12 months.
Of the various challenges facing the industry, ABS professionals elected that regulatory uncertainty (22 percent), increased credit risk (18 percent) and increased competition (18 percent) pose the greatest challenges for their businesses over the next 12 months. Fluctuations in interest rates was listed as the greatest challenge for 15 percent of respondents.
You can get in-person service and online loan assistance for conventional, FHA, VA and refinance loans, as well as first-time homebuyer education.
2. Best for Online Lending: Quicken Loans
There are many reasons to go with an online lender — and a great reason is because you can get pre-approved from the comfort of your sofa. Quicken lets you check mortgage rates among lenders on its site and choose the best option for you.
IIRR Management Services (IRM) claims to be one of the largest crowdfunded real estate investment firms in the world. IRM is owned by RREAF Holdings and iintoo Investments. The company recently took over management of Realtyshares’ portfolio – once a prominent entrant in the real estate crowdfunding sector that unexpectedly collapsed in 2018 stunning the industry. Today, IRM claims over $1.5 billion in combined assets salvaged from RealtyShares.
CrowdStreet indicates a total average annual return rate of 25.5% across all fully realized deals, according to the company website. The company believes markets are stronger when they are more accessible, transparent, and efficient.
Since CrowdStreet launched in 2014, the company has posted over 360 projects on its Marketplace and has raised more than $800 million from thousands of investors, he said.
The platform allows accredited investors to diversify their portfolios by investing in individual projects or funds for as little as $25,000.
Finitive, a NYC-based financial technology platform providing institutional investors with direct access to alternative lending investments, closed a $2m venture debt.
Galen and Larsen, who built the online lender E-Loan together, are both interested in broadening the perspectives of Silicon Valley executives who might otherwise be detached from ways to make an impact on the rest of the world.
Fundbox, the B2B payments and credit network designed to facilitate and accelerate B2B commerce at scale, announced that the company ranked #92 on the 2019 IDC FinTech Rankings.
According to a study published online in the Journal of Behavioral and Experimental Finance in June, borrowers unconsciously could be manipulated into choosing a more expensive loan, depending on the calculator’s default settings.
Shares in peer-to-peer lender Funding Circle climbed over 10 percent after its loans under management soared 31 percent to £3.7bn, but the company cautioned of “an uncertain economic environment”.
It said loans under management had grown to £3.7bn compared to £2.8bn the year previous.
Funding Circle reported that loan originations were up from £1.6bn in 2018 to £1.8bn in 2019.
Jonathan Avery-Gee, Edward Avery-Gee and Daniel Richardson at CG & Co have been appointed administrators of the company and are working closely with the FCA.
Stuart Law, CEO at Assetz Capital, claimed that smaller P2P lenders were “clearly struggling to keep up”.
Starling Bank, the UK digital bank, has raised £30 million in a new funding round. Merian Chrysalis Investment Company Limited is leading the round with an investment of £20 million, while Starling’s existing investor, JTC, has added a further £10 million.
Oodle Car Finance has appointed Andrew Lawson as chief product officer.
He joins from Zopa, the world’s first peer-to-peer lender, where he spent five years as chief product officer responsible for business growth during a period of expansion that saw the brand become the UK’s largest online open market lender.
Celsius Network will begin supporting Tether (USDT), the largest stablecoin in the market, in its interest-earning wallet. That will enable users to leverage their holdings in order to receive a passive income.
Klarna’s range of flexible payments are available to shoppers online at Wayfair.co.uk, with additional new features on Wayfair.de. Joining Klarna’s partner list, Wayfair customers across the UK now have control over how and when they pay for their purchases, with payments options such as Pay later and Pay in 3.
Six offers have been made for welsh education reseller Gaia, which fell into administration earlier this year.
A number of lenders were also revealed to be owed hundreds of thousands of pounds, with White Oak UK and Funding Circle owed £703,000 and £500,000 respectively. HMRC is owed £866,148.
Capitalise.com, the business funding platform for accountants, has today announced a partnership with small business lender, iwoca, and a high street bank, to launch Instant Offers. The partnership enables accountants to receive instant quotes on funding applications for their clients. Accountants benefit from offering their clients exceptional customer service with instant quotations and eligibility on suitable financial products whilst lenders can onboard high credit quality businesses, faster.
I first wrote about the Chinese p2p lending industry later that year and introduced the west to CreditEase, the company that was the largest p2p lending platform in the world. Over the next couple of years the industry thrived with thousands of platforms launching and the total loan volume skyrocketing to over $150 billion in 2015, which was four times the loan volume of 2014.
China’s Biggest Ever Financial Scandal
We got the first inkling that something was not quite right when China was rocked by the biggest financial scandal in its history. Ezubao, one of China’s largest p2p lending platforms, collapsed as it was revealed the business was nothing more than an elaborate Ponzi scheme. Around 900,000 investors collectively lost $7.6 billion in what was the second largest Ponzi scheme the world had ever seen (Madoff being the largest).
There Will Be No LendIt China in 2019
We have held LendIt China every year since 2016 in Shanghai and I am sad to report that in 2019 there will be no event. While we have expanded beyond online lending it still represented a significant part of our business in 2018 but given the recent challenges we expect no lending companies will be interested in speaking, sponsoring or even attending this year. So, we made the difficult decision to cancel the event. We will regroup in 2020 and hopefully will be able to bring our unique event back to China.
The newly imposed rules by the China Banking and Insurance Regulatory Commission (CBIRC) will mainly be targeting online P2P lending companies. These companies often entail high-risk lending activities that result in massive defaults, suicide, deaths, and illegal debt collections.
Since 2017, the country has had an estimated $692.8 billion in bad loans. The sector has tried to dispose of these bad loans as best they can through different methods.
The draconian cleanup campaign of China’s scandal-ridden peer-to-peer (P2P) industry has led to a three-year implosion that has put the sector almost back to where it was in 2014.
The number of functioning P2P lending platforms fell to 646 in September, a decline of nine compared with August and the lowest since early 2014 when the industry was booming, data compiled by Wangdaizhijia, an online lending research portal, show. The scale of the drop has been dramatic — at its peak in November 2015, the sector had more than 3,600 platforms.
Roostify, which powers the digital mortgage platforms of JPMorgan Chase, TD Bank, Guild Mortgage, HSBC Bank USA and more, is plotting an expansion in the U.S. and internationally thanks to a new injection of funding from Santander Group and others.
In the countries colored in black the income tax rate is applied on interest earned on p2p lending investments. That means the individual rate of taxation depends on the other and overall income of the investor. For example in the UK the tax bands are 20%, 40% and 45% dependent on overall income. In Ireland tax bands are 20% and 40%.
Days after it was announced that banks across the world are currently in a ‘do-or-die dilemma,’ Accenture’s 2019 Global Payments Survey reveals that 60 percent of the participants believe they will lose up to 15 percent of payments revenue – $88 billion – in the next three years after being displaced by emerging, competing financial services players.
38 percent of respondents said that big technology companies pose a competitive threat and 32 percent of those surveyed feel the same about fintech firms, which makes sense with the latter attracting nearly $11 billion through over 800 deals between 2016 and 2018.
Indonesia’s growing financial technology (fintech) companies have called on the government and legislators to issue a new law to ensure fair business for and better protection of both the industry and consumers. The Indonesian Fintech Lenders Association (AFPI) said that fintech companies, especially those involved in peer-to-peer (P2P) lending or online lending, needed a stricter regulation to ensure that all the stakeholders, such as borrowers and investors, would receive better protection.
According to one recent report, “Indonesia’s fintech industry is in the midst of a period of significant growth. P2P lending recorded a triple-digit increase in 2018, while e-payment services have grown more than six-fold since 2012, prompting a surge of new foreign investment into a vibrant and increasingly diverse start-up community.”
There are 831 financial technology startups headquartered in or operating in Canada, according to data collected by Fintech Growth Syndicate, yet only a handful of venture capital funds specializing in the region and sector.
Luge Capital, a fintech and AI-focused venture capital fund headquartered in Montreal and Toronto, is looking to close that gap. The firm has raised $85 million for its debut fund and plans to make seed investments as small as $150,000 and as large as $2 million.
News Comments Today’s main news: KBRA assigns preliminary ratings to SoFi Consumer Loan Program 2019-4 Trust. Stripe debuts corporate credit cards. College Ave completes $300M securitization of private student loans. Yirendai issues earnings results. Today’s main analysis: Deregulating Fannie and Freddie (A MUST-READ REPORT FROM THE U.S. TREASURY). Today’s thought-provoking articles: Average FICO scores hit […]
Deregulating Fannie and Freddie. The treasury department has issued a report on reforming the housing sector. This is an important report, which includes a section defining the “limited role for the federal government.” It discusses single-family mortgage lending, multifamily mortgage lending, protecting taxpayers against bailouts, and promoting competition in the housing finance system. This could be one of President Trump’s most significant achievements, with implications for online lenders. A must-read.
Average FICO score hits all-time high. This likely means a diminished market share for alt lenders who target subprime markets, but for alternative lenders who use FICO scores it can be good news.
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by SoFi Consumer Loan Program 2019-4 Trust (“SCLP 2019-4”). This is a $465 million consumer loan ABS transaction.
Preliminary Ratings Assigned: SoFi Consumer Loan Program 2019-4
OnDeck today announced that Chairman and CEO Noah Breslow will be a keynote speaker at the LEND360 Conference in Dallas, Texas on Thursday, September 26, 2019. Mr. Breslow will discuss industry trends in alternative data and how they are improving many aspects of online lending to small businesses.
Last week, when the popular payments startup Stripe made some waves with its first move into money lending through the launch of Stripe Capital, we reported that the company was also soon going to be launching a credit card. Now, that news is official. Today, the company is doubling down on financing with the launch of corporate cards for business customers.
Student loan marketplace, College Ave Student Loans, announced on Tuesday it has completed a $300 million securitization of private student loans, its third securitization and largest to date. According to College Ave, the transaction was oversubscribed attracting a broad and diverse group of repeat investors and new participants. Barclays and Goldman Sachs were joint lead underwriters on the transaction with Barclays serving as structuring agent and sole bookrunner.
For the first time, the average national credit score has reached 706, according to FICO, the developer of one of the most commonly used scores by lenders.
U.S. consumer borrowing swelled in July by the most since late 2017 as Americans carried larger credit-card balances to fund both everyday and online purchases.
Total credit rose by $23.3 billion from the prior month, exceeding all estimates in a Bloomberg survey of economists, Federal Reserve figures showed Monday. Revolving debt outstanding increased by $10 billion, also the most since November 2017, while the growth of non-revolving credit was little changed from a month earlier.
Global financial service platform Kabbage announced this week the launch of its new Small Business Revenue Index. According to Kabbage, the index has two million live data connections the platform maintains across its customer base of more than 200,000 small businesses.
The companies that I view as pioneers in this space are Kabbage and OnDeck.
Although Kabbage and OnDeck were early to small business lending there are many other names in this space with varying models and scale including Funding Circle, Streetshares, Fundbox, BlueVine, Biz2Credit, Fundation and Credibly to name a few. LendingClub also has a small business lending operation but they primarily work with partners Funding Circle and Opportunity Fund today to originate these loans.
The Challengers of Small Business Lending
Probably the most recognizable name is PayPal and the Working Capital product which, according to deBanked, has surpassed OnDeck in small business lending volume.
Numerated, the loan technology company that incubated inside Eastern Bank and spun off on its own in May 2017, has raised $15 million from bank investment fund Patriot Financial Partners. Existing investors Venrock, Fintop Capital and Hyperplane also joined the round.
TBF Financial purchased nearly $60 million in non-performing loans from a major online small business lender in recent transactions, CEO Brett Boehm announced today.
TBF bought the pools of post-charge-off loans as the highest bidder in transactions arranged through multiple brokers. In most cases, the company purchases directly from alternative lenders, equipment leasing companies and banks.
Total population 17,321
Median individual income $39,045
Median home value $674,600
Affordable housing costs for a median income earner $911
Calculated mortgage payment for a median priced home $2,767
Median rent payment $1,441
Home affordability deficit -$1,856
Rent affordability deficit -$530
The DeFi trend is accelerating and gaining acceptance, with Coinbase joining the fray. The leading brokerage has created the Coinbase Bootstrap Fund, to boost DeFi projects. Coinbase will invest in two projects, the Compound crypto lending scheme, and the dy/dx crypto derivative exchange.
You might not have $30,000 saved up to buy a rental property right now, but do you have $500? The beauty of REITs like DiversyFund is you can start investing for the amount of money you might drop on a new pair of shoes.
There are public and private REITS as well as funds classified as real estate crowdfunding. Compare your options and find the best one that works for you.
Real estate investment platform PeerStreet announced on Tuesday it won first place in CRETech’s 2019 Real Estate Tech Awards (RETAs for the Information & Intelligence – Crowdfunding category.
Balboa Capital, an online lender that specializes in equipment financing and small business loans, hired 125 new employees during the first six months of 2019 to accommodate the company’s rapid increase in new business and acquisition of several new strategic partners.
The digital revolution has had a huge impact on the way new and small companies are financed – and crowdfunding has been at the forefront.
Initially, crowdfunding brought great optimism that it would have a “democratising effect” on finance. On the one hand it would enable entrepreneurs excluded from traditional sources of finance to attract funding. And, on the other, it would provide new opportunities for people with even relatively modest amounts of money to invest. For example, private investors looking for higher returns than those available with high street banks have been attracted to various lending platforms – also known as peer-to-peer (P2P) platforms.
Finance tech provider Sonovate is looking to expand internationally and deploy more working capital to SMEs and mid-market businesses after raising £110 million, reports Jane Connolly.
Over three-quarters of commercial finance intermediaries in the UK expect the number of loans they broker to increase after Brexit, with more than half saying the number will rise “by a lot”.
In July Berlin-based online lender Spotcap asked 132 UK brokers, accountants and advisers about the future of SME finance in the UK, the results of which it published today as part of a report entitled The State of Commercial Finance in the UK.
FIRMS should prepare for the possibility of a no-deal Brexit, says the Financial Conduct Authority (FCA), as it launches a dedicated helpline for businesses.
The City watchdog, which oversees the peer-to-peer lending market as well as the rest of the financial servcies sector, says firms who have not prepared appropriately for the UK leaving the EU without a deal may see an impact on their business.
REGULATORY consultancy Bovill has reported a steady stream of interest from new entrants to the peer-to-peer lending market, particularly from overseas firms.
Brown attributed the slowdown to the fact that P2P is a more mature market, meaning there was “less of a gold rush” for new players.
Swedish fast-fashion giant H&M has extended its partnership with payment provider Klarna to the UK market, offering Brit shoppers the option to ‘buy now, pay later’.
Digital Risks is an insurance provider for small and medium-sized digital businesses, including cover for specific threats like commercial legal protection, cyber security, management liability, employers liability, public liability and professional indemnity.
While CyberSmart is a platform for SMEs to identify digital weaknesses and achieve their Cyber Essentials Certification, the government-backed accreditation for companies looking to protect against cyber threats.
Yirendai posted its earnings results on Tuesday, September 3rd. The technology company reported $0.24 earnings per share (EPS) for the quarter, missing the consensus estimate of $0.48 by ($0.24), Morningstar.com reports. Yirendai had a return on equity of 32.93% and a net margin of 15.30%. The firm had revenue of $322.89 million for the quarter.
Chinese consumer financing platform LexinFintech announced on Wednesday it has entered into a convertible note purchase agreement with PAG issue and sell convertible notes in an aggregate principal amount of $300 million through a private placement.
Beijing-based online lender Yirendai (NYSE:YRD) and Shanghai-based Paipaidai, or PPDAI Group (NYSE:PPDF), shares have been pummeled down to their lowest levels in the past year. Yet aside from receiving credit lines from large Chinese institutions amid China’s crackdown on fraud lending in their industry, both lenders appear to remain in a healthy state.
PPDAI — the older and bigger of the two lenders — came out strong in its recent quarter, beating earnings expectations. The $1.2 billion online lender reported it had 29% year-over-year growth in loan origination volume to $3 billion, compared to just 1.6% growth a year earlier.
Chinese peer-to-peer lending platform Hexindai (NASDAQ: HX) announced on Tuesday its support for the decision by industry regulators to include the country’s P2P platforms in the central bank’s credit system. The online lender reported that it believes this as a positive move for the P2P industry.
The president of Germany’s powerful savings banks association, community lenders that dominate the country’s shopping streets, joined Dutch bank ING yesterday in criticising the ECB’s loose monetary policy.
Its 50 million customers have increased their savings by almost 5% since last year to €965bn which is roughly the size of the Dutch economy. With lending amounting to about €860bn, the banks are left with a chunky unused surplus.
Fintech Europe, Plug and Play’s fintech-focused innovation platform based out of Frankfurt, Germany, announced today the eight startups selected for its fourth batch. The platform has grown its partner base to 11 Financial Institutions since its inception in May 2018. Together with Deutsche Bank, TechQuartier, BNP Paribas, Nets Group, UniCredit, Aareal Bank, Abanca, Danske Bank, DZ Bank, Elo, and Finablr, it runs two 12-week innovation programs a year.
CashDirector SA is a technology company providing SMEs and banks with a Digital CFO integrated with on-line banking, helping with SMEs manage cash flow and accessing financing.
European banks are spending vast sums on technology—but it may not be enough to defend against the incursions of bigger, richer American rivals.
U.S. lenders already dominate investment banking in Europe. The big risk for the continent’s banks is that slicker tech could give their American rivals a platform to make gains in lending to companies—the Europeans’ traditional stronghold.
This year, Europe’s banks plan to make technology investments worth in aggregate $77 billion, according to consulting firm Celent. That compares with $105 billion for their U.S. rivals. Faster, more seamless trading systems have long been a priority, but tech spending has shifted across business lines and from back office to front office. It can cover everything from maintaining decades-old systems to cutting-edge artificial intelligence.
Germany-based global provider of digital payments and commerce solutions Wirecard announced on Wednesday it is partnering with U.S. business funding fintech Credibly to digitalize funding disbursement. Wirecard claims to be one of the largest issuers of payout cards in the U.S. and is now offering fully digitalize solutions.
The European financial services industry is facing an ‘Amazonisation’ moment, in which those offering consumer-first solutions underpinned by sustainable finance will survive and the others will cease to compete.
That is the headline finding of 52-page report co-authored by PwC Luxembourg and Luxembourg for Finance, which investigated underlying industry trends and indicated that the European market is losing ground on its US and Asian peers when it comes to innovation and assets.
Predictably it was Binance that stole the limelight, with the surprise launch of its eponymous lending platform, which was unveiled on Monday, August 26, and then proceeded to fill its initial lending quota of 200,000 BNB and 10 million USDT in a matter of seconds two days later.
Dharma and Compound have announced new products, while Coinbase has hinted that this will be the next vertical it expands into.
Lenders can enjoy annualized interest of up to 15%, which is significantly better than the negative rates they are currently offered on fiat savings and on negatively yielding government bonds.
On Wednesday New South Wales senator Andrew Bragg successfully moved to secure a senate committee inquiry into the fintech and regulatory technology spaces, paving the way for a year-long review into how competitive Australia is in these sectors.
Chief executive of small business lender Lumi, Yanir Yakutiel, said the inquiry should focus on expanding the regulatory sandbox program, which is designed to help early stage fintechs test their ideas.
This business model boomed in China, but following a regulatory clampdown by authorities on risky financial practices, the number of fintech and peer-to-peer (P2P) lending platforms in the country dropped from about 1,900 a year ago to just 900 in May.
It now appears that some of these Chinese P2P lending companies have not necessarily disappeared. They simple ventured into new markets and in particular Vietnam.
According to the State Bank of Vietnam (SBV), there were 40 peer-to-peer lending companies operating in Vietnam as of March. Of these, 10 companies are from China.
Through conversations with Lebanese entrepreneurs, business owners, bankers, and politicians, I have had a number of eye-opening discussions into the challenges and opportunities faced by Lebanon’s SME ecosystem. Given the country’s long-standing tradition in financial services and its large banking sector, I believe fintech—with solutions such as peer-to-peer lending, machine learning to personalize insurance solutions, and the use of artificial intelligence for wealth management—stands as a serious contender to unlock the funding challenges faced by Lebanon’s SMEs.
Japan’s SoftBank Group Corp (9984.T) is in talks with venture capital firms in Latin America to invest hundreds of millions of dollars in their funds, a move likely to speed up spending of a $5 billion regional venture capital fund, three sources with knowledge of the matter said.
So far, SoftBank has only announced direct investments using the fund’s resources, injecting capital into Colombian delivery app Rappi, Brazilian lender Creditas, gym membership app Gympass and Mexican payments firm Clip, for instance.
Contxto – Not only is the Mexican real estate industry huge but also outdated with many inefficient processes. Counteracting this, a new Mexican startup, Flat, recently raised US$4.5 million in one of Mexico’s largest pre-seed rounds ever.
Canada’s first peer to peer lending platform for SMEs, Lending Loop, has topped CDN $50 million in loans, according to a post by Brendon Vlaar, co-founder and CTO of the company. Lending Loop provides investment opportunities in debt-based securities to both accredited and non-accredited investors.
Introduction Online lenders are fast becoming the first port of call to avail loans and have been attracting strong funding interest from VCs and PEs. This demand for a digital lending experience has also forced traditional lenders like banks and credit unions to figure out the technology which will allow them to originate loans in […]
Online lenders are fast becoming the first port of call to avail loans and have been attracting strong funding interest from VCs and PEs. This demand for a digital lending experience has also forced traditional lenders like banks and credit unions to figure out the technology which will allow them to originate loans in a flexible yet scaleable way. They have two options: Buy or Build.
The build option can be extremely expensive and time consuming. But the buy option leads to a digital experience that is constrained, as you are dependent the features and functionalities of the vendor. Moreover, there is no way to really differentiate in the eyes of the digital customer. The solution is DigiFi: an open source tech platform which also allows you to customize along with a layer of additional services like hosting, support, platform implementation, etc.
DigiFI
DigiFi was founded by Joshua Jersey and Bradley Vanderstarren in 2014. It started its life as Promise Financial, an online lender, and raised $110 million in credit capital. It built up its own proprietary tech as there was no solution provider in 2014 offering an end-to-end loan origination platform that could automate the entire process. They sold off the tech to a large lending institution in 2017 and pivoted to DigiFi, one of the world’s first open source loan origination systems (LOS) which equips the lenders with flexible and modern tools to create unique platforms and digital experiences.
The company’s ideology is simple: That is to give other incumbent lenders, branches, credit unions, and startup digital lenders a platform where they do not struggle to build core lending capabilities from scratch. The company utilized the year 2017 and early 2018 to build up its platform, and started working with clients in late 2018. The company, with 10 people, has raised $4 million in equity to date and is based in New York.
The Market’s Pain Points and the DigiFi Solution
The ‘build or buy’ question creates a space for a platform that can bring together the qualities that fulfill the core origination requirements of the lending market and yet customize to give the client a competitive edge over other players. DigiFi empowers its clients to control the features and UI/UX so that it suits the specific needs of their unique client base. The existing tech vendors force the lenders into a rigid structure that limits flexibility to differentiate and provides the exact same experience for all sets of clients.
DigiFi gives the best of ‘buy vs. build’. Thus, DigiFi clients do not need to start from scratch and yet have the power to tailor the tech (buy and build, a win-win!). The company’s core platform is open source, and the source code can be accessed on Github. Revenue is generated from acting as a layer that provides hosting, support, platform implementation and customization services.
In crux, the platform of the company has features like complete lending CRM, decision engine for lending decisions, machine learning environment, and open-API architecture, and it can be configured for deployment across a range of lending verticals that include consumer, mortgage, small business, and commercial. DigiFi gives out the open source platform and its documentation for free.
The platform of the company is currently being leveraged by Sprout Mortgage, Mariner Finance, Constant Energy Capital, Greenwave, and Home Point Financial.
The Platform in Detail
The company provides its platform to the lenders for free and charges for additional services of configuration, setup, support, and running. Depending on the requirements of the client, DigiFi offers support plans for a monthly fee. The customization and platform implementation are charged on an hourly basis. The implementation time and cost varies. The implementation might take up to 4-8 weeks at a minimum and can take up to months if the lender needs to build out features from scratch. As compared to years and millions of dollars for building an in–house model, the DigiFi solution is usually in the 5-6 figure range.
The company’s platform is built on the JavaScript tech stack, and uses two well-established coding languages that are uncomplicated for clients to work with and engage. DigiFi focuses on end-to-end loan origination and concludes with onboarding onto a servicing system after funding.
The Future
As per the CEO of DigiFI, the incumbents are getting better with time as they have a lower cost of capital and existing customer base, positioning them to succeed. Getting the right tech partner on board is thus the critical piece to build a successful moat.
DigiFi offers a platform to lenders looking to tap the online lending market that not only equips them to get the best of the ‘buy vs. build’ system but also ensures full support and customization. It powers the lender with ready-made solutions, fast implementation, support and training, feature controls, unique customizations, flexible hosting options, and a contributor community. It provides the option to integrate all major data sources – Transunion, Equifax, Experian, MicroBilt, LexisNexis, etc. With over 45,000 development hours, DigiFi platform provides it clients a strong barrier to entry with complete configurability with other APIs, true scaleability with AWS, and integrated AI ML solutions.
With billions of dollars in monthly origination and listed players like Lending Club, alternative lending is now mainstream in the United States. Experian’s Clarity Services, a specialist in alternative financial services data and solutions, has released a report titled Alternative Financial Services Lending Trends. It includes deep insights into the online consumer lending industry and […]
With billions of dollars in monthly origination and listed players like Lending Club, alternative lending is now mainstream in the United States. Experian’s Clarity Services, a specialist in alternative financial services data and solutions, has released a report titled Alternative Financial Services Lending Trends. It includes deep insights into the online consumer lending industry and leverages data points of over 350 million consumer loan applications and 25 million loans.
The report threw a lot of expected statistics and some surprises that should help online lenders pivot to more fertile territory.
Understanding the Channels
Alternative financial services can be obtained from both online and offline platforms. Though online platforms are mushrooming, brick and mortar still remains dominant in the consumer lending industry.
Types of loans
The types of loans in the report are broadly classified in two categories-
Installment loans – Loans repaid in a series of regular payments (months or years) are known as installment loans.
Single pay – Single pay loans are repaid in a single payment (Lump sum) and usually have a shorter tenure (days/weeks).
Market Trends- Product Mix
Everybody is aware of the fact that online lending has grown, but the growth numbers presented by Clarity are staggering. Following are the charts that capture the growth pattern of online installments and online single pay loans in regards to funded loan volume and the number of funded loans from 2014 to 2018.
The online installment loans marked a growth of approximately 643% in 2018 starting from 2014 whereas the single pay loans’ market doubled in four years.
The number of loans analysis threw similar growth numbers as the loan volume analytics.
Data suggests that online installments loans are the most popular choice in the alternative lending space. The number of unique borrowers has increased by 30% for the past three years.
Loan Characteristics
Installment Loans
Loan amount –Almost 60% of loans fell between the $500 to $2000 range in 2018, rising from 43% of all loans in 2014. Only 15% of the funded loans were under $500 in 2018. Therefore the average loan amount is increasing on a year-on-year basis.
Loan Tenure – Maximum loans (over 62%) had a repayment period of over 7 months in 2018 whereas only 9% online installment loans have a payment period of fewer than three months.
Scheduled monthly payment amount – The monthly payment amounts have declined over time. Around 34% of monthly repayments were less than $200 in 2018. This number is an increase from 17% in 2015.
Single Pay Loans
Loan Amount – Loans above $500 grew from 23% to 28% between 2014 and 2018. The overall trend is towards an increasing loan amount.
Credit Quality
A credit profiles analysis indicates that online lending is finding favor among not only the subprime category but also the prime and near-prime, which are aggressively adopting alternative financing options. Clarity reports that 29% of consumers with an alternative credit inquiry fell into the prime or near-prime categories in 2018 compared to 21% in 2017.
Consumer Demographics
Age – The online installment borrowers were older than the online single pay borrowers whereas the age of installment and single pay loans’ borrowers remains the same in the case of the storefront channel.
Income trend – The online borrower reported a higher income as compared to one borrowing through a storefront.
In the online segment, income values tend to be higher for Installment loans than single pay loans.
Data Points:
– Forty-five per cent of online installment borrowers reported an annual income over $40,000, while 37% of single pay borrowers reported incomes in this range.
– Conversely, 15% of single pay borrowers reported an income of less than $20,000, as opposed to only 8% of installment borrowers.
Hence consumers falling under the category of online installment loans are likely to have a higher income as compared to other sub-groups.
Consumer Choice – Consumers that prefer privacy opted for online lending whereas the consumers that were looking out for a reliable personalized experience went for the storefront option.
Location – California and Texas are the obvious leaders due to their size. Ohio is steady at third place for the last 3 years with Illinois at the 8th position.
Takeaway
Clarity’s alternative credit loan data provides key learning points for all in the alternative lending industry.
The Online Installment Loan market is growing and the demographics support further growth.
The online installment loans are being increasingly characterized by larger loan amounts, longer payment terms, and smaller scheduled payment amounts.
There are early signs of deterioration in credit performance.
Over half of the online borrowers in 2018 were new to the alternative lending space.
Applicants new to the alternative lending space in 2018 have higher credit scores than those previously seen. However, 2017 borrowers who migrated to traditional lending in 2018 also had higher credit scores than those who stayed with alternative financial services.
California, Texas, and Ohio continue as the top three states for online lending in number of loans, while the largest growth in borrowers is in the middle states like Nebraska and Kentucky.
Insight: Online Lenders will be well served to identify patterns like an increase in loan amount and loan tenure and the rise of Middle America looking for hassle-free lending options.
News Comments Today’s main news: Funding Circle sets new high on loans under management. SoFi partners with Lemonade, Root. Salary Finance hires SoFi co-founder, raises $32.8M. Dianrong to raise $100M. Klarna may be headed to the stock market. Linked Finance sees record quarter. Today’s main analysis: European online alternative finance grows 36%. (A MUST-READ REPORT […]
LendIt Fintech USA 2019 slide presentations. Everyone should be able to find something of interest here. Start with the keynote speaker addresses: Mike Cagney of Figure, Renaud Laplanche of Upgrade, and Rob Frohwein of Kabbage.
Groundfloor doubles year-over-year revenue. Groundfloor is one of the few opportunities for non-accredited investors. They are looking better every day. Disclosure: I own stock in and have an account with Groundfloor.
SoFi has announced two new partnerships in the insurance space. The partnerships expand SoFi’s portfolio of offerings to include homeowners’ and renters’ insurance through Lemonade and auto insurance through Root.
As the world continues to wait for the US SEC’s decision on the Bitcoin ETF applications that are still being processed months after a decision was expected, some investors may find themselves seeking alternative methods of entering into the Bitcoin market without actually having to do the dirty deed of investing in Bitcoin itself.
Crypto lending serviceshave recently reported record profits; crypto futures exchanges are also reporting higher-than-ever trading volumes.
Young adults are getting married later than previous generations. In 1980, the median age for men and women at their first marriage was 24.7 and 22, respectively. In 2018, the ages increased to 29.8 and 27.8, for men and women, respectively.
Millennials make up the largest share of homebuyers at 37%, according to a report from the National Association of Realtors.
Nearly a quarter (24%) of millennial first-time homebuyers want to own a home before getting married.
On the flip side, this means just over 3 in 4 millennial buyers (76%) want a marriage before a mortgage. Additionally, 27% of millennial buyers are postponing parenthood until they’ve achieved homeownership. Among homebuyers of all ages, nearly 2 in 5 are waiting to get a pet until after purchasing a house.
More than a quarter (26%) of first-time buyers have poor credit.
Just 15% of first-time buyers have a score of 740 or higher. Nearly 2 in 5 (38%) aren’t satisfied with their credit score, yet more than a quarter of those who are dissatisfied haven’t taken steps to improve their score. By contrast, more than 70% of repeat homebuyers are satisfied with their credit score.
GROUNDFLOOR, an investing and lending platform that allows anyone to invest fractionally in real estate, is today announcing its Q1 results and momentum. Despite the government shutdown of the U.S. Securities and Exchange Commission for 35 days, GROUNDFLOOR still experienced 123% percent non-GAAP Q1 revenue growth compared to the prior year Q1.
Additional Q1 momentum for GROUNDFLOOR includes:
Achieving a 166% increase in unit volume for loans closed in Q1 ’19 vs. Q1 ’18
More than doubling loan application volume for Q1 ’19 vs. Q1 ’18 (121% increase)
Selling more than $14.5M in real estate investments to retail investors on the platform
Surpassing more than 60,000 registered users
Eclipsing $100MM in loans to real estate developers to-date in more than two dozen states
Expanding product offerings, such as new construction loans and a fixed annualized notes product returning 5 percent on a 90-day term
Launching a second online public offering to purchase stock in GROUNDFLOOR directly
The online lender Avant will pay $3.85 million to settle Federal Trade Commission allegations that it misled customers who were seeking to repay their loans.
The FTC said Monday that its commissioners approved the settlement by a 5-0 vote.
A San Francisco-based startup called Returnly is seeking to solve at least a portion of the headache—namely, the payment delay—by issuing instant store credit when you decide you don’t want an item. The company says that by assessing a shopper’s risk, it can offer store credit to 85% of customers on the spot, without first requiring that the item has been received or even put in the mail.
Returnly announced on Wednesday that it has raised $19 million in a Series B funding round, led by venture capital firm Craft Ventures and with participation from Max Levchin, the PayPal cofounder who currently runs Affirm.
Last year 32% of credit-seeking small businesses applied to an online lender, up from 19% in 2016, according to the survey, which was released Tuesday. Over the same period, large banks, small banks and credit unions all saw either steady application rates or a slight decline in interest from those same small businesses, which typically had fewer than 10 employees.
Mastercard (NYSE: MA) today announced it has acquired Vyze, a technology platform that delivers more choice – and purchasing power – to people who want their point-of-sale payment options to match the flexibility and convenience of today’s shopping experiences.
Increasingly, consumers are seeking alternative financing options,1 leaving merchants and financial institutions with a need to deliver these services at the point of sale. In the U.S. alone, these solutions represent a more than $1.8 trillion opportunity, according to Accenture.
Earnest today announced that it’s modernizing student loans with a new in-school student lending offering.
Built based on feedback from students and people with student debt, an Earnest student loan incorporates four unique differentiators:
Innovative eligibility check – A quick two-minute eligibility check requires only basic personal information, school details, and an estimated credit score.
Cosigner invite – Earnest’s application makes it simple and easy to invite a cosigner to the process.
Checkout– Clients can customize their loan according to their individual financial needs with easy-to-understand terms and a clear understanding of their monthly payments after graduation.
9-Month grace period – Earnest found through talking with recent graduates that they wanted the flexibility of a longer grace period after graduation to get settled. Earnest offers a 9-month grace period after graduation compared to the 6-month industry standard.
In the “If you can’t beat ‘em, join ‘em” world of bank-fintech relations these days, TD Bank’s recent agreement with the online lender Avant fits right in.
Avant is expanding its efforts to license technology to traditional banks, and TD Bank in March announced it will use the Chicago company’s technology platform, called Amount, to power the bank’s unsecured loan product, TD Fit Loan. HSBC, Regions Banks and Banco Popular also use Amount.
Over the past decade, the digital-lending industry has evolved to become more sophisticated. For example, companies are integrating big data and proprietary algorithms to analyze a borrower’s credit risk score in a matter of seconds, according to Juniper Research.
According to the firm, MPLs are projected to generate US$588 billion in loan origination value annually by 2023. This is estimated to account for 41 percent of SME funding around the world.
The research firm further reports that revenue from MPLs are predicted to grow at a 48 percent CAGR. This brings MPL platform revenue to US$137 billion annually by 2023, a 400 percent return from the estimated US$30 billion in revenue in 2019.
The odds of winning the $654 million Mega Million prize last year were put at one in 302 million, while the $345 million Powerball offered one chance in 292 million. But those astronomical odds apparently haven’t deterred the many Americans who are banking on using a lottery jackpot for their retirement nest egg.
Thirty-one percent of Americans don’t invest because they think it’s risky, but 39 percent, including 59 percent of millennials, feel it’s reasonable to think of the lottery jackpot as a potential means of retirement, according to the survey.
Miillennial men in particular (66 percent) believe the lottery is a reasonable retirement plan, compared to 58 percent of millennial women. However, if they did win the lottery, more millennial men (61 percent) than women (42 percent ) would save or invest the entire amount.
Documents filed in a New York Supreme Court case by the receiver managing Direct Lending Investments (DLI), revealed that DLI had more than 950 investors worldwide with collective investments on the books totaling over $780 million.
A loose-knit group of Virginians, stung by triple-digit interest rates on payday and other loans, is trying to do what the General Assembly won’t — make sure all lenders, including online ones, follow Virginia laws.
The latest lawsuit, filed last week, alleges that four web sites — Golden Valley Lending, Silver Cloud Financial, Mountain Summit Financial and Majestic Lake Financial — set up in the name of the Habematolel Pomo of Upper Lake tribe in northern California were actually operated by non-tribal members in a Kansas City suburb, including the son of a payday loan executive convicted of fraud and racketeering.
Lendio has announced the opening of a new Lendio franchise in Phoenix. Through the Lendio Franchising program, Sam Foreman will help local businesses apply for loans, review their options and secure funding, easing the financial hurdles for area small business owners.
Ocrolus today announced a partnership with BlueVine. BlueVine leverages Ocrolus technology to accelerate growth and scale operations efficiently, creating a faster and more seamless experience for its customers.
Loans under management grew 44 per cent to £3.4bn compared to £2.3bn in the first quarter of the previous year, and revenue growth soared by 40 per cent.
The firm reported that loan originations were up 23 per cent from £525m in the first quarter of 2018 to £644m between January and March this year.
Salary Finance, a UK-based startup focused on salary-linked savings and loans for employees, has raised $32.8 million and hired SoFi co-founder Dan Macklin for a US expansion.
Shanghai-based peer-to-peer lending platform Dianrong is looking to raise $100 million in fresh funding, according to a Financial Times report, a move that should give it enough buffer to meet China’s strict capital requirement for P2P players.
The GIC-backed firm has not made any official statement about its fundraising plan but analysts said the move is part of the firm’s efforts to meet Beijing’s proposed Rm500 million ($74.5 million) capital requirement for P2P operators nationwide.
It will not be soon for China’s commercial banks, consumer finance service firms and other institutions to see a national regulation governing internet-based lending activities, despite recent progress on specific rules for online peer-to-peer lending and microloans, Caixin learned.
Swedish tech unicorn Klarna is nearing the point where it could seek a stock market listing, but it’s unlikely to be this year, the CEO and co-founder of the fast-growing online payments services firm said.
The Stockholm-based fashion house Acne Studios has expanded their existing European partnership with Klarna. Showing at Paris Fashion Week, Acne Studios encompasses women’s and men’s ready-to-wear, shoes, accessories and denim, but also moves across the borders of fashion, art and design. With Klarna now available in Acne Studios’ online store, shoppers in the U.S. can choose to checkout with four equal payments – with no interest or fees.
The first quarter of 2019 saw the platform provide more than €11.3 million in loans to Irish SMEs, an increase of 32% over the same period last year.
Since its establishment in 2013, Linked Finance has helped provide more than 2,000 loans and €92 million in funding to businesses across Ireland. Lenders who have supported SMEs through the platform have earned more than €7.1 million in interest and received more than €50.4 million in repaid principal since the business launched in 2013.
Linked Finance issued its largest loans ever in the quarter with a number of €300,000 loans provided. The average loan increased to €70,000.
But before I share these top real estate crowdfunding companies, I would first want to tell you about the characteristics which a best performing real estate should have. Well, they must have:
Challenger banks have leapfrogged to the forefront in overall customer satisfaction, according to a new study from FIS.
63 percent of direct bank customers report being “extremely satisfied”, compared to 52 percent of credit union customers and just 19 percent of customers of the top 50 global banks.
73 percent of all consumer interactions with banks in the US are done digitally.
Nearly two-thirds (65 percent) of younger millennials (between ages of 18 and 26) reported that they have not used any branches at all in the prior month.
According to new research commissioned by SME lender OnDeck, Australia’s small to medium enterprises (SMEs) are bracing for “a double whammy” of disruption from the back-to-back Easter/Anzac Day public holidays.
Over one in four (27 per cent) of SMEs expect the Easter/Anzac Day period to disrupt normal trading.
In the wake of the Royal Commission we’re seeing a tightening of finance for SMEs with even long time customers being turned away for loans. For years, banks have taken too long and required too much, like property collateral, from SMEs. Innovations like marketplace lending are giving SMEs transparent and prompt access to.capital when they need it.
Stephen Barnes, Principal at Byronvale Advisors Pty Ltd
I would say that the term ‘redundant’ may not be so appropriate but certainly through a number of factors the ‘Big 4’ may be less able to meet the needs or timeliness requirements of small business. A large number of small business owners need to use personal assets, usually the family home, as security for loans.
A little more than a year after the Reserve Bank of India (RBI) came out with guidelines for peer-to-peer (P2P) lending companies to convert into non-banking finance companies (NBFCs), micro and small enterprises (SME) lending has turned out to be the focus area for these companies.
However, the current regulation does not allow a single lender to lend more than Rs 10 lakh across P2P platforms at a time. This is hampering growth prospects, say P2P players. The association of P2P lenders has sought relaxation in the norm, and requested the RBI to raise the limit to Rs one crore, according to sources in the industry.
Fintech startups have started offering a broader set of banking services beyond payments and lending, pointing to a deep integration with lenders that has the potential to change the way customers access banking products.
South Korean Financial Services Commission (FSC) has identified three sectors — payments, data, and lending — to protect consumers, foster fintech innovation, and ultimately remove uncertainties that may restrict investments into Korea.
Legal Framework Around Marketplace Lending
South Korea is a country that has gone through two economic crises which has made banks extremely conservative especially in terms of lending. As such, 40% of the population cannot receive loans from tier one banks and must resort to secondary markets such as savings banks with extremely high interest rates above 20% and shady underground loan sharks.
This paper provides case studies and market analysis from the Arab Middle East and Africa as examples of fast-growing economies, open to best-in-class solutions, with both wealthy and underbanked populations. Key go-to-market findings serve to inform fintech firms, investors and others about participating in the region.
Lendified, a Toronto-based FinTech, announced today that it has closed a $15 million CAD Series A funding round, in order to continue its growth within Canada.
Bank accounts for consumers is still relatively low, with only 68%, compared to 79% in China. Debit cards, however, outpaced credit by 2:1.
While you may see a slight uplift in the U.S. and U.K markets, consider this:
Annual consumer rates for credit cards topped 270 percent for unpaid balances.
As Brazil suffered its worst economic crisis in history, the banks raised credit card rates to a stunning 500 percent per annum on unpaid bills.
With Brazilians relying on credit an paying for everything from everyday goods to luxury items in installments, massive interest rates are being embedded into these payments.
News Comments Today’s main news: BlockFi hits $25M in deposits in 2 weeks. Cash-back ETF injects trouble into ETF market. PeerStreet expands product line. Funding Circle fund higher impairments drag returns. Dianrong blames Chinese regime for troubles. Today’s main analysis: New home equity loans do not significantly alter credit scores. Today’s thought-provoking articles: SoFi Money review. Can Citi, JPMorgan beat […]
Can Citi, JPMorgan compete with fintechs on personal loans? Fintechs had 36% of the personal loan market in 2017. Can big banks make a comeback? I think their efforts in doing so are going to make this a much more competitive market. Can alternative lenders continue to grow with streamlined processes and leaner teams?
BlockFi Lending LLC, a New York-based “secured non-bank lender” that provides cryptocurrency-backed loans in USD to digital asset investors, has revealed that its interest-generating deposit accounts have received over $25 million in cryptocurrency.
SoFi Money is an online checking account by SoFi, a company best known for its student loan refinance loans. SoFi’s account has a top-of-the-line interest rate and no monthly or overdraft fees. There’s no free ATM network, but SoFi reimburses many third-party ATM fees and doesn’t charge its own. SoFi also boasts unique perks: free career counseling and financial planning sessions.
Can Citi and JPM beat FinTech Personal Loans? (PeerIQ Email), Rated: AAA
The personal loan market has grown rapidly since 2010 and the growth has been driven by FinTechs. Source: TransUnion, PeerIQ
“My Chase Plan” and “My Chase Loans” – a point-of-sale financing alternative and a personal loan product respectively – that will be offered to its existing credit card customers.
Home prices in the United States have rebounded to new highs since the financial crisis. As a result, American homeowners are sitting on the largest amount of home equity in history — at just over $15 trillion dollars, according to the Federal Reserve.
The decline in scores averaged just 13 points. At the high end, scores declined by 24 in San Jose,Calif. The smallest decline was 5 points in San Diego. Borrowers had an average score of 735 to start, so the declines are quite negligible in terms of access to credit and may have marginal impacts on the cost of credit. The highest starting credit score was 752 in San Francisco, while the lowest was 712 in Indianapolis.
The decline took an average of 158 days to reach bottom, which is just over five months. St. Louis homeowners saw their credit scores reach their lowest points in an average time of 101 days (3 months), while the longest decline was for homeowners in Dallas at 211 days (7 months). Loans do not appear on credit reports immediately after closing. Typically, the lender starts reporting to the credit bureaus after your first payment, depending on the lender’s reporting cycle. Thus it may take about 60 days after closing or even longer for it show up and start affecting a score.
Scores recovered over an average of 163 days. This is also just over five months, so the time to fall and recover are about equal. The quickest time to recover was 102 days, or slightly over 3 months, in Cincinnati. Borrowers in Chicago had the longest recovery time of 243 days, just over 8 months.
Scores recover within a year and begin to move higher. The complete cycle to return to the credit score prior to the home equity loan takes 321 days, less than 11 months. The shortest cycle was in St. Louis at 211 days and the longest in Chicago at 443 days, about 15 months.
Last week, one ETF upstart created a minor splash by doing what was once unthinkable — offering to pay investors to buy into its exchange-traded fund. That comes on the heels of eight fund providers — including JPMorgan Chase, Vanguard and BlackRock to name a few — all slashing fees in one of the industry’s most aggressive rounds of price cuts to date.
The sub-zero fee giveaway by Salt Financial, which previously ran a single $11 million ETF, is widely seen as a marketing gimmick to drum up a little PR, get customers in the door and increase its assets under management. During the first year, investors will receive 50 cents for every $1,000 in a new low-volatility stock ETF — until it grows to $100 million. After a year, a management fee of 0.29 percent, or $2.90 per $1,000, could kick in.
The race to zero, however, is very real. Fidelity Investments jump-started the no-fee push in August by offering index funds for free. In February, SoFi said it would waive charges on two planned ETFs for the first year. Last week, JPMorgan started selling America’s cheapest-ever ETF for the princely sum of 20 cents for every $1,000 invested. And BlackRock unveiled plans Wednesday to cut fees for large clients in one of its S&P 500 indexed mutual funds.
PeerStreet, a platform for investing in real estate backed loans, today announced the launch of a new loan product for private lenders: Residential for Rent loans. Residential for Rent loans have a 30-year term so borrowers can secure long-term financing for residential rental properties. This launch is in response to key market conditions: as more people struggle to finance buying a home, the rental market has continued to grow.
One-quarter of families don’t complete the FAFSA, according to Sallie Mae’s 2018 How America Pays for College survey. Of those that don’t fill it out, 48 percent say it’s because they don’t believe they’ll qualify for financial aid.
But they’re often wrong: An analysis by NerdWallet found that in 2017, students left an estimated $2.3 billion in federal financial aid on the table by not filling out the FAFSA.
According to Elaine Rubin, senior contributor and communications specialist at private student loan marketplace Edvisors, most Americans are eligible for some type of federal aid. In fact, it’s available to anyone with a household income below $250,000 per year, CNBC reported.
An 8-year-old class action that wreaked havoc on the online lending industry is finally winding down, but the lobbying push in Washington to undo its impact shows no signs of abating.
Lawyers in the case have filed a proposed settlement that would provide $9.8 million in cash and debt relief to as many as 58,000 consumers, setting up the final chapter in a lawsuit that is likely to be remembered best for the legal precedent it established.
A recent trend report by Clarity Services, a credit reporting provider, showed that online funded loan volumes grew by almost 500% between 2013 and 2017.
How Far are Most in their Digital Transformation Strategy?
54% of financial institutions have developed a digital strategy, but have not yet implemented it
29% of financial institutions are currently developing a digital transformation strategy
Only 14% of financial institutions are in the process of implementing a digital transformation strategy
How Much Will They Be Investing In Digital Transformation in the Next 12-18 Months?:
65% are planning to increase spending by 10%
26% are planning to increase spending by 1-9%
6% have no plans to change spending
What will They be investing in over the next 12-18 Months?
The stock of X Financial (NYSE: XYF) jumped more than 5 percent Tuesday morning, to $6.55 per American depositary share, after the peer-to-peer lending marketplace announced improved revenue and profit for the fourth quarter, as well as a dividend for 2018.
The Shenzhen-based company, which connects borrowers and investors on its platform, reported in a statement Monday evening that its revenue grew 18 percent year-over-year to $125.5 million during the three months through December.
Its net income, X Financial said, was $35.2 million, or 22 cents per share, at a 53 percent increase from the same period of 2017.
If you look at the graph below, 5% of S&P 500 companies hold more than half the overall cash; the other 95% of corporations have cash-to-debt levels that are the lowest in data going back to 2004, according to Wells Fargo research. We know who those 5% are — they are the GAFA companies: Google, Amazon, Facebook and Apple.
Discrimination in lending has long been a problem, shutting minority groups out of the home buying process.
ZestFinance, the artificial intelligence software company focused on the credit market is trying to change that with ZAML Fair, a new software tool that aims to reduce the instances of biases and discrimination in lending.
CoreLogic, a global property information, analytics and data-enabled solutions provider, today announced PanoramIQ, an intelligent property solution that delivers a more complete view of property data with more current and reliable sources than public-record data alone. Utilizing a combination of public and proprietary property datasets, a unique property ID, machine learning and advanced analytics, PanoramIQ provides lenders, mortgage industry professionals and government entities with deeper, more accurate and complete property insights, allowing clients to make better decisions in a timely and efficient manner.
White Oak Healthcare Finance, LLC announced it will broaden its product offering and enter the healthcare real estate investment market. White Oak hired Jeff Erhardt, Paul Nevala, Mike Treiber and John Brussard to build out the vehicle, which will initially invest up to $500MM and will focus on investments in seniors housing and skilled nursing properties using triple net leases and joint-venture RIDEA structures.
A bank industry group is lobbying Congress to block financial technology firms, such as online lender Social Finance Inc. and payment processor Square Inc., from obtaining an obscure form of a state bank charter that would let them operate nationally with little federal supervision.
The Independent Community Bankers of America last week distributed a policy paper around Washington calling for an immediate moratorium on providing federal deposit insurance to industrial loan companies, or ILCs, which are chartered by only a few states — most notably Utah.
Approximate date of commencement of proposed sale to the public: From time to time after this registration statement becomes effective.
Debt Securities. We may offer debt securities, which may be secured or unsecured, senior, senior subordinated or subordinated, may be guaranteed by our subsidiaries, and may be convertible into shares of our common stock. We may issue debt securities separately or together with, upon conversion of or in exchange for other securities. It is likely that any debt securities issued will not be issued under an indenture.
Figure Technologies, Inc., a fintech company in both the home equity and blockchain space, announces that John Sweeney has joined the company as the head of Wealth and Asset Management, along with Dr. Michael Dooley, who joined as chief economist. These hires reflect Figure’s commitment to empowering consumers and building out products to improve their financial well-being.
LendPro Hires Belinda Kelton as Vice President of Sales (LendPro Email), Rated: B
LendPro LLC, a provider of Lending-as-a-Service (LaaS) products and platforms for retailers, has hired retail industry veteran Belinda Kelton as its Vice President of Sales, the company announced today. Kelton is the latest of many new hires for the fast-growing fintech company, which recently moved to a new location to accommodate new staff members and provide the best service possible to customers.
Affirm is looking for a business-minded Corporate Counsel, Commercial with broad expertise in complex commercial transactions. This role will report to Affirm’s Associate General Counsel.
The Funding Circle SME Income fund saw just a marginally positive performance in February with Net Asset Value growth of just 0.05 per cent as impairments continued to hurt performance.
Impairments reduced NAV returns by 0.7 per cent in February, said analysts at Liberum, in line with the average monthly impairment rate of recent months.
Storonsky is getting a taste of the scrutiny that lies ahead as he tries to upend the world of banking with Revolut, his 3-1/2 year-old startup. The U.K.’s financial regulator is examining why the digital bank last summer temporarily turned off a system designed to automatically block suspicious transactions.
It was valued at $1.7 billion at its last fundraising and now has over 4 million customers after new accounts tripled in 2018. That’s about three times more than the two lenders combined and the same number of customers as foreign-exchange business TransferWise, which is four years older.
The specialist peer-to-peer lender has secured £100m of loan capital as it launches a public crowdfunding campaign, already oversubscribed, that values the business at more than £15m.
Having raised £100m from an unnamed “major institution”, CrowdProperty will use the funds to expand the number of property projects it backs over the next 12-24 months.
OakNorth reports £33.9m profit for 2018 and commits to donating 1% of all future net profit to charitable causes and social entrepreneurship (OakNorth Email), Rated: A
Ablrate’s IFISA offers returns ranging between 10 and 15 per cent, enabling investors to fund asset-backed loans to UK businesses.
ArchOver’s IFISA enables investors to fund secured business loans and enjoy tax-free returns of up to 10 per cent per year.
MoneyThing’s IFISA is one of the highest-paying tax wrappers that invests in secured business loans, offering annual returns of up to 13 per cent.
Assetz Capital
Returns vary depending on the account, going from 4.1 per cent to 6.25 per cent on its auto-invest products, and up to 15.5 per cent with its manual lending option.
Funding Circle
The minimum investment in this flexible IFISA is £1,000.
LendingCrowd
The Growth and Income ISAs automatically spread investors’ money across a range of loans and have variable target rates of six per cent and 5.6 per cent, respectively.
The situation is a big reminder to lenders that it is crucial to concentrate on building a diverse range of funding sources, rather than just one single route.
It’s something that we have put a lot of work into at LendInvest, as it allows us to lend with confidence, knowing that the funds we have promised to a borrower will be there.
The firm sent out an email on 24 January 2019 suggesting that recipients should have a “stockpile ready” as some believe Brexit “could affect the amount of food available,” while offering a £5 promotional discount on a loan.
Dianrong, one of China’s biggest peer-to-peer (P2P) lenders, is laying off staff and shutting stores. The company blamed the Chinese regime for its troubles and said the absence of clear-cut policies was proving to be a heavy burden.
Dianrong shut down 60 of its 90 offline stores and laid off an estimated 2,000 employees, Reuters reported in early March.
Pintec Technology Holdings Ltd. (Nasdaq: PT) gained 15 cents in trading by midday after reporting a slight increase in revenue and narrowed losses for the fourth quarter.
The Beijing-based tech platform facilitating financial services said on Wednesday that its revenue in the three months through December was $32.9 million, 2 percent higher year-over-year. Its net loss was $1.2 million, a 10 percent decrease from the same period of 2017. Loss per share was 1 cent.
For the full year, Pintec reported revenue of $153.1 million, 85 percent higher from the preceding 12 months, and profit of $1.1 million in contrast to a loss in 2017.
Global investment powerhouse KKR & Co Inc is raising its first Asia-focused real estate fund, targeting $1.5 billion as it looks to deepen its real estate portfolio in the region, said people with knowledge of the matter.
Investment firms raised $18.6 billion in 26 Asia-focused real estate funds last year, the highest since 2008, according to data provider Preqin. KKR’s U.S.-based rival Blackstone Group raised the region’s biggest real estate fund last year at $7.1 billion.
Alternative investors are increasingly drawn to Asian hedge funds and distressed strategies, according to the latest Alternative Investment Survey from Deutsche Bank.
The 2019 survey canvassed the views of 425 asset allocators running $1.7 trillion of hedge fund assets in 28 countries.
Finnest, an Austria based Fintech that provides debt capital to small and medium-sized firms, has announced a planned merger with Finland based Invesdor Oy. The newly formed company will see the combination of a leading Nordic equity crowdfunding platform and a top online lender serving the DACH region (Deutschland, Austria, Switzerland). The two companies will now be able to offer a full stack of debt and equity services and investments across Northern Europe as well as more numerous options for investors.
Invesdor claims over 50,000 registered users as well as a MiFID II license for 28 European countries – the first crowdfunding platform to receive approval. Invesdor reports investors, both institutional and individual, from over 150 different countries. Invesdor currently offers a unique financing portfolio in the market, from equity to loans and bonds to IPOs.
Bitbond has launched Germany’s first Security Token Offering with a BaFin approved Prospectus and will be using BitGo’s Business Wallet. The STO has a hard cap of EUR 100 million (~USD 113 million) and will conclude in May. Thousands of investors have already joined to take advantage of early bird discounts.
The STO marks a significant milestone for the crypto asset industry, not only because it has an approved prospectus, but also because it offers tokenized debt with a predetermined maturity. Bitbond Token (BB1) holders will receive quarterly and annual payments for 10 years, after which Bitbond will buy back the token at its original value of EUR 1 per token.
The banking sector is witnessing a massive growth owing to the launch of connected products and services, business innovation and the rise of the middle class along with the emergence of new fintech areas of mobile payments, digital wallets and P2P lending. Technologies such as chatbots, blockchains and automation through robotics powered by AI are transforming the sector.
As of 2019, there are still 2.45 billion underbanked and unbanked people in the world. The more innovative lending companies there are, the faster this market will be covered and served.
October.eu (formerly Lendix) is an innovative, easy-to-use, and intuitive peer-to-peer platform for lending and investing.
The Dharma team works on a platform that lets businesses build lending products on the Ethereum blockchain.
The governing idea of Kabbage is that funding shouldn’t be complicated for businesses. So, the company makes an effort to provide entrepreneurs with up to US$250,000 in loans for which you can allegedly qualify for in just 10 minutes or at most, a day.
Founded in 2014, TurnKey Lender has already become the market’s leading intelligent all-in-one lending automation platform.
The name SoFi comes from social finance and it’s another great example of a successful peer-to-peer lending operation. Founded in 2011, the company is already a huge market player with US$30 billion worth of funded loans and 600 thousand members.
Affirm goes a different route than most alternative lenders. The idea behind it is enabling in-house financing for retail businesses. So, the store’s customers get an instant loan with zero to 30 per cent interest rates.
With quite a unique approach, Lendio offers small business an opportunity to get services and credit products from lenders with the best conditions. It’s a marketplace with more than 75 lenders on board.
Vietnam’s strong economic growth in recent years has led to the flourishing of the nation’s digital economy. The country’s economy in 2017 was deemed to be one of the best performing in the region. Its economy saw a 6.8 percent increase in gross domestic product (GDP) – higher than the government’s initial target of 6.7 percent – making it one of the fastest growing economies in Southeast Asia.
Vietnam currently has 54 percent of its population on the internet and the number is expected to grow further in the coming years.
Data from Vietnam Briefing shows that 39,580 start-ups entered the Vietnamese market in just the first four months of 2017, a 14 percent increase from the first quarter of 2016. Within the start-up scene, the fintech sector has become the most attractive for investments, receiving US$129 million in 2016.
Co-founded by former Expedia employees, Singapore-based Travelstop is a modern, artificial intelligence (AI) powered SaaS platform that simplifies business travel, automates expense reporting for businesses in Asia, and offers insights to business owners.
The platform is quickly gaining traction from the region’s startups and fintech community, helping small and medium-sized enterprises (SMEs) and high-growth organizations including Funding Societies, Fintech News Network, RedDoorz, S P Jain School of Global Management and Dot Property better to manage their business travels.
Asia has the largest share of mobile internet traffic, with 61% of its population using mobile devices to go online.
After online stores, Indonesia’s leading digital payments platform Ovo has been making strides into offline stores, increasing the number of merchants that accept the payment method.
OVO has reportedly acquired local peer-to-peer lending company Taralite, a move that will pave the way for OVO to branch out into the lending business which is seen to be a potential profit-generator for the company.
TurnKey Lender, a provider of intelligent lending automation, decision management, and risk mitigation solutions, announces the opening of a new office in the capital of Malaysia, Kuala Lumpur. Its main goal will be to physically represent TurnKey Lender and support the company’s operations in Asia.
With internet penetration at 85.7% in 2018, the country is perfectly positioned for the rapid growth of alternative lending initiatives in areas like peer-to-peer lending and in-house financing.
Golden Gate and Hanwha will focus on startups that are raising fund for ‘Series B’ stage.
Singapore-based Golden Gate Ventures confirmed on Tuesday that it has teamed up with South Korea-based Hanwha Asset Management to invest in Southeast Asian technology startups.
News Comments Today’s main news: FTC makes final decision on SoFi. OnDeck extends two revolving credit facilities. LendingPoint sees drop in debt management loans, increase for new purchases. LendInvest to float 500M GBP. Lufax hits $39.4B valuation. Klarna adds GooglePay as payment option. Today’s main analysis: Unemployment rate and GreenSky’s earnings. Today’s thought-provoking articles: Earnest vs. SoFi for student loan […]
The Federal Trade Commission (FTC) has finalized its deal with SoFi, an online lender that the agency had accused of making false statements about student loan refinancing.
According to the FTC, the California-based personal finance company misrepresented how much money student loan borrowers have saved or could save by refinancing.
OnDeck, a small business online lending platform, announced on Wednesday extensions to its existing credit facilities with Credit Suisse and Deutsche Bank on improved terms. According to OnDeck, the amended facilities provide an aggregate of $360 million of committed funding capacity and are available to finance OnDeck’s term loans and revolving lines of credit. The scheduled maturity dates for the facilities were extended three years to March 2022.
Earnest and SoFi are two of the best student loan refinancing companiesout there. They both offer fixed as well as variable rate loans, a 0.25% autopay rate discount, and certain unemployment protections to help in the event of involuntary job loss, but they also have their differences.
Here’s a side-by-side comparison of both lenders to help you make an informed decision.
It turns out that, over the past two years, the proportion of our borrowers who say they are earmarking their loans for debt consolidation has decreased markedly, from about 60% in 2017 to about 54% in 2018. The percent using loans to pay for new merchandise or services has grown during those two years. Home improvement jumped from 6% to 8%; loans for medical expenses rose from 2% to 7%.
In 2017, the percent of millennial consolidators was about 61%. In 2018, that dropped a full 10%, down to 51%, a bigger decrease than any other age cohort.
A new affinity banking service developed by Green Dot proposes to tap one of the most potent — and controversial — sources of distribution in the digital economy: social media influencers.
The digital banking and payments provider is developing what it calls Bank OS, a simpler version of its enterprise banking-as-a-service platform already used by the likes of Intuit, Stash, Uber and Walmart. It would enable partners to develop their own financial products just as those brands do, including offering credit cards, debit cards with loyalty programs or even a mobile app.
But while small businesses still struggle with cash flow, how they shop for loans and their level of financial education about their options are changing. On Tearsheet’s recent webinar with leaders at Kabbage, BlueVine, and Intuit’s QuickBooks Capital, we discussed the changing nature of the SMB borrower and how their firms have evolved to keep up.
Everyone knows the Golden Rule of business is to pay yourself first. But more than half of small business owners are going months without pay – if they are taking any at all.
About a quarter of these entrepreneurs go two to six months without pay, and another quarter have gone more than six months without salary, according to a recent survey from Kabbage (), a cash flow optimization platform.
The PayNet Small Business Lending Index (SBLI) rebounded with a 17.2 point jump to 150.7 in January, climbing to its second-highest level ever. On an annual basis, the SBLI increased 4.9%. The SBLI 3-month moving average also rose in January and currently stands 1.5% above its year-ago level.
Source: PayNet
The PayNet Small Business Delinquency Index (SBDI) 31–90 Days Past Due edged up one basis point to 1.45% in January, and is up six basis points on an annual basis — its 33rd consecutive year-over-year increase. The SBDI 91–180 Days Past Due was unchanged at 0.38% but is three basis points above its year-ago level.
Salt Financial, which currently offers one ETF, has filed plans with regulators to launch a low volatility that would pay investors, but there’s a catch.
“During the first year, holders will receive 50 cents for every $1,000 in a new low-volatility stock ETF — until it grows to $100 million when the cash-back benefit will be capped and shared with all investors,” reports Bloomberg. “The rebate is until at least April 2020, when a $2.90 management fee could kick in.”
Equifax Inc. failed to preserve key internal discussions over its massive 2017 data breach, U.S. senators said Thursday at a hearing where elected officials grilled the credit reporting giant’s CEO and the…
Despite record-high levels,[1]new home equity line of credit (HELOC) originations have been steadily declining[2] as a perfect storm of rising interest rates, new tax laws and growing competition from alternative lenders has crimped traditional HELOC growth. According to the J.D. Power 2019 U.S. Home Equity Line of Credit Satisfaction Study,released today, HELOC customers are more likely than ever to shop for alternative sources of funding and HELOC providers are falling short on digital offerings.
New York-based DDG, Chicago-based Marc Realty and Ruttenberg Gordon announced plans for a 13-story hotelwith 250 rooms in Fulton Market. The developers are raising $55 million to fund the project through Prodigy Network, a New York-based real estate crowdfunding platform. The hotel will be located at 1234 West Randolph Street and will be operated by New York-based Standard Hotels. It’s set to be completed within two years.
PeerStreet has announced the hiring of two executives with extensive experience in the financial services and real estate sectors: Ellen Coleman and Bob Brown. Ms. Coleman joins as Executive Vice President of Finance, and Mr. Brown joins as Executive Vice President of Finance & Corporate Development.
CoreLogic, a global property information, analytics and data-enabled solutions provider, today released an enhanced Verification of Employment and Income(VOE/I) product. The comprehensive new VOE/I product takes time, touch and cost out of traditional employment and income verification through a three-step ‘waterfall workflow’ process, ensuring that every mortgage applicant can be verified.
The enhanced VOE/I product features a three-step ‘waterfall workflow’ that ensures each borrower’s employment and income is verified as efficiently as possible.
Step One: Instant verification via a direct integration to The Work Number (TWN)
Step Two: Automated verification leveraging dozens of third-party data sources
Step Three: Manual verification by a team of dedicated CoreLogic verification experts
CoreLogic today announced the integration of its CondoSafe product with the Ellie Mae Encompass® all-in-one mortgage management solution. CondoSafeis a one-stop condo project review tool that enables lenders to have a single, consistent, standardized review process, allowing them to determine eligibility earlier in the process, resulting in quicker approvals.
ArborCrowd, the first crowdfunding platform launched by a real estate institution, today announced a new offering that allows investors to acquire equity interests in the Sioux Falls Multifamily Portfolio, a collection of class-B apartment communities located in Sioux Falls, S.D. The properties exhibit strong upside potential due to Sioux Falls’ sound multifamily real estate fundamentals and notable lack of professionally managed workforce housing product.
The investment has a targeted internal rate of return (IRR) of 12 to 14 percent over a three- to five-year hold period. Tzadik has budgeted $5.2 million to perform a comprehensive capital improvement plan that will include upgrades to all renovated units, common areas and public spaces.
LendPro’s Female Leaders Celebrated on International Women’s Day (LendPro Email), Rated: B
As the financial technology (fintech) industry continues to grow, innovators are increasingly looking for leadership and expertise to grow their companies and stand out from competitors. LendPro, a Lending-As-A-Service (LaaS) fintech company, prides itself in hiring strong talent. Women make up 50% of staffing at LendPro’s Charlottesville corporate office, versus 37% female staffing at most fintech companies.
The online property finance hub Lendinvest is plotting a £500m stock market flotation that will provide a fresh test of investors’ faith in a fast-growing but volatile area of the non-bank lending market.
Sky News has learnt that Lendinvest, which was set up in 2008 and has so far lent roughly £2bn to help buy, build or renovate British homes, has appointed Lazard, the investment bank, to advise on its strategic options.
Eight out of ten SME loan applications were approved by banks in the third quarter of 2018, according to the latest figures from trade association UK Finance. While this is a far cry from the days of the global financial crisis, when SME lending all but dried up in part due to regulatory pressures to shore up capital, smaller companies are still citing challenges in securing funding from traditional players, according to Stuart Chalmers, commercial banking lead for Accenture UK.
Alternative lenders understand the hunger for a seamless customer experience and have built credit journeys that align to business expectations
Almost 30,000 companies used non-traditional channels over the year, with peer-to-peer lending and equity-based crowdfunding now established investment vehicles for seed, startup, early-stage and fast-growth companies seeking capital. In fact, CCAF estimates that 29 per cent of all new loans issued in 2017 to small businesses with annual turnovers less than £2 million came from alternative finance.
In a letter to chief executives (4 page / 352KB PDF) sent last week, the FCA said a recent supervisory review of firms’ current arrangements against current requirements “strongly suggests” some P2P firms were falling short of the standards required by its rules.
It has been recently revealed that the number of compensation claims made against the failed payday lender Wonga, which filed for administration in August 2018, has ended up increasing four-fold. The initial figure given by the Financial Ombudsman Service in a Treasury Committee in January this year suggested that there were around 10,500 customers who had open complaints with the short-term credit, high-interest company.
Now, it turns out that the number of redress claims that have been made against Wonga is considerably higher, totalling over 40,000. It is potentially the case that these people will not end up getting their money back after having been mis-sold loans.
According to the most recent HMRC statistics, overall ISA savings fell from £79.8bn in 2015/16 to £61.5bn in 2016/17. Meanwhile, Bank of England statistics found that the amount of money that Brits were saving (both within and outside of the ISA wrapper) fell by £7bn in 2018 alone.
Crowdfunding and peer to peer lending grew out of the banking crisis of 2008. According to the European Central Bank, the availability of bank loans to SMEs declined 23 percent immediately following the crash, causing a devastating impact on the economy.
Over 100 Finastra customers were upgraded to the latest compliant versions of its transaction banking software, Fusion Trade Innovation, ahead of the new SWIFT standards deadline of 17 November 2018. The new ‘Standards MT Release’ included significant changes to category 7 messaging standards used in trade finance – the most significant set of changes to the SWIFT trade finance messaging interface in over 30 years.
Chinese peer-to-peer lending business Lufax has confirmed it has reached an enormous $39.4bn valuation thanks to a Series C round led by private equity house Primavera Capital.
Chinese peer-to-peer (P2P) lender Lufax is not in a hurry to list on the stock markets, said an executive of its biggest shareholder, Ping An Insurance, during its earnings call, Chinese media reported (in Chinese) on Wednesday.
Ping An Insurance Group deputy CEO Jessica Tan said after Lufax’s latest round of funding, Ping An still holds approximately 41% of its shares.
Today, Klarna, the global payments provider “smoothing” out kinks in the checkout process for retailers, announced a partnership with GooglePay. Available for Klarna customers in Sweden, the intention is to make mobile payments “even easier and more secure.”
CreditEase, a Beijing-based leading FinTech conglomerate in China, announced today that its direct investment arm, CreditEase FinTech Investment Fund (CEFIF), participated in wefox Group’s $125million USD Series B, a fast-growing Berlin-based insurtech firm together with Mubadala’s newly created European Ventures Fund. The investment is the largest Series B round for a European insurtech and Goldman Sachs International is acting as the private placement adviser to wefox Group in connection with the transaction.
The investment will help spearhead the company’s expansion into the European broker market. It also paves the way for wefox Group to accelerate growth and create the world’s most innovative product and engineering team applying advanced data analytics to create an all-in-one insurance platform in which all interactions are personalized. The company, which was founded in 2014, has grown its revenue to around $40million USD, while serving more than 1500 brokers and over 400,000 customers, making it Europe’s number one insurtech platform.
Luna Connect is a new digital lending platform primarily aimed at those lending to SMEs. It is designed to fit into the rapidly evolving financial services ecosystem and its founder, Brian D’Arcy, drew the inspiration for his business from the disruption currently underway in the financial services sector.
The company’s target market are lenders offering loans of under €200,000, whose borrowers typically require a fast decision on their application and want a more transparent lending process. The initial focus will be on Ireland and the UK with Europe and the US to follow. Investment in the project to date has been around €120,000 which was self-funded with support from the NDRC and Enterprise Ireland through the competitive start fund.
The new U.S. ambassador to Australia said Wednesday that he’s concerned about the way China lends money to developing Pacific nations in what he describes as “payday loan diplomacy.”
China categorically rejects accusations that it uses loans, grants and other financial inducements to extend its diplomatic and political reach, saying it is merely acting in the best interests of both sides in such transactions.
As distrust of the nation’s big banks and mortgage brokers swells amongst the wreckage of the banking royal commission, online lenders are emerging as real challengers in the home loan, business loan and personal lending markets.
The CEO of National Australia Bank subsidiary UBank, Lee Hatton, says future retail depositors will want more control over where banks lend their money, prompting it to launch a “green” term deposit targeting environmentally concerned Millennial customers.
However, it’s also true that today’s investors face a risk environment of unprecedented complexity. In 2018, the S&P/ASX200 declined by 6.8%. Residential property values are falling and bank deposit rates fail to match inflation. In the last year, the Australian media landscape was dominated by the findings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, with its revelations of duplicitous lending practices, improper fees, and general misconduct that, by the banks’ own admission, fell far short of community expectations.
Financial Markets Authority (FMA) executive Garth Stanish left the investment watchdog at the end of last month over an internal employment matter, a spokesman for the authority said.
Stanish was also a director of markets oversight, a group that includes oversight of NZX, crowd-funding/P2P lending platforms and frontline supervisors.
Vivriti Capital, a Chennai-based lending platform for corporate entities, secured Rs 110 crore worth of equityin an additional round of funding from its existing investor Creation Investments.
MSMEs play a major role in Economic development of India. There are around 63.4 million units and they contribute to 6.11% of the manufacturing GDP and 24.63% of the GDP from service activities and 33.4% of India’s manufacturing output. They have been able to provide employment to around 120 million persons and contribute around 45% of the overall exports from India. The sector grows at a rate faster than the large ones at more than 10% pa.
About 20% of the MSMEs are based out of rural areas.They provide employment to more than 130 million people and contribute to 45% of exports. MSMEs are also the largest employment generator every year. As of Sep18, the total credit in India was Rs 105.5 Lakh crores and MSMEs had borrowed Rs 24.7 cr. Large and Mid Caps borrowed Rs 44.4 cr. Year on Year the growth of overall commercial credit was at 13.5%.
Micro loans which are less than Rs1 cr grew 22.2% year on year and SME loans between Rs1 cr – Rs 2.5 cr grew at 18.3%.The growth was faster than the overall growth. Share of NBFCs in SME credit increased from 13% in Sep 15 to 17% in Sep 18. The number of NBFCs lending more than Rs 100 cr to MSMEs stood at 77 at the end of Sep 18.
The Investment Alert Task Force has suspended the operation of 168 entities allegedly running peer-to-peer lending services without a legal business license from the Financial Service Authority (OJK).
The task force has also suspended the operation of 47 illegal investment entities which has the potential to harm the public.
“Based on the monitoring on website and application in Google Playstore, the Investment Alert Task Force has stopped the operation of 168 entities that have violated OJK regulation no. 77/POJK.01/2016 on fintech peer-to-peer lending services, which has the potential to harm the public,” head of the task force Tongam L Tobing said in a statement here on Wednesday.
A group of financial technology (fintech) lenders wants to help develop a healthier lending industry and protect consumers by setting out a strict code of conduct for its members.The Indonesian Fintech Lenders Association (AFPI) will help stimulate the industry, which only gained government recognition three years ago, by providing risk management certification, public education campaigns and a compulsory code of conduct, which should be uploaded to the AFPI website soon.AFPI chairman Adrian Gunadi said the association had been established to ease the Indonesian Fintech Association’s (AFTECH) workload in dealing with fintech companies that provide lending services, including peer-to-peer (P2P) lending, crowdsourcing and digital credit cards.Such lenders account for 30 percent of all licensed fintech companies, whereas the remaining 70 percent are companies engaged in, among other thing…
During a recent meeting with relevant ministries and agencies to discuss P2P lending, Hue instructed that during the pilot operation, P2P lending would be restricted to connecting lenders and borrowers as currently being run by most P2P lending companies in Viet Nam. P2P lending companies would not be allowed to mobilise capital, but act as intermediaries to connect lenders (investors) and borrowers.
The development of P2P lending will also create a new capital supply channel. Research conducted by Transparency Market Research showed that P2P lending would surge by 48.2 per cent annually in the 2016-24 period, while Morgan Stanley forecast the business model would reach a growth rate of 53.5 per cent globally by 2020.
Contemporary borrowers want to be able to price, decide. and act on loans from their phones. Make no mistake: Quicken Loans’ 2018 Super Bowl commercials with Keegan-Michael Key had its sights on lenders who might be a lot like you. Quicken Loans wants to peel away young, affluent customers who judge the aptitude of lenders […]
Contemporary borrowers want to be able to price, decide. and act on loans from their phones.
Make no mistake: Quicken Loans’ 2018 Super Bowl commercials with Keegan-Michael Key had its sights on lenders who might be a lot like you.
Quicken Loans wants to peel away young, affluent customers who judge the aptitude of lenders based on their ability to answer their questions and deliver a product through a language of graphics and swipes.
The ads have a young couple sitting in an office across the desk from a bald, middle-aged loan officer. “Yeah,” he says, “you can get a mortgage that avoids PMI, but there’s no way to avoid MIP on an FHA. Now there’s—“
Mr. Key rolls out on a desk chair from behind the couple and shows them a cell phone. “Hey, this will help.”
The next frame shows the Rocket Mortgage home page, as the narrator intones, “Rocket Mortgage by Quicken Loans makes the complex, simple. Understand the details and get approved in less than 8 minutes.” The message here is clear, your competition understands that borrowers want clarity and convenience, and your challenge is to be sure that you are meeting those expectations.
The reality for some credit unions and community banks is that they can’t afford to adapt their processes to fit into the palm of a smart phone user’s hand. But the costs of avoiding the expense can be even greater than a line item in an operations budget. Lenders risk their reputation. A bad mobile experience tells your customers that their needs aren’t your priority. How many of those customers can you afford to lose?
Technology is not about being trendy. It’s a requirement to stay ahead of the market and meet your customers expectations. Lenders with online lending programs optimized for mobile phones are following advice their grandparents might have given: Meet people where they are—not where you want them to be. Does your loan origination system maximize your customers’ online experience, allowing you to lend anywhere and at any time? This is something you need to consider when starting or improving your online lending experience.
Mobile Lending and Smart Phone Usage
Mobile lending has become the method of choice for many young affluent customers who will soon be the backbone of your portfolio. A Federal Reserve Study found that 38% of all bank customers in 2015 were using mobile phones to at least get information about their accounts. The base for that comparison included customers who didn’t even own a phone, and other Fed studies indicate that number surpassed 50% in 2018.
A 2018 study by the Pew Research Center found more than three quarters of adults have a smart phone. While distribution is roughly even between men and women, and among racial and ethnic groups, the distribution by age, income, and education shows wide gaps. Smartphone ownership is:
94% of ages 18-29
89% of ages 30-49
73% of ages 50-64
46% of ages 64 and over
Those with college degrees or annual incomes over $75,000 have smartphone ownership rates exceeding 90%, while those without any college education or incomes below $30,000 have ownership rates below 70%.
A 2018 study by the University of Southern California’s Center for the Digital Future found that more than one in three bank customers under age 45 would switch their primary bank for “better online/mobile services.”
Among most age groups, interest rates and fees were by far the biggest reason to switch, but among those ages 25 to 34, the gap was narrow: 47% would switch for online/mobile services, compared with 54% for lower fees and rates. If you require a driver’s license as a stipulation for a loan, these borrowers expect to be able to take a picture of it with their phone and send it to you within a few seconds. It would not be wise to expect them to stop by your branch or even scan-and-email stipulated documents.
Maximizing customer convenience is just as important as advertising low rates and fees. And while age matters, these studies are also showing that mobile usage is increasing sharply among all age categories and incomes, including older consumers. Your institution’s future is at stake if you’re not keeping up with the convenience borrowers expect, and providing that level of service requires advanced technology. You want to meet your customers where they live. And if they’re moving, you want to be the first to greet them.
These trends are clear. How are you addressing them?
