- Today’s main news: Affirm debuts shopping app. Zopa profits tick upward. RateSetter recovering from loan scandal. PPDAI stock rises 7% with lift in institutional-funded loans. Oportun ends Nasdaq debut with 8% gain. Australia: RBA cuts interest rates, online lenders follow.
- Today’s main analysis: The Future of Finance: Marcus, Neobank, and fintech. (A MUST-READ)
- Today’s thought-provoking articles: Peter Renton’s quarterly marketplace lending results. Loans for sneakers. Lessons learned from LendIt Fintech Europe. What’s happening in fintech worldwide.
- Affirm debuts new app for shoppers. The app allows consumers to shop and check out with “virtually any retailer.” This Business Insider article highlights Affirm’s need to step up its game in order to compete with Amazon, 66 percent of whose customers begin their search for new product at Amazon. Affirm will have to offer better deals for consumers and make it easy to purchase things. With Affirm’s relationship with Walmart, that shouldn’t be too much of a challenge. However, it will be a challenge.
- Affirm app allows for bill splitting.
- Interview with Max Levchin, founder and CEO of Affirm.
- OnDeck survey indicates small businesses are concerned about economy. Old news, still interesting.
- Marcus, jobs, the economy, housing prices, and Oportun. From PeerIQ, well worth the read.
- Peter Renton’s quarterly MPL results. For Q2 2019. Always interesting to read how Renton’s investments have been doing. With lots of charts.
- The rose of “loans for sneakers” as a business. The focus is on Afterpay, an Affirm competitor, but this is a good read because it tackles POS lending from a consumer’s perspective. Insightful and interesting.
- What happened to Borro?
- Auto, home equity are soft spots in consumer lending.
- Maker offers multi-collateral DAI lending.
- A $40 billion pile of leveraged loans battered by huge losses.
- CFPB ruling shorts debt collectors.
- The SEC is hiring a data chief.
- Voyager selects Celsius Network for asset management.
- Zopa’s profits tick upward.
- Zopa says 9 out of 10 shoppers are confused by car finance options.
- RateSetter recovering from loan scandal.
- Wonga customers average 118 GBP payout.
- Savvy secures 20 million GBP funding facility.
- Interview with founder of Blend Network.
- Crowdfunding options for startups explained.
- Lessons learned from LendIt Fintech Europe.
- Linked Finance launches ‘Beyond Brexit’ business loans.
- ID Finance to double revenues within two years.
- Binance launches next phase of crypto lending program.
- What’s happening in the fintech revolution worldwide. A great read with interesting charts.
- Marcus, Neobank, and fintech developments. This is today’s must-read. Very detailed with lots of charts, but the focus is mostly on digital banking. Still, a very good read.
- Blockchain: The future of finance.
- China: PPDAI stock soars 7% on institutional-funding lending increase.
- Australia: RBA cuts rates. Online lenders do too.
- Australia: loans.com.au cuts rates.
- Bahrain: Beehive funds first SME.
- Malaysia: The risks and rewards of SPV 2030.
- Australia: OnDeck appoints national broker chief.
- Canada: BFS Capital opens data science and engineering hub in Toronto.
- United States
- OnDeck Survey: Economy is Top Concern for Small Businesses Ahead of 2020 Election (New Kerala), Rated: AAA
- Affirm debuted a new app encouraging customers to start their shopping journeys with it (Business Insider), Rated: AAA
- Affirm ships new shopping and bill splitting app (Finextra), Rated: A
- Max Levchin On The Future-Present Of Everywhere POS Lending (PYMNTS), Rated: A
- Latest Macro; latest from Marcus; Oportun goes IPO (PeerIQ), Rated: AAA
- My Quarterly Marketplace Lending Results – Q2 2019 (Lend Academy), Rated: AAA
- The Maybe-Dubious Rise of the Loans-for-Sneaker Business (GQ), Rated: AAA
- What Happened to Borro? (deBanked), Rated: A
- Auto, home equity are soft spots in consumer lending (American Banker), Rated: A
- Finally! Maker Offers Multi-Collateral DAI Lending (Cryptovest), Rated: A
- A $ 40 Billion Pile of Leveraged Loans Is Battered by Big Losses (Bloomberg), Rated: A
- Ruling cuts short debt collectors’ victory lap over CFPB proposal (American Banker), Rated: B
- The SEC is hiring a chief data officer (Business Insider), Rated: B
- Voyager Selects Celsius Network to Manage Certain Assets (AP News), Rated: B
- United Kingdom
- Zopa’s P2P profits tick up but group losses widen due to heavy investment in bank (P2P Finance News), Rated: AAA
- Zopa: nine in 10 shoppers confused by car finance options (Verdict), Rated: A
- Ratesetter recovering from loan scandal (The Times), Rated: AAA
- Wonga customers’ average compensation payout may be just £118 (The Guardian), Rated: A
- Payday loan alternative Savvy secures £20 million funding facility (Finextra), Rated: A
- MEET THE FRENCHMAN WHO WANTS TO SOLVE THE UK’S HOUSING CRISIS (Business Leader), Rated: A
- Crowdfunding a start up options explained for businesses and investors (What Investment), Rated: A
- Landlords wary of tax changes (Money International), Rated: A
- PPDAI Stock Soars 7% on Increase in Institutionally-Funded Loans (Capital Watch), Rated: AAA
- European Union
- What we learned at this year’s LendIt Fintech Europe (Business Insider), Rated: AAA
- Linked Finance launches ‘Beyond Brexit’ business loans (Bridging and Commercial), Rated: A
- ID on track to double revenues as it eyes €300m+ of revenue within 2 years (Fintech Finance), Rated: A
- Binance Launches New Lending Program Phase (CoinCodex), Rated: A
- A Guide to What’s Happening in the Fintech Revolution (Bloomberg), Rated: AAA
- Goldman’s $ 1.3B Marcus burn, Neobank £200MM loss; plus 14 short takes on top developments (Lex), Rated: AAA
- Blockchain: the future of finance (Financier Worldwide), Rated: A
- Hot home loan rates starting with a 2 (mozo), Rated: AAA
- loans.com.au jumps on October RBA home loan rate cut party (mozo), Rated: AAA
- OnDeck appoints Robbie Fidler as new national broker chief (IT Wire), Rated: B
- SPV 2030: Sharing of risks and reward (The Malaysian Reserve), Rated: A
- Beehive funds first SME in Bahrain (Arabian Business), Rated: AAA
- BFS Capital Opens New Data Science and Engineering Hub in Toronto (Financial Post), Rated: B
OnDeck Survey: Economy is Top Concern for Small Businesses Ahead of 2020 Election (New Kerala), Rated: AAA
OnDeck today announced the results of a national survey of U.S. small business owners that finds economic issues are the most important factors in determining their choice for president in 2020.
- Economic concerns arise in several dimensions, including tax policy, job growth, support for small businesses, government spending and the overall economic climate. These issues were cited as the top concerns of more than 33% of those surveyed;
- Immigration was an issue of interest for 11.3% of small business owners surveyed, ranking second behind the economy as a concern.
- 57% of small businesses surveyed said they were either Very Optimistic or Somewhat Optimistic about the economic outlook for their businesses;
- 93% of those surveyed said they plan to vote in the 2020 election.
- 60% of small business owners surveyed said they already know who they plan to vote for in the 2020 presidential election.
Affirm debuted a new app encouraging customers to start their shopping journeys with it (Business Insider), Rated: AAA
The point-of-sale (POS) financing provider
Affirm ships new shopping and bill splitting app (Finextra), Rated: A
Affirm’s app also allows consumers to pay at any brick-and-mortar store that accepts Apple Pay or Google Pay, which is increasingly important as 24% of consumers want the flexibility to look online and shop in-store.
Those with Apple Pay or Google Pay enabled have also seen up to 14% of transactions driven in-store, making the Affirm app a rare omnichannel solution for customer acquisition.
Max Levchin On The Future-Present Of Everywhere POS Lending (PYMNTS), Rated: A
Since Affirm’s launch, the landscape in the POS space is radically different than it was when Affirm entered. It is, first and foremost, a much bigger and more populated space than it once was. Other startups have come to the field — Afterpay, Uplift and Sezzle for example — but also bigger and more established names in financial services. In the last 12 months alone Square, Mastercard, PayPal and Chase have all rolled out POS installment lending products or enhancements as the market continues to pick up popularity among consumers, particularly younger ones.
Latest Macro; latest from Marcus; Oportun goes IPO (PeerIQ), Rated: AAA
Q4 is off to a brisk start. The jobs report released this past Friday shows 114K in net new jobs (vs expectations of 120K), generally flat wages, and a drop in the unemployment rate to 3.5%.
On the one hand, the US economy is near ‘stall speed’ – around 1 to 1.5% growth rate.
House prices are expected to rise 5.8% over the next year due to low mortgage rates.
Two major financing announcements this week. FinTech lender, Oportun, led by CEO Raul Vazquez, ends its Nasdaq debut with an 8% gain. The debut is notable as it represents a positive shift in the sentiment to the reception of lenders to the IPO market.
My Quarterly Marketplace Lending Results – Q2 2019 (Lend Academy), Rated: AAA
The upward trend in my returns continued in Q2, making it the fifth quarter in a row with increasing returns. My preliminary return for the 12 months ending June 30, 2019 is 6.20% (one investment is still not final), the best I have achieved since Q3 2017.
The Maybe-Dubious Rise of the Loans-for-Sneaker Business (GQ), Rated: AAA
Afterpay is one of a number of platforms that have sprouted up over the past couple years that are willing to float customers a couple hundred or thousand dollars to shop. In addition to it, there are Affirm, Sezzle, Klarna, and Quadpay. They are positioned as a more consumer-friendly option than credit cards, a whole host of services bent on—because this is 2019—disrupting the powers that be.
Globally, Afterpay, which launched in Australia, has over 4.6 million customers and 35,000 retail partners. In the U.S., where Afterpay only launched in May of last year, it has two million customers and is available at 6,500 retailers. Over three million people use Affirm, while another 500,000 have shopped with Sezzle.
Silicon Valley promises aside, Afterpay is, at best, a platform that allows you to take out what amounts to a small loan on an item. After an approval process—Afterpay does not check a credit score; others like Affirm do—the customer pays a fourth of the price upfront and the rest is paid off in three equal installments every two weeks.
Also new is the $1,500 limit, up from $500, that Afterpay raised after Hyde-McCormick proved himself a responsible shopper and the $87.50 payments currently due every two weeks.
What Happened to Borro? (deBanked), Rated: A
In 2013, Borro, an innovative online lending company that was poised to disrupt pawn shop lending forever, invited me to their stylish offices at 767 Third Avenue in Manhattan.
Borro made $50 million worth of such loans in 2013 and doubled that number in 2014.
Auto, home equity are soft spots in consumer lending (American Banker), Rated: A
In its quarterly report that tracks consumer delinquency trends, the American Bankers Association said that 30-day past-due rates ticked up in eight of 11 categories in the second quarter when compared with the first quarter, but stressed that delinquencies remain well below historic norms.
Finally! Maker Offers Multi-Collateral DAI Lending (Cryptovest), Rated: A
Maker DAO, the most active decentralized finance app on the Ethereum network, has announced a date for its long-awaited multi-collateral DAI generation. According to observers, November 18 may be the date MKR starts accepting other assets as collateral.
Multi-collateral DAI creation has the potential to be riskier in comparison to ETH-based models. Currently, Maker is deliberately over-collateralized at above 300%, with the minimum at 150%, due to the high volatility of crypto assets.
A $ 40 Billion Pile of Leveraged Loans Is Battered by Big Losses (Bloomberg), Rated: A
Loans tied to more than 50 companies have lost at least 10 percentage points of face value in just three months, according to data compiled by Bloomberg. Some have dropped a lot more, with lenders lucky to get back just two-thirds of their investment if they tried to sell.
Energy is the hardest-hit sector on the list, with more than $12 billion of loans falling more than 10 cents on the dollar. Consumer and health care follow, comprising around $8 billion and $5 billion of loans outstanding, respectively.
The SEC is hiring a chief data officer (Business Insider), Rated: B
The Securities and Exchange Commission is hiring its first chief data officer, according to a job posting for the role.
Voyager Selects Celsius Network to Manage Certain Assets (AP News), Rated: B
Voyager Digital, LLC, a subsidiary of publicly-traded Voyager Digital (Canada) Ltd (Ticker VYGR.CN), an industry-leading best execution crypto asset broker, today announced a partnership with Celsius Network, in which Celsius will manage a portion of Voyager’s digital assets.
Zopa’s P2P profits tick up but group losses widen due to heavy investment in bank (P2P Finance News), Rated: AAA
Zopa Group – which incorporates the P2P platform and upcoming digital bank – reported a pre-tax loss of £18.295m for the year ended 31 December 2018, compared to a pre-tax loss of £5.536m the previous year.
Zopa: nine in 10 shoppers confused by car finance options (Verdict), Rated: A
In a survey of 2,000 consumers, 47% of people who had recently bought a car with finance are unable to identify which type of finance deal they signed up for. Zopa estimates that the average car buyer could save up to £11,000 over the course of their lifetime by working out the best finance deal available.
Wonga customers’ average compensation payout may be just £118 (The Guardian), Rated: A
Customers who were mis-sold loans by the collapsed payday lender Wonga are expected to receive less than 10% of what they are owed in compensation after administrators revealed that only £41m will be put aside for claimants.
Payday loan alternative Savvy secures £20 million funding facility (Finextra), Rated: A
Stockport and Wilmslow based fintech company Savvy.co.uk is to create 25 jobs after securing a £20 million investment.
MEET THE FRENCHMAN WHO WANTS TO SOLVE THE UK’S HOUSING CRISIS (Business Leader), Rated: A
WHY DID YOU START BLEND NETWORK?
I started working in the financial industry as an FX trader before moving to trading gold and copper, both much more inefficient markets than FX. I realised that the UK property market was a hugely inefficient market in the sense that lenders and borrowers are not meeting. On the one hand, you have very experienced property developers across the country who are trying to access funds to build homes but traditional lenders are no longer active in providing development finance.
Instead, we lend in places such as Coventry, East Anglia, Doncaster, Northern Ireland. Northern Ireland is a very good example of our strategic approach to lending. Last year, we did around 80-85% of our business in Northern Ireland.
Crowdfunding a start up options explained for businesses and investors (What Investment), Rated: A
Crowdfunding a start up brings to mind the statement ‘Nothing worth having comes easy’, never truer than in the case of launching a start-up. Getting a new business off the ground will often require capital. Something which a lot of people don’t know how to go about getting.
- Reward based crowdfunding;
- Equity based crowdfunding;
- Debt based crowdfunding, and
- Donation based crowdfunding.
Landlords wary of tax changes (Money International), Rated: A
Half of the 200 landlords approached agreed tax changes and tougher mortgage borrowing criteria have thwarted their plans to buy more properties, while 15% admitted they had been put off buying homes to rent.
A third who still wanted to invest are considering a switch from buy to let to peer-to-peer lending secured against property, while 8% have already done so.
PPDAI Stock Soars 7% on Increase in Institutionally-Funded Loans (Capital Watch), Rated: AAA
The stock in PPDAI Group Inc (NYSE: PPDF) closed 7% higher on Wednesday, at $2.83 per American depositary share, after it announced a positive trend in funding of loans by its institutional partners and increased loan origination volume.
For the third quarter, the Shanghai-based company, which operates an online consumer finance marketplace, said in a statement on Wednesday that the volume of loans facilitated by its institutional funding partners jumped to $2.64 billion, up 91% from the second quarter. Total loan origination volume was above PPDAI’s guidance, it said, as it reached $3.51 billion, up 14% from the previous quarter.
What we learned at this year’s LendIt Fintech Europe (Business Insider), Rated: AAA
At the conference, Business Insider Intelligence identified four emerging themes that we expect to set the tone for the space for the next year: further proliferation of partnerships between banks and fintechs, increased focus on digital banks’ sustainability, accelerated innovation and disruption from small- and medium-sized business (SMB) lenders, and more challenges ahead for the UK’s P2P lenders.
- CYBG bank and price comparison site GoCompare recently partnered to offer an energy compare and switch service for all of CYBG’s B customers.
- Barclays bank partnered with SMB finance fintech MarketInvoice last year to give Barclays’ SMB clients access to MarkeInvoice’s solutions.
- French Banking-as-a-Service platform Treezor was acquired by Société Générale last year, as the bank looked to enhance its ability to innovate and decrease time to market.
Linked Finance launches ‘Beyond Brexit’ business loans (Bridging and Commercial), Rated: A
The new 18-month loan period will allow borrowers to access working capital facilities of up to €300,000 (approximately £265,194) in just 24 hours.
ID on track to double revenues as it eyes €300m+ of revenue within 2 years (Fintech Finance), Rated: A
ID Finance, the fintech operating in Europe and Latin America, saw revenue growth of over 100% in the first 9 months of 2019 and is on track to double its revenues to €90m revenue this year. The data science, credit scoring and digital finance company is now planning its first equity crowdfunding round via Crowdcube as it targets €300m+ of revenue within 2 years.
Binance Launches New Lending Program Phase (CoinCodex), Rated: A
The Binance cryptocurrency exchange has launched the latest phase of its relatively new lending program. For the program’s eighth installment, Binance is sticking with the model of short-term loans, as users only have to commit their crypto for 14 days.
A Guide to What’s Happening in the Fintech Revolution (Bloomberg), Rated: AAA
These underbanked markets, led by countries in Asia and Africa, have inspired fintech innovation that’s leapfrogging the technology available in the developed world. Ant Financial Services Group’s Alipay and Tencent Holdings’ WeChat Pay in China, Paytm in India, and Safaricom’s M-Pesa in Kenya are some well-known examples.
Take Facebook Inc.’s plan to launch a digital currency called Libra in 2020. The social network’s gigantic reach—more than 2.4 billion active monthly users—could draw a much wider audience to Libra than has used previous cryptocurrencies. For instance, global remittances by migrants reached a record $689 billion last year, according to the World Bank.
San Francisco-based 500 Startups staked 43 such companies in the 12 months ended June 30.
Goldman’s $ 1.3B Marcus burn, Neobank £200MM loss; plus 14 short takes on top developments (Lex), Rated: AAA
Goldman is losing $1.3 billion on Marcus, trying to build a Fintech leader. Etrade is going to lose $75 million from cutting trading fees to $0 to keep up with Robinhood. Revolut is losing £35 million on £60 million in revenue, with another £140 million burned by Atom, Monzo, Tandem, and the rest.
Generally speaking, from a deposit point of view, these are still all small businesses at £1 billion in assets (e.g., Betterment manages $20 billion).
The first is that the Robinhoods and Monzos of the world are 10x overpriced relative to the payments apps. I can sort of buy this — though money in motion is way easier to capture than money at rest. The second is that venture investors think a finance user is worth $1,500 in a digital bank.
Blockchain: the future of finance (Financier Worldwide), Rated: A
Recent examples of blockchain’s impact on financial markets go well beyond these initial applications or P2P lending or crowdfunding.
The first wave of applications in finance and banking is being driven by easily achievable gains in actively traded assets.
MasterCard incorporated a blockchain payment system providing vendors real time, lower cost settlements on cross-border transactions. Representing a consortium of more than 40 of the world’s largest banks, fintech firm R3 launched a payment system built on DLT platform Corda, to expedite intra-bank transfers.
St. Regis Aspen, a Colorado resort, is a partnership formed with a crowdfunding site, Indiegogo, that in lieu of a traditional IPO completed a private placement via DLT financing real estate. This sale of ‘tokens’ – fractional interests in the underlying property – raised $18m, compliant with securities laws.
Hot home loan rates starting with a 2 (mozo), Rated: AAA
The RBA has cut official interest rates for the third time this year, and already a handful of lenders have responded by slashing rates across their range of variable rate home loans. Right now, if your home loan doesn’t have a ‘2’ in front of it, you’re missing out.
OnDeck appoints Robbie Fidler as new national broker chief (IT Wire), Rated: B
Online SME lender OnDeck Australia has appointed experienced commercial lending operator Robbie Fidler as its national broker channel manager.
SPV 2030: Sharing of risks and reward (The Malaysian Reserve), Rated: A
BFS Capital Opens New Data Science and Engineering Hub in Toronto (Financial Post), Rated: B
BFS Capital, a leader in small business lending, has officially launched a data science and engineering hub in Toronto as the company accelerates its plans to develop best-in-class digital financial products for small businesses across the globe.
In early October, TIME Magazine released its inaugural list of the top 50 Genius Companies, and two online lending companies, CommonBond and Oportun were included. The magazine asked its global network of editors and correspondents to nominate companies that are inventing the future. They then evaluated the candidates by such factors as originality, influence, success, […]
In early October, TIME Magazine released its inaugural list of the top 50 Genius Companies, and two online lending companies, CommonBond and Oportun were included. The magazine asked its global network of editors and correspondents to nominate companies that are inventing the future. They then evaluated the candidates by such factors as originality, influence, success, and ambition.
What they were looking for
A video titled How We Chose the 50 Most Genius Companies of 2018 includes snippets of interviews from founders and CEOs whose companies made the list. Viewing these gives us more insight into what the magazine saw as worthy of “genius” thought. Bob Igor, CEO of Walt Disney, talks about having “constant curiosity, constant desire for more knowledge about what is new.” Luis von Ahn, CEO of Duolingo, whose company’s goal is to give “equal access to education to everybody,” reminds us that it’s “OK to fail.” Anne Wojcicki, co-founder and CEO of 23andMe, says that “it’s not that taking risks is essential, it’s that being open-minded to a different way of looking at a problem is essential.” She adds: “Risk…is essential to creating a new path and making change.”
These are all revelations that the 50 companies represented have made, whether they are time-tested and proven companies or promising start-ups.
Notables on the list
The list has a good mix of both types of companies, those which are proven winners and those that are trying to make their mark by helping to better the world. Long proven household names like Apple, Disney, and Lockheed Martin are joined by newer companies that now define so much of our world, like Amazon, Netflix, Spotify, and Pinterest, and those who look to shape the future more differently than the past, like SpaceX, Slack, and Lishtot.
And then there are the two online lending standouts–Oportun and CommonBond.
Oportun and CommonBond are moving to make money more easily accessible for sectors of the population that need it. Oportun is working to make loans available to higher risk borrowers than those that have access to more traditional means of lending while CommonBond is looking to transform access to student loans.
Oportun is a Menlo Park California company that provides emergency loans for low-income consumers who can’t get a loan from a traditional bank and who don’t want to get into the vicious cycle of high fees and triple-digit interest rates of payday lenders.
Oportun began with a focus on serving the Latino community but has expanded to open borrowing to the estimated 45 million Americans who have little or no credit history. In lieu of credit scores, Oportun relies on other data to assess applicants, such as the length of time that a person has had the same job or address.
CEO Raul Vazquez says that Oportun is “committed to building a sustainable business that helps people shut out of the financial mainstream.”
Proven Track Record
To this point, the company has proven it can make a profit while providing $5.4 billion worth of loans to people who didn’t meet banks’ criteria. In so doing, the Oportun team has helped some 600,000 customers establish credit scores and open themselves to future borrowing by reporting successful payments to credit bureaus.
A CDFI (Community Development Financial Institution), Oportun issued its first securitization in June 2013, and it announced its twelfth securitization last week, issuing $275 million of three-year asset-backed bonds secured by a pool of its investment loans. Morgan Stanley and Co. LLC served as lead book-running manager, and Goldman Sachs and Co. LLC and Jefferies LLC were joint book-runners.
As of now, the company has loans available at retail locations in nine states: Arizona, California, Florida, Illinois, New Jersey, New Mexico, Nevada, Texas, and Utah. Online loans are also available in Idaho, Missouri, and Wisconsin.
Rates of Service
The company’s interest rates average about 35 percent, a reasonable rate for high-risk borrowers.
The Economist, Consumer Reports, and The Wall Street Journal are among the publications that have reviewed the company favorably. Oportun was even named one of the three finalists in The Wall Street Journal’s 2018 Financial Inclusion Challenge.
The team heading up the company has many notables, including Vazquez, who is the former CEO of Walmart.com. Chief Credit Officer, Patrick Kirscht, previously served as Senior VP of Risk Management for HSBC Card Services Inc., and Johnathon Coblentz, who serves as CFO and CAO, is the former CFO and Treasurer of MRU Holdings Inc. and was Vice-President of Fortress Investment Group LLC.
With the rising price of college tuition and the more than $1.5 trillion in active student loans in the United States today—more than car loans and credit card debt—the market is ripe for new players in the scholastic financial space. CommonBond has been working to put a new face on student loan refinancing since 2011.
By staying small and using technology to keep costs down, CommonBond seeks to offer borrowers refinancing rates lower than those of the federal government and private banks. The firm estimates that it saves borrowers on average $24,000 over the life of their loans.
CommonBond offers three types of loans (Undergrad, Graduate, and MBA) and repackages and refinances existing loans at lower rates.
The firm offers loan terms of five, 10, and 15 years, with amounts ranging from $5,000 to the cost of tuition. The loan cap for any borrower is $500,000. The company offers the customer a personalized rate before he or she applies. Loan origination fee is two percent, and the company charges no prepayment penalties. CommonBond’s late fees might be especially attractive to college-age students, who might not always get their payments in on time. The late fee is only the lesser of $10 or five percent of the monthly payment.
Being a father of school-age children, CommonBond is a company I could see myself using in five or six years, and I read the reviews of the company as a potential customer. The reviews aren’t all glowing, but they give me an overall feel that this is a firm I could do business with, if I so needed. Fast Company named CommonBond the Most Innovative Company in Education earlier this year, and thecollegeinvestor.com, despite thinking the rates could be more competitive, continuously puts the company on its Best Companies to Finance Your Student Loan list. CommonBond is also one of only three lenders the site recommends for finding the best student loans.
Double Bottom Line
Charitable work and philanthropy being so important in today’s world, it can’t hurt for a company to have a strong double bottom line. This is one area where CommonBond sets itself apart from others in the space. Every time a loan is funded, CommonBond covers the price of a child’s education through its “Social Promise.” The firm’s partnership with Pencils of Promise has provided schools, teachers, and technology to thousands of students in the developing world, and its commitment to social equality also distinguishes it as a true difference maker in the United States. Loans and restructuring are available to anyone with a degree from a not-for-profit American university regardless of citizenship, as long as the customer meets the other criteria.
Those of us in and around the online lending space can be heartened by the addition to these two companies to this list. We can also be heartened by the continued efforts of business founders to make funds available more easily and affordably for Americans just trying to navigate the business aspects of life. Both of these companies should be recommended to those who may benefit from their services.
Written by Paul Keenan.
News Comments Today’s main news: Upgrade to issues ABS–but when? FCA warns Funding Circle clone. Funding Circle Netherlands approved for Guarantee SME Credit Scheme Participant. Today’s main analysis: The metro areas with the most fraud alerts. Today’s thought-provoking articles: The regulation of marketplace lending (A MUST-READ REPORT). LendIt, PitchIt award winners. Is China Rapid Finance close to profit? GDPR consent […]
- Today’s main news: Upgrade to issues ABS–but when? FCA warns Funding Circle clone. Funding Circle Netherlands approved for Guarantee SME Credit Scheme Participant.
- Today’s main analysis: The metro areas with the most fraud alerts.
- Today’s thought-provoking articles: The regulation of marketplace lending (A MUST-READ REPORT). LendIt, PitchIt award winners. Is China Rapid Finance close to profit? GDPR consent for data processing. The 2018 VC market is off to a strong start.
- Upgrade may issue an ABS soon. At this point, until I see an official announcement, I’m not ready to say it’s going to happen. But it wouldn’t surprise me to see it happen.
- The metro areas with the highest, lowest fraud alerts. Houston and Las Vegas top the list of the highest. Rochester and Buffalo, New York are top of the list of the lowest.
- The regulation of marketplace lending. A must-read.
- PitchIt, LendIt award winners. Congratulations to all the winners.
- Modernizing consumer lending.
- CashCall appeal could jeopardize Consumer Financial Protection Bureau.
- Optimizing mortgage loan lifecycles.
- Big banks are using non-bank middlemen to lend to subprime borrowers.
- Second chances – Mike Cagney and Renaud Laplanche.
- Blockchain gives P2P lenders a taste of their own medicine. There will always be innovation, and that’s good.
- FCA warns Funding Circle clone.
- Prestige Funds partners with Goji.
- Loan approval and payments speed.
- Higher salaries give fintechs a leg up.
- The VC market is off to a strong start.
- How global fintech trends impact banking.
- What’s going on with blockchain P2P lending startups.
- United States
- Ex-LendingClub chief’s new venture set to issue ABS (GlobalCapital), Rated: AAA
- LendingTree Ranks Metros with the Most Fraud Alerts (PR Newswire) Rated: AAA
- The Regulation of Marketplace Lending: A Summary of the Principal Issues (Chapman and Cutler) Rated: AAA
- LendIt Fintech Names PitchIt Competition Winners And Second Annual LendIt Industry Award Winners (PR Newswire) Rated: AAA
- To modernize consumer lending, it had to strip systems to the core (American Banker) Rated: A
- Appeal could jeopardize CFPB win in landmark tribal sovereignty case (Reuters) Rated: A
- Optimizing Mortgage Loan Lifecycles With Fintech (the M Report) Rated: A
- Big Banks Using Non-Bank Middlemen to Lend to Subprime Borrowers (Low Cards) Rated: A
- Two’s company (Breakingviews) Rated: A
- Blockchain makes online lenders taste own medicine (Nasdaq) Rated: A
- United Kingdom
- FCA issues warning about Funding Circle clone (Peer2Peer Finance News) Rated: AAA
- Prestige Funds partners for Innovative Finance ISA bond (The Armchair Trader) Rated: A
- The need for speed for loan approvals and payments (Credit Strategy) Rated: A
- Higher salaries giving fintech sector edge over traditional banking (Finextra) Rated: B
- China Rapid Finance: Is It Close To Making A Profit? (Seeking Alpha) Rated: AAA
- European Union
- Ministry of Economic Affairs and Climate Approves Funding Circle Netherlands As Guarantee SME Credit Scheme Participant (Crowdfund Insider) Rated: AAA
- GDPR and financial advice: Consent for data processing (Professional Adviser) Rated: AAA
- Strong start to 2018 for VC market (Digital News Asia) Rated: AAA
- How global fintech trends will impact your banking (Bank Rate) Rated: A
- What’s Happening with P2P Lending Blockchain Startups in 2018 (Equities) Rated: A
- The future of financial advice is tech and touch (Moneyweb) Rated: A
- Dipping Into Digital (Global Finance) Rated: AAA
- New Realities, New Technologies (Global Finance) Rated: B
Ex-LendingClub chief’s new venture set to issue ABS (GlobalCapital), Rated: AAA
Upgrade is said to have a private warehouse facility in place and is looking to debut a securitization in the coming months, according to two people familiar with the matter.
According to an April 2017 press release, Jefferies is advising the company on its capital markets strategy and is….
LendingTree Ranks Metros with the Most Fraud Alerts (PR Newswire) Rated: AAA
With millions of Americans affected by data breaches every year, such as recent revelations at Uber and Equifax, LendingTree decided to look at anonymized data from a sample of the over 7 million My LendingTree users to see where people are most likely to have asked a credit bureau to place a fraud alert on their credit report.
Key findings of the study:
- The average rate of fraud alert requests among all cities reviewed is 6.4 percent.
- Las Vegas and Houston tie for the highest rate of fraud alerts, at 13.6 percent.
- Miami and New York are close behind, tied at 12.9 percent.
- Rochester, N.Y. has the lowest rate of people requesting fraud alerts at 2 percent. Nearby Buffalo, N.Y. has 2.6 percent.
The Regulation of Marketplace Lending: A Summary of the Principal Issues (Chapman and Cutler) Rated: AAA
So-called “true lender” litigation remains one of the most significant risks facing the marketplace lending industry. These are cases involving a claim by a borrower or regulator that the “true lender” of a loan funded by a Funding Bank for a marketplace lender is the marketplace lender rather than the
Funding Bank. Often such litigation involves asking the court to look past the form of the loan transactions to their substance in order to ascertain which party, the Funding Bank or the marketplace lender, holds the predominant economic interest in the loans. The aim of true lender claims is to subject
the marketplace lender to federal and state regulation as a non-bank lender, enabling the claimant to pursue actions based on failure to comply with state lender licensing or usury laws.
Read the full report here.
LendIt Fintech Names PitchIt Competition Winners And Second Annual LendIt Industry Award Winners (PR Newswire) Rated: AAA
Out of eight PitchIt finalists, the judge’s winner was CreditStacks, a company that offers U.S. based premium credit cards to prime, new-to-credit customers. The audience winner was Narmi, a fintech company the helps credit unions and banks deliver a unified experience with modern and secure online banking, mobile banking and websites.
Below are the second annual LendIt Industry Award winners, per category:
Fintech Innovator of the Year
Executive of the Year
Anthony Hsieh, Founder & CEO, loanDepot
Fintech Woman of the Year
Kathryn Petralia, Co-founder & COO, Kabbage
Blockchain Innovator of the Year
Most Innovative Token Economy
Top Consumer Lending Platform
Top Small Business Lending Platform
Top Real Estate Lending Platform
Emerging Lending Platform
Excellence in Financial Inclusion
Most Promising Partnership
LendingClub + Opportunity Fund
Most Successful Cross-Border Partnership
Kasisto + DBS Bank
Most Innovative Bank
International Innovator of the Year
Top Enterprise Technology Company
Top Emerging Technology Company
Top Professional Services Company
Most Innovative Mobile Technology
Top Fintech Equity Investor
Best Journalist Coverage
Tony Zerucha, Managing Editor, Bankless Times
Top Investment Bank in Fintech
To modernize consumer lending, it had to strip systems to the core (American Banker) Rated: A
Replacing core systems can be an expensive and risky proposition for banks, but KeyCorp has decided the time is now to replace an antiquated legacy system.
The $138 billion-asset bank announced at the Oracle Industry Connect conference in New York this week that it plans to ditch its existing lending platform in an effort to digitize and modernize the lending process.
Appeal could jeopardize CFPB win in landmark tribal sovereignty case (Reuters) Rated: A
Online lender CashCall filed a notice of appeal Tuesday in a Consumer Financial Protection Bureau enforcement action that set precedent on whether consumer lenders can evade state interest rate caps by affiliating with Native American tribes and invoking tribal sovereignty. In 2016, U.S. District Judge John Walter of Los Angeles granted partial summary judgment to the CFPB, holding that CashCall was the true lender, rather than a company owned by a member of the Cheyenne River Sioux Tribe, so state laws govern CashCall loans. The company’s notice to the 9th U.S. Circuit Court of Appeals, filed by its lawyers at Latham & Watkins and Skadden Arps Slate Meagher & Flom, indicated that CashCall will challenge the landmark summary judgment decision on tribal sovereignty, as well as other rulings by Judge Walter.
Judge Walter, however, concluded that the bureau hadn’t shown it was entitled to any restitution and that CashCall had not knowingly flouted consumer protection laws. He awarded the bureau only $10.3 million in penalties.
Optimizing Mortgage Loan Lifecycles With Fintech (the M Report) Rated: A
Integrated properly into both the trading and operational side of the mortgage lifecycle, fintech can not only increase margins but also allow for lenders to originate more loans in less time and in a more efficient and secure manner. Additionally, by using fintech throughout the mortgage lifecycle, each phase of management is enhanced and therefore produces optimized outcomes leading to better investment returns, while still providing the borrower with a great customer experience.
A “High Level” Tech-Enabled Residential Mortgage Lifecycle*
*This chart is provided as a “high level” example of what types of fintech can optimize the lifecycle. It is not to be considered a complete integration or feature roadmap.
Big Banks Using Non-Bank Middlemen to Lend to Subprime Borrowers (Low Cards) Rated: A
If a borrower has a low credit score and needs a loan for a $12,000 vehicle, this would not be of interest to a large bank such as Wells Fargo. But it would be an option for a non-bank lender like Exeter Finance. Exeter would screen the applicant and approve the loan at their discretion. Then, Wells Fargo would extend a loan to Exeter. The bank is still profiting from a sub-prime loan, but they are giving the money to another lender.
This does not eliminate risk on Wells Fargo’s end. However, it does push the burden onto the non-bank lender, according to The Wall Street Journal.
Two’s company (Breakingviews) Rated: A
Silicon Valley is giving two of its most noted fintech outcasts a second chance. Former Social Finance boss Mike Cagney and erstwhile LendingClub Chief Executive Renaud Laplanche are each back with new loan ventures after losing their jobs to scandals.
Between them, both men created what are now the two largest fintech lenders, having originated or facilitated some $63 billion between them in the past few years.
Blockchain makes online lenders taste own medicine (Nasdaq) Rated: A
Blockchain is giving online lenders a taste of their own medicine. The likes of Prosper, Social Finance and On Deck Capital found cryptocurrency technology trying to steal the limelight at their annual get-together in San Francisco this week. It’s a case of the disruptors being disrupted.
FCA issues warning about Funding Circle clone (Peer2Peer Finance News) Rated: AAA
THE CITY watchdog has issued a warning to consumers about a clone of peer-to-peer lender Funding Circle.
The clone, Funding Circle Loans, had set up a website purporting to be the P2P platform.
Its website, , has since been suspended.
Prestige Funds partners for Innovative Finance ISA bond (The Armchair Trader) Rated: A
Prestige Funds, a specialist direct lending manager, is partnering with UK-based Goji to launch a Renewables Lending Bond which is eligible for inclusion in an Innovative Finance ISA (IFISA). IFISAs are a new, tax-free way for investors to access investment opportunities that are not available on stock exchanges.
The Goji Renewables Lending Bond will include a yield target of between 5.5% and 6.5% over three and five year terms. Interest payments on the bond will be supported by UK government subsidies, such as Feed-in-Tariffs.
The need for speed for loan approvals and payments (Credit Strategy) Rated: A
Arguably, consumer lending has come full circle.
But today’s consumer lenders are having to contend with raised customer expectations. “Empowered borrowers,” says consultancy firm PwC, expect not only a simple, but also a fast loan process.
Consumer lending research published by PwC found that other than economic factors (interest rates and closing costs) or “having an existing relationship,” the speed of the process was the most important factor for borrowers in choosing a lender.
Higher salaries giving fintech sector edge over traditional banking (Finextra) Rated: B
The threat from Brexit has also called into question how Britain has – and will – deal with the country’s departure from the European Union in terms of its strong worldwide financial standing. With this in mind, Joblift has analysed and compared the UK’s Fintech and traditional banking sectors over the last 12 months. The analysis shows that traditional banking has felt the effect of the competition from Fintech and the upcoming Brexit with vacancies decreasing by 3% monthly, while Fintech seems to be flourishing, with a huge growth of 9% monthly, in the face of these challenges.
China Rapid Finance: Is It Close To Making A Profit? (Seeking Alpha) Rated: AAA
China Rapid Finance (XRF) went public on NYSE on April 28, 2017, as the beginning of the IPO wave for China P2P companies in 2017. The company focuses their business on meeting the credit demand for EMMAs (Emerging Middle-class Mobile Active consumer) in China.
- China Rapid Finance (XRF) has experienced a business shift from lifestyle loans (larger in size) to consumption loans (smaller size), which will lead to bigger impact from regulatory hammer;
- Q4 earnings results didn’t satisfy investors and stock price dropped 15% in two days after the ER release;
- Despite of the short term concerns, operating efficiency has significantly improved in 2017, which makes the profitability outlook of the firm very positive.
Ministry of Economic Affairs and Climate Approves Funding Circle Netherlands As Guarantee SME Credit Scheme Participant (Crowdfund Insider) Rated: AAA
The Ministry of Economic Affairs and Climate (EZ) has reportedly approved Funding Circle Netherlands as a Guarantee SME Credit (BKMB) scheme participant.
According to AltFi, for participating firms, which are typically major banks, the BKMB provides guarantee of up to 75% of the loan amounts that fit within its criteria.
GDPR and financial advice: Consent for data processing (Professional Adviser) Rated: AAA
A firm could be in trouble with the Information Commissioner’s Office (ICO) if an individual makes a complaint about being marketed to by a firm and there is no consent in place, since this constitutes a breach of the GDPR.
Article 6 – lawfulness of processing
Processing shall be lawful only if and to the extent that at least one of the following applies:
a. the data subject has given consent to the processing of his or her personal data for one or more specific purposes;
b. processing is necessary for the performance of a contract to which the data subject is party or in order to take steps at the request of the data subject prior to entering into a contract;
d. processing is necessary in order to protect the vital interests of the data subject or of another natural person;
f. processing is necessary for the purposes of the legitimate interests pursued by the controller or by a third party, except where such interests are overridden by the interests or fundamental rights and freedoms of the data subject which require protection of personal data, in particular where the data subject is a child.
Strong start to 2018 for VC market (Digital News Asia) Rated: AAA
Mega-deals continue to shape Asian market
After rounding off 2017 at a remarkable high bolstered by megadeals, Asia continued to see large deals in Q1 2018.
Global Q1 2018 key highlights
- Global VC investment rose from US$46 billion in Q4’17 to US$49.3 billion in Q1 2018, a solid increase buoyed by five US$1 billion+ megadeals.
- The number of global VC deals declined for the fourth straight quarter, falling from 3,286 in Q4 2017 to 2,661 in Q1 2018. The number of VC deals has dropped by half since reaching a peak of 5,480 deals in Q1’15.
- The Americas set a new record for VC investment in Q1 2018, with US$29.4 billion raised across 1,782 deals. Asia raised US$14.6 billion across 317 deals, and Europe raised US$5.2 billion across 548 deals.
- Corporate participation in global VC deals set a new record for the second straight quarter, rising from 18.5% in Q4 2017 to 21% in Q1 2018.
- New and old unicorns – companies valued at over US$1 billion – attracted a significant amount of funding with US$14 billion across 32 deals. Two unicorns went public late in Q1 2018: cloud-based security provider Zscaler and cloudstorage provider Dropbox, with both companies seeing positive results to date. With Spotify set for a direct listing in April and UK-based online loan provider Funding Circle planning to go public later this year, the IPO market may be opening up.
How global fintech trends will impact your banking (Bank Rate) Rated: A
In the last few years, the U.S. has seen the launch of a whole crop of neobanks, consumer-friendly startups that are trying to change the way we manage our money. A bunch of neobanks have appeared in Europe, too (they are called challenger banks across the pond), and it seems like they are all eyeing the U.S. market.
Last year, French firm Revolut, which includes a crypto wallet and free international transfers among its features, announced its plans to expand into the U.S. Germany’s N26 recently raised $160 million from venture capital investors to fuel a U.S. expansion. Meanwhile, British startup Cleo, which is more of an AI-powered budgeting tool than a challenger bank, recently began offering its product in the U.S.
What’s Happening with P2P Lending Blockchain Startups in 2018 (Equities) Rated: A
That is why startups like Alchemy, SALT, Eth-Lend and Celsius can be game-changers not only in peer-to-peer (P2P) lending, but for the future of the American economy as well. Based on blockchain technology, these startups are committed to creating a safe, global, and accessible source of P2P lending.
The debt is then pooled into Collateralized Debt Obligations (CDO’s) which are then organized by risk and made available to purchase on the platform. This not only provides an easy and secure source of P2P funding, but creates a sustainable ecosystem and investment opportunity for anyone on the network.
The future of financial advice is tech and touch (Moneyweb) Rated: A
There is a lot of conversation around investing digitally, right now. Supporters of the idea suggest that investors should cut out their brokers or financial advisors and take their money online by investing through digital platforms. The argument goes that while an advisor might give your investments a bit of an edge in terms of growth, the fees they charge tend to negate the value that they add.
Since both financial advisors and technology have such an important role to play in supporting individuals in making the right financial decisions, and in the convenience of access to information about their spread of financial products, I recommend a “touch-and-tech” model of engagement.
Dipping Into Digital (Global Finance) Rated: AAA
The MENA fintech sector is booming, with more than $100 million raised by start-ups in the last decade. Dubai-based digital research network Wamda’s State of Fintech report released last March predicted the total for just that year would reach $50 million, an increase of 270% over 2016.
Although online payments, remittances, crowdfunding and peer-to-peer lending attracted the largest tickets, fast-growing fintech subsectors include cryptocurrencies, artificial intelligence and digital wallets.
In 2017 some of the major deals included a $20 million capital injection in Saudi Arabia’s online payment solution PayTabs; a $10 million round by three investors, including UK firm Gocompare, for Emirati price-comparison platform Souqalmal; $13 million for Emirati Cloud HR and insurance platform Bayzat; $5 million for Emirati peer-to-peer lending company Beehive; and $3.5 million for Emirati comparison website Yallacompare.
Lebanon was one of the first MENA countries to invest massively in the digital economy. Back in 2013, the central bank, Banque du Liban, issued a circular guaranteeing up to $400 million worth of investments in innovative technologies, later raising that amount to $600 million. Today, the country is home to 15 funding institutions, as well as a myriad of accelerators and start-up support programs.
New Realities, New Technologies (Global Finance) Rated: B
Surprisingly, the UAE accounts for 70% of the investments in areas such as digital banking services, cryptocurrencies, ecommerce and fintech start-up deals. For a nascent market, the growth rate is explosive, with dozens of new start-ups launching every year. So far, online payments, remittances, crowdfunding and peer-to-peer lending have attracted the largest investments. Late last year, Bahrain introduced the world’s first shariah-compliant fintech consortium.
News Comments Today’s main news: More LendingClub-IEG drama.Black Fish raises $145M.Moneygram partners with Ripple.Kreditech expands into India with Mambu. Today’s main analysis: JP Morgan Chase’s investments into digital technology.Is Yirendai undervalued? Today’s thought-provoking articles: Investors go into debt to buy bitcoin.Small business financing trends.How open banking could change how people manage money.Banks, trade finance, and […]
- Today’s main news: More LendingClub-IEG drama.Black Fish raises $145M.Moneygram partners with Ripple.Kreditech expands into India with Mambu.
- Today’s main analysis: JP Morgan Chase’s investments into digital technology.Is Yirendai undervalued?
- Today’s thought-provoking articles: Investors go into debt to buy bitcoin.Small business financing trends.How open banking could change how people manage money.Banks, trade finance, and big data.ESG and credit risk.Myanmar’s focus on SMEs.
- More on the LendingClub/IEG Holdings drama. AT: “This is more about IEG Holdings and its bizarre founder Paul Mathieson, who claims to have left Australia in fear of his life.”
- IEG Holdings is planning a cryptocurrency for lending.
- Investors buy bitcoin with debt. AT: “Am I the only one thinking this is foolish?”
- Small business financing trends. AT: “A heavy focus on online lending.”
- JP Morgan Chase teardown on digital technology. AT: “Besides Goldman Sachs and Citi, no other big bank is investing in digital technology like JP Morgan Chase. Whether their investments will make them a strong competitor in digital banking remains to be seen, but this is one area–at least, in the U.S.–that desires way more exploration and focus than it’s getting.”
- Nav facilitated more than 20,000 small biz credit approvals in 2017. AT: “Congratulations.”
- Bono investment fund backs Acorns.
- LendingPoint acquires LoanHero. AT: “LendingPoint is making some moves as of late.”
- Oportun is opening 20 Florida offices.
- Key trends in fintech. AT: “Some of these are obvious, but I like the mention of emerging economies because some, like Africa and Latin America, tend to get forgotten.”
- Google rebrands payments tools into one umbrella.
- Ladder nabs $30M.
- Fifth Third regains top CRA grade, enters M&A.
- Beginners guide to college loans.
- Roostify hires VP of engineering.
- Roofstock appoints CMO.
- Open banking could change how people manage money. AT: “No kidding. It will change how banks acquire and attempt to retain customers, too.”
- ThinCats looks for a great year in SME lending.
- Loan Store to reduce interest rates on instant cash loans.
- Crowdstacker joins P2PFA.
- Yirendai undervalued, says analyst.
- Black Fish raises $145M.
- Renren poised to grow with blockchain.
- Dianrong partners with Dalian Finance Development Bureau.
- Shangai tightens supervision of finance sector.
- Moneygram partners with Ripple.
- How banks can use trade finance, data to increase wallet share.
- Principles, ESG, credit risk.
- ABS braces for more auto deals.
- Ways fintech will change the world. AT: “Some interesting insight into payments and lending.”
- Overstock’s innovation and expansion. AT: “And people are talking about Amazon.”
- TradePlus24 partners with Trade Ledger.
- Bankers fear Amazon-like tech disruption. AT: “Maybe they should fear being Overstocked.”
- Karma token trading opens.
- United States
- Lending Club has a bitcoin pivoting suitor (Financial Times), Rated: AAA
- SeeThruEquity Issues Update on IEG Holdings Corporation (Bay Street), Rated: A
- Desperate to get into bitcoin, investors slip into debt (CNBC), Rated: AAA
- Small Business Financing Trends To Stay Abreast Of (CXO Today), Rated: AAA
- JPMorgan Chase Competitive Strategy Teardown: How The Bank Stacks Up On Fintech & Innovation (CB Insights), Rated: AAA
- Online Marketplace Lender Nav Facilitated More Than 20,000 Small Business credit Approvals in 2017 (Crowdfund Insider), Rated: A
- Bono’s Fund Makes Its First Fintech Investment, Backing Acorns (Bloomberg), Rated: A
- Georgia Company Acquires S.D. Fintech Startup LoanHero (San Diego Business Journal), Rated: A
- Small-dollar lender Oportun to open 20 offices in Florida (American Banker), Rated: A
- 6 Key Trends in Fintech to Watch in 2018 (Lend Academy), Rated: A
- Google Pay brings payment tools under a single brand (Tearsheet), Rated: A
- Ladder Secures $ 30M Series B Led by RRE Ventures (coverager), Rated: A
- Fifth Third regains top CRA grade, an entree to M&A (American Banker), Rated: A
- A Beginner’s Guide to Applying for College Loans (Student Loan Hero), Rated: A
- Roostify adds tech veteran Adnan Habib as vice president of engineering (Housingwire), Rated: B
- Roofstock Appoints Suresh Srinivasan as Chief Marketing Officer (BusinessWire), Rated: B
- United Kingdom
- An invisible banking reform that ‘could fundamentally change how we manage our money’ is days away (Business Insider), Rated: AAA
- ThinCats Says 2018 is Poised for Growth in SME Lending (Crowdfund Insider), Rated: A
- Loan Store Reveals to Reduce Interest Rates on Instant Cash Loans for the UK People (MENAFN), Rated: A
- Crowdstacker joins the Peer-to-Peer Finance Association (P2P Finance News), Rated: B
- 3 Growth Stocks at Deep-Value Prices (The Motley Fool), Rated: AAA
- Chinese finance platform Black Fish raises $ 145m from Gobi, Lightspeed, others (Deal Street Asia), Rated: AAA
- China’s Renren Is Poised To Unlock Value From Its Investment Portfolio And Grow With Blockchain (Seeking Alpha), Rated: A
- Dianrong Signs Strategic Agreement with Dalian Finance Development Bureau & Dalian Finance Industry Investment Group (PR Newswire), Rated: A
- Shanghai tightens financial sector supervision (Ecns), Rated: B
- European Union
- Rocket Internet CEO says ready to pounce with cash pile (Business Insider), Rated: AAA
- MoneyGram Signs Deal to Work With Currency Startup Ripple (WSJ), Rated: AAA
- How Banks Can Use Trade Finance Services and Data to Increase Share of Wallet (Traxpay), Rated: AAA
- PRINCIPLES, ESG, AND CREDIT RISK (All About Alpha), Rated: AAA
- ABS braces for more auto deals after strong start to year (IFR), Rated: A
- FROM BANKING TO BITCOIN, FINTECH IS POISED TO CHANGE THE WORLD (Tech Genix), Rated: A
- Overstock.com’s 2017 Highlights: Innovation, Expansion, and Recognition (Business Insider), Rated: A
- Global lender selects Aussie fintech, Trade Ledger, as worldwide technology partner (PR Newswire), Rated: A
- Bankers fear they will get Amazon-ed in tech disruption (Financial Times), Rated: A
- Karma token trading opens after successful $10 million ICO campaign (Crypto Ninjas), Rated: B
- German Online Lender Kreditech Heads to India (Bank Innovation), Rated: AAA
- Kreditech selects Mambu’s SaaS banking engine for its passage to India (Finextra), Rated: A
- NiYO Solutions Raises $ 13.2M in Series A Funding (FINSSMES), Rated: A
- Myanmar takes small steps towards providing greater liquidity for SMEs (Myanmar Times), Rated: AAA
- Cloud Lending Solutions Recognized as a Top 25 FinTech Company of 2017 (BusinessWire), Rated: B
- Local digital currency eyes real estate disruption (ITWeb), Rated: AAA
Lending Club has a bitcoin pivoting suitor (Financial Times), Rated: AAA
Lending Club has all kinds of problems: a history of profit warnings, faint traces of scandal after a management upheaval almost two years ago, and a share price still more than 80 per cent adrift from its peak.
Add to that list: a bizarre, crypto-fuelled activist campaign waged by a Las Vegas-based payday lender called Paul Mathieson, who told authorities in his native Australia that he fled to America in 2008 because he feared being killed by a mobster.
Mathieson’s case for change at Lending Club, laid out in a letter to the company’s board on 2 January, is not a terrible one, on the face of it. He argues that the cost structure at the loss-making company, a pioneer in peer-to-peer lending, is “excessive,” noting fancy headquarters in San Francisco and “hundreds” of “excess” developers. He says that the board should consider a pivot to using its own balance sheet to lend, rather than acting as a broker, taking fees for matching borrowers with lenders. Underwriting has been sloppy, he says, resulting in sub-par returns to investors.
Mathieson is offering 13 shares in his own penny-stock company, IEG Holdings, for every share in Lending Club. At the time of the offer on Monday morning, that was a premium of 19 cents, or about 5 per cent.
SeeThruEquity Issues Update on IEG Holdings Corporation (Bay Street), Rated: A
IEG Holdings Corporation (OTCQB: IEGH) provides online unsecured consumer loans under the brand name “Mr. Amazing Loans” via its website, www.mramazingloans.com, in 20 US states. The company offers $5,000 and $10,000 personal loans over a five-year term at rates ranging from 19.9% to 29.9% APR. IEG Holdings plans future expansion to a total of 25 US states, which would cover 240mn people and represent approximately 75% of the US population.
Since 2013, IEGH has obtained additional state lending licenses, and they are licensed and originating direct consumer loans in 20 states including: Alabama, Arizona, California, Florida, Georgia, Illinois, Kentucky, Louisiana, Maryland, Missouri, Nevada, New Jersey, New Mexico, Ohio, Oregon, Pennsylvania, Texas, Utah, Virginia, and Wisconsin. The Company was founded in 2010 and is headquartered in Las Vegas, Nevada.
IEG Holdings Plans to Create its own IEGH Crypto/Blockchain Currency Backed by Gold Metal and SEC Registration as a Security
IEGH announced that its wholly owned subsidiary, Investment Evolution Crypto, LLC (“Crypto”), is negotiating to purchase a gold project with gold metal in the ground and prospecting licenses. IEG Holdings plans to utilize a gold resource to investigate creating, through Crypto, and a joint venture with Investment Evolution Corporation, also a wholly owned subsidiary of IEG Holdings, its own gold metal-backed crypto/blockchain currency, and potentially offer loans and accept loan repayments in its own crypto/blockchain currency.
IEGH increases loan originations
The company stated that it provided $960,000 in new consumer loans through its online property mramazingloans.com, from the October 2017 to December 2017 period. This represented a 12.3% increase over its July to September 2017 operating period, during which the company’s new loan originations were $855,000.
Desperate to get into bitcoin, investors slip into debt (CNBC), Rated: AAA
Roughly 18 percent of people who buy bitcoin use a credit card to do so, according to a new survey by loan marketplace LendEDU. Of those, 20 percent have not paid off their balance. The phrase “buy bitcoin with credit” has been trending on Google for weeks.
Another problem with going into debt for cryptocurrencies is that people will have to pay back their debt before they see sufficient returns, said Erika Safran, founder of Safran Wealth Advisors. That may require tapping other resources, potentially creating further financial trouble.
Small Business Financing Trends To Stay Abreast Of (CXO Today), Rated: AAA
- Traditional bank loan rejections are notoriously high in all markets
- Small Business Administration (and equivalent agencies) are nefarious for overextending the time-to-credit tolerances of small businesses
- Volatility of markets, and exposure of almost all markets to disruption by startups could pose urgent cash needs for businesses, which are generally not considered for loan applications by traditional lenders.
Online Lending And Its Deepening Hold Over The Small Business Finance Market
In 2014, a Federal Reserve (US) survey concluded that one in five small business owners opted for loans from online lenders. Since then, the proliferation of online lending platforms has been on the surge, to the extent that traditional brick and mortar lending institutions have also had to move base to the online domain. In the coming years, multiple factors will result in the success and sustainability of online lending platforms. These include:
- Growing confidence among small business owners to trust online lending platforms
- Availability of cheaper, quicker, and more convenient loans
- Options to truly personalize and customize the loan repayment terms to suit the business’ interests
The Call for Transparency in the Online Lending Market
Though the online lending market has been growing year on year, this doesn’t detract from the concerns around lack of transparency in the way some of these platforms operate. Some of the key concerns are around undisclosed APRs and hidden fees. In fact, some online lenders have been castigated for charging significantly high rates of interests from borrowers, often with service quality issues post-approval. Thankfully, there’s already some progress towards bringing a degree of regulation in place for online lending platforms to be at par with traditional lending regulations.
JPMorgan Chase Competitive Strategy Teardown: How The Bank Stacks Up On Fintech & Innovation (CB Insights), Rated: AAA
JPMorgan is making a bigger push into payments technology as digital banking becomes a strategic priority.
In 2016, the bank spent $9.5B on technology and Dimon has committed $300M alone to improve JPMorgan’s technology for its asset management products. Relative to its peer group, JPM claims the highest number of mobile banking customers and its Chase Mobile app currently sports a 4.7 (out of 5) rating in the App Store.
Earnings call analysis – Barclays, Bank of America, Morgan Stanley talking up digitization
- JPM discussed continued digital consumer banking growth, which grew 6% in Q3’17.
- Bank of America spent portions of its Q1’17 and Q3’17 talking about digital banking initiatives and technology investment. Specifically, CEO Brian Moynihan mentioned the bank spent $2.25B on technology initiatives in the first three quarters of 2017. The bank also now sees mobile devices account for 1 of every 5 deposit transactions.
- On Morgan Stanley’s Q3’17 earnings call, Morgan Stanley CFO Jonathan Pruzan mentioned the bank is beta testing new customer-facing digital products it plans to launch, potentially in the robo-advisory space. Specifically, Pruzan noted: “When we think about our wealth business, it’s a business that’s built on scale. And it’s built on the fact that people with wealth want personal advice. So it’s going to be both a mix of technology and digital with the personal element of the advice channel. And we think that’s the winning formula going forward.”
Based on the data, JPMorgan ranks ahead of most bulge bracket banks when it comes to overall fintech investment since 2013, but behind its peers Goldman Sachs and Citi.
Online Marketplace Lender Nav Facilitated More Than 20,000 Small Business credit Approvals in 2017 (Crowdfund Insider), Rated: A
Nav, a small business marketplace lending platform, announced this week it has facilitated more than 20,000 small business credit approvals in 2017.
The company currently has more than 327,000 entrepreneurs now using its platform to manage their data and access capital.
Bono’s Fund Makes Its First Fintech Investment, Backing Acorns (Bloomberg), Rated: A
The Rise Fund, a private investment firm co-founded by the U2 lead singer, is making its first known bet on a fintech business by backing Acorns Grow Inc., said people familiar with the matter, who asked not to be identified because the details are private.
Georgia Company Acquires S.D. Fintech Startup LoanHero (San Diego Business Journal), Rated: A
LoanHero, one of San Diego’s few financial technology startups, has been acquired by Georgia-based company LendingPoint.
Terms of the deal, announced Jan. 11, were not disclosed.
Small-dollar lender Oportun to open 20 offices in Florida (American Banker), Rated: A
Oportun, a community development financial institution that provides small loans to individuals with little or no credit history, is planning to open 20 lending offices in Florida.
The Redwood City, Calif.-based lender said this week that it has already opened four offices in Miami and Hialeah and that it expects to add 16 more in the Sunshine State, primarily in South Florida, by the end of the year.
6 Key Trends in Fintech to Watch in 2018 (Lend Academy), Rated: A
- Convergence of Software and Financial Products One of the important lessons that Square taught the market is that bundles of software solutions (loyalty, POS, analytics, scheduling and many others) and lending are essential drivers in advancing growth of payment processing.
- The Power of the Machines Companies like LendingClub are using machines to discover new relationships and patterns to introduce more tailored financial offers to their customers.
- Emerging Economies Many growing companies in Africa, Asia, and Latin America are developing and adopting financial solutions, often faster and with more innovation than in developed economies.
- Last year, Alipay and WeChat processed nearly $3 trillion of payments, up from $80 billion in 2012
- In Kenya last December, fintech lending companies like Branch and Tala ranked higher in the Google Play Store than Facebook and Instagram.
- Wealth Management
- Rise of Crypto and Blockchain
Google Pay brings payment tools under a single brand (Tearsheet), Rated: A
The Internet giant is finally putting its many payments capabilities — Google Wallet, Android Pay and Pay with Google — under a single name, Google Pay, after lagging for years behind Apple Pay and Samsung Pay.
Ladder Secures $ 30M Series B Led by RRE Ventures (coverager), Rated: A
CA-based life insurance MGA Ladder announced it has raised $30M in a Series B round led by RRE Ventures, with participation from Thomvest Ventures, as well as Ladder’s existing investors: Canaan Partners, Lightspeed Venture Partners and Nyca Partners . Ladder launched its fully-digital life insurance solution in California on January 10, 2017, and has since expanded to nearly every state across the country.
Fifth Third regains top CRA grade, an entree to M&A (American Banker), Rated: A
Fifth Third Bancorp has received top marks from the Federal Reserve on its most recent Community Reinvestment Act examination as expected.
Fifth Third announced the results on Wednesday, saying in a press release that the Fed gave it an “outstanding” rating on its most recent exam. The Cincinnati company had said in a regulatory filing last month that it expected to ace the test, which covered the period between Jan. 1, 2014, and June 30, 2016.
A Beginner’s Guide to Applying for College Loans (Student Loan Hero), Rated: A
Student loan debt statistics show that more than 70 percent of students graduating from four-year colleges have debt, so you aren’t alone if you need to borrow to cover educational costs.
Step 1: Understand your options
- Federal loans for students
- Federal loans for parents
- Private loans for students
- Private loans for parents
Step 7: Determine if you’ll need to apply for private loans
- Family contributions if parents or other family members are willing and able to pay
- Scholarships or grants from community groups or other sources
- Parent PLUS Loans
- Private student loans
Step 8: Learn how to apply for private student loans
Because there are many private student loan lenders, it’s a good idea to shop around. You should consider:
- Loan eligibility requirements: What do you need to qualify?
- Loan terms: How long do you have to repay the loan?
- Repayment terms: When do you need to start repaying, and is there a prepayment penalty?
- Fees: Is there a cost to apply for the loan or a loan origination fee?
- Interest rates: Is the rate fixed or variable? How much will you pay to borrow?
You can visit our private student loan marketplace to find private student loan lenders offering loans to parents and students.
Here are the top 6 lenders of 2018!
|LENDER||RATES (APR)||ELIGIBLE DEGREES|
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|2.58% – 7.25%||Undergrad
|2.57% – 6.39%||Undergrad
|2.76% – 7.25%||Undergrad
|2.99% – 5.15%||Undergrad
|VISIT LAUREL ROAD|
|2.74% – 7.26%||Undergrad
|3.11% – 8.46%||Undergrad
Roostify adds tech veteran Adnan Habib as vice president of engineering (Housingwire), Rated: B
Roostify announced Thursday that it hired Adnan Habib as the company’s new vice president of engineering.
In this role, Habib will lead Roostify’s growing product delivery team and will be responsible for making improvements to the Roostify’s digital lending platform.
Roofstock Appoints Suresh Srinivasan as Chief Marketing Officer (BusinessWire), Rated: B
Roofstock (www.roofstock.com), the leading online marketplace for buying and selling leased single-family rental homes, today announced the strategic hire of Suresh Srinivasan as chief marketing officer. Srinivasan has 20 years’ experience leading marketing, product, and e-commerce functions at Fortune 500 and high-growth tech startups. Most recently serving as the SVP of Marketing for Xome, Srinivasan brings a deep understanding of the fast-growing real estate technology sector to Roofstock where he will be responsible for accelerating growth of Roofstock’s marketplace for single-family rental homes and developing the company’s partnership network.
An invisible banking reform that ‘could fundamentally change how we manage our money’ is days away (Business Insider), Rated: AAA
Regulators in Europe and the UK are ordering banks and credit card companies to share customer data with other companies if their customers agree. The companies will also be able to carry out payments on a customers’ behalf.
Open Banking forces lenders to offer a digital “fire hose” of data that any third party can use to get standardised access — provided the startup is registered with the UK Financial Conduct Authority (FCA) and the customer agrees to share their data. They won’t have to negotiate deals with banks, just plug into their digital systems and go.
The aim of Opening Banking is to give customers greater control over their data and to encourage account switching.
An investigation by the UK Competition and Markets Authority in 2015 found just 3% of customers switched their banks in the last year, meaning many were left with accounts that were not right for them.
ThinCats Says 2018 is Poised for Growth in SME Lending (Crowdfund Insider), Rated: A
ThinCats says 2018 is poised for growth. The online lender reports that December was a record month booking £12 million of funding listed on the platform followed the biggest-ever ThinCats-listed loan of £6.7 million to the Chelsea Yacht & Boat Company at the end of September.
Loan Store Reveals to Reduce Interest Rates on Instant Cash Loans for the UK People (MENAFN), Rated: A
Loan Store is the responsible lending hub that reveals to reduce the interest rates on instant cash loans for the UK people.
Hennery Dicosta, a senior adviser of Loan Store, has offered the complete details about this announcement. This is what he said- In a recent scenario, people usually try to borrow a small loan amount. That is why we have decided to provide the loans for bad credit people with no guarantor and no fees on an instant decision to resolve their short term emergencies. We never charge any processing fee and we are now providing these loans on quite low rates of interest. Besides, we do not judge the creditworthiness of the borrowers with their credit rating and give an instant decision on their loan request.
Crowdstacker joins the Peer-to-Peer Finance Association (P2P Finance News), Rated: B
CROWDSTACKER has joined the Peer-to-Peer Finance Association (P2PFA), becoming the self-regulated trade body’s eighth member.
The business lending P2P platform will be represented by chief executive Karteek Patel.
3 Growth Stocks at Deep-Value Prices (The Motley Fool), Rated: AAA
With that in mind, we asked three Motley Fool investors to each profile a company that has a low valuation now compared to its earnings-growth potential. They identified Yirendai (NYSE:YRD), Criteo S.A.(NASDAQ:CRTO), and Changyou.com (NASDAQ:CYOU) as strong contenders trading at attractive discounts.
China’s first P2P online lending platform
The Chinese P2P lending market blossomed in the late 2000s, catering to customers who were underserved by traditional banks, and is worth about $60 billion today.
Analysts expect Yirendai’s revenue and earnings to rise 74% and 14% respectively this year, followed by 43% revenue growth and 41% earnings growth next year. Yet the stock trades at just 14 times earnings, compared to an industry average of 26 for credit service providers. Based on those numbers, Yirendai looks likely an undervalued growth stock.
But there are some obvious reasons why investors are discounting it.
First, Yirendai is a subprime lender. Just 1.7% of its loans were rated as prime “Grade A” last quarter. Another 8.7% were Grade B, and 14.1% were Grade C — but 75.5% were rated Grade D. Yirendai collects higher fees from lower rated borrowers, but its business could collapse if its delinquency rates rise.
The company only discloses delinquency rates for loans past due by 15 to 89 days, and that rate came in at a low 1.8% last quarter. But it doesn’t report any data on loans delinquent for over 90 days.
Chinese finance platform Black Fish raises $ 145m from Gobi, Lightspeed, others (Deal Street Asia), Rated: AAA
Black Fish, a consumer finance platform based in China’s Nanjing region, has received $145 million in a series A round from a cluster of firms including Lightspeed China Partners and Shanghai and Kuala Lumpur based Gobi Partners.
Others who participated in the round include Morningside Venture Capital, JAFCO Asia, Fullcent Capital and Zhang Tao, founder of Dianping.com.
At this point, the average annual growth rate of consumer finance is 16.4 percent.
China’s Renren Is Poised To Unlock Value From Its Investment Portfolio And Grow With Blockchain (Seeking Alpha), Rated: A
Renren holds a significant investment portfolio that is easily worth $12 per share. This value will likely be realized in the near term due to multiple catalysts.
The company has started to get involved with blockchain-related businesses, which potentially turns them into a “blockchain play”.
This situation leads to an asymmetrical payoff structure in which there is very little downside and significant upside. My target price is $18.
Renren was an early VC investor in Sofi, taking part in its seed round of financing as well as a later follow-on round. They currently hold a 13% stake in SoFi, having sold 14.1% of their holdings (representing 2% of SoFi) in April 2017 for $92 million.
Dianrong Signs Strategic Agreement with Dalian Finance Development Bureau & Dalian Finance Industry Investment Group (PR Newswire), Rated: A
Dianrong and the Dalian Finance Development Bureau and Dalian Finance Industry Investment Group (DFIIG) recently signed a strategic cooperation agreement to drive financial innovation in Dalian and across China. According to the agreement, Dianrong will develop a series of specific projects in partnership with the Dalian government, including:
- Assist the Dalian Finance Development Bureau in creating a financial technology (fintech) cloud platform to provide fintech capabilities for small loan and guarantee companies, and other small and medium-sized financial institutions in the region and at large. Tools and services will include sophisticated fraud detection, big-data risk management tools, payment channel integration, and compliance reporting. The fintech cloud platform will also provide regulators with easier monitoring of local lending activities and trends in an ongoing and comprehensive way, helping them provide timely policy guidance and support on risk management.
- Work with DFIIG to establish a special Internet finance investment fund for Dalian. The fund will focus on investment in fintech projects and startups with the potential to strengthen Dalian’s new economy and financial services industry.
- Develop a supply-chain trading platform in Dalian utilizing advanced fintech and blockchain capabilities to help more small and medium-sized suppliers secure needed funding. Last year, Dianrong created the first blockchain platform for supply-chain finance with FoxConn Group, a global leader in consumer electronics.
Shanghai tightens financial sector supervision (Ecns), Rated: B
Shanghai is one of China’s largest financial markets by market trading volume. In 2017, its trading volume was 1,438 trillion yuan ($220.9 trillion).
Shanghai has already launched a campaign against fraud and illegal behavior in financial consumer markets, such as internet-based peer-to-peer lending, cash loans to college students, and pay-day loans.
Rocket Internet CEO says ready to pounce with cash pile (Business Insider), Rated: AAA
Germany’s Rocket Internet needs to hold on to its mountain of cash so it can compete with rivals from the United States and China and pounce when investment opportunities arise, the chief executive said in an interview.
Rocket is invested in more than 100 start-ups, including in financial and property tech, logistics and travel sites, with its stakes in the five biggest of them potentially worth more than 1 billion euros to Rocket, according to Berenberg bank.
MoneyGram Signs Deal to Work With Currency Startup Ripple (WSJ), Rated: AAA
The Dallas-based company agreed to test XRP as a tool for reducing money-transfer costs and settlement times.
How Banks Can Use Trade Finance Services and Data to Increase Share of Wallet (Traxpay), Rated: AAA
While global trade presents tremendous growth opportunities, businesses of all sizes are none-the-less finding it difficult to access much needed credit, resulting in a global trade finance gap. According to an Asian Development Bank’s (ADB) 2017 Trade Finance Gaps, Growth, And Jobs Survey, that gap was $1.5 trillion in 2016.
Non-financial institution competitors are aggressively targeting this market, using innovations such as blockchain to develop products and tools that not only replace outdated paper and manual-based processes, but also deliver unprecedented levels of cybersecurity that are critical in today’s digital transaction space. The same ADB survey revealed more than $13 billion in venture capital was invested in FinTech trade finance in 2016 alone.
The recent Simmons & Simmons Hyperfinance studyof the world’s leading trade banks found that only 7% believe they are at the forefront of digital innovation in spite of the fact that 80% of innovation leaders report digitally-driven products and services introduced over the past three years have expanded revenue growth. This illustrates the reality that financial institutions recognize the importance of developing a digital strategy, but few are moving aggressively enough to take advantage of these new technologies.
PRINCIPLES, ESG, AND CREDIT RISK (All About Alpha), Rated: AAA
The question before the house right now, though, is: what about the credit rating agencies? The question comes in three parts: there are the global CRAs; the smaller/regional CRAs in most of the world, and regional CRAs in the special case of China.
First, the global CRAs [there are just two of them, Moody’s and S&P] are making “strong efforts” to incorporate an understanding of ESG issues. They are hiring staff with ESG backgrounds, equipping their existing analysts with the relevant expertise, and drawing on third party providers.
Then there is China. Its CRAs include Dagong Global, China Chengxin, and Golden Credit Ratings. The idea of integrating ESG into their analyses is thus far limited to the issue of green bonds, that is, bonds issued for the development of brownfield sites. Government policy in China encourages green bonds and the CRAs have responded. The resulting assessments are focused on the “E,” not so much the “S” or the “G.” And their environmental assessments rely on measuring the impact of the project the bond aims to finance.
- Research very generally supports the hypothesis that there exists a causal link between ESG factors and the credit worthiness of a borrower;
- Academic research in limited in that it is too exclusively content to measure credit risk by credit ratings, rather than testing the ratings themselves against alternative measures;
- But some research does employ the spread of credit default swaps as an independent measure of risk;
- Anecdotal observation indicates a clear link between G and defaults, although the linkage between E and S and defaults is more difficult to pin down;
- There is much evidence in the linkage of ESG to macroeconomic factors and potential growth, which in turn are important to sovereign risk in particular.
ABS braces for more auto deals after strong start to year (IFR), Rated: A
The asset-backed bond market is braced for a slew of new issues next week, with deal flow expected to be dominated by auto issuers including BMW and Mercedes.
Just two issuers sold deals this week – GM Financial and Consumer Portfolio Services – and both auto trades were met with strong demand from investors. One banker on the GM deal said the deal was over-subscribed across the capital stack.
The biggest tightening though was seen on the smallest and lower rated tranches. The 3.58-year Class B, rated Aa3/AA by Moody’s and Fitch, priced at 30bp over interpolated swaps versus guidance of 35-40bp and whispers of 45bp area.
The 3.58-year Class C, rated A1/A, priced at 50bp over interpolated swaps versus guidance of 55-60bp and whispers of 65bp area.
FROM BANKING TO BITCOIN, FINTECH IS POISED TO CHANGE THE WORLD (Tech Genix), Rated: A
To give you a perspective, venture capitalists invested more than $13 billion across 840 different fintech holdings in 2016, according to a report by KPMG. This is 7 percent more than they invested in 2015.
According to the McKinsey report, five areas will see high growth over the next decade. They are consumer finance, mortgage, lending, retail payment, and wealth management.
PayPal handled $1.73 billion worth of transactions in the first quarter of 2017 alone, representing a 30 percent increase year-on-year.
Borrowing and lending
However, the delinquency rates have been increasingover the last few years. These rates have increased from 0.56 percent in January 2015 to 0.75 percent in December of the same year.
Overstock.com’s 2017 Highlights: Innovation, Expansion, and Recognition (Business Insider), Rated: A
Overstock’s blockchain-focused subsidiary, Medici Ventures, named its board of directors in 2017, and also saw a number of its portfolio companies continue to use blockchain to revolutionize industries including capital markets, money and banking, property registry, voting, identity, and underlying blockchain technology, including:
- tZERO, the world’s first SEC approved, blockchain-based alternative trading system, launched its initial coin offering (ICO), which attracted over 10,000 subscribers and raised $100M in commitments in the first 12 hours of its pre-sale. A significant portion of the tZERO security tokens issued will be available to accredited investors in the public sale beginning in January, 2018.
- DeSoto Inc., a joint venture between Overstock.com founder and CEO Patrick Byrne and world-renowned economist Hernando de Soto, was created to develop a global property registry system to surface the property rights of billions of people in the developing world.
- Bitt, a Barbados-based financial technology company using blockchain to create central banking tools and mobile money applications, named Rawdon Adams, son of former Barbadian Prime Minister Tom Adams, as its CEO. Bitt also fully launched its new mMoney digital payment product, bringing to market a blockchain-based mobile wallet that allows users to participate in digital transactions on their smartphones without the need for a traditional bank account, helping to foster financial inclusion in the region.
- South-American based Ripio (formally known as BitPagos), participated in an ICO that raised $37M to fund its Ethereum-based peer-to-peer lending platform, Ripio Credit Network.
- Belgium-based SettleMint launched a token sale for its DataBroker DAO, a peer-to-peer marketplace created to provide Internet of Things (IoT) sensor-owners with a clear path to data monetization, and data consumers with a decentralized marketplace in order to buy IoT sensor data. SettleMint also signed an agreement with The Islamic Research and Training Institute, the research arm of the Islamic Development Bank Group, to work with local partner Ateon on developing blockchain-based financial products that can be used to support development and inclusion in IsDB member countries.
Global lender selects Aussie fintech, Trade Ledger, as worldwide technology partner (PR Newswire), Rated: A
Zürich-based lender, TradePlus24, has selected Australian deep tech startup, Trade Ledger, as its global technology partner to roll out its new trade insurance wrapped lending product across their European lending network, and enter the Australian market.
Bankers fear they will get Amazon-ed in tech disruption (Financial Times), Rated: A
According to IDC, only about a quarter of US bank technology budgets is spent on digital transformation, as opposed to business as usual. They expect this to grow to nearer 40 per cent in 2020.
Secondly, this spending could substantially boost banks’ productivity, and profits.
Banks will drive up the cost of customer acquisition for start-ups who will increasingly struggle unless they build network effects and scale very quickly. Roboadvisers and peer-to-peer lenders will be on heightened alert. Some start-ups will need to rethink their plans to disrupt and look to form partnerships instead.
Changes in financial regulation, such as a lighter touch fintech charter being examined in the US or the second payment services directive in Europe, could potentially make this more likely. The tech giants have the brands, customer reach, digital processes and flair to develop good products, and to take swift advantage of any regulatory changes.
Karma token trading opens after successful million ICO campaign (Crypto Ninjas), Rated: B
German Online Lender Kreditech Heads to India (Bank Innovation), Rated: AAA
German online lender Kreditech is making its way to India, Bank Innovation has learned.
For this expedition, the fintech has teamed up with SaaS banking platform Mambu for providing short-term lending products specifically tailored to local consumers.
Kreditech selects Mambu’s SaaS banking engine for its passage to India (Finextra), Rated: A
Kreditech currently operates in Europe and Latin America and will expand into India in early 2018, together with its partner PayU, a global online payments provider and Mambu client in Latin America.
The loan product is expected to go live in the first quarter of 2018, all data will be hosted by AWS India.
NiYO Solutions Raises $ 13.2M in Series A Funding (FINSSMES), Rated: A
NiYO Solutions Inc., a Bangalore, India-based fintech startup for salaried employees, raised $13.2m (85 crore) in Series A funding.
Myanmar takes small steps towards providing greater liquidity for SMEs (Myanmar Times), Rated: AAA
A rising number of start-ups as well as small and medium enterprises (SMEs) are emerging in Myanmar as business opportunities rise. However, many companies fail to achieve their full potential and contribute substantially to the economy because capital assistance is lacking in the country.
A rising number of start-ups as well as small and medium enterprises (SMEs) are emerging in Myanmar as business opportunities rise. However, many companies fail to achieve their full potential and contribute substantially to the economy because capital assistance is lacking in the country.
Currently, local banks extend loans at interest rates ranging between 8.5 percent and 13pc. The local banks began offering SME loans at8.5pc interest in 2015. Since then, the Japan International Cooperation Agency (JICA) and KfW Development Bank from Germany have also launched SME loans.
To get around the financial constraints, borrowing from family members and peers is common.
In fact, a rising number of businesses have resorted to P2P lending for funds to build up their businesses. Without any guarantees of success though, many entrepreneurs ultimately end up in debt. Others fall prey to fraud. Last year, The Myanmar Times reported at least three cases of fraud involving fake promises of repayments with up to 30pc interest.
Cloud Lending Solutions Recognized as a Top 25 FinTech Company of 2017 (BusinessWire), Rated: B
Cloud Lending Solutions was recognized as a “Top 25 FinTech Company for 2017” by APAC CIO Outlook Magazine. A panel of industrial experts and executives collaborated with the editorial board to curate the list with an aim to provide clarity into the ideal FinTech partners.
Local digital currency eyes real estate disruption (ITWeb), Rated: AAA
Cape Town-based fintech company, Wealth Migrate, has launched a global digital currency – WEALTHE Coin.
According to Wealth Migrate, while almost half of the world’s wealth is held in real estate, fewer than 13% of people have access or the resources to invest in and benefit from this lucrative market.
News Comments Today’s main news: Yirendai reports Q1 results. Desai steps down from Funding Circle P2P fund. Yirendai reports Q1 results. Klarna is changing its name. Uncertainty looms over SoFi’s bank charter. Today’s main analysis: Quarterly marketplace lending results. Today’s thought-provoking articles: What’s in Ron Suber’s portfolio. China Rapid Finance quiet period coming to an end. Online lenders dominate Mozo awards. Over […]
- Today’s main news: Yirendai reports Q1 results. Desai steps down from Funding Circle P2P fund. Yirendai reports Q1 results. Klarna is changing its name. Uncertainty looms over SoFi’s bank charter.
- Today’s main analysis: Quarterly marketplace lending results.
- Today’s thought-provoking articles: What’s in Ron Suber’s portfolio. China Rapid Finance quiet period coming to an end. Online lenders dominate Mozo awards. Over 90% P2P lenders earn 18%-26% gross returns.
- KBRA assigns prelim ratings to Oportun Funding VI, LLC, Series 2017-A. GP:”The flurry of bond sales continues.”
- What’s in Ron Suber’s portfolio. GP:”Most angel investors lose money and they do it for the fun. A few have made it a carreer. I have always been very curious what Ron Suber invested in. Finally we get some very interesting insights. The real question is: why he said yes to these and no to probably 100x more companies.”AT: “Payments, online lending, and financial inclusion. None of this is surprising. I’d expect the leader of a disruptive finance industry to back financial inclusion. It’s not just decent humanity, it’s good business sense, especially if you believe in the technology doing the disrupting.”
- Quarterly MPL results. GP:”The take away: An average ROI of 7.73%. A great number to remember.”AT: “Interesting portfolio mix, but it doesn’t seem very diversified.”
- Uncertainty looms over SoFi’s plan to obtain bank charter. GP:”Of course uncertainty rules in any interaction with a regulator, judge, client. The take away from this article: the chart showing the number of industrial banks over time. “AT: “Obey this rule: Don’t believe it until you see it.”
- U.S. startups fail to attract crowd of small investors. AT: “This is a misleading headline. There are any number of reasons why non-accredited investors may not be flocking to crowdfunding opportunities, one of which is they may not know about them. Most opportunities are still open only to accredited investors. The investment for the platforms to get in front of these investors is huge, and the potential ROI on the short term is thin, so long-term business sense is undoubtedly driving the current focus on accredited investors until cash flows reach a point to do otherwise. In time, the cost of meeting regulatory demands and marketing will decrease allowing platforms to built a real business model around the non-accredited investors. Plus, small investors themselves tend to be more cautious with their money simply because a loss can be much more devastating than an equal loss to a larger investor. The market will come around–in time.”
- Goldman, Cohen bet on Nav. GP:”A few companies are always attracting a lot of attention from the public: Apple, Goldman, Google, Facebook due to their reputation of smart strategic visionaries who have made surprising bets in the past that paid off incredibly well. Is Nav such a bet?”
- Thousands flock to Build credit card for credit repair. GP:”Beyond the sensational title: a few startups , and now banks, are selling the “improvide your FICO” by using our product. Some of them in fact even allow you to lend money to yourself in order to achieve this via a complex locked account structure. “
- How fintech’s are beating credit unions. AT: “Credit unions typically are not innovators. They too will come around, eventually. It will take time.”
- Podcast: Raul Vazquez of Oportun.
- Why Wells Fargo is engaging fintech partnerships right now.
- Lender expansion.
- The top 10 players in Bay Area fintech. GP:”The interesting story here given the share of the finance industry in the world and local economy: Why isn’t New York the hot bed of Fintech? A possible answer: because people experience in finance always see all the reasons why an idea won’t work and don’t even want to try. Young inexperienced people don’t know better and try, and sometimes they find a pocket of opportunity.”AT: “San Francisco is a hotbed for fintech companies.”
- Fintech marketer on why you should simplify your message. AT: “Simplifying your marketing message is important, but clarifying your messaging is just as important. How you say what you say is as important as saying it.”
- Funding Circle’s Desai steps down from P2P fund.
- WiseAlpha exceeds 627K GBP during second Crowdfund raise.
- RateSetter appoints Joanna Wright as new CRO.
- HSBC voice recognition system duped by customer’s twin brother.
- Lenders look to alternative asset classes and areas.
- Fears grow over P2P trusts.
- Is there still an advice gap?
- Five things to know about P2P lending.
- Yirendai releases Q1 2017 results. GP:”Take away: Loan volume grew 100%, revenu 83%, EBITDA 93%. Net Income: 166%. Impressive numbers.”
- China Rapid Finance ends quiet period today.
- Zhongan Financial Holding raises 220M yuan, Alipay to launch facial ID payment.
- Klarna is changing its name to include ‘Bank’. AT: “This is very interesting. If Klarna can entice consumers to open up digital bank accounts and fund their retail purchases through those accounts, the company should be able to corner the market on e-commerce payments. This would be a huge boon.”
- Should real estate investors go global? GP:”A very interesting discussion as real estate is fundamentally local and it is all about location.”
- Online lenders dominate Mozo awards.
- InvestmentLink launches goals-based advice platform.
- Wellington ranks #2 worldwide for sharing economy.
- Over 90% P2P lenders earn 18%-26% gross returns per annum.
- Interview with head of analytics and data science at Kabbage India.
- Fintech will slaughter banks.
- United States
- KBRA Assigns Preliminary Ratings to Oportun Funding VI, LLC, Series 2017-A (BusinessWire), Rated: AAA
- Here’s what’s in Ron Suber’s portfolio (Biz Journals), Rated: AAA
- My Quarterly Marketplace Lending Results – Q1 2017 (Lend Academy), Rated: AAA
- Uncertainty looms over SoFi’s plan to obtain bank charter (SNL), Rated: AAA
- U.S. Startups Fail to Attract Crowd of Small Investors (Bloomberg), Rated: A
- Goldman, Cohen Bet on Nav (deBanked), Rated: AAA
- Thousands are flocking to a credit card that helps repair their bad FICO scores and avoid payday loans (Business Insider), Rated: A
- How fintech is beating credit unions at their own game (Credit Union Journal), Rated: A
- Podcast 101: Raul Vazquez of Oportun (Lend Academy), Rated: A
- Why Wells Fargo is stepping up fintech partnerships now (American Banker), Rated: A
- Lender Expansion; FHA, VA; Households Moving Toward Buying (Mortgage News Daily), Rated: A
- The top 10 players in fintech in the Bay Area (Biz Journals), Rated: A
- Fintech Marketer Tom Roberts On Why Simplifying Your Company’s Message Is Key (Hypepotamus), Rated: A
- United Kingdom
- Funding Circle boss steps down from P2P fund (Citywire), Rated: AAA
- UK Online Lender WiseAlpha Exceeds £627K During Second Crowdcube Run (Crowdfund Insider), Rated: AAA
- UK P2P Lender RateSetter Announces Joanna Wright as New CRO (Crowdfund Insider), Rated: AAA
- HSBC voice recognition security system duped by customer’s twin brother (IB Times), Rated: A
- Lenders look to alternative asset classes and areas (Bridging&Commercial), Rated: A
- Fears grow over P2P trusts (FT Adviser), Rated: A
- Is There Still an Advice Gap? (Morningstar), Rated: A
- Tinder for businesses: Five things you need to know about Peer-to-Peer lending (Independent.ie), Rated: B
- Yirendai Reports First Quarter 2017 Financial Results (PR Newswire), Rated: AAA
- A Quick Buy For China Rapid Finance At Upcoming Quiet Period Expiration (Seeking Alpha), Rated: AAA
- P2P Industry News (Xing Ping She Email), Rated: A
- European Union
- Klarna is changing its name — revealing a bold challenge to incumbent banks (Business Insider), Rated: AAA
- Should Real Estate Investors Go Global? (ETF Daily News), Rated: B
- Australia/New Zealand
- Online lenders dominate 2017 Mozo Experts Choice Home Loan Awards (Mozo), Rated: AAA
- InvestmentLink launches goals-based advice platform (Financial Standard), Rated: A
- Wellington ranks #2 in the world for sharing economy (IT Brief), Rated: A
- Over 90% lenders in P2P lending earn gross returns of 18-26% per annum (India Times), Rated: AAA
- Meet the Analytics & Data Science Head at Kabbage, one of the hottest fintech companies (Analytics India Mag), Rated: A
- At this rate, Fintech will slaughter India’s banks (India Times), Rated: A
- SoftBank’s massive Vision Fund raises $ 93 billion in its first close (TechCrunch), Rated: AAA
KBRA Assigns Preliminary Ratings to Oportun Funding VI, LLC, Series 2017-A (BusinessWire), Rated: AAA
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to two classes of Oportun Funding VI, LLC, Series 2017-A (“Oportun 2017-A”), a consumer loan asset-backed securities transaction.
The collateral in the Oportun 2017-A deal includes approximately $188.24 million of loans, as of the April 12, 2017 statistical calculation date. The transaction includes a three year revolving period during which additional collateral may be funded in the transaction so long as it complies with certain eligibility criteria. The preliminary ratings reflect the initial credit enhancement levels ranging from 30.0% for the Class A notes and 15.0% for the Class B notes.
Preliminary Ratings Assigned: Oportun Funding VI, LLC, Series 2017-A
|Class||Preliminary Rating||Expected Initial Class Principal|
Here’s what’s in Ron Suber’s portfolio (Biz Journals), Rated: AAA
Digital signature company DocuSign and online lender SoFi, which have been valued at $3 billion and $4.3 billion respectively. His involvement with Prosper itself started out as an investment in the company back in 2013.Digital signature company DocuSign and online lender SoFi, which have been valued at $3 billion and $4.3 billion respectively.
He added that he focuses on five themes in his personal fintech investing: digital transactions, the payment rails of fintech, online lending, unlocking cash for assets and financial inclusion.
My Quarterly Marketplace Lending Results – Q1 2017 (Lend Academy), Rated: AAA
Overall Marketplace Lending Return at 7.73%
I complained last quarter that the annualized return, based just on the latest quarterly numbers, on my main Lending Club account had dropped to 2.1% in Q4. Well, this quarter it dipped further. The balance on this account on December 31, 2016 was $39,733, the balance on March 31, 2017 was $39,472 for a -2.6% annualized return according to Lending Club’s own statements.
When I look at where the recent defaults have been coming from the majority are in the D and E grade 36-month loans issued in 2015.
My TTM return according to my own calculations is 2.56% and Lending Club says my return is 8.32%.
Last month marked four years since I invested in the Direct Lending Investments fund. It has been my best performing investment by far over this time period. While yields have come down slightly from the initial 13-15% to 10-12% today I am still very happy with this investment. As the fund has grown, today it is closing in on $1 billion, it has changed focus from investing in high yield short-term small business loans to providing funding lines for a variety of consumer, small business and real estate lenders.
Peerstreet focuses on short term loans – typically 6-24 months with yield to investors in the mid to high single digits. I like the $1,000 minimum per investment at Peerstreet which has enabled me to feel comfortable starting with a relatively small investment. I have already almost cycled through my initial investment as 11 of my first 12 properties have already paid off in full.
Uncertainty looms over SoFi’s plan to obtain bank charter (SNL), Rated: AAA
Social Finance Inc. executives say the company is ready to be regulated more like a bank, but it is unclear how feasible it will be for SoFi to obtain the industrial bank charter it wants.
In his comments to TechCrunch, Cagney said that the goal of the charter is not to use deposits to fund loans.
SoFi has yet to submit an application for an industrial bank charter in Utah, according to Utah Department of Financial Institutions supervisor of industrial banks Shaun Berrett. As of May 19, the online lender had 28 job openings in its Cottonwood Heights location.
U.S. Startups Fail to Attract Crowd of Small Investors (Bloomberg), Rated: A
Investors sprinkled about $38 million across 142 companies since May 2016 when Title III of the JOBS Act allowed equity crowdfunding for non-accredited investors, according to data from industry tracker NextGen Crowdfunding LLC.
Swat said the practice is still in its infancy. Wefunder, StartEngine and SeedInvest are the primary crowdfunding platforms, and many founders aren’t aware that equity fundraising is an option. Of those who explore it, many decide it’s not worth the hassle and expense.
NextGen data show companies typically spend from $20,000 to $50,000 on legal, accounting and marketing — a serious outlay for a startup that’s only looking to raise a couple hundred thousand dollars.
Technology startups, quite understandably, have largely ignored the new fundraising option because they benefit more from the existing system.
Goldman, Cohen Bet on Nav (deBanked), Rated: AAA
Nav recently lifted the size of a Series B round by $13 million for lead investor Goldman Sachs Principal Strategic Investments as well as Cohen’s Point72 Ventures and others, bringing the tally for this round to $38 million.
King points out that bringing the startup’s vision to reality is a gamble. For instance, Nav’s current customer count is 215,000 and they aspire to have 28 million.
Also part of the vision is international expansion.
Thousands are flocking to a credit card that helps repair their bad FICO scores and avoid payday loans (Business Insider), Rated: A
Marla Blow thinks she can help. A card industry veteran who spent nearly a decade at Capital One and helped run the credit card and payments division at the Consumer Financial Protection Bureau, Blow recently helped launch a startup called FS Card, whose sole product at the moment is a credit card targeted toward those with tarnished credit histories.
The card, which is called “Build” and has MasterCard branding, enables customers to avoid the local payday lender’s sky-high rates and gradually mend their standing in the eyes of the almighty FICO.
FS Card’s strategy is to target “deep subprime customers” in the 550 to 600 credit score range, a group that’s largely been overlooked and forgotten by the big banks, according to Blow, the company’s CEO. By offering transparent rates and fees and low spending limits to start, Blow thinks she can carve out a profitable business that also helps people repair their financial bedrock.
There’s some evidence from the Federal Reserve Bank of New York that lending is returning for subprime borrowers with credit scores below 660.
The payday loan industry — wherein people take out a two-week loan for several hundred dollars that comes with a fee that amounts to a 400% interest rate on average — now serves 19 million households out of some 20,600 locations across the country, according to industry group the Community Financial Services Association of America.
The Build card, on the other hand, is unsecured and requires no deposit, providing a more flexible line of credit from the get-go.
The Build card comes with a $75 annual fee and a starting credit limit of about $500 — not incidentally, the same as the maximum payday loan amount in many states — which grows as the borrower proves responsible over time. The interest rate percentage starts in the upper 20s, on the high end for most credit cards. All the terms are laid out plainly to avoid any surprises.
In a year and a half on the market, the Build card has extended $25 million in credit to nearly 50,000 customers, according to Blow.
How fintech is beating credit unions at their own game (Credit Union Journal), Rated: A
One of the leaders in that effort is Acorns, an app that connects to a user’s credit or debit cards and rounds up purchases to the next dollar, holding the accumulated difference in escrow and investing it with a risk portfolio determined by the user. The service costs just $1 per month for balances of less than $5,000 and users can withdraw their funds at any time.
The bigger issue, said Habib, is that CUs are once again being cut out of the relationship with their members’ money. Saving a nickel here and a dime there may not seem like a significant threat, but if Acorns or similar fintechs eventually enter the lending space then credit unions could really begin to feel the pinch.
While most CUs don’t have a round-up offering, one credit union that has embraced the idea is Tampa’s GTE Financial, which in 2015 launched Future Change, an app that allows members to round up purchases and set aside money to pay off their loans at the credit union more quickly.
In the two years since GTE began offering Future Change, $1.3 million per year has been moved to roundup savings accounts, with members making more than 3,500 principal payments on their loans. The app has been downloaded more than 15,000 times and Burney said members log in about 14,000 times per month.
Podcast 101: Raul Vazquez of Oportun (Lend Academy), Rated: A
The CFPB estimates there are 45 million adults in the US today who have little or no credit history.
In this podcast you will learn:
- What Raul did before he came to Oportun.
- The three criteria Raul needed to consider when moving from Walmart to Oportun.
- The core market of borrowers served by Oportun.
- The percentage of Oportun borrowers who do not have a credit score.
- The total loan volume they have done to date.
- The typical loan terms they offer.
- Why they base their interest rates on the size of the loan.
- The marketing channels they use to find their customers.
- Why they use physical locations in most of the states where they operate.
- How they are able to do 100% automated underwriting.
- What being a CDFI means and why it is important for Oportun.
- The three ways Oportun gets the funding they need.
- The work that Raul does with the CFPB Consumer Advisory Board.
- How long Oportun has been profitable.
- What they are working on for the future.
Why Wells Fargo is stepping up fintech partnerships now (American Banker), Rated: A
Wells Fargo is putting more focus and effort into its partnerships with tech companies — from giants like Apple, Samsung and PayPal to the smallest startups.
Lender Expansion; FHA, VA; Households Moving Toward Buying (Mortgage News Daily), Rated: A
Some originators will say that the FHA program is the “new” subprime channel – certainly the program appeals to lenders who like the profit margins, and it appeals to borrowers new to home ownership and who may not have the necessary down payment for other programs. Good LOs have a sense of demographics & population trends, and as it turns out, for the first time in a decade, more new U.S. households in the first quarter chose to buy homes than to rent, suggesting a long-term decline in home-ownership rates might be coming to an end.
Speaking of SoFi and other lenders that use computers (is there a definitive definition of “fintech?”), the WSJ discusses how investors are returning to bonds backed by online lending securitizations.
The top 10 players in fintech in the Bay Area (Biz Journals), Rated: A
Fintech Marketer Tom Roberts On Why Simplifying Your Company’s Message Is Key (Hypepotamus), Rated: A
Regardless of how complex your product may seem, your company’s marketing message should be simple and straight-forward. A complicated, dense message could alienate customers unfamiliar with the technology and reduce your leads. Crafting a narrative around your company’s solution should translate to all sides of your target market — potential customers, investors and users.
You’ve worked on simplifying the PrimeRevenue brand and presenting the company in a more digestible way. How did you approach this?
But every marketing person should be so lucky to find a great story that is not being effectively told. That’s exactly what I discovered with PrimeRevenue. We work with some of the world’s largest brands to help them optimize their working capital, and we support their suppliers by giving them more visibility and control over what their customers owe them. I crafted the narrative around the immense ROI we deliver into a simple core messaging for both buyers and suppliers.
How did you approach the company when talking about the new brand message?
I’ve done a lot of work to simplify complicated messages for B2B audiences in the past. I find the key is putting together a logical story about what you are trying to achieve and how it will accelerate sales. Then you’ve got to be a great collaborative, internal seller of both your approach and your progress. I say collaborative since one mistake marketers seem to make is huddling with their team and then popping new “stuff” on an executive team. Unless you’re lucky, that can backfire.
Why was simplifying the brand so important for the marketing strategy?
A simplified brand message was key for us putting in place a sophisticated, multi-channel digital lead and demand generation program. Frankly, the company didn’t have much in the way of lead gen other than some field marketing at very small niche conferences.
Funding Circle boss steps down from P2P fund (Citywire), Rated: AAA
Samir Desai, the founder and chief executive of Funding Circle, the peer-to-peer (P2P) lender to small businesses, has stepped down from the platform’s investment company.
FCIF is listed on the London Stock Exchange and invests in loans originated by Funding Circle. It is unusual in not levying a management fee, with the fund’s shareholders only paying the platform’s 1% annual charge. Last month it nearly doubled in size by raising £142 million from investors in a C-share issue.
Stepping back from FCIF allows Desai to concentrate on Funding Circle, whose backers include Baillie Gifford, manager of Scottish Mortgage Trust (SMT), which holds an investment in the private company in its unquoted portfolio. Funding Circle has lent over £2.2 billion in the UK having and attracted 61,000 private investors who the company estimates have made an average return f 7.2% lending through the platform.
UK Online Lender WiseAlpha Exceeds £627K During Second Crowdcube Run (Crowdfund Insider), Rated: AAA
WiseAlpha, a UK online lending platform that gives everyday investors access to high yield institutional bond and loan investments, has raised over £627,000 on its Crowdcube return in just 7 days, coming in at 125% over its original target. More than 433 investors have invested in return for 8.92% equity. The highest amount by a single investor was £150,000 for the platform pre-valued at £6,402,630.
UK P2P Lender RateSetter Announces Joanna Wright as New CRO (Crowdfund Insider), Rated: AAA
Peer-to-peer lending platform RateSetter has appointed Joanna Wright as Chief Risk Officer. Wright joins RateSetter from GE Capital where she was Chief Risk Officer for GE Capital Bank in the UK, leading a team of over 200 risk professionals with responsibility for prudential and enterprise risks across the bank.
HSBC voice recognition security system duped by customer’s twin brother (IB Times), Rated: A
HSBC’s much-touted voice recognition software, used by half a million customers to verify their identity and secure their bank accounts, has successfully been duped by the brother of one of its customers. In an investigation carried out by BBC Click reporter Dan Simmons and his non-identical twin, Joe, the brothers revealed that it was possible to breach an HSBC customer’s account by mimicking their voice.
After Dan Simmons set up his own HSBC voice-ID authenticated account, his twin Joe attempted to access the account by providing his account details, date of birth and saying the simple phrase. After seven repeated attempts to mimic his brother’s voice print, the bank granted him access on his eighth try.
Although Joe was not able to withdraw any money from the account, he was able to access balances, recent transactions and even transfer money between accounts, the BBC reports.
Lenders look to alternative asset classes and areas (Bridging&Commercial), Rated: A
Last week saw a mix of property developers and finance providers come together to discuss the state of the property market.
In the afternoon, the focus shifted towards the future of the property market with a look at new types of finance, such as crowdfunding, challenger banks and peer-to-peer lending.
Even though he admitted that banks and challenger banks still dominated the space, Ashley pointed out that the alternative finance sector was continuing to grow.
As a result of new lenders entering into the development finance space, Ashley added that some lenders have been looking to move away from ‘safer’ geographical areas, such as the South East, and are targeting places further north, including Scotland.
Fears grow over P2P trusts (FT Adviser), Rated: A
Recent months have seen problems return to the fore in the £2bn trust sub-sector, which has attracted investor interest in part because of yields well in excess of 5 per cent.
Winterflood also criticised certain P2P investment trusts over disclosure levels in its latest monthly report. Analyst Simon Elliott said Ranger Direct’s partial writedown of a 20 per cent exposure to the struggling Princeton Alternative Income fund was a “disheartening episode”. Princeton had previously said its NAV would not be affected by problems at firms in which it had invested.
Of the six funds in Winterflood’s P2P trust sector, three are trading on double-digit discounts, although one – Honeycomb – trades on a premium of 12.2 per cent.
Is There Still an Advice Gap? (Morningstar), Rated: A
Four years ago, sweeping reforms were introduced to the financial advice market, aiming to improve free transparency and professionalism.
However, one of the biggest unintended consequences has been what many describe as an ‘advice gap’. This has been caused by high street banks, investment management firms and financial advisers withdrawing services for those with less than £100,000 to invest. They argue the cost of servicing these clients has become too high.
A number of advisers also used the RDR as an opportunity to leave the industry, leaving many ‘orphaned’ clients behind.
Stephen Kavanagh, chief executive of financial advice firm Chase de Vere, believes the advice gap was not caused by the RDR, but rather the regulation exacerbated existing inefficiencies in the market.
According to AXA Wealth, there is only one adviser for every 2,700 people in the UK who require help with their finances. This compares to ratios of one adviser per 1,400 people in Australia and one per 156 savers in Hong Kong.
The good news is that the advice gap is on the agenda for the Financial Conduct Authority, the regulator, alongside the Treasury. The two organisations have launched the Financial Advice Market Review, which is ongoing and aims to ensure that affordable advice and guidance is available to everyone.
Since the RDR was introduced, robo-advisers have sought to address the issue, with new entrants and established firms offering online services for those with smaller sums to invest. Some deliver investment management online, while others provide automated financial advice. They are typically powered by computer models, known as algorithms, and involve little or no human interaction.
Although Kavanagh recognises that technology has the potential to plug the advice gap by offering lower-cost services to a wider range of people, he believes the robo-advice market still has much further to go before it reaches this point.
Tinder for businesses: Five things you need to know about Peer-to-Peer lending (Independent.ie), Rated: B
One – It was invented in Ireland!
Two – As the whole process is run online, overheads are lower and lending can therefore be provided more cheaply than in more traditional financial institutions.
Three – According to Linked Finance, lenders can earn between 8.5pc and 15pc interest on the loans that they issue, however any income earned on the lending will be subject to income tax.
Four – P2P is currently not regulated in Ireland, as a result of this certain protections do not apply to consumers of P2P products.
Five – Figures for the first three months of 2017, show that the Irish P2P platform increased lending activity by more than 326pc on the same period in 2016, according to Linked Finance, and the platform has now facilitated more than €25m in loans to Irish SMEs.
Yirendai Reports First Quarter 2017 Financial Results (PR Newswire), Rated: AAA
Yirendai Ltd. (NYSE: YRD) (“Yirendai” or the “Company”), a leading online consumer finance marketplace in China, today announced its unaudited financial results for the quarter ended March 31, 2017.
Starting from the second quarter of 2016, the Company changed its reporting currency from the U.S. dollar (“US$”) to the Renminbi (“RMB”), to reduce the impact of increased volatility of the RMB to US$ exchange rate on the Company’s reported operating results. The aligning of the reporting currency with the underlying operations will better depict the Company’s results of operations for each period. This release contains translations of certain RMB amounts into US$ for convenience. Prior period numbers have been recast into the new reporting currency.
For Three Months Ended
in RMB million
Amount of Loans Facilitated
Total Net Revenue
Total Fees Billed (non-GAAP)
Adjusted EBITDA (non-GAAP)
A Quick Buy For China Rapid Finance At Upcoming Quiet Period Expiration (Seeking Alpha), Rated: AAA
The 25-day quiet period on China Rapid Finance Ltd (NYSE: XRF) will end on May 23, allowing the firm’s IPO underwriters to publish reports and recommendations after this time.
China Rapid Finance acquires consumers through multiple channels, such as online travel agencies, social networks, e-commerce platforms, and payment service providers. Its business model offers smaller, shorter-term loans through its platform. The proprietary technology then analyzes the data and identifies borrowers who may qualify for larger, longer-term loans. In 2016, 89% of its total loan volume originated through this platform, and the borrowers were prime and near-prime consumers with creditworthiness closely comparable to FICO scores ranging from 660 to 720.
XRF’s principal loan amounts range from RMB500 (US$72) to RMB6,000 (US$865). Longer-term loans range from three months to three years, with principal amounts from RMB6,000 (US$865) to RMB100,000 (US$14,400).
The total number of loans has grown from 63,251 in 2014 to 6.0 million in 2016. The number of borrowers has increased from 101,384 in 2014 to 1.4 million in 2016. However, net losses reached US$131,000, US$(30.0) million and US$(33.4) million in 2014, 2015 and 2016, respectively.
The average annual investment return for investors in lifestyle loans was 11.9% in 2014, 11.5% in 2015, and 11.3% in 2016.
P2P Industry News (Xing Ping She Email), Rated: A
Zhongan Financial Holding Raised ￥220M in A Round
Zhongan Financial Holding (ZFH), an auto consumer financial services provider, announced that it has raised 220 million RMB in A round of financing at the end of 2016. This capital was led by Haitong Capital, followed by Huaxin Capital, YinDuhui, Promising Capital and the listed company Sunyard.
Founded in 2014, ZFH is focused in personal car consumer financial services across the country. It provides lifecycle service of car transactions for consumers and dealers, including marketing, customer acquiring, car sourcing, trading and financing.
In addition, ZFH cooperated with banks to use the way of interbank (credit card stage) for the car consumer finance business. In this way, the cooperative bank originates credit card loans to customers, and customers mortgage the vehicle to the bank, then after the loans are issued, customers will pay the monthly payment.
Alipay to launch ““Face Identifying Payment”
Alipay has recently tested for “Face Identifying Payment” inside. In this new way of paying, the process of face identifying takes only one second, if succeed, the customer should further input the last four digits of his phone number. After the two-step verification, the payment can be completed.
Shortly after that, Alipay confirmed the news, and announced they have finished the last step of bringing “Face Identifying Payment” from laboratory to commercial use, it will soon be available on the stores of partners.
Klarna is changing its name — revealing a bold challenge to incumbent banks (Business Insider), Rated: AAA
Swedish e-commerce company Klarna wants to change its name to Klarna Bank, reveals application documents received by the Swedish Companies Registration Office.
This implies that Klarna could soon be receiving its Swedish banking license, which it applied for in October 2015.
Should Real Estate Investors Go Global? (ETF Daily News), Rated: B
The FlexShares Global Quality Real Estate Index Fund (NYSE:GQRE) was trading at $59.44 per share on Monday afternoon, up $0.15 (+0.25%). Year-to-date, GQRE has gained 5.45%, versus a 7.10% rise in the benchmark S&P 500 index during the same period.
Online lenders dominate 2017 Mozo Experts Choice Home Loan Awards (Mozo), Rated: AAA
The awards compared 504 home loans from 89 providers, and awarded the top 10% in each of the 8 categories.
This year, Mozo found that online lenders took out more awards for great value mortgage products than in previous years, accounting for approximately 41% of the winners overall, up from just over 25% last year.
InvestmentLink launches goals-based advice platform (Financial Standard), Rated: A
Financial data feed provider InvestmentLink is launching a new cloud-based platform targeted at financial planners looking to provide outcomes-oriented advice to clients.
CashDeck uses InvestmentLink’s data repository to allow clients to manage all their financial information, while advisers can use the information to generate projections and insights around client goals.
Wellington ranks #2 in the world for sharing economy (IT Brief), Rated: A
Peer-to-peer motorhome rental platform SHAREaCAMPER recently released the 2017 Return on Investment Index. The study aims to identify which cities offer the highest return on asset investment via rental peer-to-peer (P2P) platforms.
The application Airbnb was used to collect data alongside a collection of other rental platforms.
Taking into account all five of the markets researched, Wellington is ranked in second place. Auckland placed in the fifth position in the ranking.
Over 90% lenders in P2P lending earn gross returns of 18-26% per annum (India Times), Rated: AAA
Promise of higher returns and faster adoption of digital disruption has pulled a large number of millennials towards P2P lending, according to a report by online P2P lending platform Faircent.com. In fact as per the report, nearly 60% of the lenders on the platform are less than 35 years old.
Meet the Analytics & Data Science Head at Kabbage, one of the hottest fintech companies (Analytics India Mag), Rated: A
This week we bring you a closer look at Kabbage, a Fintech company headquartered at Atlanta USA, through an interaction with Ratnakar Pandey. RP, as he is popularly known, heads the Analytics and Data Science portfolio at Kabbage India.
RP has more than 15 years of experience in analytics and data science fields. At Kabbage, RP is leading the machine and deep learning models development activity across customer lifecycle, from acquisition to customer engagement to fraud prevention to risk based underwriting policy development.
Analytics India Magazine- Could you tell us more about Kabbage and your data and analytics platform?
Most of the heavy lifting that happens in Kabbage is done by technology and data, which is one of the key differentiators. We like to call ourselves a data company rather than a typical finance company. So, data is the core competency of the company and we use that in our decision making every day.
AIM- Would you like to share some of the analytics solutions you have worked on?
We use several programming and data management tools for providing both tactical and strategic analytical solutions, some noteworthy tools are Python, R, SQL, Spark, Hadoop and Scala. In terms of statistical techniques for machine learning, we routinely use regression techniques (linear, logistics) and classifiers such as Gradient Boosting Machines (GBM), Elastic Net Regression, Support Vector Machine (SVM), Ensemble Learning etc. For forecasting and anomaly detection we use ARIMA/X, k-NN and other similar techniques. We also heavily use Natural Language Processing (NLP) for drawing insights from text and unstructured data.
AIM- What kind of knowledge and skill-sets do you look for, while recruiting your workforce?
For the positions that we are currently hiring, we are looking for 8+ years of work experience in data science, preferably in the banking and lending industry. We are keen on hiring people who can lead a project from start to finish and take the full accountability and ownership of it. We generally hire from the premiere institutes, 90% of people we have right now are from tier 1 institutes.
AIM- What are the most significant challenges you face being at the forefront in analytics space?
Lack of machine learning and deep learning talent is the biggest challenge in the Indian market.
AIM- How do you think ‘Analytics’ as an industry is evolving today? Could you tell us the most important contemporary trends that you see emerging in the present analytics space across the globe?
We are generating more data than ever before- 90% of the data that we have today is generated in last 2 years alone. This data is coming from a variety of different sources such as voice, text, transaction, sensor, chat, images, videos etc.
At this rate, Fintech will slaughter India’s banks (India Times), Rated: A
India’s banks, which still dominate the country’s financial landscape, appear to have hardly a kick left in them. Stressed assets without any loan-loss cover now exceed $96 billion, McKinsey & Co. said last week. An overwhelming 91 percent, or $87 billion, of the provisioning gap is at state-run lenders, whose net worth would be wiped out if they took the hit on their capital.
Even as McKinsey was delivering this sobering reality check, fintech was running a victory lap of sorts. Paytm, a digital payments company announced a $1.4 billion investment by Masayoshi Son’s SoftBank Group Corp. on Thursday, the largest funding round by a single investor in an Indian startup.
Capital First’s retail assets have grown 24-fold in six years to about $3 billion. Its bad-loan ratio of less than 1 percent compares with almost 10 percent for banks. And the latter figure is an official estimate; the reality is probably a lot worse.
SoftBank’s massive Vision Fund raises $ 93 billion in its first close (TechCrunch), Rated: AAA
SoftBank’s huge $100 billion investment fund — the largest tech fund in history — announced its first close today… and it’s huge.
The Japanese telecom giant revealed that its VisionFund has closed an initial commitment of $93 billion from a bevy of high profile backers. They include Apple, Qualcomm, UAE-based Mubadala Investment Company, Saudi Arabia’s PID public fund, Foxconn, and Foxconn-owned Sharp. The plan is for the fund to reach its $100 billion target within the next six months through commitments from other investors.
Recent deals include Indian fintech unicorn Paytm, virtual reality Improbable Worlds, China’s Uber killer Didi Chuxing, and global connectivity company OneWeb. Beyond that, there’s been a steady flow of unconfirmed investments linking the fund to companies like WeWork.
News Comments United States EarnUp raises a $3mil seed round to help 200 million consumers smooth their loan repayment experience. Could EarnUp be a good lead source for lenders ? Or a good alternative data source ? A great table of MPL raises and valuations from CrunchBase, who claims that data hints at future down […]
- EarnUp raises a $3mil seed round to help 200 million consumers smooth their loan repayment experience. Could EarnUp be a good lead source for lenders ? Or a good alternative data source ?
- A great table of MPL raises and valuations from CrunchBase, who claims that data hints at future down rounds for marketplace lenders. However, we have recently seen BizFi, Promise Financial and more raising good rounds at decent terms. Perhaps there is a difference between fund-raising for mature MPLs and fund-raising for challenger Alt Lending 3.0 start-ups.
- Very interesting 1st hand data from Morningstar about the state of US consumer debt, including trends and statistics. Credit Cards charge-off rate chart, 90 days delinquent data per asset class.
- 500 Startups shares fintech investment trends chart and data and discussed government policies that could and should enable fintech innovation.
- Through the survey of France’s P2P and MPL lenders, a great analysis of the lessons learned from Lending Club’s crisis.
- Securitization trends in Marketplace Lending. A must read.
- Acquiring borrowers is difficult. Acquiring borrowers at purchase decision time is easier. Focusing on point-of-sale partnerships to generate credit demand is a very interesting direction which is, therefore, popular and gaining ground. A quick article as a reminder of this interesting direction.
- Royal of Canada dumped 99.5% of their LC stock in Q1 2016. Interesting timing.
- Getting SME lender’s loan data is at best difficult. In a space where we talk about transparency, SME originator’s data is a good example of the opposite. RateSetter stands out for publishing their data which lead to a nice summary, mostly figure based, article. I am not sure if this data is from RateSetter Australia only or includes other geographies.
- A small article, that is not well researched, not well documented, but asks a question that is worth exploring a lot more “How can p2p lending companies fail, and what happens in that case ?” . The quick and dirty answer is: if they are setup right, where the operations and the loan books are separate with backup servicing, the only effect is that new loans stop being generated. We would love to publish a long article on this matter.
- Banks in the EU lend even less to SMEs than in the US. A quick paragraph volunteering an explanation and some predictions that could be true: the double whammy effect. Readers should read more on the state of the Italian banks, the EU-Italy bank-bailout dispute, and the probability of a Greece-style crisis in Europe lead by Italy.
- News Comments
- United States
- Paying Loans Sucks – FinTech Startup EarnUp Lands $3 Million To Intelligently Automate Payments, (PR Newswire) ,Rated: AAA
- Data hints at down rounds, but not wipeout, for marketplace lending, ( TechCrunch), Rated: AAA
- State of the U.S. Consumer—Please Sir, Can You Lend Me Some More?, (Morningstar), Rated: AAA
- Fintech Investment is Exploding — 5 Ways Governments & Ecosystem Builders Can Help, (500 Startups), Rated: AAA
- The Lending Club Predicament & The Lessons Learned, (Crowdfund Insider), Rated: AAA
- Marketplace Lending Securitization Tracker, (PeerIQ), Rated: AAA
- Why mobile point of sale (MPOS) Is Gaining Ground in FinTech, (Tech.co), Rated: AAA
- Royal Bank Of Canada Sold A Lot More LendingClub Corporation Common (LC) Stock, (Fidaily), Rated: A
- The average RateSetter business loan, (Finder), Rated: AAA
- United Kingdom
- If Funding Knight went bust how safe is peer-to-peer lending?, (The Telegraph), Rated: AAA
- European Union
- Why Funding SMEs Within The EU Capital Markets Union Action Plan Is Challenging, (Seeking Alpha), Rated: A
Paying Loans Sucks – FinTech Startup EarnUp Lands Million To Intelligently Automate Payments, (PR Newswire) ,Rated: AAA
EarnUp, a consumer-first fintech platform that intelligently automates loan payments, announced its launch today with $3 million in seed funding. Blumberg Capital, Kapor Capital, Camp One Ventures, Fenway Summer Ventures, and other leading angel investors provided seed capital to accelerate the platform’s development and expand user access with a mission to improve consumer financial health. Forbes recently announced EarnUp as a winner of the prestigious Financial Solutions Lab in partnership with JPMorgan Chase & Co. (NYSE: JPM) and the Center for Financial Services Innovation. Though still in private beta, EarnUp already manages hundreds of millions of dollars in consumer loans on its platform. More information is available at www.EarnUp.com.
“Millions of Americans suffer financial stress from income volatility, where their income doesn’t match up with when loan payments are due,” said Matthew Cooper, co-founder of EarnUp. “Our product solves this issue by effectively budgeting for the consumer. We help put money aside as it comes in, giving people peace of mind in knowing the money they need will be there when loan payments need to be made. We give control back to the consumer.”
There are over 200 million Americans with debt and a typical household may have income and expenses hitting their bank accounts over 20 times a month. This financial chaos causes incredible stress for consumers, who may struggle to come up with even the minimum loan payments on time. EarnUp works by automatically putting a few dollars aside for future loan payments whenever consumers can afford it, then sending those payments and making sure they are applied in a way that reduces debt faster.
EarnUp has been bootstrapped to date and the $3 million in seed financing represents the company’s first institutional funding.
Data hints at down rounds, but not wipeout, for marketplace lending, ( TechCrunch), Rated: AAA
Comment: This is bad news for entrepreneurs. VCs usually have terms that protect them in a down round.
Private valuations across the lending space, where available, showed marked appreciation in 2014 and 2015. SoFi, for instance, was valued at $3.5 billion as of July, up from about 1.4 billion in early 2015 and $400 million in early 2014.
Those are post-money values, but the appreciation is well in excess of the sums invested. Avant showed a similar rise, with its post-money valuation doubling in less than a year. And Prosper more than doubled in less than a year, hitting a $1.8 billion valuation in April of last year.
Alternative lending currently looks like the reverse of the standard VC model, in which private markets are where one builds a business, and public markets are where one gets a lucrative exit.
That said, while we can expect down rounds near-term, it’s not clear VCs will lose their shirts in marketplace lending forays, particularly those who were mid- or early-stage investors.
High VC ownership levels mean that even a lackluster exit could return all or more of invested capital. Even after LendingClub’s stock plummet, for instance, VC’s post-IPO stakes would be worth more than the $392 in disclosed investments before going public.
Nonhousing consumer debt levels are increasing, with student-loan debt leading the charge, according to the Federal Reserve. Student-loan delinquencies more than 90 days past due have risen since late 2011. With the proliferation of postcrisis loans made to students, especially to those attending for-profit colleges with focused specialties, Morningstar Credit Ratings, LLC expects to see challenges in the sector.
Credit Card and Mortgage Delinquencies at Lows Since the crisis, credit-card and mortgage delinquencies have
Since the crisis, credit-card and mortgage delinquencies have improved, with the balance more than 90 days delinquent declining, according to the Federal Reserve Bank of New York. After seaking at 8.9% in the first quarter 2010, mortgage delinquencies have come down considerably from their highs, resting at 2.1% at the end of the first quarter. Credit-card delinquencies have also dropped, with the current level of 7.6% nearly half the 13.7% recorded in the first quarter of 2010. Low interest rates made it easier for consumers to either refinance or stay current on their debt obligations.
Meanwhile, after little change over the past few years, auto- loan delinquencies have edged higher, as competition among underwriters led to an increase in subprime auto loans. While we expect to see an uptick in auto delinquencies given the larger subprime component, overall auto-loan delinquency rates remain at relatively low levels. If unemployment remains in check, those auto-loan delinquency gains should be within reason, while we expect credit-card and mortgage delinquency rates to remain low.
New data that has been released since publishing solidifies the trend of consumer spending improving after a typical slow start of the year, with 1Q16 GDP growth at 1.1%. In addition, consumer confidence has strengthened.
Eye on the Road: Student and Auto Loans Bear Watching Consumers are adding to their household debt levels, with student-loan debt leading the way behind mortgages. Postcrisis, students enrolled in for-profit colleges in record numbers, with dreams of a future career. For many, those dreams never materialized, and they were left saddled with heavy student-debt obligations that they were unable to meet. This pool of nonpaying indebted students contributed to the student loan delinquency rate rising steadily since the end of 2012. While the pace of student-loan delinquencies has slowed, Morningstar Credit Ratings views the sector as vulnerable to declines in employment as the delinquency rate remains near record levels despite a generally healthy job market.
Fintech Investment is Exploding — 5 Ways Governments & Ecosystem Builders Can Help, (500 Startups), Rated: AAA
Quarterly financing to VC-backed fintech companies has been growing immensely:
But investment is not flowing freely everywhere. For example, in 1Q2016, Chinese fintech companies received $2.4 billion in funding (albeit primarily from two mega-deals), while the rest of Asia received only $0.2 billion. Meanwhile in Europe, deal count increased but the amount of capital invested did not. Even when the investment flows, the performance often does not.
Fintech’s 3 Ecosystem Challenges
1. Regulatory regimes are often ill-suited for fintech. Regulations in the finance sector are often unclear or highly complex, and regulatory processes and agencies may be slow.
2. Traditional financial institutions may hold down fintech startups, intentionally or unintentionally. Not long ago in the U.S., many banks did not even entertain meetings with or extend invitations to fintech startup founders.
3. Customer preferences may not be ready for certain fintech solutions. Customer acquisition is very difficult in fintech. Banks in the US spend over $500 to acquire a single user, and over time many startups will get there as well.
5 Ways Goverments Can Help
1. Create a “regulatory sandbox” that provides startups the opportunity to test new ideas without immediate threat of regulation.
2. Offer fast and transparent regulatory review of potential new fintech products or services.
3. Create a support system or kit to help fintech startups meet regulatory requirements.
4. Roll out consumer awareness initiatives to increase demand.
5. Encourage traditional financial institutions to invest in or partner with fintech startups — preferably non-exclusively.
The Lending Club Predicament & The Lessons Learned, (Crowdfund Insider), Rated: AAA
Lending Club’s problems should make the sector reflect on the governance issues that arise from the mixed business models that some crowdfunding platforms have evolved into.
Banks lend their own money and take risk on their balance sheet; hence, they must meet regulatory requirements such as Basel III. Asset managers manage other people’s money and invest on their behalf; hence, they are regulated as financial advisers. Platforms must clearly choose their business model because it has regulatory consequences. It also has an impact on the market valuation of the company. Marketplaces are currently much more highly valued by investors than banks. Even before the scandal, Lending Club’s stock was valued rather like a bank’s stock. Eventually, mixed business models potentially lead to conflicts of interest of the type observed at Lending Club.
Lending Club lost its way a long time before the scandal and the subsequent dismissal of Renaud Laplanche. By progressively marginalizing retail investors and letting investment funds securitize Lending Club’s loans on their own terms, Lending Club de facto surrendered the control of the platform to the very same established finance that P2P Lending was supposed to present an alternative to. This change of course created a detrimental layer of complexity, and potentially of systemic risk, in what was supposed to be a simple and direct relationship between private lenders and borrowers.
Beyond the image problem, the impact of the incidents has been small. European institutional investors are still very much interested in marketplace lending, as can be seen from two recent announcements: a$100 million loan program through Funding Circle by the European Investment Bank and €70 million multiplatform crowdlending fund by Eiffel Investment and French insurers Aviva and AG2R La Mondiale.
Marketplace Lending Securitization Tracker, (PeerIQ), Rated: AAA
Marketplace lending securitization volume topped $1.7 billion this quarter, up 14.8% from Q1, with cumulative issuance reaching $10.3 billion. YTD issuance of the sector stands at $3.2 billion as compared to $1.8 billion from prior year, a 77% increase. Q2 saw a total of 6 deals: 3 are backed by student loans, 2 by unsecured consumer loans, and 1 by SME loans. SoFi issued its first rated unsecured consumer loan deal and received an industry first ever AAA rating from Moody’s on its recent student loan transaction.
MPL securitizations are moving towards rated and larger transactions. The second quarter was the first to have all deals rated by one or more rating agencies. Further, the growth in average deal size continued, the average deal size grew to $267 million in 2016 as compared to $64 million in 2013.
New issuance and secondary spread tightened by quarter end, a good sign for the industry. Across all segments in MPL, Q2 2016 saw moderate spread compression in senior tranches of newly issued deals and widening in junior tranches as compared to Q1 2016.
Numerous factors, including lending platform rate increases, and spread tightening in both primary and secondary markets, look to improve future deal economics. The increase in rates from platforms increases excess spread and improves the economics of securitization for residual holders. The demand for
The demand for higher standard of due diligence, transparency and analytics will be the norm. With the recent Lending Club headlines, ABS investors are demanding greater transparency and validation to enhance trust.
A total of 6 deals were done in Q2 and spanned several marketplace lenders and categories. Here is the breakdown from Q2 2016:
- 3 student loan securitizations (Earnest, SoFi, CommonBond)
- 2 unsecured consumer loan securitizations (Avant, SoFi)
- 1 SME securitization (OnDeck)
Despite Citi stopping the securitization of Prosper loans, they continue to be the leader in marketplace lending securitizations followed closely by Morgan Stanley and Credit Suisse.
Cited as factors for an improving securitization market are increasing platform rates and spread tightening in both primary and secondary markets. A detailed analysis of specific securitizations are outlined in PeerIQ’s report.
Why mobile point of sale (MPOS) Is Gaining Ground in FinTech, (Tech.co), Rated: AAA
Comment: in our market context I would think that lenders would like to acquire/partner/sign up with Point of Sales solutions to extend credit in physical stores.
One such story goes of Swedish payments giant Klarna that recently announced that they were moving beyond its online services into physical stores, which it will accomplish by partnering up with mobile point of sale (MPOS) and e-commerce company Sitoo.
We are approaching a near future where the value chain for payments as we know it will be forever altered and new constellations will surface. More specifically, we expect to see more payment providers partnering up with POS companies to add value to their services and to diversify their position. There’s also a strong possibility that we’re likely to see some of the more aggressive payment providers outright acquiring POS-companies to accelerate growth and control a larger chunk of the value chain.
Royal Bank Of Canada Sold A Lot More LendingClub Corporation Common (LC) Stock, (Fidaily), Rated: A
Royal Bank Of Canada says it sold 35,334 shares last quarter decreasing its holdings in LendingClub Corporation Common by 99.5%. Its investment stood at $1,000 a decrease of 99.7% as of the end of the quarter.
The average RateSetter business loan, (Finder), Rated: AAA
If Funding Knight went bust how safe is peer-to-peer lending?, (The Telegraph), Rated: AAA
A peer-to-peer website has been rescued after falling into administration, offering a lifeline to 900 savers who faced being unable to get their cash back.
Funding Knight was promising investors returns of up to 12pc for lending cash to small businesses.
Many feared that they would lose their money when the company ran out of cash and went into administration last month.
However, last week the firm was rescued by GLI Finance, an investment firm, which said savers cash was safe and could be withdrawn at anytime. GLI has also invested a further £1m in the business.
Despite Funding Knight savers being assured that their cash is safe by the new owners, the incident has raised concerns over the safety of peer-to-peer lending.
Any funds they lend through a peer-to- peer website are not covered by the government-backed Financial Services Compensation Scheme (FSCS), which protects bank savers up to £75,000.
A spokesman for the Peer-to-Peer Association, a trade body of which Funding Knight is not a member, said:
He said: “We have been consistent in calling for, and embracing, regulation of the sector and requires robust adherence to its published operating principles, including the publication of platform loan books in full and clear information on all fees and charges to investors and borrowers.”
“Peer-to-peer lending offers overall a lower risk profile than some other forms of investment with less volatility, but it is not entirely without risk.
“Within the peer-to-peer lending sector, there are a number of different asset classes each with their own risk-return profile.”
Why Funding SMEs Within The EU Capital Markets Union Action Plan Is Challenging, (Seeking Alpha), Rated: A
European banks are caught in a conundrum because they still have to clear up their bad loan portfolios, which their US counterparts have largely dealt with. This situation, together with stricter capital requirements, and a challenging policy environment with low or negative interest rates, has led to a double whammy affecting both banks and SMEs. Additionally, credit information is still very fragmented in the EU, as shown by our CFA Institute member survey on the Capital Markets Union from May 2015.