Thursday April 25 2019, Weekly News Digest

fintechs

News Comments Today’s main news: LendingClub restructures SME lending. Funding Circle lowers return projections. RateSetter receives Queen’s Award for Enterprise. SoFi could get $500M funding from Qatar. Today’s main analysis: How personal loans impact credit scores a year into repayment. Today’s thought-provoking articles: Employer payday loans and continuous billing using today’s technology. Interview with Deserve’s […]

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United States

LendingClub shuts down SME lending arm (Banking Tech), Rated: AAA

US peer-to-peer lending pioneer Lending Club has closed the doors on its in-house small business lending operation, reports Julie Muhn at Finovate.

Opportunity Fund, a non-profit small business lender; Funding Circle, one of the largest alternative small business lending platforms in the US; and Lending Club have teamed up to offer Lending Club’s small business clients’ access to credit. Businesses can now borrow up to $300,000 for rates as low as 5%.

How Personal Loans Impact Debt and Credit Scores a Year Into Repayment (LendingTree), Rated: AAA

Key findings

  • One year after taking on a personal loan, 52% of borrowers owed less overall on credit cards and personal loans. These borrowers’ balances — the sum credit card and personal loan balances — fell $811 on average.
  • Among baby boomers who took out personal loans, 56% lowered their overall balances after their first year of repayment, compared with 52% of Generation X and 48% of millennials.
  • Boomers also lowered their balances by much larger amounts, owing an average $2,048 less after a year. Balance reductions of younger borrowers were more modest: Generation X lowered their overall balance by $338, and millennials reduced their overall balance $250.
  • A year into repaying a personal loan, credit scores declined slightly for all age groups. Boomers’ credit scores declined the least, with the median falling just 1 point from 669 to 668. The median score of Generation X personal loan borrowers fell 7 points, from 659 to 652. Millennial credit scores fell 10 points, dropping from 661 to 651.
  • Credit utilization rates — the ratio of the sum of credit card balances to the sum of credit card limits — show a similar trajectory. One month after taking a personal loan, the median utilization rate fell from 35% to 26%. But after the first month, utilization increased. The median utilization rate one year after taking a loan increases to 44%.

How To Get Your Paycheck Early (Forbes), Rated: AAA

Speaking of Walmart, the retailer has partnerships with two fintech startups–Even Responsible Finance and PayActiv–that enable its US workers get part of their salary paid before payday.

Employees can get up to eight drawdowns (called Instapays) on their salary ahead of scheduled payouts. The first eight drawdowns are free to the employees, and then in subsequent use, fees are levied across a personal finance app available through Even.

Continuous Billing

There’s no reason why billers can’t provide continuous information about what a customer owes, in real time, online or through mobile apps.

Deserve’s Kalpesh Kapadia: ‘We promise the best credit card for our customer’s profile and life stage’ (Tearsheet), Rated: AAA

The financial system has always struggled with young people. Because the system uses credit history, young people were frequently excluded from credit products because they’re new to the system. If you’re an immigrant or foreign student studying in the US, it’s way worse. Kalpesh Kapadia set out to change a system that was skewed against young people. He’s the co- founder and CEO of Deserve, which offers credit cards to college students at 2500 universities in the US.

To do this, he’s created an analytics-based lending platform that’s also branching out into powering credit cards as a service. We talk about how Deserve is able to underwrite credit-thin files and why he thinks his firm is at an advantage when it comes to competing against Marcus’s credit products and Apple’s new credit card.

Resolve Accelerates Shift to B2B eCommerce with Automated Net Payment Terms (GlobeNewswire), Rated: A

According to Forrester Research, business-to-business (B2B) eCommerce is poised to reach over $1.8 trillion by 2023. To help power this explosive growth, Resolve today announced that it has formally spun out of Affirm to launch an automated payments platform offering extended net terms. Early customers using Resolve’s payment automation technology have realized significant increases in B2B sales, growth in order size, and faster sales cycles.

Online Auto Loans: The Pros and Cons (U.S. News), Rated: A

Things are different now. Almost every financial institution has an online presence, and most offer information about car loans on their site. Most also provide an opportunity to apply for financing online, with a growing number able to take car buyers through the entire auto loan process without ever having to visit a bank or credit union branch.

It’s Not Easy Solving For $ 1.5 Trillion In Student Debt (PYMNTS), Rated: A

There is $1.5 trillion worth of student loan debt outstanding in the U.S. and it is creating problems.

Admittedly the plan is quite a bit more complex than that, as detailed by Sen. Warren in a Medium post that went live yesterday (April 22). In broad strokes, for students from families with less than $100,000 a year in annual income, $50,000 in student loan forgiveness would be available. The post also calls for “substantial debt cancellation for every person with household income between $100,000 and $250,000.” The Warren plan also calls for the elimination of tuition at all two-year and four-year public institutions of higher learning, and would create a fund of at least $50 billion specifically for historically black colleges and universities. Federals subsidies for for-profit colleges would be banned.

Would You Take a Job Just for the Fertility Insurance? (Glamour), Rated: AAA

The cost, however, put it out of reach. A single round of IVF rings in at about 

dv01 Launches Credit Risk Transfer Market Surveillance Offering (dv01 Email), Rated: A

dv01 today announces the launch of its Credit Risk Transfer (CRT) Market Surveillance offering, which will be showcased on April 25 at the 4th Annual Credit Risk Transfer Symposium in New York.

dv01’s latest offering adds $1.8 trillion of Freddie Mac (STACR) and Fannie Mae (CAS) CRT securitizations to dv01’s modern web-based data analytics platform, furthering their goal of bringing greater transparency to capital markets. Building on the success of dv01’s Market Surveillance offering for consumer loans (launched in 2017), the CRT offering will allow investors to analyze historical performance of CRT deals both individually or as combined deals, perform whole market analysis, and run cash flow scenarios.

Let’s give post offices another job (The Student Life), Rated: A

As of 2017, approximately 6.5% of households in the U.S., totaling more than eight million, don’t have an account open at an insured bank, according to the Federal Deposit Insurance Corporation. An additional 24.2 million households utilize non-traditional financial services that often make them vulnerable to usurious lending rates.

Americans utilizing alternative forms of credit spend nearly 10% of their salaries on fees alone. For a family making the average salary of $25,500 in 2012, those fees average out to $2,412.

The USPS has 59% of its locations in zip codes that have one or fewer banks, according to a 2011 government report. This could help people to overcome a geographic boundary.

Equifax acquires PayNet to help expand access to capital for small and mid-sized businesses (PR Newswire), Rated: A

Equifax Inc., a global data, analytics and technology company has acquired PayNet, a company that provides commercial credit risk underwriting and management solutions to online and alternative finance lenders, and commercial finance and leasing companies in the U.S. and Canadian markets.

Marketplace Lending Update #5: The Very Long Arm of Colorado Law (The National Law Review), Rated: A

Recently a state court in Colorado ruled that securitization trusts that acquire marketplace lender loans originated to Colorado consumers are subject to Colorado jurisdiction. The court’s ruling derailed the attempt by the securitization trusts to escape the ongoing battle between the State of Colorado and marketplace lenders over rates and fees that can be charged to Colorado residents.

Berman Tabacco Announces Major Win for Victims of Plain Green Online Lending Scheme (BusinessWire), Rated: A

In a long-awaited opinion, the U.S. Court of Appeals for the Second Circuit today ruled that borrowers who took out loans from the Native American-affiliated online lender Plain Green can proceed with their nationwide RICO class action in Vermont federal court. The Second Circuit affirmed a May 2016 ruling by District Judge Geoffrey W. Crawford and comes nearly two years after oral argument on Defendants’ appeals. Berman Tabacco and Gravel & Shea PC are Lead Counsel in the case, Gingras, et al. v. Rosette, et al., No. 5:15-cv-00101-gwc (D. Vt.).

2nd Circ. Says Tribal Officers Not Immune In Payday Loan Suit (Law360), Rated: B

The Second Circuit on Wednesday rejected a bid by officers of tribe-owned lending company Plain Green LLC to escape a suit claiming they charged exorbitant interest rates on so-called payday loans,…

White Oak Global Advisors Completes $ 30M Loan for Danimer Scientific Holdings (AP News), Rated: B

White Oak Global Advisors, LLC (“White Oak”) today announced it acted as sole lender and administrative agent to provide a $30 million senior credit facility to Danimer Scientific Holdings, LLC (“Danimer”), a manufacturer of specialty compostable and biodegradable plastics. This transaction expands on White Oak’s ESG-lending platform, which aims to finance small and medium-sized enterprises (“SMEs”) that are developing solutions to help address environmental and social issues around the world.

Online Lender Upgrade Recognized as Top Place to Work in San Francisco (Crowdfund Insider), Rated: B

Online Lender Upgrade, a Fintech serving the consumer credit market, has been named a “Best Place to Work in the Bay Area’”by the San Francisco Business Times and Silicon Valley Business Journal. Upgrade is the creation of  CEO Renaud Laplanche, the founder of publicly traded marketplace lending platform LendingClub. This is the second time Upgrade has been recognized as a nice place to work in the notoriously work focused bay area.

United Kingdom

Funding Circle lowers return projections (P2P Finance News), Rated: AAA

FUNDING Circle has revised down its annual return projections in the face of a weaker environment for consumer credit.

The peer-to-peer business lender now predicts investors in its Balanced portfolio will achieve a return of 4.5 to 6.5 per cent a year.

Investors in its Conservative portfolio, meanwhile, could achieve 4.3 to 4.7 per cent a year.

Peer to Peer Lender RateSetter Receives Queen’s Award for Enterprise (Crowdfund Insider), Rated: AAA

Peer-to-peer investment platform RateSetter has been recognized with a prestigious Queen’s Award for Enterprise for excellence in innovation.

Challenger bank Tandem to double headcount as CEO warns of Brexit brain drain (Yahoo! Finance), Rated: A

Tandem Bank said on Tuesday it had moved into a new 16,000 square foot office in London as part of plans to double headcount this year to 230 and grow to 300 people by the end of 2020.

“Last year we hit 500,000 customers when we had an expectation for 150,000,” Knox told Yahoo Finance UK.

Consumer P2P loans weigh on P2PGI fund returns (P2P Finance News), Rated: A

P2P Global Investments (P2PGI) has warned that its legacy peer-to-peer lending portfolio continues to be more volatile than expected despite posting an improved net asset value (NAV) return for 2018.

P2PGI – the world’s first P2P-focused investment trust – revealed in its annual report that its NAV for 2018 was 5.2 per cent, up from three per cent in 2017.

China

How Leverage Turns Market Corrections into Crashes (Yale Insights), Rated: AAA

Q: Is shadow borrowing unique to China?

It’s difficult to study the phenomenon very precisely. We do observe shadow lending in various forms growing throughout the world, including in the U.S., and, if left unregulated, this type of lending could mean that household and financial institution leverage keeps rising in a way that is both unregulated and undocumented.

Because the Chinese government believed that the shadow sector was partly responsible for the crash, it seized the data from some shadow lending platforms and allowed us to analyze it.

Q: Who’s providing the financing in these situations?

The exact sources of financing are not well known. Some of it could be other stock investors that have put up their own holdings as collateral and borrowed against it and then lend out the proceeds on the shadow market. It could also be peer-to-peer lending platforms. It’s also believed that some of the financial institutions and brokerage firms within China may have also lent out within the shadow sector.

Trade war with US could lead to economic ‘cold war’ for China, Beijing researchers say (SCMP), Rated: A

The tit-for-tat tariff war with the US and the broad hostility is seen as a major risk endangering China’s “economic security”, along with a property bubble, local debt, unemployment and online financing including peer-to-peer lending, according to the latest edition of China’s Economic Security Outlook.

European Union

French Lender Societe Generale Issues $ 112 Million Bond on Ethereum (CoinDesk), Rated: AAA

French financial services giant Societe Generale Group has issued about $112 million worth of bonds in the form of a security token on the public ethereum blockchain.

Announced today, a subsidiary called Societe Generale SFH used the OFH token (obligations de financement de l’habitat, or home financing obligations) to represent 100 million euros of covered bonds, a type of security that is backed by specific assets but remains on the issuer’s balance sheet.

The bond has a five-year maturity with a 12-month extension period, Moody’s said.

N26 opens tech hub in Vienna with a focus on security (TechCrunch), Rated: A

Fintech startup N26 is opening an office, its fourth, in Vienna. Eventually, the company plans to hire 300 software engineers, product managers and IT specialists.

API card platform Marqeta signs up three customers in Europe (Verdict), Rated: B

The platform has been signed up by French digital bank Morning, Swiss digital bank Yapeal, and Spanish POS lender Aplazame.

CoinLoan Plans IEO and Seeks Partners (Digital Journal), Rated: B

CoinLoan crypto-backed lending platform declares its intention to launch an Initial Exchange Offering and invites discussion with major crypto exchanges interested in the listing.

International

SoFi Is in Talks With Qatar for $ 500 Million Funding Round (Bloomberg), Rated: AAA

Fintech startup Social Finance Inc. is in the final stages of closing a funding round from the Qatar Investment Authority and others, according to four people familiar with the matter.

The new round, which could close as soon as this week, is said to value the startup at an amount similar to the $4.3 billion valuation of its 2017 funding round, led by Silver Lake. Two of the people said that in order to achieve the same valuation, investors were asking for more protections should the company raise money or sell itself for a lower price tag in the future. The terms of the deal have not been finalized and could still change, the people said. All of the people asked not to be identified because the discussions are private.

These are the top 10 hottest fintech startups and companies in the world (Business Insider), Rated: AAA

Fintech industry funding has already reached new highs globally in 2018, with overall funding hitting $32.6 billion at the end of Q3.

Brex

What it does: Brex is a US-based corporate credit card provider, which initially focused on serving startups.

Raisin

Why it’s hot in 2019: Raisin became a fintech unicorn after raising $114 million in January, and has since then formed partnerships with Commerzbank and ClearScore. Additionally, the startup partnered with Starling Bank in 2018 to launch bank accounts in the UK

SoFi

Why it’s hot in 2019: While the company previously focused on loans, including student loans, in 2019 it has made some significant moves into the wealth management space, and launched both free ETFs and an investment product, dubbed SoFi Invest. As it becomes a more rounded financial product, SoFi will be worth watching in the next few years.

Lending Express

What it does: Lending Express is a US-based lending platform, which focuses on SMBs, and helps them gain access to more funding by providing them with advice.

Volt Bank

Why it’s hot in 2019: In January, Volt became Australia’s first fully licensed neobank. The challenger bank will first offer a suite of retail banking products, as well as budgeting and account aggregation tools, and plans to enter the SMB banking sector in 2020.

U.K. fintech now has war chest to push stateside (American Banker), Rated: A

Fresh off a $100 million funding round last year, the British startup OakNorth is preparing to license its business lending technology to U.S. banks and beyond.

The 3-year-old small-business lender is entering the U.S. at a time when fintechs and banks have stepped up their digital business lending efforts. Though OakNorth has not announced any official partnerships in the U.S., CEO Rishi Khosla said there’s appetite for what the firm is offering.

BlockFi Is Now Paying Interest on $ 53 Million of Crypto Deposits (CoinDesk), Rated: A

Crypto lending startup BlockFi has gathered another $18 million of bitcoin and ether deposits since last month, bringing its total interest-earning accounts to $53 million.

The company also lowered its minimum balance to earn interest on bitcoin from 1 BTC to 0.5 BTC and expanded its operations to India, meaning its service is now available globally, except for territories sanctioned by the U.S., U.K. and E.U.

No crypto winter for BlockFi as client base reaches 50% (CoinGeek), Rated: B

Crypto lending startup BlockFi has been growing, and now claimed that it has grown its client base by 50% in just one month.

Funds at your disposal: Digital lending making inroads into traditional lending (Finextra), Rated: A

The penetration of the internet of things and devices such as smartphones has brought in many advancements. This has made economic activities available at the touch of a button. Among the various sectors, the digital world has evolved the way traditional banking processes are being carried out. A growing number of businesses and individuals are filling applications online for taking loans rather than getting into the lengthy lending process.

Microsoft Will Pay You To Develop… Ethereum? (CryptoBriefing), Rated: B

“[ConsenSys Labs] has put up a few bounties in the vein of rethinking the lending market, and thinking about a peer-to-peer lending and a decentralized credit score system,” explains ConsenSys’ Operations Lead Vivek Singh. Instead of relying on centralized credit agencies, such a system—if successful—could allow borrowers to leverage their social connections into a sort of decentralized credit score.

India

Indian lendtech ZestMoney raises $ 20m (Banking Tech), Rated: AAA

ZestMoney, a start-up that helps consumers with no credit history get loans to buy online, has raised a $20 million Series B.

‘Money Loji’ launches App that offers loans to salaried professionals within 5 Minutes (Business Standard), Rated: A

Money Loji, a modern money ending platform, has launched its App, which offers quickest and the most secure loans to salaried professionals for an immediate requirement with flexible repayment options starting from 7 days to a maximum of 90 days. They follow a unique three-step process – application, approval, disbursement which is carried out within 3-4 minutes. The eligibility criterion is a minimum in-hand of Rs 20,000/month and a minimum age of 23 years. The application requires the users to upload an identity proof, an address proof, last 3 alongside the slips.

Blockfi Launches High-Interest Crypto Lending Program in India (Bitcoin.com), Rated: A

New Jersey-based crypto startup Blockfi announced Tuesday that it has expanded service to users in India. Its flagship Blockfi Interest Account (BIA) for BTC and ETH is now available in 65 countries.

Asia

Nuo Network Crypto Lending Platform Becomes Asia’s Biggest with $ 2 Million in Reserves (Bitcoin Exchange Guide), Rated: AAA

ConsenSys ventures backed Nuo.Network, which is a non-custodial lending platform recently made it to the top 5, dollar Defi (Decentralized Finance) projects and it presently the largest lending platform based in Asia. In the past month, the value of loans given has doubled, this is partly due to the growth of DAI reserves, which is now about 500,000 USD and the surge in Maker stability fees.

Why China’s Ping An OneConnect picks Indonesia for expansion (The Asset), Rated: A

The archipelago is viewed as an ideal market to benefit from the services offered by the enterprise. According to the Ping An Group, Indonesia, at around US$27 billion in 2018, is the largest and fastest-growing internet economy in Southeast Asia.

MENA

Banks use fintech to make up for lost time on financial inclusion (Financial Times), Rated: AAA

It fell to a mobile phone company more than a decade ago to financially empower tens of millions of Africans who found themselves passed over by the traditional banking sector. Now, some 12 years after Vodafone co-founded M-Pesa, the mobile payments venture that took east Africa by storm, banks are upping their game to improve financial inclusion rates across Africa and the Middle East, as technology widens their ability to deliver banking services at lower costs.

Source: Financial Times

In east Africa, the Catalyst Fund has backed Sokowatch, a three-year-old Kenya-based fintech that enables small retailers to order goods from suppliers registered on the mobile-focused platform and receive same-day deliveries. It also offers access to credit. The platform has already expanded into Tanzania and Rwanda.

In the Middle East, Citigroup has given $5m to a microloans fund in Jordan that helps give women access to credit. The financial support will help provide loans to around 10,000 additional women.

Iraq’s financial inclusion drive boosted by homegrown fintech (Financial Times), Rated: A

Around 7m Iraqis are now receiving welfare benefits or public sector salaries electronically, as the government replaces cumbersome cash dispersals with biometric debit cards that can be used at ATMs and in shops.

Only 23 per cent of Iraqis aged 15 and over held an account with a financial institution in 2017, according to the World Bank — although that figure has doubled since 2011.

Source: Financial Times

YouHodler Cryptocurrency Lending Platform Adds Dash (Dash News), Rated: A

Users will now be able to borrow in EUR, USD, or Stablecoin against their Dash as well as use the site to covert Dash to any crypto or fiat on the platform and withdraw to their crypto or fiat wallet. If a user enters their credit/debit card on the platform then they can “convert DASH to fiat and instantly withdraw that amount onto their personal cards, adding a unique “real world” utility for crypto”.

Canada

7 ways emerging fintech hubs are taking on the giants (PaymentsSource), Rated: AAA

Toronto is another significant fintech force in North America, and the leading fintech zone in Canada, because of the high concentration of financial organizations and technology development in Ontario. Last year Toronto accounted for CA$221 million (US$165 million) in total fintech investments across 25 deals, according to a recent report from Toronto Financial International (TFI).

Toronto ranks ninth out of the top 15 global fintech hubs, according to TFI. Currently the region has more than 190 fintech companies and 20 incubator/accelerators in operation. Payments represent the single leading category of fintech investment in the Toronto area, and combined with lending and digital currencies/FX firms it accounts for half of all local fintech activity, according to TFI.
Source: PaymentsSource
Latin America

Brazilian Credit Marketplace FinanZero raises USD 11 Million in Series B Round (Yahoo! Finance), Rated: AAA

FinanZero, a Brazilian fintech that operates as a consumer loan broker, received a new round of investment, raising USD 11 millionfrom Atlant Fonder, Dunross & Co and Vostok Emerging Finance, among other investors.

Authors:

George Popescu
Allen Taylor

The post Thursday April 25 2019, Weekly News Digest appeared first on Lending Times.

Thursday April 12 2018, Daily News Digest

Thursday April 12 2018, Daily News Digest

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 […]

Thursday April 12 2018, Daily News Digest

News Comments

United States

United Kingdom

China

European Union

International

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News Summary

United States

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

Affirm

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

ConsenSys

Most Innovative Token Economy

AxiomZen

Top Consumer Lending Platform

Yirendai

Top Small Business Lending Platform

Kabbage

Top Real Estate Lending Platform

LendInvest

Emerging Lending Platform

LendingUSA

Excellence in Financial Inclusion

Oportun

Most Promising Partnership

LendingClub + Opportunity Fund

Most Successful Cross-Border Partnership

Kasisto + DBS Bank

Most Innovative Bank

Cross River

International Innovator of the Year

IrisGuard

Top Enterprise Technology Company

ThreatMetrix

Top Emerging Technology Company

MoneyLion

Top Professional Services Company

Millennium Trust

Most Innovative Mobile Technology

Juvo

Top Fintech Equity Investor

Edison Partners

Best Journalist Coverage

Tony Zerucha, Managing Editor, Bankless Times

Top Investment Bank in Fintech

FT Partners

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*

Source The M Report

*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.

United Kingdom

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

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.
Source: Seeking Alpha
European Union

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.

International

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.

Africa

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.

MENA

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.

Authors:
George Popescu
Allen Taylor

Monday February 26 2018, Daily News Digest

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News Comments Today’s main news: Revolut breaks even, prepares for global expansion. RateSetter finances divorces. Which Isas pay 6% or more. Half of all employers offer financial advice. CoAssets increases revenue by 471% in half a year. Today’s main analysis: Do Americans really want a bank branch? Today’s thought-provoking articles: Ron Suber, Godfather of Fintech. Unscrupulous banks fueled the rise […]

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United States

United Kingdom

China

European Union

International

Australia

India

APAC

Africa

News Summary

United States

How Helping Your Employees Improve Their Credit Helps Your Bottom Line (Forbes), Rated: AAA

One possible cause of an employee’s poor attitude is that he or she has looming debts or is attempting to climb out of a credit score canyon. Workers facing these challenges are often unable to completely focus on their job responsibilities. It’s no surprise that constant stress over meeting financial obligations leads to a loss of focus and time dedicated to work obligations. And because employees work for paychecks that go toward their debts, it makes sense that they begin to associate the two.

Defeating Debt-Fatigue

About 

Giving the middle class credit: New bill a step in right direction (The Hill), Rated: A

Consumers need access to credit, and bank-fintech partnerships are one way to meet their needs. Indeed, bank-fintech partnerships are good for both consumers and banks.

As I noted, consumers benefit because banks can use fintech to deliver safer, more transparent, lower-cost and more convenient financial products and services over the internet and mobile devices.

Banks benefit because fintech companies can leverage big data and technology, offering the infrastructure banks need to serve and welcome more people into the financial system.

An excellent example of community banks using fintech to compete with the Wall Street banks is Radius Bank, a $1-billion asset institution in Boston, which according to news reports is establishing “long-term relationships” with fintech providers, and is finding them to be “mutually beneficial.”

Ron Suber, the Godfather of Fintech (Lend Academy), Rated: AAA

In this podcast you will learn:

  • Ron’s background and how he became interested in marketplace lending.
  • Why he saw a big opportunity for Prosper back in 2012.
  • What was behind Ron’s decision to leave Prosper last year.
  • What rewirement means to Ron and why it is important.
  • How the typical work week looks today for Ron.
  • Highlights of some of the trips he has taken recently.
  • What it was like doing the road show for the Credible IPO in Australia.
  • Details of the meeting Ron recently had with the Australian Treasurer.
  • What Ron is doing at Prosper these days.
  • Knowing what he knows now, what he would have done differently at Prosper.
  • What the marketplace lending industry still needs to improve upon today.
  • What inning the industry is in today.
  • What Ron looks for when he considers a new investment.
  • Why he pulled the trigger on some of his recent investments.
  • Ron’s view on Marcus and its impact on the online lending space.
  • What area of fintech Ron is most excited about today.
  • How he is able to maintain so many connections in fintech.
  • What is next for Ron Suber.

 

Chris Larsen Of Ripple (XRP) @Google (ValueWalk), Rated: A

Fed Minutes (PeerIQ), Rated: A

The Fed released the minutes of the January FOMC meeting and provided a bullish outlook to the economy with upside risks due to tax reform. The committee indicated that they were on track to raise interest rates in the March meeting, and market participants are expecting 3 rate hikes in 2018.

Meritize Raises $ 6.8M in Seed Funding (Finsmes), Rated: A

Meritize, a Frisco, Texas-based student lending platform, raised $6.8M in seed funding.

Colchis Capital, Chicago Ventures and Cube Financial Holdings led the investment round with participation from ECMC, College Loan Corporation, University Ventures, City Light Capital, PC Squared and Meritize management.

LendingPoint Co-founder Weighs in on Lending Club’s Earnings Report (deBanked), Rated: B

“In my view, [Lending Club’s] underlying problem is that they don’t have alignment of interest between their stakeholders,” Tavares said. “At LendingPoint, we have a different approach. We look at it really as a balance sheet model, which means that we put everything on our books. We use our own equity. We leverage other investors’ capital, but we’re not an origination platform…Lending Club’s model primarily is that they have to continue feeding the beast, so to speak, in order to continue making their revenues. They don’t have inventory to continue generating assets or to monetize going forward. That’s a significant shortcoming in their model,” he said.

Bay Area Man’s Opportunity Fund Giving Small Businesses A Leg Up (CBS Local), Rated: A

About 8,000 small business loans are denied every day in this country, according to the U.S. Federal Reserve. It’s a story Alicia Villanueva knows all too well.

So in 1992, Weaver founded Opportunity Fund, launched with a consortium of 15 banks. But although the San Jose-based non-profit works with traditional lenders, its business practices are a bit different. Weaver says Opportunity Fund delves into an applicant’s financial picture and character.  And since it lends to people with bad or non-existent credit, a granted loan comes with an automatic offer of hands-on financial management support, and a hefty dose of financial responsibility.

Today, Opportunity Fund loans about $5 to $7 million a month to small business owners in California and 13 other states. The money comes from business and private donations. An average loan can range from $2,600 to $250,000. Under Weaver’s leadership, 6,200 businesses have received loans.

Opportunity Fund, along with other partners like Lending Club, is set to expand into other parts of the U.S. later this year.

A Look at CUneXus’ Strong Growth in 2017 (Finovate), Rated: A

Lending automation company CUneXus published some impressive growth stats today. Here’s a quick overview of a few of the California-based company’s success metrics:

  • Grew from 45 FI clients to 72 over the course of one year, from 2016 to 2017, a 60% year-over-year increase
  • Reaches more than 6.5 million potential end consumers across the U.S.
  • Averaging more than $6 million in new loan requests per day
  • Generated more than 140,000 loans totaling more than $2.5 billion with its 1-click borrowing solution

These and other FI clients have reported that CUneXus has helped contribute to their own success, including:

  • Loan processing times cut in half
  • A 110% increase in pre-approved lending activity
  • A 135% spike in funded loan amounts

3 Ways Technology is Bringing in New Real Estate Investors (Realty Biz News), Rated: A

Today, in addition to teaming up with development companies, many investors are using technology solutions to research options remotely. Here are the three trending ways technology is revolutionizing how new investors step into the real estate market space.

Mobile apps like Vacation Rentals by Owner (VRBO) and Airbnb have become popular and more people are now looking to invest in such short-term rentals.

Big data is now a critical offering for the public, and the real estate niche is looking for ways of gathering and presenting the information for driving purchase behavior.

Following the success of the customer-centric applications, it’s clear to see that the industry holds a huge potential if technology is leveraged to bring in new investors. Real estate is the largest global economy asset with figures hinting at $217 trillion – surpassing the world’s GDP of $80 trillion! This is a clear indicator that there is a huge potential for financial freedom creating entrepreneurs looking to tap into the real estate market.

New York Federal Reserve: Fintech Has Improved the Mortgage Lending Market (Crowdfund Insider), Rated: A

The New York Federal Reserve has published a staff report pertaining to “The Role of Technology in Mortgage Lending”.

While still relatively small, this segment of onlien lending has grown annually by 30% from $34 billion of total originations in 2010 or 2% of the market, to $161 billion in 2016 or 8% of the market.

The Fed research finds that Fintech lenders reduce mortgage processing time by about 10 days, or 20% of the average processing time.

Additionally, default rates tank by a whopping 25% indicating the credit process is superior to the antiquated analog method of traditional banks.

 

 

Do the Majority of Americans Really ‘Want’ to Use a Branch? (The Financial Brand), Rated: AAA

According to research conducted by Novantas, 60% of Americans said they would rather open a new checking account in person at a bank branch than on a phone, tablet or desktop computer. Reinforcing this finding is the reality that most consumers still only use digital channels for the most basic banking functions, such as checking account balances and transferring funds. For more complicated issues, like problems with an account or advice, most consumers prefer human contact.

The reliance on branches in North America is almost double other countries, where better digital offerings have been introduced. In fact, according to Novantas, 75% of consumers in Australia report visiting the branch less than once per month, or even less! The UK is very similar while, interestingly, only about half of US consumers exhibit the same behavior.


The banking industry has seen the closure of 1,700 branches in the 12 months ending in June 2017 – the largest one-year decline on record. Capital One Financial Corp. has cut 32% of its branches from mid-2012 to mid-2017, while SunTrust Banks Inc. cut 22% and Regions Financial Corp. has cut 12%.

U.S. Bank Offers New Online Tool to Help Consumers Get Fast, Convenient Car Loan Approvals (BusinessWire), Rated: A

Working with financial technology startup AutoGravity, U.S Bank created a new platform on USBank.com that provides a simplified, streamlined loan application process for users that typically takes just minutes to receive a loan decision.

Car buyers using the new U.S. Bank tool simply:

1) Pick their car and select a dealership online

2) Apply for a pre-approval for a U.S. Bank loan online

3) Close the loan at the dealership and drive off in their new car

When Weak Bank Lending Is a Good Sign (WSJ), Rated: A

Total commercial and industrial loans extended by U.S. banks were up just 1% from a year earlier on Feb. 7, according to weekly Federal Reserve data. For the month of January, C&I loans were down an annualized 10.8% compared to December, according to calculations by Keefe, Bruyette and Woods.

Asked how demand for loans has changed over the past three months from large and medium-sized firms, 84% said it was “about the same” or “somewhat stronger,” while just 16% said it was “moderately weaker.” For small firms with annual sales of less than $50 million, 88% of bankers said loan demand was about the same or better, while only 12% said it was weaker.

Financial incumbents are starting to care about financial education (Tearsheet), Rated: A

On Wednesday, Greenlight Financial Technology — the creator of a smart debit card for kids, teens, and college students — closed $16 million in a Series A funding round. Its investors went beyond your traditional venture capital firm, including a disparate coalition of  financial services bigwigs like SunTrust Bank and Ally Financial as well as the Amazon Alexa Fund, among other VCs. Greenlight, whose mission is to help strengthen financial literacy among kids and give parents a platform to raise “financially smart kids,” will use the new funds to develop its products.

That coalition of Greenlight partners signals a renewed understanding of the reality of most Americans’ financial lives — 57 percent of Americans are financially unhealthy according to the Center for Financial Services Innovation — by legacy financial services companies coming to terms with the fact that they need to be in the business of financial health in order to keep customer relationships in tact over the long term.

Don’t be THAT credit union. Offer short-term loans to your members. (CUInsight), Rated: B

CashPlease is an innovative new short-term, small-dollar loan solution that allows credit unions to implement a consumer loan product efficiently and compliantly.  Here’s how:

  • No additional loan officers or other additional staff needed
  • Underwriting technology that is automated and proven
  • Assistance with compliance best practices
  • Data-driven marketing to educate consumers about the availability of lower-cost loans

ATTORNEY GENERAL HERRING OBTAINS FULL RESTITUTION FOR CUSTOMERS OF ONLINE LENDER (Virginia.gov), Rated: A

Attorney General Mark Herring announced today that his office has reached a settlement with eight affiliated online lenders and debt collectors to resolve allegations that the companies offered unlawful open-ended credit plan loans and engaged in unlawful debt collection practices including contacting borrowers’ employers and implementing wage garnishments. As a result of the settlement, borrowers will receive nearly $150,000 in restitution and forgiven debt.

The settlement includes the following key terms relating to loans made by the lenders during the period from January 2015 through June 19, 2017:

  • The Lenders agree to refund all interest and fees paid by consumers in excess of 12% of the loan amount, totaling approximately $85,000;
  • The Lenders agree to forgive all outstanding remaining debt of Virginia consumers, totaling over $63,000;
  • The Lenders agree to a permanent injunction against consumer lending activity in Virginia;
  • The Debt Collectors agree to a permanent injunction against all debt collection activity in Virginia;
  • The Lenders agree to pay $10,000 in civil penalties and $10,000 in attorneys’ fees;
  • The Debt Collectors agree to pay $75,000 in civil penalties and $10,000 in attorneys’ fees.

The companies include six lenders (Field Asset Service Team, LLC; VIM Holdings, LLC; MR Capital Group, LLC; Nascent Holdings, LLC; B Financial, LLC; and DTS Capital, LLC, collectively “the Lenders”) and two debt collectors (Bradley Goldberg & Miller, LLC and U Solutions Group, LLC, “the Debt Collectors”) that acted in concert to provide and collect open-end credit plan loans made over the Internet to Virginia consumers.

The Lenders offered open-end credit plan loans and imposed “service fees” as high as $160 per month. The Debt Collectors then emailed consumers in an effort to collect on these loans and contacted the consumers’ employers to implement wage assignments and collect money directly from the consumers’ paychecks.

CFPB Drops Lawsuit Against Payday Lender (JD Supra), Rated: B

The CFPB has dropped a recent lawsuit against a payday lender accused of charging up to 950% interest.

The case is CFPB v. Golden Valley Lending, Inc., et al., Case No. 17-cv-02521 (District of Kansas).

United Kingdom

Difficult divorce? RateSetter can help (P2P Finance News), Rated: AAA

The ‘big three’ peer-to-peer lender has been offering a family finance product for a number of months, whereby individuals can apply for a loan to pay for their divorce litigation.

The P2P platform offers personal loans ranging from £500 to £35,000, with terms between one year and five years, according to its website. Borrower rates range from 3.9 per cent to 29.9 per cent.

Unscrupulous banks have fuelled rise of alternative lenders (RealBusiness), Rated: AAA

Now it emerges that one bank was actively working against small businesses in its greed-fuelled quest for profits and bonuses. RBS has been exposed for making up fees, imposing punishingly high interest rates, acquiring equity and property from failed businesses – and pocketing huge bonuses off the back of it.

As a result, it is alternative lenders that are now the go-to for independent businesses in need of assistance when it comes to growth. Take, for example, the business cash advance, which is sometimes referred to as a merchant cash advance. This funding can be from as little as £500 up to £300,000 and is advanced to the business against future credit and debit card turnover.

These Isas pay 6% and more – but should you invest? (Which?), Rated: AAA

Last week, Ratesetter launched an Isa paying a top rate of 5.8%, while yesterday (24 February), Easyjet founder Stelios Haji-Ioannou launched an tax-free account aiming to pay 4.05% per year.

Other innovative finance Isas are currently paying returns as high as 16% a year.

Zopa is currently paying between 4% and 4.6%. Zopa primarily lends to individuals, Ratesetter lends to both individuals and businesses whereas Funding Circle lends exclusively to small businesses. The latter’s innovative finance Isa is only available to existing customers, but is projecting an annual return of 7.5%.

EasyMoney launches Innovative Finance ISA (P2P Finance News), Rated: A

EASYMONEY, part of Sir Stelios Haji-Ioannou’s ‘easy’ family of brands, has launched in the UK with an Innovative Finance ISA (IFISA) offering a target rate of 4.05 per cent a year.

Jacob Rothschild-backed firm plans £100m float (Professional Adviser), Rated: A

Augmentum Fintech, which is preparing to float next month, has unveiled plans to issue a target of 100 million ordinary shares at a price of £1 each, with a maximum issue size of 125 million shares.

FCA seeks feedback on its ideas for a global sandbox (Mondaq), Rated: A

The FCA’s new webpage contains its ideas for a global sandbox [14.02.02]. Its current sandbox only allows firms to test their ideas in the UK.

It highlights three areas:

  • addressing “pre-identified challenges” in areas known for “regulatory problems that cross jurisdictional boundaries” e.g. AML and KYC on-boarding.;
  • enabling firms wishing to expand in different markets to “bring their ideas to market more quickly and easily, creating more effective competition.” The FCA asks for firms who could benefit from testing out their ideas in a number of markets to get in touch; and
  • policy and regulatory challenges – the FCA suggests the sandbox could be used to convene “joint events and papers on emerging trends and challenges” using the experiences of the range of firms and regulators taking part to develop “consistent approaches”.

Brexit to shut the door on lengthy London house price boom (Euronews), Rated: A

British inflation will outstrip gains in house prices this year and next, particularly in the capital, as uncertainty over Brexit and weak consumer spending power hits demand, a Reuters poll found on Friday.

Next year, house prices will rise 0.9 percent in London and 2.0 nationally, still both below the 2.1 percent expected inflation rate. In 2020, London prices will increase 2.0 percent and by 2.3 percent nationally.

“Quite simply, with loan-to-income ratios for first time buyers sitting at around four times, average salaries of 33,000 pounds ($46,000), and your average flat in London costing over 500,000 pounds, it’s extremely difficult to see how London can be viewed as anything but very expensive,” LendInvest’s Lockhart said.

China

Hang Seng Bank deploys fintech to simplify mobile banking, mulls use of facial recognition at ATMs (SCMP), Rated: A

Hang Seng Bank plans to expand the use of fintech to mobile banking services and is also toying with the idea of incorporating facial recognition, after initial success with iPhone X, to allow customers to withdraw cash from its ATMs across the city, according to its chief executive.

The global facial recognition market is forecast to be worth US$6.5 billion by 2021, up from US$2.3 billion in 2016, according to estimates from research company Technavio.

European Union

Klarna Bank AB appoints Niklas Savander to Board of Directors (LeapRate), Rated: B

Klarna Bank AB has announce the appointment of Niklas Savander to the Board of Directors with effect from Thursday 22nd of February 2018. Niklas Savander will replace Niklas Adalberth.

International

Digital banking start-up Revolut breaks even as it prepares global expansion (CNBC), Rated: AAA

Revolut said Monday that it had broken even for the first time in December, and that its monthly transaction volume surged to $1.5 billion, an increase of over 700 percent in the last 12 months.

The start-up has signed up a total of 1.5 million users to its mobile app, up 50 percent from a figure it achieved in November.

Cryptocurrency A Risk Factor, Bank Of America Says In Annual SEC Filing (International Business Times), Rated: A

The 10-K filing referred to cryptocurrencies, without naming any specific one, three times under a subsection titled “Risk Factors” and described three different ways in which they could pose problems for the bank’s business.

The first reference was under geopolitical risks, with the bank talking about international money-laundering.

The third reference was along similar lines, with BoA saying: “The widespread adoption of new technologies, including internet services, cryptocurrencies and payment systems, could require substantial expenditures to modify or adapt our existing products and services as we grow and develop our internet banking and mobile banking channel strategies in addition to remote connectivity solutions,” adding it “might not be successful in developing or introducing” competing products at lower prices.

 

Australia

SPOTCAP AWARDS SCHOLARSHIP TO ASPIRING FINTECH ENTREPRENEUR (Global Banking & Finance), Rated: A

Spotcap today announced Vishal Uppal as the winner ofthe Fintech Scholarship 2017. The first of its kind in Australia, the scholarship awards one aspiring graduate with an interest in fintech $10,000 towards the cost of their tuition.

India

Guide to smart banking: Why P2P lending is an ‘interest’ing idea (Business Line), Rated: AAA

P2P lending, on the other hand, is a completely tech-driven investment, which gives a net annualised return of 18-22 per cent to lenders, who start earning their principal and interest back from the very first month. The returns are higher because you can lend directly to the borrower and the intermediary costs are drastically reduced.

A majority of investors on these platforms are salaried professionals aged between 20 and 35 years looking for additional sources of income.

On Faircent.com lenders can invest as low as 750 per loan size or choose tech-enabled processes like auto-invest to save time. These features are a major attraction for millennials and, in fact, according to the last Research and Analytics report on P2P lending published by Faircent.com, 64 per cent of lenders are below 35 years of age.

Retirement plan: How real estate investment can help millennials secure their future (Financial Express), Rated: A

A growing number of millennials are also opting for investments into commercial real estate, as opposed to investments into residential properties made by their parents.

Commercial real estate: better yields for better financial security

Leases on these properties are usually taken out for multiple years by blue-chip companies, thus ensuring that steady rental income is assured for a specific duration of time. With India’s rise as a prominent international business destination, the sector is also witnessing remarkable growth; the country’s 537 million square feet of rent-generating commercial real estate inventory is currently estimated to be worth nearly $70 billion.

How technology is enabling millennials to make high-value real estate investments

The investments can start as low as Rs 5 lakh, making the entire process extremely affordable for millennial buyers whilst also allowing them to make multiple investments to diversify their portfolio, increase rental incomes, and minimise risk. Average rental returns to the tune of 7%-8% are quite common, while the overall returns can be as high as 22%.

India is projected to become the youngest country in the world by 2020, with a median age of 29.

Movers And Shakers Of The Week [19-24 Feb 2018] (Inc42), Rated: B

BigWin Infotech, a government recognized fintech startup has appointed Suneel Mohnot a the Director on its board.

BigWin Infotech is a self-funded startup who has recently forayed into P2P lending business through its solely owned market place PaisaDukan.com post revised RBI guidelines for NBFC-P2P and one of the strong contenders for NBFC-P2P license.

APAC

CoAssets Reports Half-Year Results With 471% Increase In Revenue (AsiaOne), Rated: AAA

CoAssets Limited (“CoAssets” or the “Group”) (ASX: CA8), a leading crowdfunding platform and Fintech lender specialising in facilitating funding for businesses reported its financial and operating results for the half year ended 31 December 2017, together with an update on the Group’s growth and capital strategy to the Australian Securities Exchange (ASX) on 22 February 2018.

Total reported revenue increased by 471% from S$446,040 in 2016 to S$2,547,554 in 2017. Group’s profits in year 2017 was S$2,046,013, from a loss of S$3,899,325 in 2016. This increase in profits was due to business activities as well as investment gains. Operating expenses decreased from S$3,570,287 in 2016 to S$2,577,013 in 2017. This represents about S$1million or 28% in cost savings. Registered investor base reached 433,805 as at 31 December 2017. This represents an 88.17% increase from 30 June 2017.

Singapore — CoAssets Pte Ltd (“CAPL”)

After receiving the Capital Market Services (CMS) licence from the Monetary Authority of Singapore (MAS) in June 2017, the company crowdfunded more than S$5.11million worth of deals from 1 July 2017 to 31 December 2017.

Singapore — CoAssets International Pte Ltd (“CAI”)

The company disbursed more than S$6.65million worth of loans over the last 6-months, with its loan book growing to more than S$16.21million as at 31 December 2017.

China — CoAssets China

This represents the Group’s fastest growing market, achieving remarkable growth in registered user base of more than 117% (from 173,000 to more than 375,000 members) from 1 July 2017 to 31 December 2017. The CoAssets platform in China funded more than RMB28.15million (S$5.94million) worth of crowdfunding projects over the last 6-months in 2017.

Hong Kong — Fintech Pte Ltd

In April 2017, the Group acquired Fintech Pte Ltd, an online corporate cash management platform called “PiggieBank ” in Hong Kong.  Since then, PiggieBank has successfully managed funds flow of more than S$21. 39million as at 9 February 2018.

Hong Kong — Brighten Finance Limited (“BFL”)

As at 31 December 2017, BFL’s loan book was worth HK$36.91million (S$6.27million).

EF, KoinWorks Serve Online Loans for Courses (netral english), Rated: A

English First, an English Education Institute signed a joint venture with KoinWorks – a Indonesian Peer to Peer Lending Platform – that serves investments and online loans without collateral for various productive loans.

Africa

Blockchain and financial services disruption (Punch), Rated: AAA

Key areas of the financial services that are most likely to be affected by blockchain include transfers, payment and lending. We have seen different start-ups such as OneFi, Inspire, Upstart, and Funding Circle, playing critical roles in peer- to -peer lending and services to individuals.

The closest we have seen so far is what VoguePay, a leading online payment start-up, has done.

It recently launched a multi-currency payment platform to enable businesses to send and receive payment from local and international customers, allowing merchants to accept payment in dollars, Euros, Rands, Cedis, Naira and Bitcoin payment.

The average Nigerian bank pays about five per cent interest rate on fixed deposits while requesting for two-digit interest rates on loans from customers. Economically, this does not make much sense because the margin is too wide when compared to what they offer for holding customers’ fund. Many people are tired of the highly monopolistic nature of banking.

Authors:

George Popescu
Allen Taylor

Wednesday July 12 2017, Daily News Digest

challenger banks customer channels

News Comments Today’s main news: dv01 partners with Upgrade. U.S. lawmakers try to stop sale of Chicago Stock Exchange to Chinese buyers. PayPal hires ex-Amazon exec to head lending. LendingClub expands Opportunity Fund partnership. Revolut raises $66M, adds bitcoin. Yirendai lawsuit dismissed. International RegTech Association launches. Today’s main analysis: 5 reasons fintech consolidation is inevitable. Today’s thought-provoking articles: Real estate investing […]

challenger banks customer channels

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United States

United Kingdom

China

European Union

International

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India

Asia

Africa

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News Summary

United States

dv01 Launches Strategic Reporting Partnership With Upgrade (Cision), Rated: AAA

dv01, the reporting and analytics platform that offers institutional investors transparency and insight into lending markets, today announced a partnership with Upgrade, Inc., the new consumer credit platform, whose founding team is led by Renaud Laplanche.

Under this partnership, all Upgrade investors will initially receive complimentary access to Upgrade data through dv01’s reporting and analytics platform, including use of dv01’s Portfolio Management solution. Investors will have a full suite of visualization tools at their disposal, making it simple to gain a high level portfolio overview or gather answers to complex questions involving loan composition, performance metrics, and credit metrics.

dv01 will also act as loan data agent for Upgrade’s securitizations, providing investors access to its Securitization Explorer, which includes loan level performance and composition details of upcoming deals, as well as reporting and analytics tools for use after a deal closes. Upgrade expects to access the securitization market on a quarterly basis.

US lawmakers are trying to stop the sale of the Chicago Stock Exchange to Chinese buyers (Business Insider), Rated: AAA

Eleven members of Congress asked the U.S. Securities and Exchange Commission on Monday to stop the sale of the Chicago Stock Exchange to a group led by China-based investors, saying the regulator lacks the ability to monitor the foreign buyers.

The proposal to sell privately owned CHX for an undisclosed amount to a consortium led by Chongqing Casin Enterprise Group (CCEG) has drawn attention because it would be the first time a U.S. exchange has been bought by Chinese investors. There are also U.S. investors in the group.

Casin Group, a privately held company that invests in real estate development and financial holdings, said its long-term goal is to list Chinese companies in the United States through CHX, which has locations in Chicago and New Jersey.

PayPal hires ex-Amazon exec for lending business (MarketWatch), Rated: AAA

PayPal Holdings Inc. said Tuesday it has hired Mark Britto, a financial-technology entrepreneur and a former executive at Amazon.com Inc., to lead its lending business.

Mr. Britto, 53, joins PayPal from Boku Inc., a company he founded that lets consumers buy goods and services using their mobile phones and pay for them alongside their usual bill from their telecommunications provider. He replaces Steve Allocca, who left PayPal in May to become the president of online lender LendingClub Corp.

The company currently uses cash to fund the $5.1 billion of consumer loans and around $600 million of small business loans it has on its balance sheet.

The unit has bolstered PayPal’s bottom line in recent years: the consumer-credit portion accounts for around 13% of PayPal’s annual operating profit, or roughly $280 million, according to analysts at J.P. Morgan Chase & Co.

Expanding access to credit, one small business at a time (LendingClub), Rated: AAA

Access to credit has long been a challenge for small businesses, often a chicken and egg scenario where owners need capital to grow, but can’t get the loan they need until they’ve grown. And, while access to capital has a key role in fueling economic mobility, job creation and the health of the middle class, traditional banks aren’t meeting small business’ needs, especially as it relates to minority communities and women entrepreneurs.

To help, we’ve expanded our partnership with Opportunity Fund, combining the best of high-tech and nonprofit lending, to provide underserved small businesses the loans they need to flourish. Now, small business owners living in California, Florida, Georgia, Illinois, Michigan, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Texas, and Washington will have access to affordable credit.

Already this partnership has helped many entrepreneurs access capital and by 2020 Opportunity Fund plans to invest $400 million in over 10,000 small businesses.

Real Estate Investing versus Stocks: Returns and How to Get the Best of Both Worlds (Equities.com), Rated: AAA

The decision to invest in real estate or stocks doesn’t necessarily have to be either-or and there’s good reason to choose both.

Stocks offer advantages as well with higher liquidity and lower transaction costs. It’s difficult to build a diversified portfolio of property types and regions without several hundred thousand dollars in real estate investments. Not so with stocks where you can invest easily across the major sectors for less than $100 in commissions.

Despite the steep drop in property prices when the bubble burst in 2008, real estate has still outperformed stocks over the last 20 years.

Real estate has benefited from historically low interest rates over the past decade, providing cheap money on highly leveraged properties. Stocks have also benefited from lower rates but not to the extent as property investors.

The downside to REIT investing is that you don’t get the control or tax benefits you get in direct property ownership. I still own several rental properties as well as equity ownership in some real estate crowdfunding deals to benefit from the tax shelter of real estate investing.

Why PayPal Could Join the Payments Buying Spree (Barrons), Rated: A

PayPal has a strong presence in the U.S. and the U.K., but it’s less well-known in the rest of the world, Ellis notes. Given the fast pace of evolution in the digital-payments industry, “the window is closing rapidly on PayPal’s ability to expand organically into new markets,” she tells Barron’s Next. Rather than build up a user base and merchant base from scratch in new areas, which could take years, PayPal might decide to buy a company that has already done the heavy lifting.

Ellis thinks a European acquisition makes the most sense. She points to a number of attractive candidates in Europe, including payment processors Adyen and Wirecard. PayPal could also buy Klarna or outbid Vantiv for Worldpay. On a practical level, PayPal’s cash is mostly sitting in Europe.

And the company has a good deal of cash: it could have about $10 billion by the end of the year once it sells off its credit receivables business, Ellis notes.

LendingTree Builds the 200 Millionth Predictive Model Delivered on the DataRobot Cloud (BusinessWire), Rated: A

DataRobot today announced a new milestone in AI adoption: since January 2015, customers have run more than 200 million predictive analytics models in the DataRobot Cloud. LendingTree, the online loan marketplace that connects consumers with multiple lenders, banks, and credit partners, achieved this milestone for the company.

Using DataRobot, companies quickly deploy machine learning models to uncover hidden opportunities and predict future outcomes from vast amounts of data. Previously deployed by expensive and elusive data scientists, these sophisticated models have the ability to learn without being explicitly programmed, making them fundamental to big data strategies.

Orchard CEO Matt Burton Started Off Running Fintech Meetups; Now He’s Raised $ 44 Million (Benzinga), Rated: A

What’s true in real estate is true in fintech—location, location, location is everything. Matt Burton, CEO of Orchard Platform, a technology and data analysis provider for online lending platforms, is living proof of that.

Despite his vision of building an electronic market for loan trading, Burton started Orchard without any network in the financial services space, he said in a fireside chat discussion at the 2017 Benzinga Global Fintech Awards.

Orchard has raised $44.7 million to date, Burton said at the event.

Silicon Valley Honors Munich Re US and Mozeika for Insurtech Leadership (Insurance Journal), Rated: A

Plug and Play presented Munich Re and Mozeika with one of 10 Corporate Innovation Awards to those it calls its “most engaged partners” in various accelerators that in addition to insurtech include fintech, health and wellness, food and beverage, mobility, new materials and packaging, brand and retail, travel and hospitality, and Internet of Things (IoT).

Some of the insurtechs Munich Re has invested in and/or partnered with include Trov, Lemonade, Root, Next, Slice, Bunker, Bought By Many and Helium.

Financial Resources Federal Credit Union Teams with Roostify to Create Better Online Mortgage Experience (BusinessWire), Rated: A

Roostify, a provider of automated mortgage transaction technology, today announced that Financial Resources Federal Credit Union (FRFCU) has implemented Roostify’s mortgage technology platform in order to create a better online experience for its members applying for or refinancing a home loan.

Financial Resources members are now able to complete their entire mortgage application online, including using a mobile device or tablet. They can upload their financial information directly into the platform and communicate with a loan officer during every step of the process. When they are on the go, they can easily upload and sign documents without a trip to the bank, saving precious time in the closing process.

This Programmatic Marketplace Is Just For Financial Services Advertisers (Ad Exchanger), Rated: A

The data just isn’t there, said Phillip Rosen, CEO and co-founder of Even Financial, an ad tech provider for financial marketers.

On Tuesday, the company added a programmatic marketplace offering to its existing supply-side API to help connect app owners and financial institutions with specific targeting needs.

Rather than paying on a cost-per-click basis, Even Financial’s programmatic marketplace operates on a real-time pricing model that rewards publishers at the top of the funnel when offers are served to pre-approved consumers.

Impact of Brexit, US politics being felt by fintech firms, says Western Union’s head of partnerships (CNBC), Rated: A

Financial technology (fintech) has felt the impact of Brexit, U.S. politics and a perceived direction towards protectionism, Western Union’s partnerships lead has said.

Christina Hamilton, head of partnerships and international expansion at the global payments and transfers company, said that protectionism and a populist surge against globalization was a serious concern for the fintech industry.

She said that her views should not necessarily be regarded as the views of Western Union, but was clear that her business had been affected.

VirtualAdvisors.com launches new FinTech tool (Sys-Con), Rated: A

VirtualAdvisors.com announces the launch of its first artificial intelligence (AI) powered market intelligence campaign.

The Newport Beach FinTech startup wants to scrape all the data on the web to put it into a structured format, with the intent to specifically make it useful to the financial service industry for many different business purposes.

The platform offers free access for family offices as well as retail and institutional investors who can use it as an educational and due diligence tool for various asset classes and specific products.

The market intelligence campaigns will be periodically launched and focus on specific alternative investment niches, starting with 1031 exchanges.

Advisor Group, Jemstep Launch Fintech Platform For Financial Advisors, Retail Investors (Benzinga), Rated: A

Advisor Group has partnered with Invesco Ltd.’s Jemstep to launch an onboarding, advice and data aggregation platform for both financial advisors and retail investors.

The new platform is expected to offer fintech solutions to challenges commonly faced by independent financial advisors, according to Advisor Group.

They include a paperless process for opening new client accounts, and a web portal where clients can monitor their accounts.

The transferring of client assets to brokerage and advisory accounts will be handled using a paperless, e-signature based process, according to the announcement by Advisor Group and Jemstep. The platform is integrated with Pershing for brokerage accounts and Envestnet for advisory solutions.

CFP Board’s proposed rule changes prompt heated debate online (Financial-Planning), Rated: A

Richard Feight (adviser)

I applaud the CFP Board for the proposed new standard for delivering all financial advice under a fiduciary standard. This is clearly a move towards establishing more credibility in the eyes of the public, media and practitioners. It’s also a move towards establishing financial planning as a true profession.

Thomas Mayo (adviser)

I mostly like the new CFP rules as explained on the site. The problem is that I now have too many government and professional groups telling me their view of what is best for my clients…. Sorry, but the odd person out may be the CFP Board. The government agencies carry more oomph! No one in the past 20 years has hired me because of my CFP credentials!… If the DOL Rule is enacted in January 2018 as it is, there is a good chance I will cancel my CFP certification.

Genti Cici (adviser)

I don’t believe [the proposed standards] go far enough. They could even backfire and give false hope that now (with the new standards) ALL CFPs are fiduciaries, at ALL TIMES, which is what I first thought. But if we read carefully at part B, we see that while the standards call for a fiduciary duty, the CFP has room NOT to use the standards.… The CFP can still be paid commissions and not be a fiduciary at certain times. Thus clients will still be confused.

Robert Burns (adviser)

I adamantly protest the proposal. When does it get to be too much bureaucracy? We have FINRA, the SEC, the IRS and the Department of Labor all seeing who can out-regulate whom. It is getting ridiculous …. By your heaping more onto us, you end up increasing the cost of our doing business. Because you all want it make it easy for us to be sued, the cost of our insurance will go up. Let the regulators regulate. You stay out of it. …. Ninety-nine percent of us are good people intent on doing the best possible job for our clients. Now get out of our way!

Cross River Appoints SVP and General Manager of Payments Division (Cision), Rated: B

Cross River announced today the appointment of Ben Isaacson as SVP and General Manager of its Payments Division. With 20 years of experience and a sophisticated understanding of the payments industry, Isaacson will be responsible for managing and growing Cross River’s full suite of payments products and clients.

Isaacson joins Cross River after six years at JPMorgan Chase and , most recently as Product Executive within Treasury Services, where he was responsible for the product development, commercialization and industry development for Real Time Payment services. Prior to this role, Isaacson led the Wholesale Payments Strategy team at JPMorgan Chase, and was responsible for long-term growth initiatives, such as business-to-business payments strategy and FinTech engagement. Before JP Morgan Chase, Isaacson spent seven years at MasterCard in the Strategic Planning and MasterCard Advisors’ Payments Strategy group, focusing on growth strategies and opportunities for MasterCard and its bank clients.

Home Point Financial Names Chad Patton Executive Managing Director-Chief Strategy Officer (Marketwired), Rated: B

Home Point Financial Corporation (“Home Point”), a national, multi-channel mortgage originator and servicer, today announced that Chad Patton has been named Executive Managing Director-Chief Strategy Officer. In this role, he will focus on funding and capital planning, business intelligence and strategic initiatives.

Mr. Patton has over 20 years of experience in the mortgage and financial industry. Prior to joining Home Point, he served as Executive Vice President at Nationstar Mortgage, overseeing production, capital markets and business development activities. Previously, he was Managing Director at Lone Star Funds, where he oversaw financial services private equity investments, including the formation and growth of Caliber Home Loans.

Ascentium Capital Announces Record Second Quarter in Originations (Ascentium Capital), Rated: B

Ascentium Capital LLC, a leader in small business financing, announced a record quarter in origination volume, reaching $255.7 million. This represents a 14.0% increase quarter-over quarter.

United Kingdom

UK fintech start-up Revolut raises million, adds bitcoin (Reuters), Rated: AAA

The “global banking alternative” Revolut has raised $66 million in a fund-raising round, the start-up said on Wednesday, in the latest sign that London is so far weathering Brexit to remain a global financial-technology center.

Led by Europe- and San Francisco-based venture capital fund Index Ventures, the fund-raising round was one of the biggest ever Series B rounds in Europe. It should provide some comfort to the British capitol as it jostles to hold onto its reputation as Europe’s leading hub for the nascent fintech sector.

Revolut also announced that it is adding digital currency bitcoin BTC=BTSP to its app in response to high demand from customers. Users will now be able to hold, exchange, spend and transfer bitcoin the same way they use other currencies. Rival cryptocurrencies Ether and Litecoin will soon be added.

London fintech Curve raises $ 10M Series A (TechCrunch), Rated: AAA

Curve, the London fintech startup that offers a platform that lets you consolidate all your bank cards into a single Curve card and manage your money, is on the verge of closing $10 million in Series A funding.

According to sources, the round, which could be announced as soon as this week, is being led by Connect Ventures, with participation from Santander Ventures, the venture arm of Spain-headquartered bank Santander Group.

Investors are banking providers Santander InnoVentures, Investec, Connect Ventures, Speedinvest, Oxford Capital, Breega Capital, and Samos Investments. Individual investors include: Henry Ritchotte (ex Deutsche Bank COO), Gael de Boissard (ex Credit Suisse board member), Alessandro Hatami (The Pacemakers; ex Lloyds, Paypal, GE Capital), Paul Townsend (Vitesse PSP, Barclays, WorldPay), Emilian Popa (Rocket Internet, Naspers, Groupon), Rohan Haldea (Apax Partners)

P2P wholesale ban boosts business for wider crowdfunding sector (P2P Finance News), Rated: A

THE FINANCIAL CONDUCT AUTHORITY (FCA)’s clampdown on peer-to-peer wholesale lending activities is pushing lenders towards other types of crowdfunding platforms to obtain finance.

P2P platforms have had to stop lending to other lenders after the City watchdog confirmed its position on the practice earlier this year, warning that it could be in breach of the rules.

“The recent changes in the P2P sector effectively pushed that type of company to the crowdfunding space,” said Andrew Adcock, chief marketing officer at Crowd for Angels.

The bond- and equity-based lending platform has recently launched a fundraising for The Asset Exchange, an asset-backed lender operating in the car finance market.

Victory Park Capital CEO buys £60k of fund’s stock (AltFi), Rated: A

Richard Levy, a director of the £351m VPC Speciality Lending Investment Trust, has increased his holding in the fund.

Levy  is founder and CEO of the trust’s investment manager Victory Park Capital as well as a board member of the fund. He bought 71,916 shares at an average price of £0.8275, totalling £59,510.

Darktrace valued at $ 825m as fintech firm Revolut secures new funding (The Telegraph), Rated: A

Darktrace, a cyber security firm backed by Mike Lynch, the Autonomy founder, has received $75m (£58m) in a funding round that values the company at $825m.

Darktrace, created by mathematicians from the University of Cambridge, claims to use artificial intelligence software that mimics the characteristics of the human immune system to detect and counter cyber threats.

Darktrace’s funding round, which brings it close to the $1bn “unicorn” valuation that represents success to many start-ups, was led by Insight Venture Partners, a New York group that has previously backed Twitter and Alibaba. Its biggest shareholder remains Invoke Capital, which was set up by Mr Lynch after Autonomy was sold to HP for $11.7bn in 2011.

Will blockchain be the building blocks of a better finance industry? (Elite Business Magazine), Rated: A

In fact, a study in 2016 by Accenture, the management consultancy, found that just 29% of respondents thought banks were trustworthy. But perhaps instead of trusting banks, people might be willing to place their faith in code instead. Blockchain has been around for some time now but it’s only relatively recently that people have started to speak of it as a sort of truth serum for the way transactions are recorded. If things keep progressing as they are, it could seriously disrupt financial services companies – or perhaps even restore people’s confidence in them.

Many of these innovations were inspired by a frustration with the status quo: Nuggets, a service that allows people to make payments or log in without having their data stored, was born out of founder Alastair Johnson’s discomfort with the way personal information was traditionally being handled by brands.

In fact, Santander has estimated that blockchain could save banks up to $20bn each year in administrative costs. However, it could also herald the start of a peer-to-peer lending regime that’s cheaper and more appealing to consumers.

Green energy “crying out” for investment, says F&P Sponsors (Bioenergy Insight), Rated: B

Green energy businesses are “crying out” for investment, according to P2P lending specialists F&P Sponsors, and are increasingly turning to the alternative financing sector to get the money they need.

Recently, the P2P lending specialists secured funding for BioDynamic UK, which owns and operates an AD plant in Colwick, Nottinghamshire. BioDynamic UK had been rejected 25 times in attempts to win funding, before F&P secured them £1.5 million in just two weeks.

China

Lawsuit Against P2P Lender Yirendai Dismissed (Crowdfund Insider), Rated: AAA

Yirendai (NYSE:YRD), a China based peer to peer lender that is a sister company of CreditEase, has shared that a lawsuit filed against it in 2016 has been completely dismissed. The putative class action lawsuit was brought by multiple law firms pertaining to the decline in the share price. Ostensibly, the legal action was taken in part due to actions by the Chinese government and not Yirendai as the government was in the midst of issuing new rules to regulate the exceptionally large P2P lending industry. Yirendai has facilitated approximately RMB 32.3 billion (USD $ 4.75 billion) in loans from March 2012 through December 31, 2016.

Shares in Yirendai have moved higher on the news. The American Depository Shares (ADS) were priced at $10 per share when they went public in 2015. Today they stand at over $27/share.

Read the order here.

The CEO of LeTV Financial Resigned. (Xing Ping She), Rated: A

Recently, Wang Yongli, the CEO of Letv Financial, confirmed that he has resigned from Letv. When it comes to his next stop, Wang only said he would take a break and hasn’t revealed too much. Wang joined Letv Financial in August 2015, acting as the CEO and vice president of financial service sector. Before that, he had worked in Bank of China (BOC) for over 26 years, and playing the role of vice president for about 10 years.

Since the Letv funding crisis broke out from the end of last year, senior executives from different business sectors of Letv ecosystem left in session, now it spread to financial sector. Now, the parent company Letv Holdings is in trouble again. According to a civil decision made by the court, three companies held by Jia Yueting couple and deposit asset amounted to $182.21million have been applied for a freeze by banks. Under the heavy crisis, how long could Letv finance sustain for is remains to be seen.

European Union

5 Reasons Why Consolidation of Fintech Ecosystem May be Inevitable (The Financial Brand), Rated: AAA

1. Challenger Banks Need to Achieve Scale

This model will increasingly make it difficult for any individual challenger bank to achieve significant scale and to compete effectively with large traditional banks. Burnmark’s primary research also showed that challenger banking users are not fully loyal yet – most will stay with the challenger bank until their customer service expectations are met.

2. Traditional Banks Need to Improve Customer Experience

The most interesting strategies from challenger banks involve targeting the banking needs of traditionally under-served, niche segments like students, freelancers, small businesses, refugees and immigrants.

Challenger banks are proving that there is viable and commercial sense in targeting niche segments that were not traditionally profitable for the big banks.

 

3. Challenger Banks Lack Product Diversity

Roughly half of challenger banks today offer only basic products like savings and checking/current accounts – and this is a gap that can be successfully filled with collaboration within the space.

4. Challenger Banks Redefine Operational Structures

The biggest challenge any large banking operation faces today is costs – finding operational efficiency in its decades’ worth of legacy systems and non-strategic investments in outdated IT systems. The biggest desire for a traditional bank in today’s world of heavy fintech competition is to build digital technology from scratch, focusing on openness, transparency, efficiency, low costs and with the ability to future-proof disruption.

5. The Importance of Digital Banking

Both traditional banks and challenger fintech banks are using digital technology as an important component of their operational strategies. Digital technology is used to acquire and retain customers as well as to find cost efficiencies.

One way or the other, most challenger banking start-ups will be in a better competitive position with larger banks as partners, and vice versa. With the number of partnership announcements made around Money2020 Europe, the industry is clearly turning to maturity and scalability through collaboration.

2017 ‘a storming year’ for venture capital investment (EuropeanCEO), Rated: AAA

2016 was a record year for venture capital investment in Europe. Businesses raised €16.2bn – up 12 percent on 2015. Freddie Achom, founder and CEO of Rosemont Group, takes a look back at the trends of the last 12 months, and suggests where the UK and Europe may be heading. You can watch more of our conversation with Freddie, where he discusses how crowdfunding is disrupting the venture capital industry, and how Rosemont Group is innovating in the private equity space.

French fintech startup Shine completes a €2.8 million financing round (Tech.eu), Rated: A

Shine, a company that provides an administrative and financial management platform for freelance workers, raised €2.8 million from DaphniKima Ventures, and several business angels in a recent financing round.

Shine offers freelancers a multitasking solution platform that combines online banking with contract and invoice management, streamlining administrative and financial tasks for those who work independently.

LEGEND IN TALKS TO TAKE OVER BIL: REPORT (Delano), Rated: B

A Chinese firm may acquire a 90% stake in Luxembourg’s Banque international à Luxembourg, a news agency has reported.

Legend Holdings is in talks with Precision Capital, the Luxembourg-based Qatari investment vehicle that owns the Bil shares, Reuters reported on 11 July.

The deal is valued between €1bn-€1.5bn, according to Reuters.

Bank rivals see a disruptive force in PSD2 (Payments Source), Rated: B

Information sharing is about to get much different in Europe, giving bank alternatives such as Klarna more to work with as they compete against the financial services establishment.

“In northern Europe most countries have only around five banks that dominate the entire market after 20 years of consolidation,” said Jim Lofgren, CEO of Klarna in North America.

International

International RegTech Association Launches, Lists Executive Board Members (Crowdfund Insider), Rated: AAA

The non-profit International RegTech Association (IRTA), incorporated in Switzerland in May, has launched to provide a united community of individuals and organizations, with a shared vision to innovate, advance, and influence the future of Regulatory Technology (Regtech).

The IRTA’s objectives include:

  • Operate in key markets and economies, internationally
  • Support the entire Regtech ecosystem
  • Represent the interests of Regtech providers and consumers globally – including
    technology firms, service providers, professional advisers, and financial institutions
  • Engage and liaises with the most influential financial regulators and academics
  • Promote the advancement of the Regtech profession, through Regtech research,
    innovation initiatives, and standards development
  • Support Regtech accelerators, and delivers professional education, and certification
  • Work in collaboration with existing industry Associations, Agencies and other
    international organizations

The Dark Side of Fintech: Navigating the Hidden Risks of Digital Financial Services (Chipin), Rated: AAA

On one end of the risk spectrum are the risk-taking fintech startups. These fast technology adopters are disrupting traditional financial services and their delivery. Circumventing regulation is part of their cost advantage, but also their weakness. Lacking strong credit and capital adequacy standards, P2P lenders have loaned to terrorists, money launderers and hundreds of fictitious companies. Without deposit insurance, hacked cryptocurrency exchanges have gone out of business, leaving depositors high and dry. More digital disruptions are being introduced. New lending platform SALT is using cryptocurrencies as collateral for loans.

Despite the credit risks, these fintech businesses are taking market share from traditional financial services firms.

Over 50 percent of bank customers are now asking for similar low-cost online lending (P2P lending), wire transfer (P2P transfers) and investment management (robo-advisor) services.

A recent default on an Alipay-facilitated investment has highlighted the laxer credit standards. Investors who crowdfunded Chinese mobile phone maker Cosun (via Alipay on their mobile phones) face a loss of $45 million following a bond default. AliPay’s rapid expansion through parent Ant Financial into a suite of digital financial services for its 400 million registered users is the model of the future. But the default has raised concerns as China’s consumer e-finance leader integrates its P2P lending, insurance and investments starting at 1 renminbi with global wire transfer stalwart MoneyGram and its 350,000 agencies worldwide.

Even with digital credit information easily accessible, the increase in competition in fintech – China alone has 5,000 peer-2-peer (P2P) lenders — is pushing financial services firms to relax credit rules to compete for customers. Industry leader the Funding Circle has maintained a default rate under 2% on £2.3 billion in loans originated since 2010, averaging 5% returns, but for the broader P2P loan market, default rates are rising .

Australia

Melbourne invoice funder Timelio hits nine digits (AltFi), Rated: AAA

Melbourne-based peer-to-peer lender Timelio has hit the nine-digit mark, having successfully funded A$100 million in invoices through its platform since it was launched two years ago.

Like Qupital in Hong Kong and Capital Match in Singapore, Timelio provides a two-way marketplace for invoices and offers SMEs an easy online solution for working capital problems.

How online lender Tic:Toc can approve a home loan in just 22 minutes (TechGuide), Rated: A

Thanks to this connected world we live in, Tic:Toc can give you an answer on one of the biggest financial decisions of your life in 22 minutes, not 22 days.

Tic:Toc is based in South Australia and offers the world’s first complete online home loan platform.

The online business is backed by Bendigo and Adelaide Bank after being awarded a $900,000 grant from the South Australian government.

To be offered a loan, a customer must have at least 20 per cent deposit for the property they want to buy as well as the fees and charges.

The property you’re purchasing must be in a major capital city which, at this stage, excludes Tasmania and the Northern Territory.

Tic:Toc performs a credit check and can even check the value of your current property.

India

A Better Deal (Business Today), Rated: AAA

As a business model, P2P lending is still at a nascent stage in India. According to Tracxn, there are 63 pure-play companies in this domain such as Faircent, Lendbox, Capital Float, Indifi Technologies and i-Lend.

P2P is a simple concept, but its very nature mandates a robust system for assessing the creditworthiness of borrowers. To make that cut, i2i gathers as much information as possible about people looking for loans (yes, it looks at their social media profiles as well), collects all relevant documents and verifies them. Each profile is then automatically analysed and put under one of the three tabs – Accepted, Rejected and On border. Next, its underwriters manually go through the borderline cases and ask for more information to give them a specific status. They also list the strengths and concerns regarding each ‘Accepted’ borrower, taking into account factors such as incomes, liabilities and CIBIL scores. The company receives an average of 4,000 loan applications every month, out of which only 50-60 per cent people complete the entire application process and out of that, only 60-70 applications get accepted, says Singh.

The start-up has also initiated a ‘One loan, One Interest’ policy for every risk category.

The company currently makes money from the fees paid by its registered users. While investors pay a one-time registration fee of `500, potential borrowers just need to pay `100. Additionally, an investor has to pay a service fee, which is 1 per cent of the total amount invested on the platform. Again, based on the risk profile, a borrower has to make an upfront payment of 3-6 per cent of the loan.

Asia

Online Bank’s Loans and Deposits Soar Past W1.2 Trillion (Chosun), Rated: AAA

Korea’s first online lender K-Bank said Tuesday that the amount of loans extended and deposits collected has exceeded W1.2 trillion just 100 days after its launch (US$1=W1,152).

The online bank has racked up 400,000 customers so far.

Africa

Lending potential in Africa (Biz Community), Rated: A

According to the Africa and Middle East Alternative Finance Benchmarking Report, Kenya and South Africa are leading the P2P business lending market in Africa. However, 90% of online alternative finance originated from platforms headquartered outside of Africa.

Furthermore, the East Africa region has the largest market share of the African alternative finance market. In 2015, East Africa accounted for 41% of total African market share, while West Africa accounted for 24% and Southern Africa accounted for 19%.

Canada

The repackaging of U.S. fintech loans comes to Canada (Financial Post), Rated: A

But the news that fixed income manager Kilgour Williams Capital has, after about two years of due diligence, launched a credit fund that will buy high interest consumer loans from U.S. fintech companies funded with capital from Canadian high net worth and institutional investors, is significant for other reasons as well.

And for KiWi Credit Fund — which has nothing to do with fruits or birds — the concept makes enough sense that a well known asset manager has anted up $30 million to become the lead investor.

But to our knowledge we are the first Canadian-managed fund to invest in this space,” said Colin Kilgour, a founder at Kilgour Williams, a firm best known for managing the program put in place after the $30 billion asset-backed commercial paper froze a few years back.

Authors:

George Popescu
Allen Taylor