- Today’s main news: Lending Club closes first-of-kind MPL transaction. Zopa the first P2P lender to lend 100M GBP in one month. Marcus’s personal loan hits the mark. China issues new rules for cash loan market. Lexinfintech delays IPO. China Rapid Finance posts quarterly earnings.
- Today’s main analysis: Mortgage delinquency case study. International P2P lending volumes.
- Today’s thought-provoking articles: China continues quest for credit ranking system. China’s social credit system will rate how valuable humans are. Centralized exchanges versus decentralized exchanges. Customers can get loans without credit scores.
- LendingClub closes first-of-its-kind MPL transaction. AT: “More on the CLUB certificate.”
- Lending Club diversifies.
- Marcus personal loans hit the mark. AT: We’re still wondering why Marcus is on the rise while OnDeck, Prosper, and Lending Club are reporting losses.”
- Mortgage delinquency case study. AT: “Another PeerIQ must-read.”
- A gift for student loan lenders in the education bill.
- Lend Academy interview with Dealstruck’s Ethan Senturia.
- Beware of Affirm loans. AT: “I see growing criticism of Affirm loans, mostly regarding what those loans are being used for but also a little about the terms of the loans.”
- MiaDonna makes 20% of its sales on jewelry through Affirm.
- Coinsource adds 18 bitcoin ATMs in Atlanta.
- Data science is one of the most important skills in fintech.
- Elevate Credit execs to present at KeyBanc, Jefferies conferences.
- ConsumersUnion urges lawmakers to oppose payday loan rule repeal.
- House bill could kill payday loan rule.
- P2P platform looking for regulatory consultant.
- Zopa lends 100M GBP in one month. AT: “Congratulations. I look forward to the day when this is common.”
- Brexit pushes FCA review into next year.
- Crowd for Angels launches bond investment opportunity.
- Brits to spend 1B GBP in work hours planning for Christmas.
- Top 25 people spreading PropTech word around.
- RICS director tops the proptech influencer list.
- China issues new rule for cash loan market. AT: “The most interesting news today is coming from China, and this is one of the more interesting pieces. China wants to regulate every aspect of lending, it seems.”
- China’s debt crackdown hits cash loan providers.
- Lexinfintech delays U.S. IPO.
- China continues quest for credit ranking system.
- China’s social credit system will rate how valuable humans are.
- China Rapid Finance posts quarterly earnings results.
- Alibaba launches $7B bond issue.
- Private equity funds investing in banned ICOs.
- Interview with Hexindai CFO.
- Funding Circle reaches 3B GBP loan origination milestone. AT: “The P2P-Banking international P2P lending volumes for November 2017, a must-read.”
- Guide to decentralized exchange Airswap. AT: “A very interesting read touting the benefits of a decentralized P2P exchange.”
- Micro-finance: Do good and profit.
- Top 100 fintech companies.
- SelfKey will aid fintech expansion.
- CollinStar Holdings to acquire BiWang Group.
- Zagga launches alternative fund.
- Banking gap continues to widen.
- P2P lending serves banks, fund managers well.
- Customers can get loans with credit scores.
- Fintech trends to watch for in 2018.
- A little bit of data goes a long way.
- United States
- LendingClub Closes First-of-Its-Kind Transaction in Marketplace Lending (PR Newswire), Rated: AAA
- Lending Club diversifies with pass through deal (Global Capital), Rated: A
- Goldman Sachs’ Marcus Personal Loan Hits the Mark as Other Lenders Struggle (LendEDU), Rated: AAA
- Donuts at the CFPB, LC’s Pass-Through Security, Mortgage Delinquency Case Study (PeerIQ), Rated: AAA
- There’s a gift for student lenders in the education bill (American Banker), Rated: A
- Ethan Senturia of Dealstruck (Lend Academy), Rated: A
- Beware Those Sketchy Loans Advertised on Instagram (Lifehacker), Rated: A
- MiaDonna Lifts AOV 36%, Repeat Purchases 17% With Financing Option (Retail TouchPoints), Rated: A
- Marketplace Lenders Should Remember Experience Can Be Replicated, Experts Say (Bank Innovation), Rated: A
- Coinsource Adds 18 Bitcoin ATMs in Atlanta, Among Ten Most Unbanked US Cities (Bitcoin.com), Rated: A
- Data Science is Becoming the Most Important Skill in Fintech (Lend Academy), Rated: A
- Elevate Credit, Inc. to Present at KeyBanc Capital Markets Consumer Conference and Jefferies Consumer Finance Summit (BusinessWire), Rated: B
- CU urges lawmakers to oppose repeal of CFPB’s payday loan protections for consumers (ConsumersUnion), Rated: A
- New House bill would kill consumer watchdog payday loan rule (CNBC), Rated: B
- Consulting for regulatory approvals to open a peer to peer lending platform in USA (Upwork), Rated: B
- United Kingdom
- Zopa zooms ahead to become the first peer-to-peer group to lend out £100m in a month (City A.M.), Rated: AAA
- No Christmas cheer for P2P sector as Brexit pushes FCA review into 2018 (P2P Finance News), Rated: A
- Crowd For Angels Launches £50 Million Bond Investment Opportunity (Crowdfund Insider), Rated: A
- Brits to spend £1bn worth of work hours planning for Christmas (London Loves Business), Rated: A
- Revealed – the 25 people doing the most to spread the PropTech word (EstateAgentToday), Rated: B
- RICS director tops proptech influencer list (Development Finance Today), Rated: B
- China issues new rules to clean up runaway cash loan market (SCMP), Rated: AAA
- China’s debt crackdown hits cash loan providers (Reuters), Rated: A
- Lexinfintech delays U.S. IPO pricing as China reins in micro-loan sector (Reuters), Rated: AAA
- China Continues Its Quest For A Credit Ranking System (PYMNTS), Rated: AAA
- China’s “Social Credit System” Will Rate How Valuable You Are as a Human (Futurism), Rated: AAA
- THE CHINA RAPID FINANCE LTD – (XRF) POSTS QUARTERLY EARNINGS RESULTS (Bangalore Weekly), Rated: AAA
- Alibaba launches $ 7bn bond issue (Capital.com), Rated: A
- Private equity funds found to be investing in banned digital currencies offerings (SCMP), Rated: A
- P2P Lender Hexindai: A Discussion with CFO Johnson Zhang Regarding the Recent IPO (Crowdfund Insider), Rated: A
- International P2P Lending Volumes November 2017 (P2P-Banking), Rated: AAA
- The Market Maker’s Guide to Decentralized Exchange (Airswap), Rated: AAA
- Micro-finance: do good and turn a profit (MoneyWeek), Rated: A
- Top 100 fintech companies revealed (Banks.am), Rated: A
- SelfKey Will Greatly Aid the Expansion of the FinTech Sector (Cryptocoins News), Rated: B
- Australia/New Zealand
- CollinStar Holdings to Acquire BiWang Group in a 100 Million US Dollars Buyout (BusinessWire), Rated: AAA
- AUSTRALIAN FINTECH LAUNCHES ALTERNATIVE FUND (Money Management), Rated: A
- Banking gap widens as tech-savvy consumers look to new products (News.com.au), Rated: A
- FMA statistics show the fledgling NZ P2P lending sector is serving banks and fund managers well (Interest), Rated: A
- Customers without credit scores can take the digital journey to get loans (livemint), Rated: AAA
- Fintech Trends to Watch Out for in 2018 (Entrepreneur), Rated: A
- A little bit of data can go a long way! (ETCIO), Rated: A
- Integrated finance services in e-commerce (TelecomAsia.net), Rated: A
- Fintech competitiveness depends on AI technology (The Korea Times), Rated: A
- National Bank ends fiscal year with strong fourth quarter (The Globe and Mail), Rated: A
- Kenyan, Nigerian startups make global Fintech 100 (Disrupt Africa), Rated: AAA
LendingClub Closes First-of-Its-Kind Transaction in Marketplace Lending (PR Newswire), Rated: AAA
LendingClub (NYSE: LC), America’s largest online marketplace connecting borrowers and investors, today announced that it has closed a first-of-its-kind transaction in marketplace lending — a whole loan transaction structured as a tradeable, pass-through security called a CLUB Certificate*. This first milestone transaction totaled $25 million with an institutional investor seeking a liquid vehicle with which to access the consumer credit asset class.
The CLUB Certificate transaction consisted of whole loans structured as a pass-through security. The instrument trades in the over-the-counter market with a CUSIP and is efficiently cleared through the Depository Trust and Clearing Company (DTCC).
Lending Club diversifies with pass through deal (Global Capital), Rated: A
The $25m transaction was purchased by an institutional investor seeking “a liquid vehicle with which to access the consumer credit asset class”, chief capital officer Patrick Dunne told GlobalCapital, though he declined to reveal pricing information or the buyer’s identity.
The inaugural CLUB certificate consists of whole loans structured as a pass-through security, and trades in the over-the-counter market with a CUSIP number, and cleared through the Depository Trust and Clearing Company (DTCC).
Unlike a securitization, the certificate only pools three year and five year loans of a particular grade that the investor is looking for.
Goldman Sachs’ Marcus Personal Loan Hits the Mark as Other Lenders Struggle (LendEDU), Rated: AAA
When Goldman Sachs launched Marcus, a personal loans product, a little over a year ago, it set an aggressive goal: lend $2 billion by the end of 2017. And while competing online lenders have reported a series of losses since then, Goldman announced this month that Marcus has hit that milestone.
Marcus offers loans from $3,500 to $30,000 on an unsecured basis, meaning they don’t require collateral such as a car or house. Borrowers must make monthly fixed payments, and interest rates range from 6.99 percent to 23.99 percent. On the Marcus website, a sample loan of $15,000 at 13 percent APR is estimated to cost a borrower $19,312 at the end of a 48-month term.
While Marcus has been soaring, other online lenders have been struggling. Lending Club, Prosper, and OnDeck all reported losses over the past 18 months.
Donuts at the CFPB, LC’s Pass-Through Security, Mortgage Delinquency Case Study (PeerIQ), Rated: AAA
On Friday, Lending Club completed a first-of-its-kind transaction in marketplace lending by selling a whole loan pass through security. The transaction size was for $25 Mn and was sold to a single institutional investor. LendingClub held 5% to comply with risk retention rules. The transaction is notable for the following reasons:
- Expands the market. The pass-through security reflects the same risk and return characteristics of a whole loan pool.
- Lower Financing Costs. Additionally, as market liquidity grows, the CUSIPs may enjoy lower-cost repo financing as an alternative to higher-cost credit facilities.
- Secondary Markets. The product addresses certain investors’ demand for secondary market liquidity.
- Valuation. The price discovery generated from markets in CUSIPs will enable valuation agents such as PeerIQ and Duff & Phelps to calibrate pricing to observed trades in the market.
Mortgage Delinquencies and the 2008 Crisis
Following the integration of TransUnion’s deep datasets on the PeerIQ platform, we examine the historical delinquencies for mortgages over the last 15 years. As seen below, we find that Mortgage delinquencies increased meaningfully, across all credit scores, one-year before the financial crisis.
We also show that the rise in delinquency levels above corresponds to the rise in Debt-to-Income levels (and other underwriting statistics – not shown) leading up to the crisis.
There’s a gift for student lenders in the education bill (American Banker), Rated: A
After the 2016 elections, there were high hopes that student lenders (and servicers) would benefit from a more favorable environment regulatory environment and expanded lending opportunities.
Until recently, however, there was not much to show in either respect. While the industry cheered the Department of Education’s decision in August to stop sharing servicing data with the Consumer Financial Protection Bureau, higher education did not appear to be a high priority for the Trump administration.
Ethan Senturia of Dealstruck (Lend Academy), Rated: A
Our latest guest is Ethan Senturia. He was the CEO and Co-Founder of Dealstruck, an online small business lender that was founded in 2013 and shut down in late 2016. Ethan talks about his journey as the CEO of Dealstruck and what led to its demise. He does not sugar coat anything and he takes a great deal of personal responsibility for everything that happened.
His has written a book about this journey called Unwound: Real-time Reflections from a Stumbling Entrepreneur and it is being released on Amazon today.
Beware Those Sketchy Loans Advertised on Instagram (Lifehacker), Rated: A
We’ve warned readers before about new, slick credit companies like Affirm, which want to replace credit cards with on-the-spot loans integrated right into online purchase pages. For all their talk of helping consumers, these companies aren’t much more than friendly loan sharks, re-branded to offer a “premium experience,” but still dangerous and even predatory.
But as Cagle points out, Affirm’s median interest rate of 19 percent is above the median credit card rate, and retailers use the company to build, and then aggressively advertise, the model of buying expensive products on credit. For all of Affirm’s talk of responsibility and helping consumers make better choices, their third most-popular buying category is fashion.
Affirm seems to be making the problem worse. As Cagle puts it: “Affirm is not just meeting a demand, but creating one, encouraging shoppers to buy and spend more. Affirm claims an average 75 percent boost in order values across all its merchant partners.”
MiaDonna Lifts AOV 36%, Repeat Purchases 17% With Financing Option (Retail TouchPoints), Rated: A
With a young, tech-savvy consumer base, MiaDonna, an online jewelry retailer specializing in ethically sourced lab-grown diamonds, wanted to be up-to-the-minute with its payment options as well. The retailer selected financing company Affirm, enabling shoppers to pay in three-, six- and 12-month increments.
MiaDonna, which now makes approximately 20% of its sales through Affirm, noted that shoppers using the service are both spending more and coming back. Affirm users make 17% more repeat purchases, with average order values (AOV) that are 36% higher compared to non-users.
The company’s target consumer is females aged 18 to 34 who are in a relationship and are close to getting engaged or married (within six to 12 months).
Marketplace Lenders Should Remember Experience Can Be Replicated, Experts Say (Bank Innovation), Rated: A
“The borrower experience at a marketplace lender is better than [the experience] at a bank, and that’s why it’s here to stay,” Don Davis, portfolio manager for Prime Meridian Capital Management, said today. during a panel discussion at the 3rd Annual Investors conference for Marketplace Lending, pointing to the ease of the online lending experience for borrowers.
Coinsource Adds 18 Bitcoin ATMs in Atlanta, Among Ten Most Unbanked US Cities (Bitcoin.com), Rated: A
The Texas-based bitcoin ATM network, Coinsource has deployed 20 new machines in the state of Georgia, marking its single largest installation to date. 18 bitcoin ATMs have been installed in the city of Atlanta, and 2 machines in the nearby college town of Athens.
A survey by the Federal Deposit Insurance Corporation (FDIC) found that 7% of households (9 million) in the US are unbanked and an additional 19.9% of households (24.5 million) are underbanked.
“Atlanta, Georgia is in the top ten of most unbanked cities in the country, and more than one in ten households have no involvement with traditional banks. Around 30% of residents are underbanked, meaning they might have to check accounts, but have to rely on other kinds of services like pawn shops, check-cashing and payday loan companies to get cash and credit,” Clark said.
To maximize exposure to potential clients, the ATMs were set up near high traffic areas, as well as close to the Georgia State University and Emory University in Atlanta, and the University of Georgia in Athens. 16 of the new machines are for buying bitcoin only, while 4 have both buy and sell functionality.
The state of Georgia now has a total of 101 bitcoin ATM kiosks, making it the third largest US market for bitcoin ATMs behind the cities of Chicago and New York.
Data Science is Becoming the Most Important Skill in Fintech (Lend Academy), Rated: A
The world generates some 2.5 quintillion bytes of data every day.
Chris Skinner penned this interesting piece last week claiming the critical importance of data in banking:
Data is the new air, and the banks that breathe the best will win. In other words, banks that really get data analytics, and can apply machine learning to gain deep customer insights are the ones that will survive.
Data scientists are going to be needed in many areas of fintech businesses such as customer acquisition, cybersecurity, customer service – even compliance. For online lending businesses the other two critical areas are underwriting and collections.
Glassdoor releases an annual 50 Best Jobs in America report and for the second year in a row Data Scientist had the top spot.
Elevate Credit, Inc. to Present at KeyBanc Capital Markets Consumer Conference and Jefferies Consumer Finance Summit (BusinessWire), Rated: B
Elevate Credit, Inc. (NYSE:ELVT), today announced that it’s CEO Ken Rees and CFO Chris Lutes will present at the following upcoming conferences:
- KeyBanc Capital Markets Consumer Conference – The panel presentation will begin at 12:05 p.m. Eastern Time, on Wednesday, December 6, 2017. A webcast is not available for this conference. The presentation materials will be posted to the investor relations section (“Presentations and Events”) of the company’s website at
- Jefferies Consumer Finance Summit – The presentation will begin at 1:00 p.m. Eastern Time, on Thursday December 7, 2017. A webcast is not available for this conference. The presentation materials will be posted to the investor relations section (“Presentations and Events”) of the company’s website at
CU urges lawmakers to oppose repeal of CFPB’s payday loan protections for consumers (ConsumersUnion), Rated: A
Consumers Union, the policy and mobilization division of Consumer Reports, today urged Congress to not repeal a rule adopted by the Consumer Financial Protection Bureau (CFPB) in October that would protect consumers who take out high-cost payday, installment and auto title loans. Under a Congressional Review Act resolution introduced today in the House of Representatives, the CFPB’s new rule could be repealed by lawmakers before it goes into effect in mid-2019.
New House bill would kill consumer watchdog payday loan rule (CNBC), Rated: B
A congressional resolution introduced Friday in the House would kill the CFPB’s new rule aimed at making sure borrowers of so-called payday loans can afford to repay their debt.
Consulting for regulatory approvals to open a peer to peer lending platform in USA (Upwork), Rated: B
I need an expert who can help with regulatory approvals to open a peer to peer lending platform in USA. You can be a lawyer or financial consultant who have experience in the domain and knows what’s involved. You must have experience related to lending industry.
Zopa zooms ahead to become the first peer-to-peer group to lend out £100m in a month (City A.M.), Rated: AAA
The financial services firm lent £100m to low-risk borrowers in the UK last month, a 48 per cent increase on November 2016.
Zopa said it has lent more than £900m in 2017 to the end of November, with the increase in lending volumes being driven in part by its integration with price comparison websites.
It expects to have lent out £3bn in total by January 2018.
P2P platforms rush to launch innovative finance Isas (Financial Times), Rated: AAA
Peer-to-peer lenders including Funding Circle and RateSetter have set dates for the launch of their innovative finance Isas, but high demand and a clampdown from providers on the highest risk borrowers will slow the process for new investors.
This week, Funding Circle became the latest to launch an IF Isa.
Yet the platform, which facilitates lending to small businesses, will not be rolling out its IF Isa to new investors immediately to make sure it can match new loans to borrowers. Instead, it is opening access to its 74,000 existing lenders in batches. Those who have used the platform for the longest and who lend most frequently will be offered first chance to apply.
RateSetter also confirmed this week that it had set a February launch date for its IF Isa after receiving authorisation from the Financial Conduct Authority (FCA) in October. The platform, which facilitates loans to businesses and consumers, says it expects to raise £500m in the first full tax year after opening, but would only offer the IF Isa to existing investors in the short term. The platform said it had made that choice to reward loyal customers.
No Christmas cheer for P2P sector as Brexit pushes FCA review into 2018 (P2P Finance News), Rated: A
PEER-TO-PEER lending platforms will need to wait until at least the new year for the outcome of the Financial Conduct Authority’s (FCA) post-implementation review as Brexit and other market issues have taken priority at the City watchdog, Peer2Peer Finance News has learned.
However, it can also be revealed that a snippet of the industry data compiled by the Cambridge Judge Business School’s Centre for Alternative Finance (CCAF) for use in the FCA report will be unveiled before Christmas.
Crowd For Angels Launches £50 Million Bond Investment Opportunity (Crowdfund Insider), Rated: A
On Thursday, peer-to-peer lending platform Crowd For Angels reportedly announced the launch of its £50 million bond investment opportunity. This news comes less than a year after Crowd for Angels launched its first crowd bonds, which are described as specially created secured, high-interest products act are eligible for the platform’s IFISA.
According to P2P Finance News, the online lending portal is looking to raise the funds for a Liquid Crypto Bond, which will pay investors 3% over five years. The investors will then receive cryptocurrency tokens through an Initial Coin Offering (ICO) that may be traded on external exchanges or used for project investments on the Crowd For Angels peer-to-peer lending platform.
Brits to spend £1bn worth of work hours planning for Christmas (London Loves Business), Rated: A
With less than a month to go for Christmas, a new research from online lender Sunny has found that the number of hours Brits spend planning for Christmas and buying gifts online while at work are worth £1bn, with over 15m Brits admitting to planning for Christmas during work hours.
Whether at work or at home, Sunny’s research demonstrates a clear gender divide, with women most likely to take on the task of planning for Christmas. Almost a third (31%) of men admit they don’t spend any time planning meals and a quarter (24%) say they don’t do any cooking or preparing of meals, compared to only one in seven (15%) women. Men also don’t make time for Christmas cards, with a fifth (20%) not giving any time to writing them versus fewer than one in ten (9%) women.
|Money saver||Men who have tried this||Women who have tried this|
|Shopped around online for gifts to make sure I’m getting the best deal||35%||51%|
|Started next year’s shopping in the January sales||12%||22%|
|Used coupons/vouchers to buy food and drink for the Christmas period||24%||36%|
|Participated in secret Santa rather than gifting everyone||7%||16%|
P2P platform appoints ex-Barclays manager (Bridging&Commercial), Rated: B
Revealed – the 25 people doing the most to spread the PropTech word (EstateAgentToday), Rated: B
This year the list was compiled in association with the UK PropTech Association, the trade body set up in February; in addition to property investment platform LendInvest, two UKPA figures – chairman Eddie Holmes and Estate Agent Today contributor and PropTech consultant James Dearsley – were on the judging panel.
Dan Hughes, director of data and information product management for RICS, has been named the top PropTech Influencer of the Year.
Professor Andrew Baum of Oxford University took second place, after authoring PropTech 3.0, a much-discussed document in the field of PropTech.
Third was digital strategist Antony Slumbers, while fourth was Gary Chimwa, the organiser behind Future:PropTech events.
RICS director tops proptech influencer list (Development Finance Today), Rated: B
China issues new rules to clean up runaway cash loan market (SCMP), Rated: AAA
China on Friday issued new rules to clean up its controversial cash loan and online micro lending market, including prohibiting lending to people without an income and putting a curb on the total charges on runaway credit, according to an official notice seen by the South China Morning Post.
It ordered therefore, that with immediate effect, all organisations and individuals must obtain a licence to conduct lending business. All lending institutions must also state clearly a comprehensive charge, which includes interest rates and various fees charged for different categories of offerings for the loan.
The tightened controls attempt to curb a common practice where online lending platforms bypass the maximum legal interest rate charge of 36 per cent with additional add-on fees.
Lenders are also banned from rolling over the credit more than twice and must put a cap on the cost of each loan.
Funds from online micro loans are also banned from being used to speculate in stocks and pay for property down payment. In addition, asset management products offered by financial institutions and banks are disallowed to invest in products securitised by cash loans, campus loans – loans granted to students with no regular incomes – or property down payment loans.
Online micro lenders expanded by 23 per cent in two years to 452.4 billion yuan (US$68.4 billion) by the end of 2016.
China’s debt crackdown hits cash loan providers (Reuters), Rated: A
On Friday, China’s financial regulators introduced new measures aimed at restricting the industry, which is estimated to be worth 1 trillion yuan ($151.5 billion).
The number of repeat borrowers is rising, which could signal financial stress on borrowers, analysts say. The companies, however, say the repeat lending is just a sign of the attractiveness of their platforms.
Online consumer lending in China, of which cash loans are a significant portion, dwarfs similar activity in the rest of the world combined, accounting for over 85 percent of all such activity globally last year, according to a recent report by the Cambridge Centre for Alternative Finance.
The boom in micro-lending comes as lenders seek to cash in on rising incomes in a country where credit card penetration remains at about one-third of the population, according to data from the central bank, which says about half a billion consumers don’t have a credit score.
And the online cash loan sector is projected to reach 2.3 trillion yuan by 2020, according to the research firm iResearch.
Outstanding household debt in China equalled 45.5 percent of gross domestic product at the end of the first quarter, according to the Bank of International Settlements, compared to 27.9 percent five years ago.
Lexinfintech delays U.S. IPO pricing as China reins in micro-loan sector (Reuters), Rated: AAA
Chinese consumer lending firm Lexinfintech will delay the pricing of its planned Nasdaq IPO to conduct more due diligence, a source with direct knowledge of the situation said – a move that comes after Beijing issued new rules to tighten control of the micro-loan sector.
The source, who was not authorized to speak to the media and declined to be identified, did not say how long the IPO was likely to be delayed.
China Continues Its Quest For A Credit Ranking System (PYMNTS), Rated: AAA
China is on the hunt for a homegrown alternative to the U.S.-based FICO score credit ranking system as it attempts to keep up with the rapid expansion in consumer loans being offered through mobile.
Lacking such a single system, online lenders instead use a patchwork of methods to assess consumer credit worthiness, including things like online questionnaires and analysis of consumer data such as individuals’ eCommerce purchases.
The National Internet Finance Association of China — a two-year-old agency closely aligned with China’s central bank — is tasked with the job, but has offered little in the way of specific detail about how the three-year-old search for a system is progressing — past noting in a brief report late Monday that “this would complete an important rung in procedural order.”
China’s “Social Credit System” Will Rate How Valuable You Are as a Human (Futurism), Rated: AAA
In a contentious world first, China plans to implement a social credit system (officially referred to as a Social Credit Score or SCS) by 2020.
Every citizen in China, which now has numbers swelling to well over 1.3 billion, would be given a score that, as a matter of public record, is available for all to see. This citizen score comes from monitoring an individual’s social behavior — from their spending habits and how regularly they pay bills, to their social interactions — and it’ll become the basis of that person’s trustworthiness, which would also be publicly ranked.
The companies that are implementing SCS include China Rapid Finance, which is a partner of social network giant Tencent, and Sesame Credit, a subsidiary of Alibaba affiliate company Ant Financial Services Group (AFSG). Both Rapid Finance and Sesame Credit have access to intimidating quantities of data, the former through its WeChat messaging app (at present with 850 million active users) and the latter through its AliPay payment service.
According to local media, Tencent’s SCS comes with its QQ chat app, where an individual’s score comes in a range between 300 and 850 and is broken down into five sub-categories: social connections, consumption behavior, security, wealth, and compliance.
THE CHINA RAPID FINANCE LTD – (XRF) POSTS QUARTERLY EARNINGS RESULTS (Bangalore Weekly), Rated: AAA
China Rapid Finance Ltd – (NYSE:XRF) announced its quarterly earnings results on Thursday. The company reported ($1.01) EPS for the quarter. The company had revenue of $10.46 million during the quarter.
Alibaba launches $ 7bn bond issue (Capital.com), Rated: A
Chinese e-commerce giant Alibaba has launched a bond issue aimed at raising $7bn just three years after selling $8bn of debt.
The bonds are being offered in five tranches – 5.5-year, 10-year, 20-year, 30-year and 40-year.
Proceeds from the sale will be used to invest in long-term growth.
Beijing’s municipal financial regulator has warned private equity (PE) funds not to continue investing in initial coin offerings (ICOs), a practice banned by the mainland’s central bank three months ago.
Huo Xuewen, chief of the Beijing Bureau of Financial Work, said in a report published on Sunday that some of the funds had been found taking part in ICOs – fund-railings by the issuers of digital currencies such as bitcoin – outside the regulatory framework and he pointed out it was a wrongdoing that the regulator would seek to weed them out.
He added the authorities now plan to set up a strict monitoring system to track operations and investments by PE funds.
P2P Lender Hexindai: A Discussion with CFO Johnson Zhang Regarding the Recent IPO (Crowdfund Insider), Rated: A
Hexindai (NASDAQ:HX), a China based peer to peer lender, became the most recent Chinese online lender to trade on a US exchange early last month. The company will report fiscal year results this coming Tuesday before markets open. Last month, Hexidai become another Chinese online lender to list their shares on the US markets in a successful IPO that raised approximately $50 million with each ADS priced at $10/each. The market cap of Hexindai stands at over $550 million today with shares in the company having traded between $10.90 and $17 since the IPO.
We asked Zhang why his company decided to list on the NASDAQ. Zhang explained that in comparison to Hong Kong the US capital markets is wider and has more comparitive companies. Zhang noted that Yirendai and other online lenders now trade on US exchanges. NASDAQ was selected because Hexindai is more tech focused.
Zhang said a key component of their competitive advantage is their sophisticated risk management. Their application pass through rate is equal to just 25% of submitted applications and their default rates are very low.
Their second competitive advantage is their extended off line channels. For example, if a customer goes to a travel agency and wants to book a trip, the agency may say they have a financing solution and will provide the application to Hexindai and then they will determine whether or not they should provide a loan to the borrower.
“For our last fiscal year there were 200,000 borrowers and 110,000 active investors. An average loan size is 80,000 RMB. The typical use of the loans are for personal use like overseas traveling, continuing education or housing renovation. We believe loan proceeds are for self investment. Their life. For their job to become better. We help the emerging middle class.”
International P2P Lending Volumes November 2017 (P2P-Banking), Rated: AAA
Funding Circle reaches the milestone of 3 billion GBP loans originated since launch.
I removed Comunitae, because of the stop due the fraud case.
The Market Maker’s Guide to Decentralized Exchange (Airswap), Rated: AAA
Market making is generally an ongoing process that includes ingesting data, generating a price, and placing an order on an exchange.
Decentralized exchange promises two major benefits:
- Security and control
- Global marketplace
Unlocking the ability to transact globally, through a decentralized exchange, will affect society in profound ways. Global information transfer birthed the term “globalization”. Global asset transfer will birth some new term that we all haven’t yet thought of, and in the end the borders that blockchain break down will be greater than the borders we saw the internet break down.
Decentralized exchanges will succeed, likewise, when there is liquidity and usability, both of which do not exist yet on any solution.
Micro-finance: do good and turn a profit (MoneyWeek), Rated: A
The ultimate example of this is the “micro-finance” movement. The idea is that you lend money to a micro-finance institution that in turn lends the money to ordinary folk (frequently women) in the developing world for practical projects that generate returns for investors. Investors hope to get back all of their money plus a return – net returns of around 2% a year aren’t uncommon.
The only trouble is that while micro-finance does score highly in terms of “impact”, it is often not so much crowd-based as “command-and-control” in style. In other words, it’s usually a credit institution making the actual lending decisions and you invest via their pool of funds.
Now, however, we have the crowd revolution and the rise of alternative finance and peer-to-peer (P2P) lending. In the Netherlands, this has given rise to companies such as Lendahand, which provide a marketplace for investing in individual projects for a defined return, usually via some form of bond. Over here in the UK, Ethex provides a similar marketplace for investors to back individual projects with real impact.
So, why not marry micro-finance, the crowd, and renewable energy into one product? That’s the idea behind a relatively new website called Lendahand, a joint venture between the Dutch platform and Ethex. The platform is working with local providers such as SolarNow in Uganda as part of its Energise Africa initiative to provide finance for solar panels. This is done via unsecured bonds that pay out 5%-6% a year for a period of between one and three years, with interest usually paid every six months (along with some of the debt, which is amortised as it is repaid).
Top 100 fintech companies revealed (Banks.am), Rated: A
First, second and third place, on this year’s Fintech100, are occupied by Chinese fintech firms: Ant Financial, which owns Alipay payments platform; ZhongAn, which uses big data to automate online property insurance; Qudian, an online electronics retailer offering monthly instalment re-payments.
The fourth and fifth places are occupied by Oscar, which seeks to radically transform health insurance through technology and Avant, the fastest-growing marketplace lending platform for short-term consumer credit.
The sectorial breakup of the Fintech100 is as follows: 32 lending companies, 21 payments companies, 15 transaction and capital markets, 12 insurance companies, 7 wealth companies, 6 regtech (regulatory technology-Banks.am) & cyber security companies, 4 blockchain and digital currencies companies, and 3 data and analytics companies.
Fintech100 includes a broad range of fintech companies from 29 different countries.
SelfKey Will Greatly Aid the Expansion of the FinTech Sector (Cryptocoins News), Rated: B
One blockchain based startup, SelfKey, is creating a blockchain-driven decentralized digital identity system that gives users full control over their personal information. The platform allows individuals to create their own secure personal identity wallet that stores important identity documents. This wallet also stores KEY tokens, which can be used to purchase services on the SelfKey marketplace. These services, which range from passport applications to opening bank accounts, don’t control users’ data–users do.
Users have the key, so to speak, that releases their own data.
CollinStar Holdings to Acquire BiWang Group in a 100 Million US Dollars Buyout (BusinessWire), Rated: AAA
On December 2, 2017, CollinStar Holdings paid $ 100 million US dollars to acquire the entire BiWang Group, including BW.COM.
AUSTRALIAN FINTECH LAUNCHES ALTERNATIVE FUND (Money Management), Rated: A
Australian fintech and fully licensed marketplace lender, Zagga has launched its Alternative Growth Fund aimed at wholesale investors, including self-managed super funds (SMSFs), which will target net returns of 6.5 per cent per annum.
The fund, which would have the minimum investment for wholesale investors of $50,000, was designed to add scale to the Zagga business model which uses a bespoke algorithm to match wholesale investors with borrowers, the firm said.
Banking gap widens as tech-savvy consumers look to new products (News.com.au), Rated: A
Peer-to-peer lender RateSetter has examined big bank profit margins and found that while they are paying record low rates on deposits their lending rates for personal loans and credit cards continue to climb.
“You can drive a bus through the spread between bank deposits and consumer lending rates,” said RateSetter CEO Dan Foggo.
“Publicity stunts such as dropping fees on ATMs are little more than a smokescreen for the poor value,” he said.
- Online savings account rates have dropped from 6.55 per cent to 1.6 per cent;
- Bonus saver account interest rates have fallen from 4.8 per cent to 1.85 per cent, but;
- Credit card interest rates have climbed from 18.6 per cent to 19.75 per cent, and;
- Unsecured personal loan rates rose from 13.8 per cent to 14.5 per cent.
FMA statistics show the fledgling NZ P2P lending sector is serving banks and fund managers well (Interest), Rated: A
But the Financial Markets Authority’s first statistical report on P2P lending, issued this week, highlights just how little actual P2P lending there has been in NZ to date.
The useful and informative FMA report details that there are 20,744 investors registered with licensed P2P services. At 207,230, there are about 10 times as many borrowers registered with P2P services. The volume of investors, or savers, versus borrowers sounds unbalanced and it is. But the bulk of money being lent through P2P platforms is coming from banks and institutional, or wholesale, investors.
Far and away the biggest NZ P2P lender is Harmoney. According to the FMA report, as of June 30 the total value of Harmoney loans outstanding was just under $239 million. The five other active P2P lenders had a shade under $50 million worth of outstanding loans between them.
Customers without credit scores can take the digital journey to get loans (livemint), Rated: AAA
Mumbai-based CreditVidya, a fintech start-up, uses alternative data sources to assess fraud and risk. It has recently raised $5 million Matrix Partners and had previously raised $2 million from Kalaari Capital. The money is being used for product development and hiring manpower. A lot of the investments are going into research and development and setting up the team right, which will include data scientists from the US. The plan is to have a total of 146 employees by end of 2018, said the founders of the company.
Currently you work with over 20 banks and non-banking financial (NBFCs) who are looking to assess customers of small unsecured credit. What is the quality of these banks and NBFCs?
Rajiv Raj: We have a mix of small and big banks and NBFCs. We have big banks such as State Bank of India, ICICI Bank Ltd and Axis Bank Ltd. There are many micro services that these companies use.
Abhishek Agarwal: We are also in talks with an MNC (multinational corporation) banks. Right now, 10 relationships are with large banks and NBFCs, out of the 27, and remaining are in mid- and small-sized banks. Every bank is focused on retail loans and in that pie on unsecured lendings. Personal loans, consumer durables and two-wheeler loans are the segment where there has been a tremendous rise.
Recently, P2P regulations came out. These companies will have to start reporting to credit bureaus. Has any P2P platform approached you to use alternate data?
Agarwal: We are currently working with three P2P lenders. Here again, it is for risk assessment of first-time borrowers. People who are digital savvy and want to access this facility, are first-time borrowers and under 35 years. Cibil’s (a credit bureau in India) penetration in the 25-35 age group is poor. Hence, 75-80% of the cases will have a no Cibil score.
Raj: These are thin-file customers who don’t qualify for loans.
Why are the traditional credit bureaus not using alternative or digital data to assess customers?
Raj: One, there is a regulatory issue. Two, they have never done this before.
Agarwal: Experian (a credit bureau) in the US has been around for the last 40 years. Digital lending in the US exists for the last 12 years. Experian never used alternative data in the US. It is not in their DNA. All the traditional bureaus in India are heavily influenced by their parent companies in the US. There is no product that the bureaus have launched in India that is only for the Indian market. They haven’t done anything that is new and specific to India.
While analysing customers, what parameters do you use to evaluate credit worthiness?
Agarwal: You look at five types of fingerprints—social finger print (anything you put on social media), device fingerprint (such as SMS), browser fingerprint (anything that identifies your device), click stream fingerprint (how fast you type) and biometric fingerprint (the physical fingerprint).
Fintech Trends to Watch Out for in 2018 (Entrepreneur), Rated: A
With a continuation to the credit line onboarding the digital trend, the next year will see more and more people borrowing using data, believes Vikram Sud, former APAC operations and technology head of Citibank and also ex-group COO of Kotak Mahindra Group.
Algorithm-based investments will see a hike, interactive brokers too will grow in numbers, while the cost of availing them will keep dropping.
While the majority of fintech users today rely on wallets and prepaid investments for transactions, many in the industry believe that that is set to change.
Citing a 360 degree financial inclusion and a future of uniform payments globally, Himaghna Dey Sarkar, Chief Expansion Officer, ToneTag spoke about how they are enabling sound-based payments. The app listens to the frequency of tones in the existing EVC machines, and enables transactions directly to the merchant’s bank account.
Sud believes that we are moving closer to a stage where the cards business is at a risk. With more and more retail lending options like buy now and pay later, Sud said that the line of credit will become more prominent.
A little bit of data can go a long way! (ETCIO), Rated: A
Imagine there being minimal record of your existence – your credit history and identification papers being almost non-existent. Unfortunately, this is not a movie plot but a reality that millions across the world have to grapple with. Both developing and under-developed economies have their fair share of people who have no formal credit footprint. These are people who have never borrowed from or interacted with formal banking channels in their lives. This lack of interaction with banking channels is one of the primary reasons that these people do not possess sufficient format documentation, a primary requirement of banks. The repercussion of this is that there is minimum information available about their credit history and when they do approach a lender for capital; more often than not they are deemed ineligible and are turned away.
Over the last few years, digital lending platforms have emerged as viable sources of credit for such borrowers.
By 2022, over 70% of India’s population is expected to own a smart phone. With a current smart phone user base of 300 million, smart phone penetration in rural India is growing at a much faster pace as compared to the urban India. This means that each one of us is generating reams of digital data giving online lenders a glimpse into our habits and preferences.
Integrated finance services in e-commerce (TelecomAsia.net), Rated: A
Again there is speculation in the US over whether companies like Amazon, Facebook, Apple or Wal-Mart could acquire a banking license.
If you go to buy items online, you might need finance for your purchase. The easiest solution nowadays is probably to use a credit card to make the payment. Then, depending on your card, you have more time and flexibility to make the payment. The problem is the actual annual interest rate of the card is easily 30% to 40%. You could get a loan with much lower interest rates, but it is complex to get a loan quickly when you are buying something.
Now we see a situation FinTech that integrated finance solutions are easily available for all kinds of retail services and they offer also a smooth customer experience. This is part of a much bigger development in the finance industry. Finance services are no longer their own isolated islands, but they can be components in any service.
Fintech competitiveness depends on AI technology (The Korea Times), Rated: A
Limiting individual investment in peer-to-peer (P2P) financing at 10 million won ($9,220) is a typical one. The ban on non face-to-face contracts on discretionary investments in the asset management field also limits the domain of fintech startups online. It is necessary to change perspectives in modifying regulations to something that will help new fintech companies.
Fintech can be classified into three areas: well-known money transfer and payment; P2P finance represented by cloud funding; and asset management represented by robo-advisors. The common technology necessary for all three is artificial intelligence (AI).
In P2P lending, supervised learning can be used in P2P for credit scoring and anticipation of expected returns. For asset management firms, reinforcement learning can be used for automated portfolio building.
National Bank ends fiscal year with strong fourth quarter (The Globe and Mail), Rated: A
National Bank of Canada capped off a better fiscal year with strong fourth-quarter profit as the Montreal-based lender enters a new phase of an aggressive plan to redefine itself.
And chief executive officer Louis Vachon said the bank is now shifting from a phase of heavy cost-cutting and job losses to one that reduces costs by using technology to automate more of its processes.
The bank is spending a total of $750-million a year on technology, about $350-million of which goes to new projects.
Profit from the core personal and commercial banking segment was $239-million in the fourth quarter, compared with $191-million a year earlier, as loans and deposits grew and deposit margins improved. The wealth-management arm also posted a 29-per-cent increase in profit to $110-million.
Provisions for credit losses – the money set aside to cover bad loans – rose to $70-million in the fourth quarter, from $59-million a year ago. But the increase effectively belonged to Credigy Ltd., a U.S. subsidiary that specializes on buying distressed loans at discounted prices.
The bank expects Credigy will continue to grow, but is tapering its appetite for unsecured consumer debt as it winds down an agreement that saw the firm buy $1.3-billion in prime loans from Lending Club, a U.S.-based online lending firm. Credigy will instead look at doing more deals for secured loans with lower spreads but also lower losses.
Kenyan, Nigerian startups make global Fintech 100 (Disrupt Africa), Rated: AAA
They include two Nigerian startups, namely payments company Flutterwave and financial management app Riby. Kenyan insurtech startup GrassRoots Bima also makes the list.