Artificial Intelligence, fondly known as AI, is the approach and research field of creating machines that are able to replicate human intelligence. Although we aren’t yet teeming with robots as intelligent as humans, we have managed to build: Intelligent programs that can beat reigning Go world champs Virtual assistants like Siri and Google Assistant to […]
With the passing of time, more and more fields are benefiting from AI and machine learning (ML). The latter is a specific form of AI that deals with devising strategies and methods for allowing a machine to learn from the available and historical data, all to find better solutions for existing problems.
Among the various markets growing by leaps and bounds with machine learning is marketplace lending. AI and machine learning have enabled this sector to automate a variety of processes, shrink operating costs, and make life easier for both lenders and borrowers.
In the past two decades, there has been a tremendous surge in people interested in learning ML as a hobby as well as a professional career choice. Before diving deeper into the subject of how machine learning will transform P2P lending in the future, let’s first get ourselves a brief understanding of ML.
The Craft of Machine Learning a.k.a. ML
Machine learning, or ML, is a subfield of artificial intelligence that follows the notion that machines can learn and adapt better from experience rather than from extensive programming.
Although machine learning is a subset of AI, there are several notable differences between AI and ML. Hence, both fields are considered to be distinct. This analogy is followed by deep learning and machine learning too, where the former is the subfield of the latter.
Today, we are surrounded by many instances of ML, varying from Apple’s Face ID and facial recognition in general to navigational and shopping recommendations generated by virtual assistants. ML also had a profound impact on the financial industry, especially the lending sector, which we are going to discuss in the upcoming sections.
The Present Impact of Machine Learning on P2P Lending
The ongoing evolution of technology and the emergence of tech innovation is having a greater impact on the financial services industry. From designing impactful business models and enhancing the customer experience to cutting costs, the benefits are many.
Fintech firms and the Internet are providing platforms to even niche products to get interested financial supporters as well as potential customers to grab their side. Peer-to-peer financing isn’t only about crowdfunding, but also includes P2P lending.
A bank offers P2P lending by allocating capital from the lending party to the borrowing party while acting as the broker, as well as the risk mitigator. The higher the risk, the higher is the imposed interest rate. Fintech organizations have made this simpler and more effective.
Several Fintech P2P lending firms like LendingClub and Prosper offer a platform where individuals gain interest by lending money to the ones who require it. These firms make money by taking a small fee for making the connection among the two parties possible.
As an alternative to submitting a traditional application, borrowers present compelling stories about why they need the capital via fintech platforms.
Other than the aforementioned, here are some of the most important benefits presently enjoyed by the P2P lending industry thanks to adding the art of machine learning to its arsenal:
1. Easy Identification of Defaulters
As the financial sector grows, so does the number of defaulters and bad loans. This has led the financial institutions to be more careful than ever to spot and avoid defaulters.
Of course, lending is one of the most complex business processes. This is the prominent reason why it is a long and tiresome process to accomplish. Thanks to its intuitive analysis, machine learning can remove the redundant parts and, hence, speed up the whole process.
An automated workflow offers lenders a competitive edge against the competition as there is less space for human error. Thus, lenders can process mammoth workloads in shorter time periods. This helps them not only to maximize profit, but also to better serve their clientele.
3. Lessening/Eradicating Errors
Lending involves a lot of documentation. From the very early stage of loan origination to underwriting, most of the steps involved demand preparing and verifying several documents. Doing it manually not only increases the overall time required but also makes it prone to errors.
Machine learning comes in handy here by adding automation to the process, prompting for human intervention where required the most, and thus, streamlining the complete loan cycle.
4. Reducing Operating Costs by Automating Several Aspects of the Lending Process
There are several aspects contributing to the operating costs of a financial institution. Among them, the most notable aspect is loan decisioning. In most cases, the loan arrives at a positive lending decision irrespective of the loan amount.
Machine learning is able to automate the process, consolidate the entire data, and process the same by taking into account a number of factors. Moreover, ML performs a credit check and enhances the overall experience and quality of the process while reducing the overall costs.
5. Simplifying the Whole Process
The traditional way of lending is a very complex process. Hence, it is obvious for lenders to look for options that can simplify the conventional lending workflow (i.e. decreasing the total time required, lowering the overall cost involved, and smoothing out the whole process).
Machine learning helps in simplifying the whole lending process by:
Automating various aspects of the business process with customizable rules engine
Ensuring straightforward processing of loan applications
Standardizing the entire process
The Upcoming Impact of Machine Learning on P2P Lending
With time, artificial intelligence and machine learning are getting bigger and better. This is evident by the fact that there’s a continuous rise in candidates interested in learning AI in general, and ML in particular.
Although machine learning has already started revolutionizing the way P2P lending works, it will continue getting better and more beneficial for the craft. Following are some projections about how ML will impact lending in the near future:
Ability to self-modify with little to no requirement for human intervention
Better means of filtering irrelevant data from relevant data
Completely automating the underwriting process
Even faster application, approval, and funding processes
Helping lenders to see the bigger picture by insights drawn using efficient ML algorithms
Increasing the outreach of lenders and identifying potential lenders
Introducing younger people to the lending-borrowing culture
More stringent safety protocols to safeguard sensitive information
Offering insightful decisions with a higher probability of success
Providing capital to more and more honest borrowers
Recognize patterns in a specific dataset to help build effective business models
Although machine learning provides access to a variety of avenues for financial institutions, it still needs to do the heavy lifting in some areas to further improve. Three of the most important aspects of ML requiring effort are discussed as follows:
1. Concealed and Undesired Bias
Bias is an inseparable aspect of machine learning algorithms. No ML algorithm can exist bias-free. Although a small degree of bias can be easily managed, the bigger it becomes, the more difficult it gets to fix the same.
Chances for machine learning algorithms to develop concealed and undesired biases from the same data used to train them do exist. Hence, human intervention becomes absolutely necessary to ensure that apposite suggestions or predictions are made by the ML systems.
2. Undetected Errors
Machine learning aims to minimize human interference as much as possible. Hence, it kind of makes humans dependent on machines. Most times, they are free from errors. However, there is room for some errors to slip through.
In case of errors that the machines aren’t able to correct themselves, human intervention becomes mandatory. However, manually identifying and correcting complex algorithms can be arduous and time-consuming.
As lending is an important aspect of the economy, even the smallest of errors being unintentionally passed through can propagate through the system and lead to a huge, undesirable consequence.
3. Time Requirement for Developing Precise Predictions
Machine learning algorithms rely greatly on historical data. The accuracy of the predictions developed by ML algorithms is directly proportional to the total time they spend interacting with the data. Therefore, making precise predictions instantly isn’t possible.
It is mandatory to feed historical data as well as the new data to the ML system continuously for ensuring that the predictions produced by the same are accurate and reliable.
Afternote
There is no denying the fact that the advent of artificial intelligence and machine learning has completely altered the way the lending sector works today. It has become faster, bigger, and better than ever with continuous improvement.
Borrowers and lenders, irrespective of the capital involved, aim to have as few formalities as possible. Though it seems unachievable with the traditional form of lending, the technology-backed lending strives to move as much closer to it as possible.
Fintech firms leverage the latest technological innovations to offer a quicker, smoother, and reliable experience to the lenders and borrowers. There are lots of challenges faced by the industry as of now. Developing better machine learning algorithms might be the key to solving them all.
News Comments Today’s main news: One student saved $20K on a SoFi student loan. PayPal, Google deepen partnership. Zopa to hire a social media strategist. Ant Financial is a top 10 global bank. Today’s main analysis: Improved MPL pools are no guarantee of ABS performance. Today’s thought-provoking articles: A deeper look at GreenSky. Quants and fundamentalists. Ways to impress a lead investor. Helping […]
Is it clear skies ahead for GreenSky? GreenSky is exiting the gate looking good. To raise this kind of money on an IPO and be profitable for the past five years is a startup’s dream, and they’re living it.
Millennials are leading an investment revolution. I’m all for making an impact and being socially responsible, but if it isn’t profitable, then don’t count on retirement. That said, the millennial generation is definitely a different generation, and it’s quite refreshing to keep reading about them.
Student debt is growing in the US and looming as a major ongoing issue. With a total of $1.48 trillion in student loan debt in the US, spread among 44 million borrowers, Americans now have more student loan debt than credit card debt, according to Student Loan Hero.
Interest rates, meanwhile, are punishing, even more so depending on the type of loan you get, and the level of education you’re paying for. According to data from the Department of Education, rates range from around 3.5% to as high as 8.5% — with most types of loans floating in the 5-7% range. That’s extraordinarily high when you consider that many auto loan rates and even mortgages are lower.
The company offered 38.0 million shares to the public that priced at the upper end of the range at $23. The over allotment grant added another 5.7 million shares to the total offering. Selling shareholders offered all of the shares with gross proceeds of $1 billion.
GreenSky ended the day virtually unchanged at $23.26 at a time when most IPOs trade in more volatile ranges. The stock only had a range of $22.05 to $23.36 suggesting minimal initial interest by traders.
At the current price of $26.70, GreenSky has a market value of over $5.1 billion on 190 million shares outstanding (including the 5.7 million over-allotment option) with sales on pace to likely top $400 million this year.
The numbers though suggest anything but a boring company. Transaction volume jumped 47% to $1.0 billion during the March quarter and active merchants grew equally impressive at 52%. The fintech is even profitable.
PayPal and Google are extending their payments relationship across Google’s entire ecosystem, according to Finextra and TechCrunch. The two firms have worked together for awhile, as customers are able to integrate their PayPal accounts directly into Google Pay, Google’s mobile wallet.
But now, they’re taking the partnership a step further, allowing customers to enter their PayPal credentials once and then have them available for various types of payments, including bill pay and peer-to-peer (P2P) payments, across Google offerings such as Gmail, Google Play, Google Store, and YouTube. The partnership is expected to roll out in full later this year.
Marketplace lenders such as LendingClub and Prosper have made strides in improving underwriting standards in the past year.
In a report issued Thursday, Fitch said investors should still be wary of assuming new-issue MPL securitizations are a step up in quality over previous ABS deals, even though firms such as LendingClub and Prosper have taken steps to tighten lending standards as well as pool greater concentrations of borrowers with higher credit scores into their recent ABS deals.
LendingClub (NYSE:LC), for instance, boosted the weighted average FICO of its most recent prime/near-prime consumer-loan securitizations in December to 703, compared with 692 in its first asset-backed transaction of 2017.
Source: Asset Securitization Report
LendingClub’s most recent self-sponsored transaction, Consumer Loan Underlying Bond (CLUB) Credit Trust 2018-NP1, had its base-case loss range tightened to 13.25%-15.25% by Kroll Bond Rating Agency, compared with 14%-16% in its CLUB 2017-P2 transaction. (In December, LendingClub pooled a collection of subprime loans with credit scores below 660, with a base-case loss range of 19.65%-21.65%.)
But the Bloomberg Professional Services Blog has run a piece recently on “quantamental” investing, indicating that a merger of the two approaches is underway. Darwinian pressures aren’t kind to presuppositions or to the purity of paradigms. And it is survival of the fittest that is at work here, because fitness requires on the one hand that the quants use good (human) judgment to monitor and adjust the investment process to the prevailing market conditions, while it also requires that any workable fundamental approach employ “promising aspects of technology … to reduce bias and random noise.”
“Alternative data” means what it sounds like it means: every sort of datumthat one would not traditionally have expected to come up in a discussion of trades, investments, or portfolio allocations.
These sources can include (Bloomberg’s list), “social media posts, credit card accounts, online browsing activity, foot traffic and weather patterns.” Any and all of these can include clues to ongoing and future trends. The use of any such source, or any cross-referencing of sources that can produce patterns, may be novel this week, customary next week, and a bare minimum for survival in the trading jungle the week after that.
Nuveen’s “Third Annual Responsible Investing Survey” of over 1,000 affluent investors found there was increased interest in working for, buying from, and investing in socially responsible companies. This is even more true among the millennials surveyed.
Some 92% of millennials agreed with the statement “I care more about having a positive impact on society than doing well financially” compared to 52% of nonmillennials.
Source: Business Insider
We interviewed a handful of millennials, asking them what makes their generation different. They answered: access to information, aligning themselves with brands on social media, and growing up in more comfortable economic circumstances than their parents and grandparents.
Most of us are aware of the importance of small businesses in the US economy. Small businesses employ over half of private-sector workers in the US, so access to capital for small businesses is critical to their success. Fortunately, online lenders such as the ones mentioned in the report have focused on serving the needs of businesses and activity has picked up over the last few years. Both awareness of these alternative options and the amount lent on these platforms is increasing. Originations at five leading online small business lenders increased by 50% in three years, from $2.6 billion in 2015 to $3.9 billion in 2017.
Nearly $10 billion of funding was provided to 180,000 small businesses from 2015 to 2017 according to data which included leading platforms OnDeck, Kabbage and Lendio. This activity has generated $37.7 billion in gross output, created 358,911 jobs and $12.6 billion in wages.
Despite fears of trade wars and increased protectionism, foreign investment in the United States remains robust. In fact, the U.S. continues to be the single largest recipient of foreign direct investment (FDI) in the world: more than
The AI and algo game is nothing new really. A couple decades ago many called it neural networks and neural computing, and that has evolved into today’s version of AI. But what is different today and so disruptive are three elements that were not there in the early days of machine learning: computing power and cloud-based systems, a growing and global population of computer and data scientists and data. Lots of lots of data.
Those three are increasingly working together in the alternative investments markets space, enabling firms to make much more accurate, and potentially, more profitable investments. The AI topic, discussed at Lendit Fintech USA 2018 conference in San Francisco in April, revealed just how integrated it is already and where it is going in the coming months and years. Listen to the full recording HERE.
The former American Express chief Ken Chenault is backing a start-up company that provides credit scores for immigrants who struggle to rent apartments and access other basic services upon their arrival in the US.
Workers on overseas postings, international students and other newcomers have long struggled to secure credit cards and other loans because American institutions hold no records on them.
Nova Credit, which is among a new breed of Silicon Valley companies seeking to shake up the financial system, aims to address the problem. It has secured funding from General Catalyst, the venture capital group that has stood behind companies including Snap, Stripe and Warby Parker.
For online lenders, small business lending continues to grow into big business. Online lenders continue to grow their originations of small business loans, according to a new study released today by Washington D.C.-based economic research firm NDP.
Alternative financing in the form of crowdfunding may be a trending topic, but it’s hardly new. Mozart used the idea in the 1780s to finance the composition of one of his early piano concertos, offering prospective backers copies of his manuscript in exchange for their financial support.
Why choose alternative financing? Because a lot of great deals may never get done without it. Many banks and other traditional lenders won’t finance transactions valued under $50 million because there’s simply not enough profit in it for them. And, because of the late stage of the current real estate cycle, many other lenders are feeling skittish or are simply tapped out. That leaves a big gap in the financing market — and a big opportunity for nontraditional sources of capital.
Layered Insight announced today that Tim McKnight, EVP & Chief Information Security Officer at Thomson Reuters, and Richard Seiersen, SVP & Chief Information Security Officer at Lending Club, have joined Layered Insight’s Advisory Board.
Renew Financial, the inventor of Property Assessed Clean Energy (PACE) financing and a leading provider of financing for home improvements, today announced that Kirk Inglis, currently Renew Financial’s Chief Financial Officer (CFO), will succeed Cisco DeVries as Chief Executive Officer (CEO) of the company. Mr. Inglis brings more than 20 years of experience in financial services and technology with a deep expertise in consumer lending. His career includes senior finance and operating roles with Calypso Technology, Prosper Marketplace and Providian Financial Corporation. Mr. DeVries will become the company’s Chief Innovation Officer to focus on key growth opportunities and to help innovate new financing tools for clean energy. DeVries will continue to serve on Renew Financial’s board of directors.
ZOPA is hiring its first-ever social media executive in an effort to broaden its customer base.
The peer-to-peer lending platform is currently advertising for a person who can “translate the brand and social media strategy into tangible plans which encompass day to day content, product content and campaign content”.
The role will involve working with the wider marketing and product team, as well as analysing and optimising performance by channel.
LendInvest announced on Thursday it has named firms JMW Solicitors LLP and Lightfoots Solicitors as its first official panel of solicitors for its Buy-to-Let product. According to the online lender, JMW Solicitors is one of the North West’s leading full-service law firms, with significant experience in handling a range of real estate finance cases for both institutional and private lenders. Lightfoots are experts in complex property finance cases and have over 30 years experience providing legal services to mortgage lenders. Both firms are experienced in dealing with introducer-led business, offering dual representation and coverage across England and Wales.
Digital wealth manager Moneyfarm has got £40 million in a Series B funding round – meaning it has secured close to £60 million in capital so far.
Moneyfarm calls this the “largest funding round by a European digital wealth manager to date” and the company, which launched a personal pension (SIPP) in March this year, will use the capital to launch solutions and expand its investment strategy.
The round was led by Allianz Asset Management, the investment arm of global insurer Allianz, which first invested in Moneyfarm in September 2016.
SWOOP, a new small- and medium-sized enterprise (SME) funding platform, has partnered with Hiscox on the insurer’s business accelerator portal.
Swoop, which is a re-brand of BizFly, connects businesses in need of finance with over 400 lenders including peer-to-peer platforms such as Funding Circle and Growth Street.
It had been rumored for some time now. Ant Financial, the Chinese financial behemoth, was raising a very large funding round that would value the company at $150 billion. It has been reported extensively today that this funding round has in fact closed. Ant Financial has raised $10 billion at a $150 billion valuation.
For a brief primer on Ant Financial there is a decent summary on their English language websitebut for a deeper understanding I recommend you read Chris Skinner’s new book, Digital Human (the Kindle version is available now). This has a 30,000 word case study that not only shares the history of Ant Financial but also why they are one of the world’s most forward thinking companies. And if you think they are just a Chinese story, think again. Ant Financial embodies the future of financial services and they will, in my opinion, shape the future of financial services more than any other fintech company on the planet.
Dianrong (点融), a leading Chinese online P2P lending service provider today announced cooperation with R3, a global platform specializing in distributed data technology. The Chinese fintech company’s supply chain finance solutions will land on Corda, R3’s open-source distributed ledger.
Dianrong hopes the cooperation will enable the company’s end-to-end service through a comprehensive supply chain and increase efficiency by ensuring transparency. The company’s initiative is to allow micro and small businesses to access credit and financial services.
As of this week, Wisr will increase its personal loan limit from $35,000 up to $50,000, with a comparative interest rate up to 5% p.a. lower than the four major banks.
Loans will be available for any worthwhile purpose over three or five years, with a comparison rate of 9.36% p.a. for borrowers with a strong credit rating. The neo-lender also offers no early repayment or exit fees.
The report analyses the number of mortgages taken out in the 12 month periods to the end of March from 2014 to March 2018, and breaks them into borrower types – first home buyers, investors, people moving house, those staying put but refinancing and those buying a second home.
According to Real Estate Institute of New Zealand figures, Auckland property sales peaked in their current cycle in the 12 months to March 2016, when 30,631 homes were sold.
That number has steadily declined and in the 12 months to March this year had slumped to 21,628, a decline of 29.4%.
Today’s investors are undoubtedly looking at technology-driven startups with a difference. The best illustration here is Flipkart which managed to introduce the right technology-driven models at a time when people had to wait endlessly to buy products of their choice. With Walmart now having acquired majority stakes in Flipkart, more technology-driven models could potentially come to the fore.
The digital wallet company finally integrated its platform with government-owned unified payment interface (UPI) last week. A week later, numbers related to UPI have popped up that has reached a 5 million mark via @ikwik handles, a VPA (Virtual payment address) handle for UPI, according to an ET report.
The platform is also planning to partner with NBFCs to disburse loans to small businesses in the range of Rs 20,000 up to Rs 5 lakh.
In Malaysia, regional P2P digital financing platform Funding Societies has announced an alliance with United Overseas Bank (UOB), to provide P2P lending to small businesses.
Using the Funding Societies platform, small businesses banking with UOB Malaysia can raise up to MYR500,000 (US$125,720) in capital directly from investors.
Funding Societies is the first P2P financing service introduced in Malaysia. Based in Singapore, the company also has a presence in Indonesia, where it’s known as Modalku.
South African investment fund Crossfin has concluded a deal with banking and asset management group Investec that will see the two companies identify early-stage fintech startups in which to invest through Crossfin’s angel funding arm Blue Garnet Investments.
The Crossfin fund, which has a particular focus on fintech startups, was formed in June of last year after South Africa-based private equity and venture capital firm Capital Eye and the Multiply Group signed a strategic investment partnership.
Capital Eye manages a portfolio of investments spread primarily across Sub-Saharan Africa, including South African fintech company wiGroup, which Investec has also invested in.
Today, Fundbox, the small business growth company, announced that the company has won the coveted Israeli Atlas Award for Best Fintech Start-Up. For a third year in a row, the 2018 Israeli Atlas Award event was held in cooperation with the Ayn Rand Center, The Marker and such leading partners as, BDI, IVC, Bank Hapoalim and Israel Aerospace Industries. The prize is awarded to those Israeli startups that have created a technology, idea or product of exceptional value in Israel over the past year.
News Comments Today’s main news: Auto loan delinquency rate hits 5.8%. RateSetter reaches 100M GBP in investor returns. Marcus may expand to Germany. OurCrowd surpasses $1B AUM. liwwa lends $11M to SMEs. Today’s main analysis: LendingTree among the 5 worst finance sector stocks, according to Nasdaq. Today’s thought-provoking articles: 3 ways technology shifts consumer approach to debt. New reporting rules […]
But it’s the growth of new products at SoFi that will most likely attract the attention of investors, as the company tries to justify its $4.4 billionprivate market valuation.
In the letter, Noto said the SoFi at Work program, which partners with companies to help their employees pay off student loans and other debt, expanded its funded loan volume by 118 percent from a year earlier. The program, used by over 700 businesses, was launched in September 2016, so the growth is coming off a small base from last year at this time.
Borrowers in the U.S. are defaulting on subprime auto loans at a higher rate than during the financial crisis in 2008.
Data from Fitch Ratings shows that the delinquency rate for subprime auto loans more than 60 days past due reached the highest since 1996 at 5.8 percent.
The default rate during the 2008 financial crisis was around 5 percent.
Based in Charlotte, NC, LendingTree, Inc.TREE operates as an online loan marketplace for consumers seeking loans and other credit-based offerings. This Zacks Rank #5 stock has a VGM Score of D. Shares of the company have lost 18% so far this year. The 2018 earnings estimates have been revised 5.7% down over the last 30 days.
The emergence of fintech and blockchain are making the loan experience streamlined and accessible to ordinary consumers, as well as to people who have issues with their credit score, businesses interested in alternative interest plans and people who are hesitant about taking loans from banks for whatever reason.
Peers Over Institutions
P2P lenders pool together smaller amounts contributed by investors and lend the money out to consumers through digital platforms. Recently, P2P platforms like Lending Club and Prosper are making available loanable amounts of around $30,000 to $40,000 at competitive interest rates and with easier application processes.
Credit Scores Matter Less
As of 2017, those aged 18-29 have an average score of just 652 which is lower than previous generations and has become an issue as they start settling down and are in need of loans for mortgages.
Fintech and blockchain, however, are starting to minimize the overall impact of credit scores in an effort to bring more financial inclusion. They can include factors such as: salary, purchasing history, educational attainment, and even social media activity.
The Drive to Decentralize
The centralized approach of financial institutions controlling the people using their systems financial activities is also being challenged.
Decentralization has been key to blockchain’s growing appeal.
It’s possible to get up to $100,000 from SoFi. With Earnest, you’re limited to a maximum of $75,000.
Source: Student Loan Hero
Because you can borrow more with SoFi, you also get access to longer loan terms — up to seven years. The longest term with an Earnest loan is five years.
Finally, SoFi doesn’t have a minimum credit score requirement, while you need a score of at least 680 to qualify for a loan with Earnest.
Even though Earnest has a minimum credit score of 680, the lender also takes into account your education, job history, and other data to help determine an interest rate.
Private equity firms smell money in the financial advice business. Last month, Hellman & Friedman LLC paid $3 billion to buy Financial Engines Inc., an online retirement planning service. Thomas H. Lee Partners LP in October took a stake in HighTower, a Chicago-based wealth adviser with $50 billion under management at the time. And in April 2017, private equity giant KKR & Co. and Stone Point Capital LLC bought a majority share of Focus Financial Partners LLC in a deal that valued the wealth manager at $2 billion.
Fair Square Financial LLC, the two-year-old, 50-worker Wilmington company that markets the Ollo credit card, says it has raised $100 million more from Orogen Group, the New York investment firm headed by former Citigroup CEO Vikram Pandit; Atairos Group, headed by former Comcast chief financial officer Michael Angelakis; and others.
Fair Square, which has lent MasterCard holders about $400 million since early last year (using the Bank of Missouri’s lending powers), is one of a string of software-intensive lenders and financial service firms that have sprung up in Wilmington in recent years, capitalizing on the area’s concentration of credit card managers and workers.
Of the many informative and innovative sessions powering the 2018 Benzinga Global Fintech Awards, none may be as important to the future of lending as the fireside chat between Cornelius Hurley, Executive Director at Online Lending Policy Institute, Colin Darke, General Counsel at Rocket Loans, and Jeremy Potter, Associate Counsel at Quicken Loans.
One of the main catalysts of the chat was a discussion about Hurley’s two main myths surrounding the future of lending:
Online lending is unregulated and is a shadow banking component.
There is a nexus between payday lending and online lending.
A longstanding real estate and private equity firm, Muirfield Investment Partners, has joined with AlphaPoint in an effort to offer its investors a more easily tradeable way to participate in the property market.
The idea is to use blockchain as a conduit for introducing more liquidity into the real estate market.
AlphaPoint’s plan is to see everything go on the blockchain. The actual asset won’t be on paper and tokenized, but that documentation will be stored using the tech. Further, it can use software to pay out dividends, if those are part of the deal, and to ensure that assets aren’t transferred to people they shouldn’t be.
If you want to attract and retain millennials, it’s all about the benefits. And no perks are more sought after among this group than studen loan benefits. In this post, guest author Alyssa Schaefer, the chief marketing officer of Laurel Road, a national online lender, explains why employers can’t wait to roll out student loan benefits if they’re serious about hiring the best and brightest millennials.
That’s why it’s so frustrating when the company you borrowed from sells your loan to another lender or stops servicing loans altogether.
Unfortunately, if you have BorrowersFirst personal loans, that’s exactly the position you’re in. BorrowersFirst no longer offers personal loans or manages loans for people who borrowed from it in the past.
In the new guide, Gartner discusses these key findings:
Data breaches have led to rampant compromise of personally identifiable information (PII). As a result, correctly reciting PII is worthless as a stand-alone method of corroborating a person’s claimed identity.
Onerous “identity proofing” methods for new-account opening and as part of step-up or multifactor authentication use cases increase customer abandonment. This creates a competitive liability when customer attrition and market share loss exceed the potential fraud loss.
Many technologies used in online fraud detection use cases, such as device reputation, can be used in identity proofing and substantiation use cases. In addition, these technologies can be invoked to elevate trust during subsequent interactions.
Peer-to-peer (P2P) lending has increased in popularity over recent decades, spurred on by the age of connectivity. Blockchain startups have been quick to recognize the benefits that the new technology can bring to P2P finance, directly connecting individuals who wish to exchange value without the need of any intermediaries such as banks.
Now, one startup plans to use artificial intelligence (AI) and machine learning in combination with blockchain technology to create a P2P lending platform for home loans. This could prove to be an ideal solution for frustrated millennials, who may be more open to using new technology to achieve their property ownership goals.
Possible social good applications include peer to peer lending, digital identities (ideal for refugees), protection against runaway inflation, campaign finance reform, direct democratic votes, solar energy trading and freedom of speech free from censorship.
UK Peer-to-peer lending platform RateSetter has topped the milestone of returning £100 million in pre-tax interest payments to its investors. RateSetter reports accomplishing this without any individual investor losing a penny.
THE Funding Circle SME Income Fund (FCIF) has reported its first drop in net asset value since 2016 after adopting new IFRS 9 reporting standards.
The new accountancy standards mean funds have to include potential losses in their portfolio. The fund, which invests in loans originated by peer-to-peer lender Funding Circle, revealed its returns were down 0.6 per cent in April after allowing for a 1.1 per cent provision.
This was the first drop in NAV since the fund’s first monthly update in November 2015 when it was down 0.1 per cent. The NAV had been consistently positive up until last month.
As Marcus looks to launch a UK savings product soon the bank is already eyeing additional European markets; they plan to make Germany the next stop, though it might be looking at 2019 or beyond; Marcus is slowly becoming an important part of the overall Goldman strategy as they look to diversify; their consumer brand has a goal to boost Goldmans’ revenues by 5 percent in three years.
Azbit, found online at Azbit.com, is an online trading platform that comes with built-in margin trading and algorithmic trading tools.
A pre-ICO Azbit tokens begins on July 1, 2018.
Azbit has an electronic payment system that will provide support and processing for all online and cryptocurrency payments, then offer additional services like instant exchange, a P2P debt platform, and P2P lending backed by your crypto portfolio.
Lithuania invites Chinese companies and investors to take advantage of a friendly and flexible FinTech environment in the country which offers broad development possibilities, chairman of the Board of the Bank of Lithuania, said on Tuesday ahead of his trip to Beijing.
It is estimated that by 2024 the annual growth of the global peer-to-peer lending market will amount to almost 50 percent in the country.
Equity crowdfunding platform OurCrowd recently reached a major milestone. The Israel-based company has surpassed $1 billion in assets under management.
OurCrowd is currently backing 150 startups across the globe and has previously helped 20 startups successfully exit from funding since its launch in 2013. One of OurCrowd’s most notable investments is Hyperloop, which it backed before Virgin Group invested in the company last year.
liwwa, an Amman-based fintech startup and a peer-to-peer lending platform, announced the issuance of over $11 million in debt to small businesses across more than 300 loans since its inception.
Cellulant, a Nairobi & Lagos–based digital payments provider, raised $47.5M in Series C funding.
The round was led by TPG Growth’s The Rise Fund, with participation from Endeavor Catalyst, Satya Capital, Velocity Capital & Progression Africa.
Led by Ken Njoroge, co-founder and Group CEO, and Bolaji Akinboro, co-founder and CEO, Cellulant Nigeria, Cellulant provides a digital payments platform that delivers connected, flexible payment options for consumers and businesses, and works with financial institutions, governments and mobile network operators to increase transparency and expand their reach in Africa.
News Comments Today’s main news: Lending Club losses extend to Q4 2017. LendingClub to settle lawsuit for $125M. Groundfloor launches online public offering. Even Financial gets backing from American Express. LendInvest launches buy-to-let calculator online. Today’s main analysis: Lend Academy reviews LendingClub’s Q4 2017 results. Today’s thought-provoking articles: Equity sharing and home ownership. How millennials move emerging markets. Why Australia needs […]
LendingClub’s losses extend into Q4 2017. AT: “This is an example of how litigation can eat into profits and impact growth. Nevertheless, despite continued losses and expected pending losses, LendingClub is looking good with increased originations. But it’s not out of the water yet.”
Groundfloor launches online public offering. AT: “This is significant because Groundfloor offers the first SEC-authorized opportunity in payment-dependent notes for non-accredited real estate crowdfunding investors. For $10 per share, anyone–literally–can invest in Groundfloor. While I applaud this opportunity for opening doors to virtually everyone, a part of me wonders if Groundfloor can raise enough operating capital by selling common stock for $10 per share. How long will it be before they are profitable? Is this a good ground floor price?”
Lending Club lost money for a fourth year in a row last year, as it wrote a big cheque to settle class-action lawsuits connected to its governance glitches of 2016.
The San Francisco-based company, the biggest listed online lender in America, said on Tuesday that net losses for the fourth quarter almost tripled from a year earlier, to $92m, as it agreed a $125m settlement to resolve civil suits stemming from the loan-mis-selling scandal that blew up almost two years ago. About $48m of the sum would be covered by insurance, the company said, with the remainder to be paid from liquid assets of about $650m.
The loss for the full year came to $154m, wider than the previous year’s $146m.
Under the agreement, which was announced Tuesday, the San Francisco-based online lender expects to pay $77.25 million. An additional $47.75 million is expected to be covered by LendingClub’s insurance, bringing the total payout to $125 million. The deal is subject to court approval.
Lending Club also underwhelmed in its revenue as the company raked in $156.5 million during its fourth quarter, below Wall Street’s consensus estimate of $157.6 million, according to FactSet. The figure did increase 20% compared to the year-ago quarter.
On an adjusted basis, the company posted earnings of a penny per share, compared to a loss of 2 cents in the year-ago quarter.
The company also experienced a 23% annual growth in originations, which reached over $2.4 billion.
LendingClub delivered another record quarter of $156.5 million in revenue up slightly from their previous quarter. Originations were slightly down from the third quarter at $2.436 billion. They reported a GAAP net loss of $92.1 million in the fourth quarter which was affected by the class action litigation settlement expense.
Source: Lend AcademySource: Lend Academy
LendingClub provided the below guidance for Q1 2018 and reaffirmed their guidance for 2018:
First Quarter 2018
Total Net Revenue in the range of $145 million to $155 million
Net Income (Loss) in the range of $(25) million to $(20) million
Adjusted EBITDA in the range of $5 million to $10 million
Reconciling Items between net loss and non-GAAP adjusted EBITDA consisting of stock-based compensation of approximately $19 million, and depreciation and amortization and other net adjustments of approximately $11 million
Full Year 2018
Total Net Revenue in the range of $680 million to $705 million
Net Income (Loss) in the range of $(53) million to $(38) million
Adjusted EBITDA in the range of $75 million to $90 million
Reconciling Items between net loss and non-GAAP adjusted EBITDA consisting of stock-based compensation of approximately $77 million, and depreciation and amortization and other net adjustments of approximately $51 million
LendingClub stock plunged 10 percent after the bell. The peer-to-peer lending company reported earnings and revenues that missed Wall Street estimates.
Groundfloor, the first issuer qualified by the U.S. Securities & Exchange Commission to offer real estate based payment dependent notes that are available to non-accredited investors, today announced that it has raised a total of $4.3 million from 687 participating investors in a combination of two recent financings, a private online bridge note closed late last year and an initial closing of its online public offering of equity. In each case, the company kicked off the invitation-only raises to customers and friends of the company with a $1M target, surpassing that in under 48 hours. Due to increased growth opportunities and strong demand, the company has today expanded the equity raise to the public.
Groundfloor is offering a total of up to 530,000 shares of Common Stock at $10 per share in its online public offering. Investor benefits include: no investor fees for life2; access to regular shareholder-only loan offerings; and invitations to attend annual Groundfloor shareholder events.
Recently increased expectations that the Fed may raise interest rates in the future has investors rebalancing their portfolios, with a shift out of equity into debt, as bond yields are expected to increase. Twelve-month bond yields have recently inched up to 1.97 percent.
By comparison, Groundfloor investors have earned an average of 13.6 percent per year over the past three years, which represents over 6x the yield of a current one year Treasury note, and over 1,000 percent more than they would have made if their money had been in a CD or savings account over this period.1 Groundfloor’s retail investors create their own portfolios of real estate debt investments in the fix and flip residential housing market, and the loans on which the investments are based are secured by a first lien position against the underlying real asset.
• High yield potential
• Lower barrier to entry: Even if you have a very less amount of money, you can still invest even in large commercial real estate projects through equity crowdfunding and enjoy the benefits of the real estate i.e., strong returns and lower volatility.
• No self-employment taxes
• Higher returns
Cons
• The risks. An investor should know how to evaluate the risk factors like local economy volatility and chances of higher than expected construction costs. Due diligence is what is required.
• Liquidity constraint: These investments need to be held up for a period of five years or so, and hence one should go for this option if this much bandwidth is available, lack of liquidity is not there, and an investor is comfortable with the invested amount to be tied up for several years.
• It’s still an early option: It is still an early option to be considered as the performance track record and validation is still not complete and individual investors are still trying to figure it out.
• Lack of control: Since it is a passive investment, the investors are not involved in the day to day activities and therefore have limited ability and control over the operations required.
In a rising tide of fintech apps, RealyInvest is emerging as a new way for beginning investors to access the high-priced world of premier commercial real estate right from their smartphones.
RealyInvestors can purchase fractional shares of REITs (Real Estate Investment Trusts) for as little as $5. Investors can also own shares of commercial real estate NNN Assets, such as a building long-term leased to Starbucks, for as little as $20.
All investments, rental income and dividend earnings can be managed right on your smartphone. Fees range from $1 to $3 per month, depending on investment options.
A handful of companies, including those backed by marquee Silicon Valley names such as Andreessen Horowitz and Mark Zuckerberg’s philanthropic organization, are experimenting with a product that essentially lets them take an ownership position in a house along with the homeowner. The agreements, called shared-equity contracts, provide a new way for investors to get exposure to rising home prices across the U.S.
Shared-equity products are aimed at new buyers who need help with a down payment, or current homeowners looking for an alternative to a cash-out mortgage refinancing or a home-equity loan. The first use has caught the attention of mortgage-finance giant Freddie Mac,which recently agreed to buy loans on properties where one firm,Unison Agreement Corp. , contributes to the down payment.
Landed Inc. offers these down-payment contracts to teachers and other educators. Last year, the Chan Zuckerberg Initiative , a philanthropy co-founded by FacebookInc.’s chief executive, gave Landed $5 million to start a new fund.
The length of the contracts can vary from a few years to 30. Homeowners can repay early, including if they sell their house before the term ends. How much they end up owing depends on how the value of their home changes. Because the funds are equity, not a borrowing, they don’t require monthly payments.
Even Financial, the technology platform powering financial services online, has secured a strategic investment round totaling $3 million. The round includes an investment from American Express Ventures, the strategic investment unit of American Express, as well as Plug & Play and Arab Angels.
With this investment, Even Financial will expand its team and advance its proprietary technology, which allows financial institutions and other partners to scale customer acquisition and remain competitive in the growing online financial services industry.
“In 2017, Fundrise investments earned an 11.44%* total return on investment, including over $16 million in dividends paid out to investors. Delivering attractive, consistent cash flow is a core part of our mission to offer you a better way to invest.”
South by Southwest Interactive Innovation Award winner and 2018 LendIt Fintech Industry Award finalist Blinker, the only peer-to-peer e-commerce platform that provides an end-to-end solution for anyone buying, selling or financing cars, announced two major milestones for its business today:
Blinker is now available in the largest car markets in the US – Beginning today, Blinker is expanding its proprietary e-commerce and loan origination platform from Texas and Colorado to California and Florida, allowing millions of customers to buy, sell and finance vehicles easier, quicker and safer with other people. Thirty percent of vehicle sales across the US every year are between people, yet private-party marketplaces including Craigslist, Letgo, Autotrader, Cars.com and Facebook Marketplace don’t have services such as integrated financing or lien payoff support. Leveraging artificial intelligence and machine learning, Blinker customers get guidance and tools to complete the entire purchase process themselves, from instant vehicle valuation to real-time auto loan approval to e-signing documents to secure funds transfer, all for free within Blinker’s mobile app.
Blinker joins with Ally to offer best-in-class auto protection products – Blinker will now give customers the option to add Ally’s vehicle protection coverage, including Ally Guaranteed Asset Protection (GAP) and Ally Premier Protection vehicle service contracts, for their vehicle purchases in the app. GAP covers the difference between the cash value of a vehicle and what Blinker customers still owe on their loan if the vehicle is totaled or stolen. Ally vehicle service contracts cover the repair cost for over 7,400 mechanical, electrical, safety or digital components, as well as some related expenses like trip interruption, rental car coverage, towing and 24/7 roadside assistance.
Scammers have taken to Zelle, the Venmo alternative backed by U.S. banks, to defraud consumers who believe the service includes the same protections they’ve come to expect from PayPal. A number of customers report having lost hundreds, or even thousands of dollars, over Zelle, when they used it for transactions with people they didn’t know – like tickets bought off a Craigslist posting, for example.
Malicious cyber activity cost the U.S. economy between $57 billion and $109 billion in 2016, the White House said Friday.
The estimate comes in a Council of Economic Advisers report on the impact of cyberattacks on U.S. government and industry. The report details the range of threats that U.S. entities face from actors including corporations and countries such as Russia, China, Iran and North Korea.
The council’s estimate represents between 0.31% and 0.58% of the 2016 U.S. gross domestic product. For comparison, the report cites a Center for Strategic and International Studies report that estimated the cost of malicious cyber activities against U.S. entities at $107 billion in 2013, 0.64% of GDP that year.
Speaking to The Drum in the final instalment of a four-part video series with Falcon.io exploring social media strategies, she admitted that while it can be a challenge, using data to understand her audience’s wants and needs has helped her shape content which is likely to resonate.
Fox says she has been finding success on the unlikeliest of social media platforms – Pinterest.
“All our content is more lifestyle focused than finance focused,” she explained.
OpenClose, an industry-leading multi-channel loan origination system (LOS) and mortgage fintech provider, announced that it has added staff to its integration and customer support departments. The new hires will help enhance OpenClose’s existing software products, facilitate digital mortgage processes, produce fintech-level innovation and provide excellence in customer support. The company also recently added three senior software engineers to its development team.
You usually have only a couple of weeks to repay the loan, and the typical APR is almost 400.00%, according to the Consumer Financial Protection Bureau. If you can’t pay it back and have to take out a new payday loan to pay off the first, you could end up stuck in a vicious cycle of predatory debt.
The business lender, which currently only has an iPhone app for investors to access, monitor and manage their accounts, is now advertising for a global mobile apps product manager and for an Android developer.
Both positions are based in the UK.
“We have an ambitious roadmap for this year and want to launch two new apps (Android and iOS) for our investors,” the job advert on the Funding Circle website said.
ONLINE lending platforms may partner with banks to fund and market credit products in the future, even sharing the approval process and compliance, in one scenario outlined by global banking regulators.
A number of peer-to-peer lenders have already partnered with banks on a smaller scale. For example, Metro Bank has lent through Zopa’s platform and Santander has referred borrowers to Funding Circle. However, these tie-ups have not gone as far as the report’s scenario suggests in terms of becoming a joint venture.
Square Pie, which started life as a stall in London’s Old Spitalfields Market, expanded with the help of a “pie bond” that promised 8% annual interest over four years. The bond was offered through one of Britain’s biggest crowdfunding platforms, Crowdcube.
A total of 324 investors signed up, lending more than £650,000 to fund Square Pie restaurants and its efforts to improve supermarket sales. Square Pie has gone into administration — the first failure of a business that issued a mini bond on a crowdfunding site.…
Lendingblock is one such business. The soon-to-launch platform is, in its founder Steve Swain’s words, “an open exchange for cryptocurrency loans”.
Lendingblock is in the middle of a three-stage Initial Coin Offering that will conclude in March. The first phase has already been completed, raising the equivalent of $500,000. The offering has a hard cap of $10m.
The number of conversions of farm buildings into new homes dropped 20% in the last year, denting hopes that these conversions could help solve the rural housing crisis.
According to Lendy, one of Europe’s largest peer-to-peer lending platforms, only 1,511 agricultural-to-residential conversion applications were approved in 2016/17.
Finnest is an interesting online lender operating in the DACH countries. The peer to peer platform was launched to provide SME funding supported by individual investors but the company is now expanding by providing loans of €10 million and higher. Institutional investors such as insurance companies, funds, family offices and banks will now be able to invest in large SMEs on “FinnestPro.”
The new EU legislation on payment services – PSD2 – and the introduction of Open Banking in the UK seem to have passed the vast majority of people in the country by, according to an AltFi News article last month.
This referred to a report by Which saying that 92 per cent of consumers hadn’t even heard of Open Banking.
Millennials in advanced economies have come under pressure in recent years, thanks to stagnating wages, rising house prices and escalating student debt. But an altogether different trend is taking place in many emerging markets where millennials are seeing their prospects rapidly improve. This in turn is creating an investment opportunity, as millennials in these countries are becoming hugely influential on the prospects for emerging market equities.
Millennials will account for half of the global workforce by 2020, meaning they will be one of the most influential groups in shaping the economy and society, including consumption habits, policy and how companies may want to market and brand themselves. They are disrupting traditional industries and companies are having to adapt. This presents investment opportunities, but it also presents new investment risks.
Based on ERC-20, the multilayered cryptocurrency platform will host a marketplace that allows developmental phases. The first phase focuses on micro loans (small loans), rent payments, student loans and peer-to-peer payment processing.
As trust grows on the platform, phase 2 will be implemented to cater to sales distribution, global small business investing and global commercial and residential real estate crowdfunding while the third stage will serve charity and insurance. The final phase will be dedicated to maintenance and future developments that may include additional currency adoption, feature adding etc.
Valorem (VLR) is the token offered. The exchange rate stands at 1 ETH= 1000 VLR. There is a total supply of 200 million tokens of which 150 million are available during the ICO and 50 million will be kept in reserve. Valorem will not be mined.
People born between roughly 1982 and 2002 are set to receive the biggest inheritance boom of any post-war generation. The Royal Bank of Canada (RBC) estimated the figure will be around $4 trillion in the UK, Canada and United States.
NewsBTC: Now it seems that you have no experience with banking services yet. How do you plan to cover this area?
Now I can say we understand confidently how banking works and how it should work in the crypto industry. By 2020, we’re going to have a licensed bank and transform it into a crypto one with a network of crypto terminals.
A bit sooner, in 2018, we plan to release crypto e-wallets with linked debit cards. Miners will be able to use recently mined coins right away, transferring them to their wallets immediately. We’re also designing a platform for peer-to-peer lending.
Australian investors and borrowers are increasingly adopting peer to peer lending platforms according to the results of survey undertaken by ASIC. The results of the survey suggest that as much as $300 million of personal and business loans were underwritten by peer to peer lenders over the course of the last fiscal year. That represents a doubling in the amount that was lent on such platforms during the 2015/2016 financial year.
Australia’s credit rating system is failing both borrowers and lenders. Many borrowers are unaware of their own credit scores and our research shows they have trouble applying for suitable loans. Lenders are also struggling with too little information, causing them to extend loans to those they shouldn’t and restrict loans to worthy borrowers.
Upcoming changes to Australia’s credit reporting system could remedy these issues.
Under the new credit reporting regime, both lenders and borrowers will have access to more data, such as monthly payment histories on loans and credit cards.
More innovation ahead in mortgage lending
For higher-risk borrowers, novel techniques to assess credit risk (such as analysis of social media accounts) may be the answer to distinguish good borrowers from bad.
But prior experience from an over-reliance on credit scores in the United States shows that careful assessment of borrowers remains vital.
Among all the personal loans the medical loan is the most crucial one which is often required on an urgent basis by the applicants.
Recently a host of Financial technology(Fintech) and Non-banking financing related start-ups have been launched in India providing a variety of medical loans to the clients.
Unable to qualify for a loan from her bank, Johnston searched online for private lenders and found a website for what appeared to be a legitimate company calling itself North Clear Credit.
Everything about it — the variety of loans offered, the glowing testimonials, the company description — seemed professional. In fact, a customer who later reported North Clear Credit to police says an officer told her the website looked legitimate.
For Johnston and Mood, the terms were appealing. The money could be paid back monthly over five years at an interest rate substantially lower than what they would be charged elsewhere.
Johnston completed an online application and was approved for a $20,000 loan.
Within a few days, Johnston and Mood had lost $3,500, and two North Clear Credit “representatives” with whom Johnston had been corresponding had disappeared.
Blackchain Solutions Inc. (the “Company” or “Blackchain”) (CSE: BIS), announces a private placement of up to 3,400,000 units at a price of $0.18 per unit, for gross proceeds of $612,000. Each unit consists of one common share and one share purchase warrant. Each warrant is exercisable at a price of $0.22 per share for a term of two years.
Proceeds generated from this financing will be used to initiate and support the filing of multiple patents and trademarks related to the Blackchain Crypto Credit Rating API and P2P Lending Platform.
News Comments Today’s main news: SoFi lays off 5% of workforce. BlueVine doubles invoice financing credit lines. Chime reaches 750K bank accounts, $2.5B transaction volume. SoftBank injects funding into Moven, who could be buying a bank. Zopa hits 3B GBP in lending. Crowd Genie kicks off ICO. Today’s main analysis: Coincheck’s recent hack could mean big changes in crypto lending, […]
SoFi lays off 5% of workers. AT: “This looks like a redistribution of human assets move. The company recently purchased the technology team at Clara Lending, which specializes in mortgage products. SoFi wants to grow its mortgage business, so it cans its own mortgage divisions and buys one with experience at building the type of product it wants to offer.”
Moven gets funding from SoftBank, plans to buy a bank. AT: “Instead of applying for a bank charter, why not just buy a bank. It’s less costly and won’t take as long to implement as going through the process of approval. If Moven buys a bank already with a charter and rebrands itself as Moven Bank, that will be a big step forward for mobile banking on the whole.”
Why big financial firms build robos instead of white labeling. AT: “It’s less expensive in the long run. Short run, there is a capital expense, but white labeling often comes with ongoing fees, though not always. Another thing, if they build it in house, they control the structure.”
The San Francisco-based financial-technology company told staffers on Tuesday it is cutting around 65 jobs, roughly 5% of its 1,300-person workforce, the people said. The layoffs are centered in SoFi’s mortgage-operations centers in Healdsburg, Calif., and Cottonwood Heights, Utah.
He added that SoFi is currently looking to fill more than 175 open jobs.
SoFi examined the salary earned upon graduation from different law schools compared to the cost of the education. They looked at 60,000 student loan refinancing applications that had been submitted to them between January 2014 and December 2016. They took that data and formed SoFi’s Return on Education (ROED) Law School Rankings. The ranking uses the average salary and student debt load of the graduates three years out of law school that is reported to them by graduates looking to refinance their loans.
The top 20 law schools with the highest average salaries are:
BlueVine has doubled the credit line size for its invoice factoring product to up to $5 million, underscoring the online business lender’s push to offer fast and flexible working capital financing to small and medium-sized businesses.
BlueVine also increased the limit for its business line of credit product to $200,000 from $150,000, making its Flex Credit product an even more attractive financing option for larger or fast-growing companies.
A federal appeals court has upheld the constitutionality of the Consumer Financial Protection Bureau’s structure, a decision that preserves the agency’s independence in the face of challenges from business interests and conservatives.
The D.C. Circuit Court of Appeals ruled 7-3 on Wednesday that a provision in the 2010 Dodd-Frank law that limits the president’s ability to remove the CFPB director during his or her five-year term does not violate the president’s authority to appoint and remove executive branch officers.
Chime is on track to open more than 100,000 bank accounts per month and expects to reach 1 million total this quarter. With more than 750,000 bank accounts opened to date and over $2.5 billion in total transaction volume, Chime has emerged as the clear leader in the challenger banking segment.
While most Americans pay more than $27 a month on average in bank fees, Chime doesn’t charge overdraft fees, monthly fees or foreign transaction fees. With its award-winning mobile banking app, Chime members avoided more than $225 million in potential overdraft fees from traditional banks in 2017 alone, while putting over $72 million into savings accounts with help from Chime’s automated savings tools.
Moven, the mobile-first “neobank” founded by Brett King in 2011, is getting a multi-million dollar infusion from the Japanese company SBI Group, owner of SoftBank. At the same time, Moven says it is pursuing the acquisition of a bank.
SBI Group will hold one of the six seats on Moven’s board, and the two companies will set up a joint venture in Japan.
At the same time, Moven is making major changes to its overall business, including splitting the company in two.
On one side will be the software provider that already develops digital banking software for TD Bank in Canada and Westpac in New Zealand.
On the other side will be the neobank, which will be called MovenBank.
Ainsley Harris reported in Fast Company today that Goldman Sachs is acquiring the employees who built Final, a credit card startup based in Oakland. Final offered a unique kind of credit card, one that would create a different virtual card number for every merchant, thereby reducing the risk of credit card fraud.
It has been a busy couple of years for Goldman Sachs when it comes to their consumer facing business. This latest deal follows a long list of acquisitions for Goldman recently:
Acquisition of GE Capital Bank – this jumpstarted GS Bank giving it a huge deposit base.
Acquisition of Honest Dollar – the digital retirement savings app was acquired in March 2016.
In November, Wells Fargo launched Intuitive Investor, its digital-human hybrid offering from Wells Fargo Advisors. The following month Morgan Stanley launched Access Investing and JPMorgan Chase launched JPMorgan Digital Investing. Goldman Sachs, Raymond James, YF Financial and ICBC are all currently developing their own.
The start of the robo phenomenon was meant to address small, do-it-yourself investors, said Tom Streiff, special consultant to HBW Partners.
“A lot of these big firms have a lot more small accounts than they’re willing to admit,” he said. “Robos were one answer to that. Now they want to have something that has more of their own mark on it … not just to get the technology but to get the smart people inside.”
Typically, the white label provider will take 15 basis points of the total and leave the rest to the bank for distribution, Saxena said. Pricing from independent players, like Betterment or Wealthfront, is competitive.
SmartBiz Loans, the SBA loan marketplace and bank-enabling technology platform, today announced the launch of SmartBiz Advisor, the first, AI-driven, online education tool that makes the financial insights and analysis provided by a typical CFO available to small businesses at no cost.
SmartBiz Advisor is an intelligent online platform that allows small business owners to easily and quickly learn how banks typically evaluate their business on key criteria before applying for a loan.
A well-managed crowdfunding platform should provide a range of deals, after having done sufficient due diligence itself so as to not place potential investors in financial jeopardy, and itself in legal jeopardy. When dealing in investment assets, whether equity or real estate, investors are still expected to be sophisticated and have the means to weather losses that are part and parcel with any private investment deal.
A growing cast of players
Interestingly, even as equity crowdfunding in startup companies has been slow to take off (Indiegogo’s platform raised just $7.53 million in equity investments during its first year of operation), real estate crowdfunding platforms have been popping up like weeds. RealtyMogul.com, for example, has an investor community of 150,000 people that have invested $318 million through its platform since it went live in 2012. The crowdfunder claims to have returned $70 million to investors thus far. RealtyShares, founded in 2013, has also posted big numbers, with platform users reportedly investing $700 million across more than a thousand deals.
A new breed of of private REIT
Private REITs are obviously opaque and potentially dangerous, but the crowdfunding platform has forged ahead all the same. Perhaps, with their interactive dashboards and high levels of investor transparency, these crowdfunded REITs will be able to correct some of the ills of their less technologically sophisticated forebears.
The Fundrise Starter Portfolio would invest her money into two portfolios that support private real estate around the United States. It would do all the heavy lifting for her — and play landlord on her behalf.
She didn’t need to have hundreds of thousands of dollars stashed away, either. She could get started with a minimum investment of just $500.
Fundrise lists an average annualized return of 11.44% in 2017. Investors pay 1% in annual fees — a 0.85% asset-management fee and a 0.15% investment advisory fee.
Q: What sort of problems were you experiencing when it came to financing real estate projects?
The problem is that behind the scenes the money is handled by hedge funds. All of the hedge funds on Wall Street do their own thing and no one knows who they are. So what happens is you have a potential investor and the first problem for them is finding the financing.
Q: How exactly does We Lend work, and how does it help solve some of the problems previously mentioned?
I’ve consolidated and cut deals to put all the hedge funds under one roof, so now investors don’t have to go through this huge undertaking to find the funds. They can came to us, and we can underwrite them and then figure out on the back end the best match.
It’s like LendingTree for the investor world.
Q: What types of projects and people does We Lend work with?
We work with small developers or a mom-and-pop builder that does five properties a year. And we mainly work with residential properties only because there are more residential opportunities than anything else.
In terms of price points, we try to stay as low as $50,000 per project.
Today, On Deck announced the appointments of Paul Rosen as Senior Vice President of Sales and James Hobson as Senior Vice President of Strategic Partnerships and Platform Solutions.
Santander Consumer USA Holdings Inc. (NYSE: SC, or the Company) today announced that it will work with automotive technology leader AutoFi to streamline and simplify the car-buying process for consumers, while giving dealers a robust digital sales channel.
Climb Credit Reveals A Solution To Student Lending Crisis (Climb Credit Email), Rated: A
For Climb students who have held two different jobs since attending their program, there is a median pay increase of 38.9% from the first to the second job
Nearly three out of four students surveyed said they would not have been able to attend their education program if they didn’t have Climb Credit as a financing option
The Indiana House approved legislation Wednesday to create a new type of payday loan – with interest rates of up to 200 percent – that opponents argue amounts to predatory lending.
The legislation creates a loan of between about $600 and $1,500, with a term of up to 12 months.
The Minnesota Commerce Department warns Minnesota consumers not to borrow money from unlicensed lenders that advertise and offer short-term, payday or installment loans through the internet.
Growth rates of internet users have remained steady. During 2017, a total of 40.74 million new netizens were added with a growth rate of 5.6%. Internet penetration rates have reached 55.8% in China, more than the global average (51.7%) and the average rates for Asia (46.7%).
The number of mobile phone users in China has reached an impressive 753 million. The proportion of internet users using mobile phones rose from 95.1% in 2016 to 97.5% in 2017.
Since the end of 2016, the proportion of internet users that pay with their phones rose from 50.3% to 65.5%.
There was another number that went up at an impressive rate. The number of internet users buying internet financial products in China has reached 129 million, up 30.2% from the same period last year.
MYbank expects double-digit increases in all growth measures in 2017 due to lower costs enabled by technology, the bank’s president, Huang Hao, said in an interview at his office in Hangzhou, in the eastern province of Zhejiang.
As a result, the cost of approving a small business loan can be as little as 2 yuan, compared to at least 2,000 yuan ($317.97) at a traditional bank, according to data provided by the bank.
Our immediate priority is to complete the Banking Union. For this, we should move in parallel on risk reduction and risk sharing. All elements are on the table. On risk reduction, this includes our November 2016 bank reform package and our ongoing work to reduce Non-Performing Loans. On the risk sharing side, we recently came with ideas on how to unblock negotiations on the European Deposit Insurance Scheme. And we have broad support to finalise the work on the backstop for the Single Resolution Fund. So the time is ripe to move at political level on completing the Banking Union.
The second immediate priority for deepening the EMU is setting up the Capital Markets Union. Deeper capital markets across Europe will increase risk-sharing among private investors and improve the shock-absorption capacity of the economy. In the past three years, we have taken fundamental steps towards deeper and more integrated EU capital markets. Of the 33 actions we announced in 2015, 25 have now been completed.
One strength of Ireland’s financial sector is asset management. As of September last year, Irish fund managers had more than €4.2 trillion assets under management. A true Capital Markets Union would enable Irish fund managers to further benefit from the full scale of the single market. In March of this year, revised rules for the EU venture capital label – EuVECA – will enter into application. Large managers can then run EuVECA funds, providing economies of scale and trusted brands. We have also expanded the range of eligible assets, and decreased the costs associated with cross-border marketing.
We are also looking more broadly at the rules for offering funds across the EU. This market is still predominantly organised along national lines. For example, 70% of the assets under management are held by funds available for sale in only one EU country. The share of alternative investment funds that is marketed in more than three countries is very low – only 3%.
Europe has what it takes to develop a globally competitive Fintech sector. We can rely on our strengths in research and engineering. For example, we have 32 artificial intelligence research institutions in the world top 100, which is more than the US or China. I also see great Fintech potential here in Ireland, with its strong information technology culture.
We will also present a legislative proposal to enable EU-wide crowdfunding and peer-to-peer lending.
The future of finance will not only be digital, it will also have to be green.
• Third, we could boost green investments and loans by introducing a so-called green supporting factor. This could be done at first stage by lowering capital requirements for certain climate-friendly investments, such as energy-efficient mortgages or low-carbon cars. However, this exercise would be delicate. Green does not mean risk-free. Any measures would have to be carefully calibrated, and based on a clear EU classification.
CreditEase, a Beijing-based leading financial technology conglomerate specializing in inclusive finance and wealth management, announced that its Founder and CEO, Mr Ning Tang, participated and spoke at the World Economic Forum Annual Meeting 2018 in Davos-Klosters, Switzerland.
Under the central theme of “Creating a Shared Future in a Fractured World”, this year’s meeting has drawn an estimated 2,500 participants, including a record number of heads of state and leaders from politics, business, academia, and civil society.
“Technology has greatly improved access to financial services for Chinese consumers and small businesses in the past decade, and we expect more progress to be made in the SME lending space with the help of FinTech in coming years,” said Mr Tang. “Financial services like angel investing and VC/PE, powered by technology, will bring more high-quality growth to the Chinese economy.”
IOU FINANCIAL INC. (“IOU” or “the Company”) (TSXV: IOU), an online lender to small businesses (IOUFinancial.com), is pleased to announce a strategic partnership with Marietta, GA-based POS solutions provider CDE (CDEsolutions.com). Through this strategic partnership, CDE’s network of 26,000 convenience store owners nationwide will be able to access IOU’s fast, convenient, non-collateral funding solutions.
Adopting Blockchain and DLT for P2P lending system can facilitate capital mobilization within the financial system through flat-out transfer of monetary values from parties unrestricted by barriers-to-entry. Thus, the potential for P2P lending in support of free international financial flows remains vastly untapped.
Ipsos MORI veracity Index shows 75% of investors complain about banks data provision, but rather P2P investment groups maintain a credible and transparent operation.
Crebit is a blockchain-empowered network provider that offers global microfinance lending collateralized by crypto assets, based on the artificial intelligence credit scoring system. This microfinancing solution leverages blockchain technology to finance through top cryptocurrencies such as Bitcoin, Ethereum and Ripple against up to 80% of investors collateralized crypto assets value. Crebit leads the way into crypto financing by building P2P lending agreements on smart contracts in the secured and decentralized Ethereum blockchain. The platform matches funding gaps for crypto holders, traders as well as multiple exchanges and transaction solutions. Crebit aims to provide businesses and individuals a decentralized credit scoring database for innovative and trustless transaction solutions unrestricted by geographical boundaries.
“In just five years, the team has lent over $500m. But there are 2.1 million small businesses in Australia, and over half need cashflow support to take advantage of opportunities, to grow, or to cover an unexpected cost. My hope is to take the Prospa proposition and meet the growing needs of this audience. We’re just getting started.”
Launched six years ago, Prospa is now Australia’s number one online lender for small business, providing loans to more than 12,000 small businesses across the country. In November, it placed second in the AFRFast 100 for 2017 thanks to a 239 per cent average revenue growth since 2013-14. Last year, Prospa secured over $50m in equity and debt funding, and doubled the size of its loan book.
Online Cash Flow Loans is a fast emerging player in the online cash flow loans marketplace. The organization is an arm of Magnolia Finance that specializes in offering low cost business loans to small businesses in Australia.
These cash flow loans are tailored to meet the growing business finance needs of businesses operating in the hospitality, retail, construction, medical and agribusiness. Basically any small business operating in Australian and in need of unsecured business loans can apply for business loan online on the company website.
Loan terms from 3 to 24 months
Same day funding
Flexible repayment options
Redraw facility available
India
Budget Reaction Rajat Gandhi, Founder & CEO, Faircent. com (Faircent Email), Rated: AAA
Hon. Finance minister budget speech reflects the government’s intent to increase the credit access for the MSME sector and women entrepreneurs under MUDRA scheme. P2P lending is using technology and new-age data and diligently working towards taking organised credit to the non and under-banked segments of the Indian economy. This is an opportunity for the government to directly invest or co-fund through registered P2P Lending Platforms and ensure credit access for MSMEs, New-To-Credit as well as female entrepreneurs. P2P lending is an asset class ensuring flow of investments from those with surplus to those in need. Hence it’s important that the lenders are supported through tax incentives. We look forward to working with the govt towards common goal of financial inclusion.
Keeping in view the credit crunch faced by the micro, small and medium enterprises (MSME) sector in India due to various reasons, new FinTech platforms are coming up to improve loan disbursal to the sector.
According to a media report, there are four popular FinTech platforms that are helping in robust loan disbursal – CreditMantri, Aye Finance, CoinTribe and Faircent.
RBI’s much awaited official guidelines for Peer to Peer (P2P) lending platforms to bring them into the ambit of non-banking financial companies (NBFCs) is set to boost online lending. It is fast emerging as an investment option for retail lenders.
Crowd Genie Financial Services Pte Ltd, regulated by the Monetary Authority of Singapore (MAS), has announced an initial coin offering (ICO) via their related entity CGSPV Pte. Ltd. The peer to peer lender states that it intends on issuing 60 million Crowd Genie Coins, or CGCoins, for a soft cap of USD $5 million. The public sale commences today and 400 CGCoins may be purchased for a single ETH. Bonus CGCOINs, between an additional 5% and 25%, will be given to early buyers as an incentive.
Chinese online peer-to-peer (P2P) lending companies have been rushing into Southeast Asian countries in recent months to cash in on untapped and lightly regulated markets that feature huge potential, as growth in the domestic market slows amid tightening regulations.
While much of Southeast Asia offers a promising future for these lenders given its huge population and underdeveloped financial services industry, most of the Chinese companies are betting on short-term gains rather than long-term growth, an industry expert noted on Wednesday.
Over 50 Chinese online lenders have launched overseas operations, with Southeast Asian countries such as Indonesia and Cambodia being the top destinations, the 21st Century Business Herald reported on Wednesday.
In Indonesia alone, there are more than 50 Chinese consumer lending apps at the moment, up from 30 just a month ago, the report said.
Peer-to-peer (P2P) lending platform Investree on Tuesday officially launched a sharia-based P2P lending programme.
The programme has been tested since November 2017. The startup claied that by January it has managed to channel IDR2.7 billion (US$200,000) worth of loan from 1,340 lenders to 313 borrowers.
A Bermudian expert on information technology, asset and risk management tools is today celebrating the global launch of her book on peer-to-peer lending and the securities crowd funding industry.
“The book, entitled ‘Peer-to-Peer Lending and Equity Crowdfunding: A Guide to the New Capital Markets for Job Creators, Investors and Entrepreneurs,’ highlights the inequality gap is widening and persists worldwide,” a spokesperson said.
“The book not only describes how debt and equity crowdfunding works but also explains investment approaches, secondary markets, governance and compliance, transparency, and risk models that are necessary for investors to make informed decisions.
News Comments Today’s main news: U.S. credit-card debt hits new record. LendingClub raises its outlook. OnDeck shares rise 17%. Zopa’s disappearing capital from IFISA. Ping An to invest in AI. Blackstone assumes majority stake in Banco Popular’s real estate portfolio. Securities and Exchange Board of India to study impact of fintech on financial markets. Today’s main analysis: SoFi bank charter could […]
Credit card debt hits new high. AT: “Making sure I understand, if millennials — the largest living generation — aren’t carrying credit cards (I’ll assume that some do), then most of this debt is from older Americans. Boomers must really love their credit cards.”
The tide could be turning for LendingClub. AT: “It looks as though it is, but keep in mind that markets fluctuate. There will be a fall again. The question is, by how much? A dip, perhaps. Bit the stock price will fall, and it may rise again. I like seeing LendingClub makes its climb back.”
The 10 biggest fintech companies in America. AT: “The figures come from CB Insights and Pitchbook. But I can’t help but wonder, aren’t they tracking PayPal? Is PayPal not considered a fintech company? I know it’s got a longer history than the word “fintech,” but it seems to me to fit the definition.”
Investors remark on disappearing capital from Zopa IFISA. AT: “Technology fails. It’s one of the downsides to fintech. Nevertheless, too many of these types of failures and platforms will lose trust and credibility. It doesn’t appear to be a hacker. Rather, it looks like an internal IT glitch. Probably easily solved with a little investigation.”
U.S. consumer credit-card debt just passed an ominous milestone, beating a record set just before the global financial system almost collapsed in 2008.
Outstanding card loans reached $1.02 trillion in June, data from the Federal Reserve show, as lenders including Citigroup Inc. and JPMorgan Chase & Co. compete to sign up cardholders who may carry balances — a relatively lucrative business in a prolonged period of low interest rates.
LendingClub on Monday posted its second highest quarterly revenues in its history. And Wall Street has responded.
Net revenue spiked 35% to $139.6 million in the second quarter, beating Wall Street’s average estimate of $136.4 million, according to Thomson Reuters.
Loan originations were up 10%.
Credit Suisse sent out a note to clients Tuesday morning outlining its case for a 25% boost in LendingClub’s stock price.
By the numbers, the performance was also in line with what investors wanted to see — revenue was up 35 percent to $139.6 million during Q2, a solid beat on the analysts’ consensus estimate of $136.4 million. Originations returned to growth in the second quarter, up 10 percent to $2.15 billion. Meanwhile, operating expenses fell by 12.5 percent to $165.1 million in the quarter.
Revenue for the year — on the strength of that big performance — got an upward revision to the range of $585 million to $600 million, a reasonable pick-up on the previous forecast of $575 million to $595 million.
Following a beat-and-raise quarter from LendingClub Corp LC, analysts surmised the company may have reached an inflection point.
Credit Suisse analysts Stephen Ju and Christopher Ford noted this is the first quarter in about a year in which the company reported year-over-year growth in loan originations. The analysts expect ongoing acceleration throughout the next four quarters, as the company continues to recover.
Canaccord Genuity expects originations to grow sequentially in the third quarter or fourth quarter, aiding revenue growth acceleration in the second half of 2017 and notable sequential margin expansion.
The firm maintains its 2017 earnings per share estimate at 3 cents but nudged up its 2018 earnings per share estimate from 19 cents to 20 cents.
Shares of OnDeck Capital Inc (ONDK.N) rose as much as 17 percent on Monday after the online lender said it had made progress on a plan to cut costs and improve the credit profile of its borrowers, and expects to reach double-digit loan growth again by next year.
Social Finance Inc., or SoFi, on June 6 applied for a bank charter with the Federal Deposit Insurance Corp.
S&P Global Market Intelligence research shows SoFi originated 1,160 mortgages in 2016, with only two of those mortgages, or 0.2%, made in distressed or underserved tracts, a CRA measure. Across the U.S., 2.0% of all mortgages were in underserved areas that year.
Of the $8 billion in total loans that SoFi said it originated in 2016, about $810 million were property loans, according to S&P Global Market Intelligence data. None of the mortgages issued by the parent company were in SoFi Bank’s proposed CRA assessment area of Salt Lake City and nearby areas.
Fewer than 1.00% of SoFi’s consumer loans are made to borrowers in Utah, according to reports for the company’s asset-backed securities issued in 2015, 2016 and 2017. The securitization documents cover $4.6 billion in principal loan balances.
SoFi’s CRA strategy will revolve around financial literacy, education and scholarships, according to its application. SoFi stated it will measure the success of its CRA plan in terms of employee hours devoted to community service, the number of scholarships awarded and the percent of its investment pool that goes into Utah Housing Bonds.
Financial technology companies in the U.S. raised $3.5 billion in the first half of 2017, according to KPMG, as investors rushed to place bets in buzzy sectors like insurance and digital currencies.
The U.S. is now home to 13 fintech unicorns who have scored valuations of at least $1 billion.
Betterment’s three new features went live in late July. The features are:
Financial Advice Via App: Through Betterment’s mobile app, clients can now message a licensed financial expert. Experts can answer questions like how to set goals, which tax features to use, and how much risk to take in investing.
Socially Responsible Investing (SRI) Portfolio Options: These options give customers a way to invest in a globally diversified portfolio of companies considered socially responsible.
Combining Plus and Premium Plans: Betterment is now combining its Plus and Premium plans, which allow customers to now make unlimited phone calls to certified financial professionals. The new, combined plan charges a .4% annual fee.
The first feature, the ability to get financial advice through an app, attempts to address a big issue with robo advisors. Many investors want a human touch. They want to talk to an advisor from time to time. This will no doubt be true during the next bear market. Betterment’s new feature attempts to address this need.
The new pricing plan will benefit investors who were already using the higher-level Betterment plans. Those who were Plus customers can now get more personalized advice for the same fee and those who were Premium customers are paying less for the same service–always a good thing.
The Premium plan now gives customers access to more holistic investing advice. This advice can run the full scope of your investments, from your 401(k) to real estate to individual stocks to your Betterment portfolio.
The fintech lender’s consumer lending activities penetrated into areas that could benefit from additional credit supply, such as areas that have lost a disproportionate number of bank branches and highly concentrated banking markets.
Consumers presenting the same credit risk could obtain credit at lower rates through the fintech lender than through traditional credit cards offered by banks.
The lender’s use of alternative credit data allowed consumers with few or inaccurate credit records (based on FICO scores) to access credit at lower prices, thereby resulting in enhanced financial inclusion.
You may no longer need to worry about carrying your ATM card with you everywhere as long as your bank’s ATM and smartphone are equipped with near field communication technology (NFC). NFC, a method of wireless data transfer that detects and enables technology to communicate, is reportedly being rolled out at banks across the country. Financial institutions believe that cardless or “Smart ATM’s” are the wave of the future and they are enabled as long as ATM’s and customers have a smartphone or mobile device equipped with NFC.
It’s been estimated that 2.2 billion smartphones will be equipped with NFC by 2020.
The emergence of robo-advice and robo-investing platforms in recent years has led many traditional advisory firms to place a greater emphasis on their digital footprints. A growing number, in fact, are moving to offer digital versions of their “human” services. The 2017 InvestmentNews Adviser Technology Study, for example, showed that 7% of independent advisory firms offered a robo-advice option at the end of 2016, compared with just 3% two years earlier. At the same time, 19% of the firms that do not offer a robo-advice option intend to introduce one in 2017—nearly double the number that indicated that intention in 2015.
Only about 4% of the mass affluent and high-net-worth individuals in our survey reported that they use an automated investing or robo-advice tool.
Source: Investment News
For context, some 49% of individuals in our study currently use a financial adviser; the balance are self-directed investors.
Better Mortgage is now available in 13 different states as it has received a license to lend to house hunters in Florida. The Sunshine state is an important addition to the online lenders services as Florida is a popular vacation home state.
Better Mortgage says it is continuing to expand its footprint in the US. The lender is now available and improving access to homeownership in 13 markets including; Arizona, California, Colorado, Connecticut, Washington, DC, Florida, Georgia, Illinois, New Jersey, North Carolina, Oregon, Pennsylvania and Washington. Better Mortgage says that it is seeing particularly strong uptake in Seattle, Washington, San Francisco, California, and Washington, D.C.
While each offers a unique focus and value proposition to investors, platforms have now consolidated into several main categories of business model:
eREITs: Fundrise and RealtyMogul, two of the original players the real estate crowdfunding space, have pivoted to offering semi-blind funds that aggregate properties throughout the country.
Commercial equity investing: probably the closest to the original ideal of real estate crowdfunding, these platforms offer CRE equity opportunities to accredited investors, allowing them to participate in high-upside, larger commercial projects. While the return potential is often great, these tend to be the longer term and riskier than other RECF investments.
Debt investing: Some platformstake some or all of an existing real estate loan, secured by a deed on the underlying property, and syndicate it out to a network of individual investors at a fixed rate of return.
Some platforms (like EquityMultiple, see below) perform their own diligence on investments, which should give you some comfort as an investor. Even so, you’ll want to understand some key components of any deal you consider, and be sure it aligns with your investing objectives before pulling the trigger. Here are some of the main things to consider:
Risk Factors – Examples of risk factors are tight construction timelines, a precarious labor market in the area, an unsubstantial track record or aggressive leverage on the part of the Sponsor who originated the deal.
Payout Structure – Be sure to understand where your investments fits in the capital stack, and what order you will be repaid principal and profits relative to the Sponsor and other LP investors.
Cash Flow and Liquidity – Simply looking at how many dollars you’re expected to receive over the lifetime of a deal (the simple return) or even a time-weighted return (IRR – internal rate of return), won’t give a complete picture of the timing and magnitude of returns.
Small Change, a real estate crowdfunding portal, recently completed the sale of its first-ever offering open to all investors — and raised $95,000. Thirty-nine investors put in an average of $2,435. The minimum investment was $500. The money will help OJT (Office of Jonathan Tate), a New Orleans-based developer, finance the construction of two affordable single-family homes, on vacant lots.
The homes will be in New Orleans’ Milan neighborhood, which is two-thirds black and one-third white, and has a median income around $33,000.
So it has to move beyond the perception that it is a singular service provider, says Voya Financial Advisors’s Tom Halloran, president of its broker-dealer. One way the firm is doing that is by tying together its institutional businesses with retail, mixing technological innovation with old fashioned salesmanship, even considering the deployment of a robo advice platform.
In fact, it’s up to you to track your performance and ensure that your compensation reflects it, said Joanne Bradford, chief marketing officer of online lender SoFi, on a recent episode of the “So Money” podcast.
SEVERAL lenders who invested through Zopa’s Innovative Finance ISA (IFISA) have complained that small amounts of money were disappearing from their account.
The issue occurred when funds were invested in the ISA Plus product and appeared to be missing capital rather than negative interest, investors on the P2P Independent Forum said.
Zopa is understood to be rectifying the technical issue.
A new report on savings and investment suggests that savers are missing out on billions of pounds by spurning investment opportunities, including peer-to-peer lending. The report is supported by RateSetter, one of the UK’s largest P2P operators, and was produced by the Social Market Foundation think tank.
The report found that savers are holding more than £200bn in cash above and beyond what is referred to as the “rainy day” level. “Rainy day” funds – which are held in cash in case of emergency – are defined by the report as three months’ worth of income. The Social Market Foundation says that this idle pot of £200bn could have generated returns of £94bn over the past five years, had it been invested in the FTSE 100, or £40bn, if invested via P2P lending.
The £240m Ranger Direct Lending fund was announced its latest dividend of 24.26 pence per ordinary share for the 3-month period to 30 June 2017, its lowest in more than a year.
Its latest numbers show returns were again comparable to the last few months. This was due to a combination of expenses such as legal fees and higher than expected cash levels. In 2017, excluding the estimated dividend mentioned above, a total of 55.44 pence per share has been paid in dividends to ordinary shareholders. In 2016, a total of 89.61 pence per share was paid in dividends to ordinary shareholders.
Investment firm Octopus seems to have its tentacles in all the pies, as it has today become the latest business to offer an Innovative Finance Isa.
Octopus is also aiming to dismiss the risks associated with peer-to-peer lending by contributing five per cent of every loan from its own pocket. Any losses suffered will come out of this sum first, meaning investors can get their initial investment back plus any interest due to them before Octopus earns anything.
Investors will be able to put as little as £10 in the tax-free product, and up to their annual Isa allowance which currently stands at £20,000.
ThinCats, an alternative lending industry leader, announced on Tuesday it has received full authorization by the Financial Conduct Authority (FCA). According to the online lender, the approval highlights its commitment to protecting consumers and also developing the alternative finance industry as a vital source of capital for businesses and income for investors.
Chinese financial giant Ping An Insurance (Group) Co will spend more than 7.77 billion yuan ($1.16 billion) on technology research and development this year, and artificial intelligence will be the focus of that R&D, according to a senior executive of the company.
Established in 2008, Ping An Technology has about 4,000 technology workers and has paid attention to R&D in cognition, robot advisory and cloud businesses. Their applications are mainly used in finance and healthcare industries; up to now, there have been more than 200 application scenarios.
On the evening of August 7, the public bankers issued a friend said that the balance of micro-loan loans over 100 billion. According to the public bank in 2016 annual report, the balance of micro-loan loans 7 months increase of nearly 300%.
In addition, July 16, the public bank retail credit director Fang Zhenyu Lundi summit speech revealed that the balance of microfinance loans 76 billion yuan, which means that the balance of 72 days of microfluice increased by 24 billion yuan. At the same time, he also revealed that the daily loan loans to 150,000 pen, up to 20 to 300,000 pen, the daily repayment of the number of 200,000 pen, a single loan approval time is 0.3 seconds, almost real-time approval. In the allocation of talent, the public bank IT department staff accounted for 57%, background managers accounted for 6%, business and support staff accounted for 37%.
Last year, the conference had a massive showing of over 1,300 attendees. This year, the conference nearly doubled to 2,400 attendees. There was hardly any place to stand when Soul Htite of DianRong and Renaud Laplache of Upgrade took the main stage to talk about Fintech entrepreneurship.
Gopher Asset Management had investment associates in just about every session at the conference looking for the next investment opportunity. Gopher is a subsidiary of Noah Holding Limited (NOAH:NYSE), one of the biggest wealth management companies in China with a current market cap of USD $1.7 billion.
Galaxy Internet, another Chinese venture capital firm is actively seeking investment opportunities in the area of finance, ecommerce, payments and big data.
Borrowell is owning the Canadian market in a big way. They just raised a $12 million round. Borrowell is helping Canadian’s to build credit starting with affordable loans. In a short amount of time, Borrowell has amassed over 300,000 borrowers and is looking to expand into other markets.
Jack Quigley, Founder and CEO of CrowdFundUp. He’s probably the hardest working man in Fintech. He’s constantly making deals and connecting dots. He’s 100% committed to China and recently moved to Shanghai and I think he’s not leaving until he brings home the trophy. I visited his office in Shanghai, overlooking a bustling city. CrowdFundUp will be China’s gateway into commercial real estate in Australia.
Banco Popular S.A. (‘Popular’) has today approved the sale of a majority stake in its real estate portfolio to Blackstone Real Estate Partners Europe V (‘Blackstone’). The agreement has been reached following a competitive process in which three international companies with long track records in the management of real estate assets presented offers. Blackstone was selected as the successful bidder after submitting the best offer in terms of both its value and management plan.
The agreement was confirmed after the European Union Directorate General for Competition today approved the acquisition of Popular by Banco Santander S.A. (‘Santander’) with no restrictions.
The transaction will involve the creation of a company to which Banco Popular will transfer assets with an aggregate gross book value of approximately €30 billion, as well as 100% of the share capital of Banco Popular’s real estate management company, Aliseda.
The valuation attributed to the Spanish assets of the business (e.g. properties, loans and tax assets, not including Aliseda) is approximately €10 billion. This is consistent with the valuation and provisions made by Santander during the acquisition of Popular and does not, therefore, result in any material capital gain or loss for Santander or Popular. The final valuation is subject to change depending on the assets remaining within the business at closure and following the integration of Aliseda.
Blackstone will own a majority 51% stake in the new company while also assuming management responsibilities, while Banco Popular will own the remaining 49% stake. As a result, the aforementioned assets will no longer be consolidated on Banco Popular’s balance sheet.
Representatives from Venture Capitalists: Seedcamp, Blenheim Chalcot, CommerzVentures, and Balderton Capital will form the judging panel of experienced VCs from and around Europe.
Collectively, these four firms are some of the most active investors in the European fintech category and have played key roles in the success of several of the largest fintech successes in Europe.
Lithuania is the latest country joining the Fintech revolution by recognizing the importance of fostering a regulatory environment that is conducive to change and challenges established norms. The Bank of Lithuania is out with a statement regarding the launch of a sponsored Fintech Sandbox.
The following measures are will apply:
Relatively easy and low-cost authorization process: following submission of all necessary documents, it takes only 3 months for the Bank of Lithuania to take a decision on the issuance of an electronic money or payment institution license. In other EU countries, the process may take 12 months and more.
Access to the Bank of Lithuania payment infrastructure for non-banking sector companies planning to provide payment services, thus avoiding a middleman.
Newcomer program. The Bank of Lithuania applies a one-stop shop principle for meetings and consultations with potential financial market participants.
Specialized banking license. In order to establish a bank in Lithuania that would provide usual banking services, the lowest initial capital requirement in the entire euro area – EUR 1 million – is applied. This is five times less than the requirement applied to banks that provide the full range of services, including investment ones.
ID Finance Co-Founders Boris Batine and Alexander Dunaev were far from newcomers to the world of finance when they started up their business in 2012. Long before founding a data science, credit scoring and digital finance company, the Russian-born and U.K.-educated entrepreneurs met while working abroad at Renaissance Capital and Deutsche Bank.
And so, in 2012, with only a few hundred thousand of their own dollars to get up and running, ID Finance launched in one of those underserved markets — their home market of Russia.
By 2015, the firm was profitable, and in 2016, it officially relocated it headquarters to Barcelona, Spain, one of three nations outside Russia ID Finance has expanded its efforts into — Belarus and Brazil being the other two.
These days, the firm originates 50,000 new loans a month — loans that it mostly finances off its own balance sheet, as opposed to selling them off on a marketplace. As of February of this year, the firm raised $50 million in debt from a consortium of banks to fund further expansion in South America.
A New $200 Million Fund
As ID Finance has expanded around the world — and partnered with various FIs — its founders realized that there are a host of small businesses that are simply being underdeveloped because they are almost invisible to investors.
Working with Elbrus Capital Fund Manager Yury Popov and asset management company Da Vinci Capital, the FinTech Credit Fund is being jointly offered as a $200 million debt finance fund aimed at FinTech companies focused on alt lending innovation. The funding from the credit fund, according to Batine, is aimed at helping up-and-coming FinTech lenders fund their own loans — and finance their loan portfolios.
“The alternative lending market is worth a potential $2 trillion, and we see a huge opportunity to back the billion dollar companies of tomorrow focused on digital lending,” Dunaev said.
Humaniq was launched in 2016 with a vision to build a world where the unbanked and underbanked around the world also have access to the banking and financial transactions. An estimated 2 billion people can be brought under the umbrella of financial inclusion with Humaniq’s services.
Tell us more about Humaniq and the problem you solve?
Humaniq is on a mission to bring new mobile digital services and financial inclusion solutions to the 3.5 billion unbanked / under banked globally who have no access to the digital economy.
How does Humaniq work, especially with respect to privacy and security?
Humaniq offers a biometric blockchain app that can be used in any simple smartphone device.
The Humaniq LITE app is part of a broader humanitarian capitalism venture. Humaniq has a digital currency tied to it, known as HMQ.
Who’s your target audience and how exactly do you help?
We are working with emergent economies – where people live on USD$2.50 a day. Many of them do not have documentation and have had little or no education.
Our first big pilot will be in Ghana with local and international organisations, targeting 18 to 40-year-old low-income smartphone users and merchants in suburban areas including the capital city of Accra.
How did you acquire your first customer and how long did that take?
We did various test in India and Africa with previous test versions of our app. We are also working with Brazilian organizations.
With regards to funding, how did you fund your business? How hard was it and how much time did it take to acquire those funds?
Our business model has thrived on the P2P innovation and blockchain driven crypto economics. We built our model on the back of a crypto, Ethereum driven smart contract Initial Coin Offering(ICO).
The New Zealand government is looking to remove the distinction between class and personal advice, as well as allow the provision of digital advice as it seeks to overhaul the country’s regulatory regime for financial advisers.
Unlike the FA Act, the new Bill enables the provision of more types of advice by being technology-neutral, lifting the existing restrictions around advice needing to be provided by a human adviser.
In turn, this allows for the provision of robo-advice and works to future-proof the legislation for technological developments. It also serves to increase the New Zealand population’s access to quality financial advice.
IOOF has credited the structure of its “non-bank-aligned” dealer groups and “open architecture” culture with a dramatic increase in revenue inflows from its financial advice business.
The results reflect a 131 per cent year-on-year increase in advice net inflows, according to a statement from IOOF, with $3.0 billion in total advice net inflows for the 2017 year.
The Securities and Exchange Board of India (SEBI) has formed a Committee on Financial and Regulatory Technologies (CFRT) to examine ongoing and medium-term trends related to fintech in the securities and financial markets worldwide.
Thus, regulators are faced with the challenges as well as opportunities to evolve their functioning more effectively through the adoption of new technology solutions. It is in this context that the CFRT committee will help the SEBI deal with relevant risks and challenges.
The Committee would examine, deliberate and advise the SEBI on an ongoing basis on the following issues:
Recent and medium term trends (within next 5 years) in fintech developments in securities market worldwide.
Opportunities and challenges from new fintech solutions and its impact on Indian Securities Market.
Fintech solutions for further widening and deepening of Indian securities market.
Approach and framework for the regulatory sandbox in Indian market conditions to facilitate the adoption of fintech and promote financial innovations.
Preparing the Indian securities market and regulatory framework to adapt to new fintech solutions while promoting market integrity, market development, consumer protection and managing change, business models and market disruptions.
Assessing technological solutions for SEBI regulatory functions viz. information management and data mining, risk management including cyber security, intermediary supervision, consumer protection, etc., through the application of new technological solutions like applying distributed ledger technology, Big Data, data analytics, Artificial Intelligence, machine learning etc.
Technology capacity building by Indian securities market in general and SEBI in particular.
The Committee on Financial and Regulatory Technologies will, among other things, deliberate on financial technology solutions for “further widening and deepening of the Indian securities market” through traditional and alternative platforms, including peer to peer lending and equity crowd-funding.
While questioning the manner in which these entities help start-ups raise funds, the regulator has said that any violation would be “construed as organising an unrecognised stock exchange” and that SEBI would be “constrained to initiate action.”
Under the current legal framework, issue of shares to more than 200 persons constitutes a public issue and needs SEBI approval.
Rubique, the one-stop online marketplace providing technology-enabled end-to-end solutions to financing needs of individuals & SMEs has announced the appointment of two directors- Suresh Sethi, EX-CEO & Managing Director of Vodafone M-Pesa and Alexia Yannopoulos Director at Apis Partners LLP.
The Centre for Finance, Technology and Entrepreneurship (CFTE) has revealed that it is setting up an international hub in Singapore designed to aid finance professionals gain the necessary skills in FinTech.
Working closely with the Monetary Authority of Singapore (MAS), CFTE has been formalizing plans to expand its education platform to the Association of Southeast Asian Nations (ASEAN), according to a report from FinTech Finance.
CFTE is to deliver courses that cover a range of areas in the finance industry. These include artificial intelligence, application programming interfaces (APIs), coding, blockchain, and RegTech. They will either be delivered online or via in-class training.
South Korea’s peer-to-peer lending growth slowed in July after financial regulators asked lenders to tighten guidelines for individual investors, industry data showed Tuesday.
According to data compiled by the Korea P2P Financial Association, lending between peers grew by 104.7 billion won (US$93.1 million) in July to a cumulative 1.2 trillion won.
In comparison, P2P lending grew by 172.8 billion won in June.
It is especially likely to absorb the investor cluster who, under the government’s new restrictive measures on real estate transactions, are swiftly turning away from banks and seeking for an alternative source of investment income, according to industry watchers.
In late May, the association enforced a set of guidelines, setting a 10 million won ceiling on the investment per business unit, responding to the government’s gesture to protect investors from potential dangers of the new investment platform.
INDONESIAN peer-to-peer (P2P) lending marketplace PT Amartha Mikro Fintek (Amartha) encourages and targets “millenials” to invest in micro-businesses and SMEs through the Amartha Short Movie Festival.
The Amartha Short Movie Festival is a competition divided into two categories which are short documentaries with the theme empowering micro-businesses and short fiction movies with online peer-to-peer lending as the theme. Applications are open from August 8 to October 9, 2017.
Global Domination Capital is set to be the regions’ first fintech startup company, offering equity crowdfunding and peer-to-peer lending solutions to the OECS countries and the CARICOM member states. This includes Barbados, Jamaica, The Bahamas, Trinidad and Tobago and The Turks and Caicos Islands.
Global Domination Capital is expected go live and accept both new investors and borrowers to the platform by late September.
News Comments Today’s main news: A comparison of funding & liquidity sources with lender maturity by PeerIQ. China Rapid Finance sets terms for U.S. IPO. China bank lending falls in March. Perfios raise $6.1M in Series A round. Abu Dhabi ranks as top fintech hub for MENA region. Today’s main analysis: Lenders test personalities to determine loan eligibility. Today’s […]
A comparison of funding & liquidity sources. GP:”Very interesting comparison of companies founded in 1912, 2006 and more recent. The funding source diversity and mix in a mature company like OneMain is mostly ABS and OnDeck mostly credit facility while Enova is mostly corporate debt. A must read”
China Rapid Finance sets terms for U.S. IPO. GP:”Valued at $586mil, raising $105mil. How will this compare to Elevate and Yirendai. A very interesting trend of IPOs in our space lately. I imagine that as long as the IPOs do well enough new ones will take place. “AT: “CRF has the potential to outdo Yirendai. I hope they reach their funding goal.”
Lenders test personalities to determine loan eligibility. GP:”Lenders, like EFL, have used this a long time. The “AT: “Employers use psychometrics to make hiring decisions. I believe psychometrics will be the future standard for determining credit risk and will eventually replace the outdated FICO score.”
Blockchain can save banks tens of billions of dollars per year. GP:”There is a lot of speculatio and the technology is not mature enough yet. There are also still unclear business cases. In the US about 40% of professionals in finance are very familiar with blockchain according to latest surveys so it is not a familiarity problem. On the other side regulation is not there yet and is in fact the largest obstacle to blockchain adoption.” AT: “Blockchain is a technology is a lot of underused potential. It could make the banks competitive again, but it would take years to implement on a global scale to the point where it would be useful and effective in making the financial system of the world transparent, trustworthy, and effective. Getting every bank to adopt it would be a massive undertaking. All it’s going to take is one major bank using it and proving how it can improve banking services to include regaining customer trust. If bank services customers get behind it, the banks will have to.”
The US Fed released their quarterly report covering “Quarterly Trends for Consolidated U.S. Banking Organizations”. The report shows that the ROE for the banking sector remains mired in the 7 to 9% range, below pre-crisis levels and the theoretical cost-of-capital for many banks.
Earnings season kicked off last week, with J.P. Morgan leading the trio of banks who released their first quarter earnings. In a positive sign, JPM booked lower loan loss provisions ($1.32 Bn) vs. prior year ($1.82 Bn) for the same quarter. Higher rates improved net interest margin by 11 bps to 2.33%.
Analysis of Funding Mix Across Leading Non-Bank Lenders
Soruce: PeerIQSource: PeerIQ
Although the funding mix might indicate that OneMain does not rely on warehouse finance, quite the opposite is true. OneMain also has eleven revolving conduit facilities with a maximum balance of $4.8 Bn in additional liquidity. The facilities represent a substantial liquidity backstop (from diverse counterparties with staggered maturities) should term ABS markets seize for a prolonged portion of time.
OneMain does not appear to be optimizing for a singular goal such as low-cost funding or maximizing ROE. All together, it appears that OneMain has implemented a financing strategy to deliver an attractive ROE (potentially high-teens or low twenties) while ensuring sufficient liquidity ballast to guard against disruptions in capital markets. For example, OneMain is also funding via $1 Bn of 8.25% senior notes issued in April last year rather than drawing on lower-cost liquidity available via warehouse finance. OneMain is willing to take on somewhat higher financing costs in exchange for access to diverse and longer-term funding sources.
OnDeck
OnDeck’s financing strategy varies significantly from OneMain. OnDeck is unique in the peer group from their utilization of whole loan marketplace sales. We note that the usage of this liquidity channel continues to decline over time as gains-on-sales from whole loans decrease, and as investors demand more ‘skin-in-the-game.’
OnDeck also utilizes both securitization and credit facilities for their funding. Securitization makes up 24% of their loan funding, while their utilized credit facilities comprise 50% (although ONDK still has $287 MM undrawn).
OnDeck has the highest loan generation per unit of capital in the cohort. OnDeck is funding through the heavy usage of low-cost securitization and warehouse finance channels, and accordingly has the lowest funding cost in the peer group. However, we note OnDeck has more concentrated sources of funding channels that in turn rely on reliable execution and smooth functioning capital markets.
Enova
Enova employs all three debt financing tools—ABS, warehouse finance, and corporate debt—to fund origination. Enova had no facility borrowing amount reported as outstanding at the end of 2016.
Elevate
Elevate, as a young online lender measured by receivable and inception, does not have any securitization programs to date and limited diversity in warehouse finance. Elevate’s primary source of financing consists of credit facilities provided by Victory Park Capital. Of the four platforms, Elevate has the least diversity in funding sources. The peer analysis suggests that diversification into securitization channels could potentially lower cost of funds for Elevate.
Funding Cost by Financing Channel
As observed in Exhibit3, securitizations can partially replace secured and unsecured debt in the capital structure with more favorable nonrecourse funding. The overall funding costs are positively impacted by the increased usage of securitizations and credit facilities, as the deals are executed at interest rates significantly below the coupon associated with the unsecured debt.
Issuers that that take the long-view and develop a competitive advantage in financing & liquidity stand to slingshot past their competitors when the cycle turns.
China Rapid Finance, a peer-to-peer (P2P) lender based in Shanghai, China, announced that it has set the terms for its upcoming US IPO. The company plans to raise $105 million through the offering of 10 million shares priced between $9.50 to $11.50 a share. At $10.50 a share, China Rapid Finance would have a fully diluted market value of $586 million.
Founded in 2001, China Rapid Finance is a consumer lending marketplace that aims to serve China’s emerging middle class. Their target demographic are employed and well-educated Chinese individuals between the ages of 18 and 29, who live in urban cities, and who are avid mobile users. This demographic, known as EMMA (Emerging Middle class Mobile Active), is estimated to include over 500 million individuals.
When no credit history is available, lenders in emerging markets are increasingly looking to personality tests to fill the gap. Psychometric data, or data acquired through personality tests, is now being used to determine if customers qualify for credit in countries like Turkey, Russia, Mexico and India. Some assessors look at traits like conscientiousness, extroversion, agreeableness and neuroticism. For example, if someone ranks high on conscientiousness, they’re likelier to be better at saving, thus more secure financially.
The method has yet to go mainstream in the U.S. in part due to culture, regulations and the range of data already available to American lenders.
Still, psychometric data offers another option to assess consumers for whom insufficient data is available to generate a credit score. It’s a section of the population that’s gained more attention in the U.S., where over 25 million people are considered unscoreable by the Consumer Financial Protection Bureau.
Over 700 characteristics are organized; results are crunched along with repayment data into a number that represents a credit score.
The global unscoreable population is huge, including in India where over 70 percent of the 1.2 billion-strong population fall into this category, McCaffery said.
For the past few months, FICO, working with the Entrepreneurial Finance Lab, has been testing psychometric testing in Turkey, Russia and Mexico. While it’s too early to offer definitive assessments, FICO is optimistic about the model’s ability to deliver results.
Before launching psychometric data in the U.S., Taylor-Shoff said lenders would need to ensure compliance with regulations including those on consumer disclosure (e.g. being able to explain to someone why they were denied credit); fair lending (making sure the method doesn’t disadvantage a particular type of customer) and safety and soundness of the data. Operational considerations, including how lenders would use this method alongside traditional methods , would still need to be resolved too.
“U.S. consumers are not going to submit to a psychometric analysis by their lender,” said Zeydoon Munir, founder and CEO of RevolutionCredit, a startup that uses behavioral data garnered from quizzes and games, in addition to traditional data, to determine if customers qualify for certain credit products. “Who would do that?”
Fifth Third Bank announced on Thursday an investment and expanded partnership with nonprofit small business lender network, Accion U.S. Network, to support lending to underserved small businesses in Florida, Indiana, Illinois, Michigan, and Ohio.
This builds upon the bank’s five-year, $30 billion Community Commitment, which includes $10 billion for small business lending, product innovation and enhanced underwriting and fulfillment. Additionally, the Fifth Third Bank’s commitment includes expanding technical assistance and support for alternative lending channels.
What happened: eMoney Advisor announced on March 23 the launch of eMoney for Enterprise, a division that will support users in the home offices of banks, large registered investment advisors, broker/dealers, insurance companies and other financial institutions.
What happened: The new product is likely to target individuals with less than $1 million to invest, a significantly larger market than Goldman Sachs’ current private wealth management service that caters to clients with at least $50 million. Their acquisition of Honest Dollar and the launch of a loan platform called Marcus suggest that this robo venture is part of a larger diversification strategy.
What happened: The Office of the Comptroller of the Currency pressed ahead with its plan to offer a specialty license to fintech firms, a move that would allow the industry to enter the federal banking system. Currently, fintech firms must apply for licenses in each state to do business, which can be a costly process. The new federal banking license would allow for one set of rules nationwide.
Why it matters: Thumbs up for allowing fintech firms to focus on innovation rather than paperwork. Removing the handcuffs of redundant licenses will surface relevant technology even faster, and I think we’ll see advisor confidence in fintech platforms continue to rise.
What happened: Morgan Stanley is continuing its technology surge after hiring Charles Schwab’s Naureen Hassan as Chief Digital Officer and appointing Jim Rosenthal to lead the development of the company’s digital services, which includes tentative plans for a self-directed robo platform.
What happened: Merrill Lynch is introducing new features to its website, such as a dashboard to track investments, real-time maps of the markets and interactive charts.
What happened: MIT and TD Bank hosted their first fintech hackathon, an event challenging 26 student teams to develop a fintech platform in under 36 hours. A team from Cornell University and their product called Switch, which they describe as a micro-loan and insurance broker, took home the $5,000 prize.
Adviser Intelligence founder and chief executive Jacqui Henderson said in a blog that some of the biggest US robo advisers are now adding humans to their advice services.
“Last month, the second largest robo in the US, Schwab, also combined its automated investment management technology with human advisers for its clients with at least $25,000 to invest.
“These moves by the biggest robos in the world are a sure admission that we are a long way off from a fully automated model becoming a reality.”
DecisivEdge, a business consulting and technology services company, launched its lending and leasing as a service (LLaaS) product, powered by Oracle.
LLaaS is a simple, flexible, securely featured and cost-effective way for small and medium sized lenders to the leverage the capabilities of a solution.
Oracle Financial Services Lending and Leasing is at the core of DecisivEdge’s offering. It is hosted in a securely featured cloud and bundled with 24/7 monitoring, support and other value added services.
HEALTHCARE LENDER HCS RECEIVES FUNDS FROM ARES MANAGEMENT (Health Credit Services), Rated: B
Health Credit Services (HCS), a healthcare funding company created to bring quality-of-life care to more individuals, announces a new financing relationship with Ares Management, a leading global alternative asset manager.
The HCS team will leverage the Ares Management-provided financing to increase patient access to quality-of-life medical care nationwide. With loan approvals in seconds, budget-friendly installment loans ranging from 12 to 84 months and simple loan management, HCS solutions make healthcare financing easy and affordable.
Due to rising insurance deductibles and premiums, the typical American spends nearly 10 percent of their income on out-of-pocket healthcare expenses.
The Bank of England (BoE), one of the first central banks to form a research group dedicated to the development of Blockchain technology, still believes the Blockchain has the potential to save banks tens of billions of dollars in operating costs.
Researchers at BoE perceive the Blockchain as an immutable, transparent and secure technology which banks and financial institutions can utilize to handle operations in an autonomous ecosystem.
BoE along with other banks including the Reserve Bank of Australia and Bank of Korea envision a Blockchain-based platform wherein many banks can participate as members of the network and settle transactions and assets in a transparent ecosystem. By relying on a shared ledger, banks can easily eliminate any additional intermediaries that are contracted to process complex settlements.
Apart from collaborative projects, BoE recently showcased a proof of concept Blockchain platform with PwC, with the intent of demonstrating the potential and applicability of Blockchain technology in the finance industry.
Link Pariti to your bank accounts and credit cards, and it will show you the total costs of your debts. If peer-to-peer lending would offer a better deal, it then offers you the option of consolidating everything into a single loan at a lower rate. The company says that while credit cards typically charge interest rates in the 16-25% range, it can get the APR down to single digits.
Former Barclays CEO Antony Jenkins believes the global financial system is beginning to undergo the “Uber moments” he predicted in the sector a year and a half ago.
Jenkins, who was CEO of Barclays from 2012 to 2015, forecast a series of Uber-style disruptions in the banking industry in late 2015. He said that advances in technology could shrink headcount at traditional big banks by as much as 50%, while profitability in some areas could collapse by over 60%.
Since being ousted at Barclays, Jenkins has set up his own fintech business: 10X Future Technologies. The startup has developed a new core banking platform, effectively a new operating system for banking to build products and services on top off. It aims to help banks cope with the “Uber” disruption by giving them a modern canvas to build upon.
The Benzinga Global Fintech Awards is the largest fintech event focusing on the capital markets. In its third year, Benzinga has expanded the event’s purview to the global stage, bringing over 200 companies to New York City from countries including India, Israel, Poland, and Singapore.
Chinese banks scaled bank lending last month, though other forms of credit outside the traditional banking system rose sharply, official data showed.
Chinese financial institutions issued 1.02 trillion yuan ($148 billion) of new yuan loans in March, down from CNY1.17 trillion yuan in February, the People’s Bank of China said Friday.
Total social financing, a measure that includes nonbank credit such as trust products, stood at CNY2.12 trillion in March, up sharply from CNY1.15 trillion in February
Last week, Perfios, a fintech startup based in Bangalore (Bengaluru), India, announced it had raised approximately US $6.2 Million (400 Million INR) in its Series A round of funding. The funding is a sign of how much the fintech market has been steadily growing in India the last few years.
The report estimates that the fintech market in India will rise to over USD 2.4 billion by 2020.
The peer-to-peer (P2P) lending industry is off to an encouraging start. Funding Societies Malaysia, the first platform to launch, successfully raised RM320,000 for two term loan financing programmes within three weeks in March.
The loans will be used to fund the working capital of two companies – an electronics business and an automobile parts distribution business. Meanwhile, the platform aims to provide investors with an effective return of 22% and 24.91% respectively over a year.
Wong says the platform aims to seal another 80 to 100 deals in the next 12 months and raise RM10 million to RM20 million. This means investors can expect more deal flows, which will allow them to invest in a variety of companies.
Singapore and Switzerland are not competitors when it comes to the development of financial technology (fintech) and with both countries being small financial hubs, it is important to cooperate, said Swiss Finance Minister Ueli Maurer.
The minister also noted that Singapore’s fintech sector benefits from its close proximity to a big Asian market, and can act as a stepping stone into Asia for Swiss fintech start-ups. For Singapore firms looking to expand into Europe, Switzerland can similarly do the same.
Lattice80 is one of the organisations that the Swiss delegation is visiting during their time in Singapore. Launched in November 2016, more than 80 foreign and local fintech firms have taken up spaces at Lattice80, which is dubbed the world’s largest fintech hub by Singapore-based private investment group Marvelstone.
The Financial Technology Enabler Group (FTEG) that was established by Bank Negara Malaysia in June 2016, has launched an initiative ‘Fintech Hacks’ that identifies pain points in the delivery as well as consumption of financial services.
The Malaysian central bank has sought ideas from the public regarding the improvements to financial services sector by adopting innovation and technology.
Abu Dhabi with the Abu Dhabi Global Market, ADGM, has been ranked as the top FinTech Hub for the MENA region in the latest Global FinTech Hubs Review, “A Tale of 44 Cities”, by Deloitte in partnership with the Global FinTech Hubs Federation.
From the 44 cities, Abu Dhabi is ranked top FinTech hub in the MENA region. The Deloitte report reiterated that the launch of ADGM’s Regulatory Laboratory, RegLab, for FinTech startups, the only “live” Fintech regulatory regime in the MENA region with 11 Fintech players in its first batch of applications, as a “milestone success for Abu Dhabi and marked the openness and support by regulators and government towards innovation.”
In an alternative funding benchmarking report by the Cambridge Centre for Alternative Finance‚ published last month‚ South Africa was identified as the potential leader in the growth of online and peer-to-peer lending models in Africa.
In 2015 South Africa represented 18% of the total African online alternative finance market‚ raising over $15-million. Kenya was the only African country ahead of it with $16.7-million raised.
The report also found that in Africa 90% of online alternative finance was originated from platforms headquartered outside of the continent.
