The growth of peer-to-peer lending was a direct result of the 2008 economic recession. Banks vacated the consumer and SMB lending space, which allowed fintechs to capture the demand left by that gaping hole. According to a recent study, by the end of 2024, the P2P lending industry will be worth $897.85 billion. The market […]
The growth of peer-to-peer lending was a direct result of the 2008 economic recession. Banks vacated the consumer and SMB lending space, which allowed fintechs to capture the demand left by that gaping hole. According to a recent study, by the end of 2024, the P2P lending industry will be worth $897.85 billion. The market expects to grow at a CAGR of 48.2%.
Hitting a trillion dollars an important milestone. But with traditional banks and lenders investing heavily in getting their digital lending game right, it is critical to evaluate the source of the next wave of innovation in fintech lending. Though crypto lending is on the verge of hitting the mainstream, it is tokenization that we believe can change the face of the industry in myriad ways.
TOKENIZATION: The New Disintegration Technique?
Tokenization is a method that converts real world assets into transferable digital tokens that live on a blockchain.
Liquidity: Liquidity is a major concern when people invest. From real estate to VC funds, many lucrative assets are constrained by their ability to provide the investor a timely exit. Thus, investors are stuck with an investment for 5 – 10 years because they have no way to trade it. Tokenization brings in the necessary liquidity by converting interest into a tradeable asset.
Monetization: Many assets such as patents, copyrights, and carbon credits do not have a physical identity but exist in a digital format. The easiest way to convert these into their monetary equivalent is to tokenize them.
Access: 99.9% of investors do not have access to the next Facebook because they cannot invest the minimum 10 million dollars required for getting entry into Peter Thiel’s next fund. Tokenization creates democracy of access as it allows the everyday investor to bet just $1,000 on the next unicorn. Tokenization empowers inclusion of retail investors, and their participation is a game changer in the long term.
Use Case: For instance, you would like to own the Empire State Building (ESB), but you do not have the estimated $3 billion required to buy the building. On the other hand, ESB is on sale and its owners can’t find a ready buyer for such a large asset. Selling it piecemeal would degrade its value. With the help of tokenization, you can convert ESB into 3 billion tokens worth $1 each and sell it across the investing world. The investor gets to own an iconic asset at $1, and the seller will have a larger buyer universe to pitch a $3 billion asset.
How Would Tokenization Work for P2P Lending?
There are new applications coming out daily, but we believe these are the earliest use cases:
Tokenization would allow P2P loans to be funded by thousands of micro investors. Instead of institutional investors controlling the lending on platforms, the ‘P’ in P2P lending can be an individual investing $100 in a loan.
The loans would become truly tradeable, and liquid. If you invested in a 3-year loan but need the money back after 6 months, you can simply sell your digital asset on an exchange at a fair price.
Crypto P2P loans can enter the mainstream with tokenization, allowing development of fixed income instruments in crypto. This will allow wider participation and lure institutional investors to the market.
Blackmoon has launched a tokenization platform on this theme. Its Prime Meridian real estate lending fund is built on a similar thesis that tokenization has the power to change P2P lending fundamentally. It is in a strong position to capture a currently niche market, which will soon to grow to encompass the primary P2P lending industry.
Impact on the P2P Lending System
A P2P loan is not liquid, and the lender usually has to see through the period of the loan tenure. It can be difficult to find a third party looking to buy the same loan. The lender might need to sell at a deep discount due to lack of liquidity. Tokenization will help create more buyers/sellers and a functioning secondary market for the sector leading to more liquidity.
The process of tokenization allows for fractionalization so that the lender can sell any portion and at any time. This breaks everything you own into its digital equivalent. This enables users to create a stock or single proof of ownership tied to the specific asset. It will also make investing easier for the average investor.
Tokenization reduces trading friction and transaction costs. It would also make fractional ownership simple and easier to execute. As the financial asset is already divided into tokens, there would no duplication of legal costs after every transaction.
With integration of the tokenization process in P2P lending, lenders can list their assets as collateral. It is through tokenization, that assets such as patents, intellectual property, or even branding, can be used for raising loans. Moreover, tokenization can allow a brand new form of P2P funding to arise. Tokenized assets can also be offered for collateral funding. So if you own 10% of an apartment, you can borrow against that fractional asset on the alt-lending market.
It can spread risk across a variety of loans. Tokenization will attract more investors to alt-lending platforms as you can now diversify risk for even an amount as small as $100.
Investors have more freedom to invest around the globe. Tokenized currencies enable investors to trade in any geographic area they wish to. Now an American Investor can lend to Asian borrowers in US-denominated loans and Asian accredited investors can invest in certain property loan platforms that are open only to a certain class of investors.
Tokenization is an interesting development with myriad applications in finance. One of its biggest impacts should be felt in the P2P lending industry. With the advent of new players like Blackmoon, P2P lending 2.0 is on the horizon.
News Comments Today’s main news: SoFi offers 6-month grace period for SoFi ReFi. Zopa to build Open Banking infrastructure. Faircent secures $4M funding round. Assetz Capital launches IFISA. Ping An make big bet on technology. Ant Financial partners with Standard Chartered. Today’s main analysis: Student loan borrowers prefer payments over iPhone X or bitcoin. Who are LendingClub borrowers? (A must-read market […]
Are instant loans helpful or hurtful? AT: “The one thing I never hear the critics say about these products is the possibility for the consumer to pay the loans off within the first 30 days, like many consumers do with credit cards.”
Zopa to build an Open Banking infrastructure. AT: “There is a shuffle for firms to place themselves at the center of open banking all across Europe. It will be interesting to see what happens once the system is in place and open banking has matured. I’m glad to see Zopa making moves.”
From 2007 through 2017, LendingClub has matched $31 billion investor dollars with 2 million borrowers’ loans.
Today, outstanding credit card and personal loan balances in the U.S. are approximately $960 billion. Of that, two-thirds, or roughly $600 billion, represents interest-earning balances carried month-to-month —the overall addressable population. About half of the addressable population (more than $300 billion) currently meets LendingClub’s target credit profile—a market that we have only just begun to penetrate.
Read LendingClub’s Marketplace Insights report in full here.
Online credit marketplace LendingClub Corporation (NYSE: LC), announced on Tuesday it has appointed Patty McCord as the newest member of its Board of Directors, effective December 13, 2017.
McCord spent 14 years creating the unique and high-performing culture at Netflix and as the video streaming giant’s Chief Talent Officer, she helped create the Netflix Culture deck and experimented and cultivated new ways to work.
Interest in marketplace loan ABS from the buyside picked up in 2017, but some investors are now saying that they could sit things out in 2018 as credit concerns grow and a lack of data presents problems in the late stages of the credit cycle.
ABS volumes doubled from $3.4bn in 2016 to $7bn in 2017, with SoFi issuing more than $3bn in deals this year, according to data from JP Morgan. The introduction of multi-seller platforms from SoFi, Lending Club, Marlette Funding, Prosper Marketplace also drove liquidity for the sector, while new …
LendEDU asked 1,000 people repaying student loans if they would prefer a popular holiday gift or a loan payment of equal value. And, despite the hype surrounding tech trends, they wanted loan payments more.
Bankers agree voice will be the biggest and most important channel to their business after mobile, only this time, it won’t sneak up on them like mobile did. They’re looking at 2018 as a year to get their companies more involved with voice by adding features to their Alexa skills, creating an Alexa skill if they haven’t done so already or expanding Alexa capabilities to other parts of the organization. But for the most part, they’re looking for a clearer sense of how people even use Alexa.
In 2017, USAA, Ally Bank and U.S. Bank launched Alexa skills. Before this year, Capital One was the only bank with the feature, which it launched in 2016.
Earlier this year, we announced an initiative to bring the industry’s first Software as a Service (SaaS) lending platform to market, which we call “Powered by Upstart”. Now we’re excited to announce that BankMobile is the first bank to launch their personal loan program on the Upstart platform. Beginning today, BankMobile offers consumers in 43 states personal loans from $5,000 to $30,000, with no origination fees and interest rates starting at 5.99%.
We are an early investor in the company ‘Kabbage” and Kabbage to me is a major disruption in the fund-lending and risk-analysis market. Established in 2009, Kabbage supported the emerging companies that were suffering the blow of a financial crisis. Banks were declining to lend money to small businesses and entrepreneurs had no access to capital to support their businesses. What aggravated the problem is that even if they did get access to money, the procedure for evaluating the risks of money lending were strictly based on scrutinizing the company’s financial background and fico scores instead of probing into the business. Deviating from the established model of risk analysis, Kabbage stepped into the market at a time of financial distress and operated on a completely different strategy. They would evaluate your UPA shipping data, ebay seller reviews, and other bits of information that are generated on different platforms and then assess credit card risks based on these factors and not just credit card fico scores. Kabbage started off by accumulating a ton of third party data which they ingested, analyzed and then created a solution. Over time, the company has gathered a substantial amount of primary data that they can use to tweak and refine their risk-analysis model. The company efficiently leveraged big data to provide an entire new service in the risk-analysis industry.
It’s a space that started out with Mint ten years ago, with a new way to look at all of one’s finances in one place. The field has now grown to accommodate an ever-expanding number of direct-to-consumer PFM apps, including apps like Digit, Clarity Money, Penny and Qapital, and banks are now folding PFM capabilities into their mobile apps.
Banks have been folding in PFM features and competing apps are having trouble differentiating. Where do you see the PFM market right now? A lot of PFM will continue to move to a business-to-business, or business-to-business-to-consumer model. Things [business-to-consumer PFMs] struggle with are being able to monetize and with customer acquisition.
What’s the problem with business-to-consumer PFM? The market is really crowded and it’s hard to provide that extra value to really distinguish themselves from other platforms in the space.
An $800 mattress for your bed. A $600 sofa for your living room. A vintage designer bag as a Christmas gift for your best friend. They’re all pretty big purchases to buy online, but now you can get an instant loan for any of them right at checkout.
Ingle says the payment plans are different than credit card options. Companies like Affirm partner with certain retailers to offer the loans, which are installment loans with interest rates, and set payments are made over time.
In a statement Faircent said it will utilise the newly acquired funds towards strengthening the platform’s technology and creating greater awareness about P2P lending’s significance as a new and highly rewarding asset class.
The race is on to become the top global app for international money transfers.
Fintech startups including WorldRemit Ltd., TransferWise Ltd. and Remitly Inc. are pulling ahead of the pack of the dozens of companies trying to disrupt the remittance industry, using the latest technology to send money internationally.
More than $600 billion is remitted world-wide every year, mostly by migrant workers from places like India, Mexico and the Philippines, who have traditionally had to deal with long lines and high fees to send money home.
Chandigarh-based Finvasia, a fintech company offering zero brokerage, has received the Certificate of Registration (CoR) from RBI to operate as a non-banking financial corporation (NBFC). This extension will allow the company to offer loan-based products to retail and corporates alike. The company plans to develop block chain technology based P2P (peer-to-peer) lending platform.
News Comments Today’s main news: PayPal launches P2P funding platform.True Accord lands $22M in funding.Lendable hits 100M GBP lending milestone.P2P Global Investments fund sees huge reduction in U.S. consumer loan exposure.Yirendai’s Q3 results.Klarna, PPRO partner on credit payment across Europe. Today’s main analysis: The latest trends in consumer credit.The corporate bond market suffers indigestion. Today’s […]
Marcus is winning the personal loans arms race. AT:”We must ask why Marcus seems to be winning. Are the leading alternative lenders losing market share to Marcus’s attack on fees? Is it simply because they’ve got the backing of Goldman Sachs. For sure, there does seem to be a competitive play going on, but is that the total picture?”
Why customer acquisition is difficult for financial startups. AT: “Customer acquisition costs are important for long-term profitability. A company can take a short-term loss in exchange for the long-term benefit, but it’s a risky proposition. Interesting that Wealthfront reduces its marketing budget every year.”
A tale of two Fed studies. AT: “Online lenders up in arms over the recent Cleveland Fed study should remember that the study is based on different data than a previous Fed study that was favorable. In truth, one cannot base a conclusion on the study of a single online lender. I think the real picture is what lies beyond both Fed studies.”
*Note: Originations are viewed one quarter in arrears to account for reporting lag.
Personal Loan Balances Reach All-Time High as Delinquency Rates Decline
Q3 2017 Unsecured Personal Loan Trends
Personal Loan Metric
Number of Unsecured Personal Loans
Borrower-Level Delinquency Rate (60+ DPD)
Average Debt Per Borrower
Prior Quarter Originations*
Average Balance of New Unsecured Personal Loans*
*Note: Originations are viewed one quarter in arrears to account for reporting lag.
Corporate bond market suffers bout of indigestion (Morningstar), Rated: AAA
The corporate bond market suffered a bout of indigestion last week. Between absorbing a healthy amount of new issues and profit-taking from early year-end window-dressing, corporate credit spreads widened, albeit from levels that are still near multiyear lows. The average spread of the Morningstar Corporate Bond Index (our proxy for the investment-grade bond market) widened 5 basis points to +104. In the high-yield market, the BofA Merrill Lynch High Yield Master Index widened 24 basis points to end the week at +376.
Energy Companies’ Credit Quality Expected to Continue to Improve;
2018 Oil Forecast $55-$60
A confluence of global events recently drove the crude oil futures price curve into backwardation, a condition in which a commodity’s market price today (or spot price) is higher than the price for further-out month contracts. As of this writing, the spot price for West Texas Intermediate crude is $56.90/barrel and the December 2018 contract is priced at $55.70/barrel. Typically, the oil market trades in contango, which is the opposite of backwardation. In contango, a commodity’s spot price is below the price for further-out month contracts.
Marcus by Goldman Sachs said it was going to lend $2 billion to customers by the end of this year. As of late Monday, it had already done that.
Lending Club has reported losses exceeding $200 million over the last six quarters; Prosper has lost $210 million since the start of 2016, despite various cost-cutting measures, and lost its unicorn status. Even OnDeck Capital, which focuses on small businesses, is struggling to become profitable, having reported losses over eight consecutive quarters.
Goldman sees a $13 billion lending opportunity with Marcus over three years, CFO Marty Chavez said Tuesday in remarks at the Bank of America Merrill Lynch Future of Financials Conference.
San Francisco based TrueAccord, announced today that is has closed $22M in additional funding led by Arbor Ventures, with participation from existing and new investors. The Series B funding follows a period of sustained and rapid growth for the company.
Customer acquisition is expensive. For a large bank it could cost between $1,500 and $2,000 to acquire a retail banking customer, according to Ciaran Rogers, director of marketing at StratiFi, an early stage startup that helps advisors manage portfolio risk. In credit cards the cost could be in the hundreds, not thousands — according to David True, a partner at PayGility Advisors. An expensive customer could be as high as about $800, which would include the cost of teasers and bonus loyalty points. At startups it could be between $5 to about $300 for one customer. Fintechs want to spend less money on that — Wealthfront, for example, decreases its marketing budget year after year.
Partnerships with bigger brands have been one way to bring that cost down. For example, Canada’s fifth largest bank, CIBC, is reportedly in talks with robo-adviser Wealthsimple over a referral deal in which the bank would send some of its customers to the digital investment startup.
At MoneyLion, the cost of customer acquisition is about $5 or less, said chief marketing officer Tim Hong. MoneyLion launched in 2013 and now touts about 1.5 million customers. Earlier this year, Luvleen Sidhu, president and chief strategy officer of the all-digital BankMobile, said it spends about $10 to acquire an account.
CleanCapital, an online marketplace for clean energy investing, announced today that it closed its Series A with a total investment of $3.7 million. This investment came through 50 investors to include FinTech and cleantech leaders as well as SeedInvest’s Selections Fund in this latest round.
As Black Friday Nears, a Record 196 Million Consumers Now Have Access to Various Forms of Credit Cards and Other Revolving Lines of Credit (TransUnion Email), Rated: A
With the holiday shopping season officially kicking off during Black Friday next week, TransUnion’s (NYSE: TRU) just released Q3 2017 Industry Insights Report found that 195.9 million consumers now have access to revolving credit such as bank-issued and private label credit cards. According to the report, this is the highest level of revolving credit access since TransUnion began measuring the variable and is greater than the 192.6 million consumers who had access to such credit products in Q3 2016.
TransUnion’s analysis found that average private label card originations in the holiday season (defined as November and December) for 2016 was 148% of the average originations for the January through October timeframe. This is tracking in line with recent rises observed in 2015 (156%) and 2014 (164%).
Other Consumer Credit Headlines from the Industry Insights Report:
Total Credit Balances Rise despite Slowdown in New Credit Card Accounts
Auto Loan Market Shifting Toward Less Risky Consumers
In 2010, digital lenders originated $249 million in unsecured personal loans, and by 2016 that number had grown ninety-fold.
Cleveland’s Dark Outlook
That detail alone isn’t necessarily bad news – after all, having more debt doesn’t necessarily mean the online lending customers are doing worse. But paired with other data, the news looks pretty grim. According to the Cleveland Fed survey, the online lending customers also showed lower credit scores on average, more delinquent debt and more total debt outstanding.
The findings further suggest that in some cases, the three- to five-year installment loans of up to $30,000 to $40,000 often offered by online lending sites are not being used for their intended purpose of consolidating credit card debt into a single, lower-interest loan. Instead, customers were using those loans to rack up more debt and maxing out the cards they used to pay off the loans.
Philly, Chicago And A Very Different Result
The earlier report did note that outcomes varied depending on the specific borrower profile and their precise lending requirements. However, because of the expanded and more inclusive credit ranking criteria, consumers who might otherwise be “credit invisible” or appear to have a sub-prime score are able to get a more complete evaluation that considers a wider array of factors.
The lack of regulatory clarity raises concerns, they said, over whether customers are treated fairly, have “equal access to credit, and receive offers that can be easily compared and understood,” suggesting that alt lenders need to compete on a level playing field with their regulated bank counterparts.
Why The Discrepancy?
The Cleveland Fed study examined data from TransUnion for consumers who had been identified as having taken out “online bank-based loans.” That includes a much wider set of businesses and lenders than is technically defined by the more traditional online lenders.
The Philly-Chicago study focused entirely on data from Lending Club, a marketplace lender.
The Cleveland Fed study goes even further. It claims that P2P lending is a ticking time bomb in which loose lending and cascading defaults could lead to another crash like the one the US suffered in 2008 when the subprime lending bust took down major banks and insurers, disabling the housing market for years.
Astrada points specifically to the high interest rates that prospective borrowers with poor credit could have to pay. Many websites offering P2P loans advertise 5 percent loans with terms of one to five years. This may look good to those who would like to roll their credit card debt of 25 percent into a P2P loan.
But the reality is that for many borrowers, the interest rate is much higher. He emphasizes that one up and coming P2P lender about to go public claims that its average loan portfolio across its business model is nearly 150 percent.
In the seventh installment of the “Kill the Check” series, PYMNTS’ Karen Webster sat down with Ingo Money CEO Drew Edwards to get a sense of how airlines can use push payments to quell misfires and compensate passengers for their troubles when things go awry.
The digital nature of push payments also helps airlines as they can better control when, where and how such monies are spent. In addition, Edwards noted, push payments are instantly reconciled with the airline’s own accounting functions as they are being used.
On Monday, home ownership investment platform Unison announced 2018 expansion plans.
The platform reported that in 2017 alone it has expanded into five additional states including Illinois, New York, Arizona, New Jersey and Pennsylvania, bringing its total footprint to twelve states plus Washington D.C.
In addition to announcing 2018 expansion plans, Unison also revealed multiple promotions and additions to its management team. These are the following:
Jim Riccitelli assumed the role of President focusing on facilitating Unison’s rapid expansion and supporting Unison’s trademark focus on consumer education and financial literacy.
Bill Walker and Brian Elbogen, former Managing Directors, have been promoted to Chief Revenue Officer and Chief Strategy Officer
Laura Wensleyhas been brought on as Director of Finance
Rayan Rafay has been promoted to Chief Operating Officer of Unison’s investment management business
John Arens, who is General Counsel at Unison, has taken on additional responsibilities as Managing Director of Business Operations
Heather Phillips has joined as Associate General Counsel
The Consumer Financial Protection Bureau is seeking more information about consumers’ experience with free access to credit scores.
In two separate notices published in the Federal Register on Monday, the CFPB said it wants more data on which companies consumers are using to obtain their free scores. The bureau also said it is updating a public list of companies that offer free access to a credit score.
I can sense that most of the folks attending the conference that got hurt by Operation Chokepoint feels a bit vindicated by the latest roll back of many new proposals laid out by the CFPB, Consumer Finance Protection Bureau. Just recently the United State senate overruled the CFPB’s arbitration rule. The overruling by CFPB and essentially a no-confidence vote happened about a week after Lend360 concluded in Dallas, Texas.
I attended Dan Quan’s “The Regulator’s View of Fintech” session on the last day of the conference. Dan manages the small dollar lender desk at the Consumer Financial Protection Bureau, at his panel, Dama Brown from FTC and Shamoil Shipchandler from SEC all spoke about an era of collaboration with lenders. The tones from all three regulatory representative is vastly different than that of five years ago where mass regulation and penalties were the topic of discussion.
I feel like the industry has finally evolved from a cat and mouse game with the regulators to a more collaborative marketing participants as this industry continues to mature.
The National Retail Federation predicts the average per-person tab this holiday season will reach $967, up nearly 3.4 percent since 2016.
Americans are on track to end 2017 with more than $60 billion in additional credit-card balances, according to WalletHub’s projections. That figure puts us perilously close to the nearly $1 trillion grand total recorded at the height of the Great Recession.
Holiday Budget by City
Sugar Land, TX
League City, TX
Maple Grove, MN
In order to determine the cities with the biggest holiday budgets, WalletHub’s analysts compared 570 cities across five key metrics: 1) Income, 2) Age, 3) Debt-to-Income Ratio, 4) Monthly Income-to-Monthly Expenses Ratio and 5) Savings-to-Monthly Expenses Ratio.
Magilla Loans, a search engine for loans which connects borrowers to banks without requesting personal information, has been recognized by National Real Estate Investor (NREI), a leading authority on trends in the commercial real estate market, as one of the 2017 Top Financial Intermediaries for commercial real estate loans arranged within the last calendar year. The ranking identifies Magilla Loans as a reliable and efficient service which satisfies the needs of commercial real estate developers and executives.
CreditShop and Värde Partners today announced that Värde will acquire Austin-based CreditShop. CreditShop is a specialty finance company focused on providing consumer friendly credit products and personal loans to prime and near-prime consumers. CreditShop is the 25th largest MasterCard and Visa credit card issuer in the United States.
In March 2017, CreditShop acquired a $1.6 billion MasterCard credit card portfolio from Barclaycard. The company expects to launch its own credit card products in 2018.
A new report from Equiniti finds that 30 per cent of consumers aged 18-25 have borrowed more than £1,000 over the past year. This equates to approximately 2 million people, according to estimates: the highest proportion of any generational group.
The report draws on data from a survey of 2,001 UK consumers in August 2017. 32 per cent were classified millennials, 34 per cent generation-x and 34 per cent baby boomers. 52 per cent were women, 48 per cent were men.
Since 2015, borrowing (of over £1,000) has increased by 17 per cent among millennials, 9 per cent for generation-x and just 1 per cent for baby boomers.
Speaking at a fintech summit in Leeds, Mr Letts also questioned whether the challenger banks were radically different from mainstream banking, positing that some had simply “put new clothes on the emperor”.
“On other the other side are what I call the ‘neobanks’, people coming in with much hurrah and hysteria and telling everyone that the big banks are finished and that they are going to take over the world .
“If you set up a fund, from Government, that invested in fintechs and you had a billion pound fund where do you think businesses will come to? It is very simple.”
The Royal College of Nursing’s (RCN) workforce survey found that 6% of nurses have been forced to take out one of the high interest rate loans in the last year to meet their daily bills and living expenses.
Meanwhile, one in four has borrowed money from friends, family or their bank, 23% have taken on an additional paid job and half did overtime to cover their bills and expenses, according to the poll of 7,720 nurses from across the UK.
Yirendai Ltd. (NYSE: YRD) (“Yirendai” or the “Company”) today announced its unaudited financial results for the quarter ended September 30, 2017
For Three Months Ended
in RMB million
Amount of Loans Facilitated
Total Net Revenue
Total Fees Billed (non-GAAP)
Adjusted EBITDA(1) (non-GAAP)
Adjusted Net Income (2) (non-GAAP)
In the third quarter of 2017, Yirendai facilitated RMB 12,185.4 million (US$1,831.5 million) of loans to 192,725 qualified individual borrowers through its online marketplace, representing a year-over-year growth of 117%; 75.7% of the borrowers were acquired from online channels; 57.2% of the loan volume was originated from online channels and nearly 100% of the online volume was facilitated through mobile.
In the third quarter of 2017, Yirendai facilitated 214,967 investors with total investment amount of RMB 13,510.0 million(US$2,030.6 million), 100% of which was facilitated through its online platform and 92% of which was facilitated through its mobile application.
For the third quarter of 2017, total net revenue was RMB 1,513.9 million (US$227.5 million), an increase of 28% from the previous quarter and 73% year-over-year; net income was RMB 303.0 million (US$45.5 million), and increase of 13% from the previous quarter and a decrease of 12% year-over-year. The decrease of net income is mainly because that, in the third quarter of 2016, the Company recognized a tax credit of RMB 151.7 million because one of its subsidiaries became qualified as a software enterprise which makes it eligible for an exemption of enterprise income tax for 2015 and 2016. Excluding the impact of the tax credit, adjusted net income in the third quarter of 2016 was RMB 192.6 million.
An online lender targeting spendthrift 24 to 36 year olds is the latest fintech firm from China to bet on the willingness of Chinese youth to go into debt for the newest smartphone – and on the willingness of US investors to bid up its shares.
Shenzhen-based Lexin Fintech Holdings, which operates an online e-commerce platform offering instalment shopping, is following in the footsteps of Chinese microcredit providers Qudian and Hexindai which raised US$900 million and US$50 million in their US IPOs in October and November, respectively.
They were also out in force for the recent Singles’ Day shopping festival, which saw sales on Alibaba’s e-commerce platforms reach 168 billion yuan (US$25.3 billion). During the first hour of the 24 hour shopping spree the number and value of orders on the Fenqile platform rose three and six times respectively compared with the same period last year.
Hui Ying Financial Holdings Corp. (OTCQB: SFHD) (“Hui Ying” or the “Company”), a leading online financial credit facility solution provider servicing Small-to-Medium Enterprises (“SMEs”) and individual borrowers in China, today announced its financial results for the three and nine months ended September 30, 2017.
Third Quarter 2017 Highlights
For the Three Months Ended September 30,
($ millions, except per share data)
Loan origination service fee
Loan repayment management fee
Financing income from entrusted loans
Other income (expenses)
EPS – diluted
Total loans facilitated through our platform increased by 73.3% to RMB 2.6 billion for the third quarter of 2017, from RMB 1.5 billion for the same period of last year, as China’s online peer-to-peer lending platform industry continued to grow significantly during the third quarter, coupled with the increased marketing campaign, promotion activities on our platform as well as increased brand awareness of our online marketplace.
Total revenues more than doubled to $14.28 million for the third quarter of 2017 from $7.07 million for the same period of last year, as a result of increase in loans facilitated through our platform and the contribution from the newly launched entrusted loan business. Revenues from loan origination service fee, loan repayment management fee and financing income from entrusted loans were $8.39 million, $5.25 million and $0.64 million, respectively, for the third quarter of 2017 compared to $5.11 million, $1.97 million and nil, respectively, for the same period of last year.
Net income was $4.76 million, or $0.06 per diluted share, for the third quarter of 2017, compared to $1.46 million, or $0.02 per diluted share, for the same period of last year.
PPRO Group and Klarna have announced an agreement aimed at enabling PSPs to offer credit-based payments through PPRO`s payment hub to European merchants.
The partnership will be marketed to PPRO’s payment service providers customer base and will provide access to Klarna’s services and consumers across Sweden, Norway, Finland, Denmark, the Netherlands, Germany, Austria, and the UK.
Banco BNI Europa and Belgian Fintech EDEBEX celebrate a partnership to support Portuguese SMEs (BNI Europa Email), Rated: A
Banco BNI Europa and Edebex have announced today the celebration of a new partnership for immediate availability of an online platform for the purchase and sale of invoices to Portuguese companies with cash requirements, offering an innovative alternative to financial credit and traditional factoring.
A number of areas have been established or significantly impacted by FinTech; Peer-to-Peer (P2P) lending, mobile payments, and instant payment notifications, to name a few.
The ongoing bank branch closures across Ireland and the UK demonstrates the changing climate.
With a reduction in branches, banks are investing heavily in technology to reduce costs, to improve their customer experience and to increase customer self-service in an attempt to ward off the threat of FinTech start-ups.
The blockchain is another example of FinTech and one which has been a hot topic across multiple industries for a number of years.
A digital future: financial services and the generation game is a report sponsored by Banco Santander for presentation at the Tenth Santander International Banking Conference, written by The Economist Intelligence Unit.
It assesses how people’s expectations of their financial services providers are changing and how technology must be deployed to meet them. The report is based on extensive desk research and in-depth interviews, conducted in August-October 2017 with 14 representatives of financial institutions and companies.
PayPal has launched Money Pools, a service that allows its users to create fundraising pages where their contacts can contribute money for a shared item or event, like a group gift or trip, Source: Business Insider
In the latest Data Drivers installment, Steve Villegas, vice president of Partner Management at PPRO Group, told PYMNTS’ Karen Webster that “alternative payments are going to drive the future of eCommerce.” But between the promise and the reality, some connectivity is on order, bringing consumers payment options – and merchants toward better conversion rates when it comes to online commerce.
Data Point One: 17.6 Percent
This is the percentage of credit card penetration worldwide – a lot of cards, but not a lot of penetration on a global stage.
As has been widely reported, Alibaba grabbed as much as $25 billion in sales to 225 countries and regions. Roughly 90 percent of transactions were completed on mobile devices.
Data Point Two: Three Billion
This is the number of people estimated worldwide to be without a bank account – and yet, armed with mobile devices, can be brought into the world of digital transactions and can participate fully in the global economy.
Data Point Three: 38 Percent
This is the average rate of eCommerce growth of the 11 fastest growing countries globally. That far outpaces the 12 percent a year eCommerce growth seen in the U.S.
China provides a stark reminder of the explosive boost to eCommerce, at 64 percent year over year. Other areas that have high eCommerce growth rates include Indonesia and Malaysia. Growth is high both in bank payment-related transactions and with eWallet. Russia is also showing growth, Villegas stated.
New research from Celent (commissioned by Finastra) which examines the future transformation of capital markets, identifies six key drivers of change over the next five years to 2022:
Digitalization of the trade and client lifecycle
The Fintech revolution
The need to integrate with an evolving ecosystem
The trend for banks to focus on core capabilities and outsourcing of non-core functions
Advances in big data, machine learning and data analytics
The rise of open APIs and micro-services in helping banks deliver increased agility
The report, ‘The Great Transformation in Capital Markets – Revolution to Evolution’, examines the changes that have already taken place in capital markets since the 2008 crisis, the wave of big transformation projects undertaken since 2011-12 designed to optimize operations and reduce costs, and expected trends in the transformation journey over the next five years. It incorporates the findings of detailed discussions conducted with 17 tier one and two global capital markets institutions, predominantly in the US and Europe but also across Asia and Latin America.
In this table we have set out what each lender says you must repay for borrowing $500. (We targeted 30 days but not every lender offers that.) Then we calculated the effective annual interest rate for entering into that deal. This is different to the interest rate the lender discloses because we bundle up that interest rate with any set-up loan fees into an effective rate. But we haven’t included any fees if you default; this analysis assumes the borrower meets all payments on time.
Ex-bankers Brahma Mahesh, Naveen Madgula, and a techie for 17 years at Hexaware – Praveen Krishnam founded FinMomenta last year, launching its loans platform Tachyloans in May.
The startup borrows from the emerging trend of servicing small-ticket loans online for individuals and SMEs.
“The loan approval process in banks is very subjective. It is dependent on a human perception of the loans officer. It kills the whole idea of credit scoring. That’s the reason banks are able to service just about 2%-5% of the huge working class of about 60 crore population. Others just depend on money lenders. Banks don’t touch these people because they don’t have a credit history,” says FinMomenta co-founder Brahma Mahesh.
The interest rates on Tachyloans range from 11.5% to 25% depending on the FinMomenta credit rating – the better the credit score, the lower the interest rate.
By the end of 2018, the company is targeting to service 1,500 loans and 34,000 loans in next 5 years, which will increase its loan portfolio to about Rs 500 crore.
Consumers will be able to sign up for new digital-identity system developed by SecureKey Technologies Inc. and underpinned by IBM Corp.’s blockchain technology in the first half of 2018. They’ll be able to instantly prove who they are to banks, telecom providers and governments using apps on their phones and Windows devices, according to Greg Wolfond, chief executive officer of Toronto-based SecureKey.
Canada’s six-largest lenders, including Toronto-Dominion Bank and Royal Bank of Canada invested C$30 million ($24 million) in the project.
The Dubai International Financial Center (DIFC) it has established a $100 million fund to invest in fintech start-ups, the latest move in the freezone’s bid to position itself as the regional centre for the fast-growing and disruptive sector.
News Comments Today’s main news: Banks pull back on car loans as used-auto prices plummet. Trump’s expected OCC pick, a banker, signals paradigm shift. Elevate Credit rated a buy. RateSetter rejigs relationships with former wholesale lending partners. China Rapid Ffinance raises $60M in IPO. Today’s main analysis: Goldman Sachs embraces banking’s bland side. Global money transfer. Today’s thought-provoking articles: German […]
Mimecast Limited vs. Yirendai Ltd. GP:”I am not very familiar with Mimecast. Mimecast is an international company specializing in cloud-based email management for Microsoft Exchange and Microsoft Office 365. Not sure why they are being compared to Yirendai. “AT: “Interesting head-to-head comparison.”
Goldman Sachs embraces banking’s bland side: Lending money. AT: “Instead of funding the lenders, GS is beginning to lend money to business itself. I think the most interesting part of this is extending credit to consumers to make online purchases. If that is true, Goldman could be positioning itself to compete directly with Klarna, Amazon, and other big online retailers and software companies. A good example of a bank trying to make the most of the 21st century.”
Colorado vs. Fintech. AT: “This is mostly a rehash of the developments in the Colorado vs. Avant, Best Egg and WebBank, CRB vs. Colorado lawsuits. The most interesting parts are where OLPI sheds some light on parts of the briefs filed in court, particularly regarding whether Avant or WebBank is the true lender.”
Wells Fargo & Co., one of the largest U.S. auto lenders, last month reported a 29% fall in its auto loan originations for the first quarter from a year earlier. The decline, the biggest for the San Francisco-based bank in at least five years, was part of a common refrain in quarterly announcements from lenders including J.P. Morgan Chase & Co.,Ally FinancialInc. and Santander Consumer USA HoldingsInc.
Bankers’ caution is increasingly showing up in car sales, which Tuesday came in worse than expected for April. The declines are mostly occurring in lending to riskier borrowers, in particular those with low credit scores, where lending had ramped up for years.
When lenders repossess cars, they resell the vehicles and use the proceeds from the sale to recover as much of the unpaid balance as possible. Declining values mean that lenders are recouping a smaller share of those balances. Lenders who are repossessing cars tied to prime auto loans that were securitized in 2015 are recovering about 51% of the unpaid loan balances on average, down from 56% for 2014 loans and 65% for 2011 loans, according to S&P Global Ratings.
Car loans have been among the fastest-growing consumer lending categories since the last recession.
The firm has been opening its checkbook for the past several years to finance corporate takeovers, lend against mansions and art, and make personal loans for things such as kitchen remodels and fixing broken windshields.
It is exploring new credit businesses such as trade finance, equipment leasing and extending credit that consumers use for online purchases, according to people familiar with the discussions.
Loans outstanding across Goldman have doubled to $95 billion since 2011, filings show. Real-estate loans are up 10-fold. Business lending has tripled, while loans in its private-wealth division, secured by everything from stock portfolios to rare artwork, have quadrupled. Goldman doesn’t report revenues tied to lending, which remains a small part of its overall business.
They set a “buy” rating and a $12.00 price objective for the company. Compass Point reissued a “neutral” rating and set a $9.00 price objective on shares of Elevate Credit in a report on Tuesday, April 18th. One analyst has rated the stock with a hold rating and four have assigned a buy rating to the stock. The company has an average rating of “Buy” and a consensus price target of $11.00.
Shares of Elevate Credit (NASDAQ:ELVT) opened at 7.64 on Monday. Elevate Credit has a one year low of $7.00 and a one year high of $8.86. The firm’s 50 day moving average is $8.05 and its 200-day moving average is $8.05. The firm’s market capitalization is $99.33 million.
Clearly, CSBS is mounting a legal counter-offensive to the OCC’s attempt to license entities historically regulated by the states. While state and federal regulators currently are arguing as to who should control the regulatory sandbox, the true focus of regulatory concern should be on the development of innovative financial services, consistent with safe and sound operations, with viable and effective consumer protections. While, historically, payments companies and lenders have been regulated by the states, the OCC’s SPNB Charter has sparked a dialogue as to whether the current regulatory system for fintech operations is viable. Innovation of financial services may also require innovation of financial services regulation. Rather than trying to pigeon-hole financial services into traditional regulatory models, perhaps it is time for regulators, at both the federal and state level, to act in concert to develop a system of licensing, regulation, and enforcement for financial products and services that is efficient, not redundant, and minimizes the regulatory burden on financial institutions while it provides for the continued protection of consumers. Setting aside the merits of the pending suit, the right policy prescription will likely involve the federal and state governments working together to minimize the regulatory burden while appropriately protecting the safety and soundness of FinTechs and provide necessary consumer protection.
President Donald Trump’s expected move to replace the Comptroller of the Currency signals a change in direction at the bank regulator that could ripple through the financial markets, from private-equity buyouts to financial technology—and even municipal securities.
Comptroller Thomas Curry, whom people familiar with the matter say could be replaced as soon as this week, is a career regulator appointed by President Barack Obama. Mr. Curry used his office to tamp down on what he viewed as overly risky lending practices in the banking industry.
His expected replacement—Joseph Otting, a former chief executive of OneWest Bank—would be the first former banker to hold the comptroller’s job since the 1990s.
A committee of Wall Street advisers is pouring cold water on a proposal by U.S. Treasury Secretary Steven Mnuchin to issue superlong 50-year and 100-year U.S. government bonds, arguing that the big pension funds and insurers expected to buy the securities won’t have much interest.
The committee meets quarterly, in advance of a regular release by the Treasury on its plans for financing the U.S. debt. Currently, the U.S. Treasury issues no debt longer than 30 years. Mr. Mnuchin has argued that ultralong bonds could be a useful tool for locking in today’s low borrowing costs for a very long time. Last month, the Treasury requested the advisory committee analyze the viability of bonds longer than 30 years.
The 30-year bond strengthened Wednesday, after the advisory committee cast doubt on the idea 50- and 100-year bonds. The yield on the 30-year Treasury dropped to 2.963% from 2.982% on Tuesday, according to Tradeweb. Yields fall as bond prices rise.
A key question for the Treasury is what types of investors would buy ultralong bonds, especially if the members of its advisory committee aren’t interested. Relatively few individual investors have 100-year or even 50-year investing horizons.
Crowd Invest Summit, the country’s largest crowdfunding investment conference, taking place on September 6 th and 7th at the Los Angeles Convention Center, has today announced that it will be expanding its focus on Real Estate crowdfunding.
Since the signing of the JOBS Act in 2012, Real Estate Investing has been the fastest growing segment of the new Crowdfunding Industry. According to Fundingtree.com, over $3 Billion Dollars has been raised so far.
Crowd Invest Summit is the largest investment focused crowdfunding event in the country. It was founded by pioneers in the equity crowdfunding sector Josef Holm and Alon Goren. The conference was developed with the vision that every American – whether accredited or not – can now become equity investors.
Goldman Sachs is leading a $13 million investment in Nav, a startup that helps small businesses with financial advice and credit scores. Billionaire Steven Cohen’s Point72 Ventures is also investing, along with Clocktower Ventures and the CreditEase Fintech Investment Fund.
This follows $25 million that was invested in the company last year, and is considered part of the same Series B round, bringing the total to $38 million.
Characterizing Nav as a Credit Karma for small businesses, King believes his startup will “materially decrease the death rate of small businesses in the U.S.” They currently have over 200,000 customers, most of whom don’t pay anything for their credit score, but can opt to pay about $20 per month for added financial advice.
68% of mobile payments users are using Venmo most often.
Venmo processed $6.8B in mobile payments in Q1.
Rapid smartphone adoption, alongside a large unbanked population, makes the theme of mobile payments an attractive investment.
In the days leading up to the quarter, a new survey of 2,170 Millennials found that Venmo is leading the category. The researchers asked the following question: “Which of the following mobile payment apps do you use most often?”
Researchers found that 44% of respondents answered “Venmo”, 1% of respondents answered “Square Cash”, 14% of respondents answered “My bank’s mobile payment app”,and 4% of respondents answered “Other”. However surprisingly, 35% of respondents answered “I don’t use a mobile payment app”.
On February 15, 2017, the Administrator of the Uniform Consumer Credit Code for the State of Colorado (“Colorado”) sued Avant and Best Egg (in separate actions), claiming in both actions that they violated Colorado’s usury rate and entered into loan agreements containing a governing law provision other than Colorado.
Shortly after, WebBank and Cross River separately sued Colorado seeking Declaratory Judgement and Injunctive Relief.
On April 25, 2017, Colorado filed a Motion to Dismiss both Complaints for Declaratory Judgment and Injunctive Relief.
Colorado initially argues that WebBank’s action for declaratory judgement should be dismissed based on the well-pleaded complaint rule. There seems to be two issues with this position: (1) WebBank was purposely left out of Colorado’s initial complaint (although this theory might apply if Avant brought the federal action for declaratory judgment), and (2) diversity jurisdiction does apply as to Avant and WebBank vis-a-vis Colorado.
Second, Colorado argues that WebBank’s action should be dismissed because WebBank’s injury is too attenuated. Colorado does not directly address WebBank’s contention that the suit challenges WebBank’s overall business model.
Finally, Colorado argues that “interest exportation does not preempt the application of state usury laws to non-banks as a matter of law.” Colorado seems to acknowledge WebBank’s right to preempt Colorado’s usury rate based on DIDA (the Depository Institutions Deregulation and Monetary Control Act of 1980 – extending the National Bank Act’s preemption to FDIC-insured state banks). Colorado argues that WebBank is trying to assign its preemption to Avant – that Avant is the lender.
Colorado also argues that the valid when made doctrine is not applicable because “there is no ‘subsequent usurious transaction’ between WebBank and Avant that is alleged to invalidate a consumer’s loan obligation. Instead, Avant merely purchased the subject consumer loans from WebBank.” This is a difficult argument to follow. Colorado sued Avant claiming that Avant loans are usurious and Avant, and not WebBank, is the true lender. Colorado points out that Avant buys the loans from WeBank within two business days of the loans being made. Relying on Midland in the Avant action, Colorado states that Avant cannot “enforce a bank’s federal interest rate exportation rights when they purchase loans from banks (or purchase loan receivables) because banks cannot validly assign such rights to non-banks.” It seems to imply that Colorado is not saying the loans are invalid (due to Avant having a Supervised Lender’s License), but rather the loans just need to be limited to the Colorado usury rate –yet, as noted, the argument is difficult to follow.
Fintech is ultimately about taking away frictions.
I guessed that there was a 25 or 30 per cent chance that 10 years from now, there was about a 25 per cent chance that there would be a fintech company with the kind of $250bn market cap that some big American banks have. I do not expect that in the foreseeable future fintech will have the kind of existential impact on banks that Netflix has had on Blockbuster. But I do think in some areas fintech companies are likely to have the kind of effect Skype has had on the big telephone companies — forcing drastic reductions in pricing and profit margins on some key products.
I was quite serene about the impact of fintech on financial stability.
By providing for faster settlements, more transparency, and diversification, fintech is likely to have as many stabilising as destabilising effects.
If the large banks of today are not as large five or 10 years from now, I think it is more likely to be because of bad lending, heavy regulation or market pressures to break up because the whole is valued less than the sum of the parts than because of disruption from fintech. I say this because much of what fintech does depends on the banking system and because I doubt that over this horizon banks can be completely disrupted.
In the report from data provider CB Insights, The Global FinTech Report: Q1 ’17, it found that during the first three months of the year, fintech funding to venture capital-backed New York companies dropped by 35 percent on a quarterly basis. However, while financial technology deals in the state rose by 26 percent from Q4 ’16, it registered a 33 percent drop below the same quarter last year.
During the first three months there were three New York City companies – Namely, Trumid, and Payfone – who were among the top ten U.S. financial technology backed deals.
Namely raised $50 million in Series D funding from Altimeter Capital, Scale Venture Partners, Sequoia Capital, Four Rivers Group, Matrix Partners, and Greenspring Associates.
Trumid raised $27.6 million in Series D funding from Thiel Capital, and Payfone raised $23.5 million in Series E funding from BlueCross Blue Shield and Andrew Prozes.
First Associates has announced today that it has implemented A.I. enabled speech analytics as part of its third-party loan and lease servicing. The speech analytics platform facilitates higher quality customer interactions while ensuring compliance with financial industry regulations.
Using speech analytics, First Associates monitors, scores and provides agent feedback on 100% of voice interactions with consumers using data-driven benchmarking. Traditional loan servicing management techniques call for a 1% sample size of voice interactions using human quality assurance agents to assess quality and effectiveness. The company has already seen significant improvements across quality and performance metrics from the implementation.
Adams Business Credit, a national asset-based lender, will rebrand as Context Business Lending, bringing the firm in unison with the family of businesses and affiliates under Context Capital Partners, an alternative investment firm. The newly named Context Business Lending will continue to focus on providing flexible working capital solutions for businesses that do not qualify for traditional bank financing.
Context Business Lending typically provides loans of up to $15 million for lower middle-market businesses that may be experiencing some type of challenge, which may include: rapid growth; seasonal fluctuations; supply chain and vendor pressure; operating losses/negative net worth; turnaround and restructuring; merger or acquisition and debtor-in-possession financing. The firm is sector agnostic and works with businesses in the manufacturing, distribution, wholesaling and service sectors.
Usage of MoneyLion’s app nearly quadrupled in the second half of 2016, allowing them to track $12bn in transactions from more than one million users. To date, users have saved over $5 million in rate reductions through MoneyLion.
RealtyShares, a leading online marketplace for real estate investing, has just announced an $800,000 commercial equity investment in Mesa, Arizona, funded through the company’s network of accredited investors. The deal is sponsored by De Rito Partners, one of Arizona’s largest retail investment and brokerage firms.
De Rito Partners acquired the property in 2016, and is seeking to capitalize on a temporary tenant turnover in a formerly fully-leased retail property. The firm intends to use the funds raised through RealtyShares to invest in tenant improvements and implement a leasing strategy to achieve market-level rents.
The property is shadow-anchored by a Fry’s Marketplace, one of the largest grocers by sales in the Phoenix metropolitan area according to Chain Stores Guide. The shopping center is comprised of more than 20,000 square feet of rentable retail space, and is currently leased to tenants including Starbucks, H&R Block and Subway. It is located at the intersection of two major thoroughfares, four miles from downtown Mesa.
De Rito Partners owns 20 properties, manages approximately 1.9 million square feet of retail space, represents 180 shopping centers in a leasing agency capacity, and is currently developing a Fry’s Marketplace-anchored shopping center and a strip center located in Chandler, AZ.
The acquired motor finance companies are Vehicle Stocking Limited and Vehicle Credit Limited. Both firms were acquired out of their parent company’s administration, and both have previously received wholesale funding from RateSetter. RateSetter will now lend directly to these companies’ customers.
The size of these two motor finance firms’ combined loanbooks is roughly £30m. These portfolios are said to be “performing well”, and we’re told they would have continued to be serviced had RateSetter not stepped in.
Another of RateSetter’s former wholesale lending partners is George Banco, a guarantor lender with a representative APR of 49.7 per cent. RateSetter has now taken an equity stake in the company, and will lend directly to its 10,000 customers.
Lendy, a UK based peer to peer lending platform in the secured property sector, believes 2017 is the year for P2P lending to finally mature. Management says that P2P will shift from alternative finance to “main challenger to the traditional banks.” But to accomplish this goal, P2P lending platforms must build upon best practices and operate more like mainstream lenders while providing rigorous due diligence and superlative service.
Lendy advocates on four key steps in providing a better service than traditional financial firms:
Initial due diligence – carry out an extensive ‘know your customer’ (“KYC”) process when they first source a loan.
Legal panel – after the loan has passed the first stage it is then reviewed by a legal panel. Solicitors ensure that a legal charge is properly made against each security property, and that each of the security properties has good title.
Valuation – use a highly rated independent firm to value security properties.
Credit checks – put each lending proposition under extensive scrutiny to determine its viability.
Robo-advice has become a widely-known concept in the financial advice community over the past 12 months, as more and more firms launch their own proposition.
In addition, it is important to have someone understanding the algorithm from the client experience, and for advisers to grasp the inputs into the algorithms.
One of the areas that needs to be tackled, according to Mr Strachan, is the grey area between fully automated guidance and full-on advice.
The report, The Next Frontier: The Future of Automated Financial Advice, outlines the amount people will be prepared to pay for the use of a robo-adviser. By the far the largest cohort said they would be prepared to pay £125, with popularity rapidly declining the more the price goes up.
Automated advice on investing £11,000 charged at £225 only received support from 16 per cent of people, while a £360 fee saw support from 6 per cent.
London fintech startup Curve has made its first PR and comms hire with the appointment of Burson-Marsteller’s Callum McCaig, as the business prepares to scale out of ‘beta’ and launch its digital banking platform to the mass market.
Curve has raised £3m in seed funding from investors, including Seedcamp and the founders of Transferwise, Betfair, Azimo and Google Wallet, and plans to announce a Series A funding round later this year.
MarketInvoice, the world’s largest peer-to-peer online invoice finance marketplace, has joined the UK FinTech Financial Crime Exchange (FFE), a joint initiative by think tank RUSI and risk consultancy FINTRAIL, launched today.
The FFE brings together FinTech firms who have agreed to collaborate, by sharing best practice and pooling information on financial crime typologies to protect their customers and strengthen their sector’s ability to detect and counter the global threat of financial crime, including money laundering, terrorist financing, bribery and corruption, tax evasion and market manipulation.
The UK FinTech sector is at the forefront of the global FinTech revolution, contributing £7b to the UK economy.
Invited to defend their views vis-à-vis the financial commission of the parliament, representatives of the German Crowdfunding Association have challenged the government’s position and presented substantial counterarguments.
As a reminder: crowdfunding regulation at European Union (EU) level was so far deemed “premature” by EU authorities and is therefore not included in the Capital Markets Union, the EU’s effort to harmonize capital market regulations at EU level. Hence, each EU country currently issues its own regulation which creates a legal patchwork and hinders cross border deals.
The German government’s report firstly notes that German real estate projects represent 10% of the successful projects and 33% of the capital raised through crowdinvesting, that is €36 million. Projects are typically residential property development, mostly construction, the reminder being renovations. German real estate crowdinvesting nearly doubled in size last year while the growth of startup crowdfunding slumped.
The government finds this trend negative. It justifies its proposal to exclude real estate from the scope of the crowdfunding exemptions as follows:
The large share of real estate in crowdinvesting represents a deviation from the intention of the legislator which was to foster the funding of high-growth startups.
There is no lack of funding for real estate projects. Social real estate, for example, can be funded through schemes that are specific to social housing.
Real estate crowdinvesting could be considered as a form of deregulation of real estate finance which could, bearing in mind the role played by real estate in the 2008 financial crisis, create a price bubble, and ultimately pose a threat to financial stability.
The Crowdfunding Association and crowdinvesting platform leaders found many of the government’s arguments “incomprehensible” and offered point-by-point rebuttals:
Crowdfunding counters price bubbles and real estate overheating. The current real estate market boom is in no way due to crowdfunding, which is much too small to influence market prices, but rather to macroeconomic factors such as the currently low interest rates.
Crowdfunding helps finance real estate SMEs and innovative entrepreneurs. There is no sensible criterion for distinguishing real estate financing from other types of business financing.
The risk of subordinated debt instruments is not specific to real estate. It would therefore be more appropriate to open crowdinvesting to all securities, including profit sharing securities, rather than to exclude real estate from crowdinvesting.
Currently, the German crowdfunding market is disproportionately small. It is surpassed on the Continent by the French market (28% smaller GDP) and dwarfed by the UK market (15% smaller GDP).
Johan Tjärnberg is quietly building a fintech business that may prove as successful as Klarna. During 2016, his payments company, Bambora, grew 20% to revenues of SEK 2 billion.
Bambora is a platform that aggregates hundreds of payments services, and it’s currently available in 65 markets. Bambora’s clients can even choose to use Klarna as their payment service.
During 2017 the business will expand to North America, where the number of merchants using the service will increase by 10,000 over the year. That will boost the sales of the group by 30% to EUR 260 million, Johan Tjärnberg said to Bloomberg News.
Currently, the company has about 100,000 clients, of which 30,000 are located in the US and Canada.
In 2010, Klaus Regling, the head of the euro-area rescue fund for the European Stability Mechanism (ESM), asked me to join the board. I agreed, and said that I wanted to build the Google of the public sector. He looked at me and asked: “Why Google? We can be better than that.” And of course, he was right.
The ESM provides financial assistance to Eurozone countries that have lost market access. It was set up at the height of the euro crisis. Without the ESM, countries such as Greece would have defaulted, and the euro would have broken up. The ESM is the institution that kept the euro together during the crisis. Our total lending capacity is $742 billion. We have provided assistance to five countries: Greece, Ireland, Spain, Portugal and Cyprus. In all, we have provided $281 billion in loans, which is three times as much as the IMF over the same period of time.
Here is how we are planning to move forward to build a modern public institution.
Digital at Heart
First of all, we wanted a lean model, and so we kept only the strategic functions in-house, like funding, economics and investments. We outsourced support functions and non-strategic functions as much as we could. We were the first financial institution worldwide to use a fully cloud-based trading system.
Secondly, we wanted to leverage new technology where possible.
Finally, our workforce of tomorrow, made up of millennials, is the first in our field to consist almost entirely of technology natives.
A Public Sector-driven Fintech solution
Europe has launched the capital markets union, an ambitious effort to harmonize corporate, tax, and bankruptcy laws across the countries of Europe. The differences between these laws are vast because of centuries of history in the 28 members of the European Union. Now we hope to make the laws more similar, because it would create a truly pan-European financial market. For example, the union would break down borders for private equity investment and venture capital, and open up an alternative channel of funding for small- and mid-sized enterprises. Thus, it would reduce Europe’s heavy reliance on bank lending.
The ECB idea is about the centralization of settlement and payment processes for securities. This is a very important initiative, and one that could be complemented by a similar initiative for the primary issuance of securities. It is worth considering a European public sector issuance platform to help distribute debt more efficiently: a fintech solution, driven by the public sector.
One could even think of using new technologies, such as blockchain, to set up the new issuance platform.
A new study by Juniper Research has found the value of digital payments will approach $3.9 trillion this year, representing an increase of more than 14% on last year’s total. While the bulk of transaction value (55%) will be accounted for by online retail purchases for physical goods, P2P (Person to Person) money transfers will see the largest year-on-year net increase in value ($200 million).
The research also emphasised that the demonetisation policies employed by India’s government had encouraged a surge in mobile wallet adoption and, with it, sharp increases in both P2P and mobile retail transactions.
The CFA Institute believes artificial intelligence, fintech and robo-advice will have the greatest impact on the financial services industry – to the extent it is considering including such topics in its examinations.
An overwhelming majority (70%) of CFA members globally who took part in a study said affluent investors will be positively affected by automated financial advice tools in the form of reduced costs, improved access to advice product choices.
Respondents (46%) however, were concerned about automated financial advice algorithms being the biggest risk emanating from robo-advice, followed by mis-selling (30%) and data protection concerns (12%).
India’s P2P Lending sector is poised to grow at a rapid pace thanks to favourable demographics, rising computer literacy, internet connectivity and the ongoing wave of digitalisation among others. With the higher economic growth, the credit-backed consumption growth may jump too.These could be the possible triggers for the growth of P2P Lending Industry.
There is no official assessment suggesting the size of the market in India. But it is estimated to be around Rs 200 Cr. The P2P lending industry may grow 25 to 30 times over next 5-6 years. Talking about the interest rate, the yield on 10-Year Sovereign benchmark bond hovers in the range of 6.45% to 6.95%.
However, it is also important to note that the P2P Lending sector is unregulated.
On the other hand, in P2P lending projects, investors can earn in the range of 14% p.a. to 30% p.a. on a reducing balance method. In P2P Lending, interest rates are decided depending upon the creditworthiness of borrowers.
Korean fintech startup company Honest Fund is a P2P crowdfunding company that raised over $6 million in funding led by KB Investments, Shinhan Capital, Hanwha Investment, and others. It is a peer to peer personal loan lending service that connects borrowers and lenders directly without the need of banks. These funds will not impact the borrower’s credit rating and will charge between 5% to 15%with the average being 9%. They offer a different personal credit review model compared to the banks that only look at a person’s credit rating.
PeopleFund is the first Peer-to-Peer lending platform through a Bank in Korea focused on unsecured personal loans. In 2015 alone PeopleFund has processed over $13 million in loans.
8 percent is a P2P lending company that raised over $13 million. Their APR is set at 8 percent which is why the company is called 8 percent. Established in late 2014 this P2P lending company has become the pioneer in this industry. 8 percent reviews an application and based on credit score and other measures. It is cheaper for clients to use 8 percent than a bank and therefore 8 percent has been able to grow every month. Loans for startup employees and a bridge for big companies have been their new model in 2016. They made news in 2016 for getting funding of $10 million from KG Inicis, one of the leading payment gateway companies in Korea. Bringing together investors and creditworthy borrowers are what 8 percent brings to the table.
Viva Republica runs a money transferring service called TOSS which raised over $48 million in funding from Altos Ventures, Goodwater Capital, Paypal, and KTB Network. They are known for Toss, which is a financial services platform that makes payment system easier by only asking users for 1 password to go along with three easy steps. The max they can transfer per transaction is $430 which makes everyday payments easy. Now they have over 6 million registered users in Korea and Toss has already processed over $3 billion in transactions. Toss now does credit scoring as well as micro-loans and is looking into cross-border money transfers and loan brokerages.