Thursday August 29 2019, Weekly News Digest

VC-backed fintech

News Comments Today’s main news: Funding Circle closes $198M ABS for U.S. SMBs. KBRA assigns preliminary ratings to Consumer Loan Underlying Bond Credit Trust 2019-P2. SoFi to create 300 jobs in Jacksonville, Florida. LendInvest postpones IPO until at least 2020. Binance offers crypto lending. Today’s main analysis: The nonbank and alternative lending industry in 2019. […]

The post Thursday August 29 2019, Weekly News Digest appeared first on Lending Times.

VC-backed fintech

News Comments

United States

United Kingdom

European Union

International

Other

News Summary

United States

Funding Circle Closes $ 198 Million Securitization to Support US Small Businesses (Valdosta Daily Times), Rated: AAA

Funding Circle today closed its first asset-backed securitization (ABS) of US small business loans originated through its platform. The $198 million deal marks the debut of Funding Circle’s US securitization sponsorship capability, and is the fifth securitization of Funding Circle business loans globally.

KBRA Assigns Preliminary Ratings to Consumer Loan Underlying Bond (CLUB) Credit Trust 2019-P2 (Benzinga), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Consumer Loan Underlying Bond (CLUB) Credit Trust 2019-P2 (“CLUB 2019-P2”). This is a $287.80 million consumer loan ABS transaction.

Preliminary Ratings Assigned: Consumer Loan Underlying Bond (CLUB) Credit Trust

2019-P2

Class

Preliminary Rating

Initial Class Principal

A

A+ (sf)

$200,700,000

B

A- (sf)

$37,900,000

C

BB (sf)

$49,200,000

DeSantis says SoFi, SS&C Technologies will create 498 jobs in Jacksonville (Jax Daily Record), Rated: AAA

Florida Gov. Ron DeSantis announced Wednesday that two international information technology companies will create a combined 498 jobs in Jacksonville, disclosing the names of Project Quail and Project Liberty.

SoFi, a California-based online personal finance company, has been seeking $1.5 million in state and city incentives through the Qualified Target Industry Tax Refund program as code-named Project Quail to establish its southeastern operations center and create 300 jobs in Jacksonville.

Court activity on Aug. 27: Sofi Lending Corp. vs Cindy Luu (SE Texas Record), Rated: B

The Harris County Civil Court reported the following activity in the suit brought by Sofi Lending Corp. against Cindy Luu on Aug. 27: ‘Original Petition Citation Issued’.

Swimming Pools Are a Highly Prized Amenity Amid the Summer Heat (LendingTree), Rated: AAA

A new LendingTree study ranks the 50 largest cities by its share of homes with a swimming pool. We found that about 10% of homes have pools, ranging from nearly 33% in Phoenix to 1% in Portland, Ore. We also looked at the values of homes with and without swimming pools to show how much this amenity is worth. Let’s dive in.

Key findings

  • You’ve gotta pay to play: The median home with a pool is valued at $469,187, while the median home without a pool is valued at $305,152 — a 54% premium. The highest premium is in Memphis at a whopping 157%.
  • Go West: It’s no surprise that six of the top 10 cities for swimming pools are in the West — four in California and one each in Arizona and Nevada.
  • Hot, hot, hot: Phoenix, which experiences more than 100 days above 100 degrees a year, leads the way with 32.7% of homes having a swimming pool.
  • Sunshine State: Florida is not far behind California with three cities in the top 10. Miami, Tampa and Orlando rank second, third and fourth, respectively.
  • Rain and water don’t mix: Two of the cities with the least swimming pools are in the rainy Northwest. Portland is in last place with just 1% of homes with pools, while Seattle is not far ahead with 1.3%.
Source: LendingTree

Brex Teams With BigCommerce To Offer Merchant Financing (PYMNTS), Rated: A

Corporate eCommerce card company Brex has announced a partnership with leading SaaS eCommerce platform BigCommerce, according to a release.

Brex’s open credit line, three-month payment terms and interest-free financing are now available to all BigCommerce merchants through the BigCommerce App Store.

German challenger bank N26’s plan to win over Americans (American Banker), Rated: A

N26’s new SoHo office has all the design elements of a tech startup — high ceilings, distressed wood, big windows, a pingpong table, beanbag chairs, community meeting areas.

Digital Banking And Branches Not An Either/Or Proposition (PYMNTS), Rated: A

GOBankingRates found that 25 percent of consumer prefer banking with a mobile app, though nearly half preferred banking in person at a branch or ATM. Yet 76 percent said they wouldn’t open an account with a bank that doesn’t have a mobile app.

According to Fiserv, the preference for digital interactions (online plus mobile) is 58 percent, considerably ahead of the preference for branch interactions (32 percent).

When breaking out online, though, there is a preference for online (37 percent) compared to mobile (17 percent).

Why Fifth Third is raising its bet on alternative power (American Banker), Rated: A

Fifth Third Bancorp is building out its renewable energy banking business, highlighting how the alternative power niche isn’t just for the biggest banks.

The $169 billion-asset Fifth Third recently added three new managing directors to its renewable energy investment banking group. With the additions of Timothy Beach, Ari Citrin and Oliver Janssen, the bank intends to offer more specialized capital markets and M&A advisory services to renewable energy firms, most of which are in solar.

How to Get Your Small Business Ready for a Recession (Successful Meetings), Rated: A

How students are trying to avoid college loans (Marketplace.org), Rated: AAA

Student debt can seem inevitable. Today, more than 44 million Americans owe nearly $1.5 trillion in student loans. This debt has been blamed for many things: Americans’ lack of retirement savingsdeclining rates of home ownership, even the death of marriage.

A look at the nonbank and alternative lending industry in 2019 (Business Insider), Rated: AAA

According to Oracle’s Digital Demand in Retail Banking study of 5,200 consumers from 13 countries, over 40% of customers surveyed think nonbanks can better assist them with personal money management and investment needs, and 30% of respondents who haven’t tried a nonbank platform said they’re open to trying one.

Business Insider Intelligence’s Online Mortgage Lending Report found that the top five US banks – Wells Fargo, Bank of America, and JPMorgan Chase, US Bancorp, and Citigroup – only accounted for 21% of total mortgage originations, which is a huge decline from their 50% combined market share in 2011.

Source: Business Insider

According to a survey from the Federal Reserve Bank of Richmond, in 2016 only 58% of loan requests from small businesses were approved by incumbent banks, compared to 71% approved by alt lenders that same year.

Fund That Flip Raises Another $ 11M to be the Funding Solution for Real Estate Speculators (Alley Watch), Rated: A

AlleyWatch caught up with Matt Rodak to learn more about the company’s success, future growth plans, and recent round of funding, which brings its total funding to $13M across four rounds.

New Tools Help Mortgage Lenders Build Stronger Relationships with Borrowers’ Real Estate Agents (SimpleNexus), Rated: A

SimpleNexus makes it easy for loan originators to create co-branded mobile apps for Realtor partners to share with borrowers. The shared platform enhances the borrower experience by keeping partners up-to-speed on loan progress and putting mortgage calculators and other handy tools at partners’ fingertips.

Pagaya Expands PAID Shelf with Prosper: Closing $ 115 Million Consumer Credit ABS (BusinessWire), Rated: A

Pagaya, a global financial technology company using artificial intelligence (AI) to reshape asset management, today announced the closing of a consumer credit asset-backed security (ABS) at $115 million. Led by structuring agent Cantor Fitzgerald, the ABS will be actively managed by Pagaya’s AI.

Pagaya has been working closely with Prosper to develop innovative financing solutions for consumers, which will be featured in this securitization.

Tech startup Blooma launches out stealth with $ 2.75 million seed funding for its loan origination AI platform (Tech Startups), Rated: A

Blooma, a tech startup that reduces time to revenue for commercial lenders, launches out of stealth with $2.75 million seed funding to transform the lending experience for commercial and private lenders and other organizations. The financing was led by Floodgate, a Palo Alto, Calif.-based investor. Other backers include: Abstract Ventures, Crescent Ridge Partners and Serra Ventures.

Former PayPal executive joins crypto lending startup Cred as CFO (The Block Crypto), Rated: B

Cryptocurrency lending and borrowing startup Cred has hired former PayPal executive as its chief financial officer (CFO), according to an announcement Monday.

iCapital Network expands exec team with four New hires (PE Hub), Rated: B

“STYLE360” Celebrates 15 Years At New York Fashion Week With New Title Sponsor Klarna (PRWeb), Rated: B

Fashion event agency, A-List Communications announces their lineup and new title sponsor Klarna for their 15th year of STYLE360, which will take place during the latter portion of Spring/Summer 2020 New York Fashion Week from September 9 – 11, 2019.

White Oak Commercial Finance Originates a Revolving Credit Facility to The Good Kitchen (Financial Content), Rated: B

White Oak Commercial Finance (“White Oak”), an affiliate of White Oak Global Advisors, announced today the origination of a new revolving credit facility to healthy meal service company The Good Kitchen. Originally founded as a meal delivery service, The Good Kitchen will use the proceeds of the credit facility to expand its business into packaged meals sold at 1,500 stores across the United States.

Lenders Moving Away From Small-Dollar Loans to High-Interest Installment Loans (Lexology), Rated: B

California non-bank consumer lenders are moving away from small-dollar short term payday loans and are, instead, embracing longer-term installment…

United Kingdom

LendInvest reportedly shelves IPO plans for now (AltFi), Rated: AAA

Nearly a year after announcing a $39.5m “pre-IPO” funding roundLendInvest has delayed plans to IPO this year in favour of another private cash injection, according to a report by Financial News.

Mobile banking apps in the UK are surging ahead of investment and insurance apps (Business Insider), Rated: A

Over three-quarters of consumers in the UK use a finance app, according to a new study from Speedie Consultants that surveyed 200 people in the country. Twenty-four percent of those surveyed use their finance apps around twice a week, and 23% said they use it daily. The most common finance app users were aged 25-45, in addition to consumers over 65.

Source: Business Insider

Klarna launches VAR campaign created by 72andSunny (Prolific London), Rated: A

Swedish fintech payments firm Klarna has launched a new campaign focused around the introduction of Video Assistant Referee technology in the UK’s Premiere League.

Celsius Network Sees A 20x Increase In Deposits, However, Many Analysts Are Concerned (Bitcoin Exchange Guide), Rated: A

According to the latest press release, leading crypto lending firm Celsius Network has seen an increase of 2,165% growth in deposits. The network has already surpassed 20,000 BTC through mobile app deposits during the first year of operations.

New data reveals rapid growth in Peer-To-Peer lending is cannibalising High st bank market share (ResponseSource), Rated: A

Know Your Money data revealed that:

• Peer to Peer and Challenger lenders comparison searches have more than doubled in 3 years

• 33% of Businesses selected a P2P or challenger lender on  in 2019 – compared to just 15% in 2017

• Alternative lending interest more than doubled in the last 2 years

Revolut Boosts Executive Leadership with New Hires from Traditional Banking (Crowdfund Insider), Rated: B

According to Revolut, the Fintech bank has hired Philip Doyle as Director of Financial Crime Risk, Wolfgang Bardorf as Treasurer and Stefan Wille as Deputy Chief Financial Officer.

European Union

Zurich-based Numbrs is the latest fintech to join the unicorn club (Business Insider), Rated: AAA

The Zurich-based fintech, whose investors include former Deutsche Bank CEO Josef Ackermann, raised $40 million at a valuation of over $1 billion, reports Bloomberg. The latest investment brings Numbrs’ total raise to date to almost $200 million, CEO Martin Saidler told the outlet.

Notably, in contrast to many of its peers, Numbrs has joined the unicorn club not by focusing on venture capital and private equity funding, but instead by relying mostly on individuals and families — 50 have invested in the company thus far. The startup’s app enables users to aggregate their various bank accounts and manage their finances, and offers a marketplace for consumers to purchase various financial products.

Source: Business Insider

P2P Global Investments sells largest position for €250m (AltFi), Rated: A

The £1bn P2P Global Investments has sold one of its largest positions, in Castlehaven Finance, an Irish alternative development and bridging finance lender.

Castlehaven typically provides loans of between €1m – €20m in the property space, an increasingly big proportion of P2P GI’s portfolio.

The investment trust has provided financing in excess of €385m to Castlehaven since 2016.

What is the EU doing to understand if Artificial Intelligence apps are trustworthy? (Open Access Government), Rated: B

The University of Oxford received an immense £150 million donation to create a centre studying the ethics surrounding AI in the modern world, whilst global audiences continue to be fascinated by shows like Black Mirror which explore the worst-case consequences of AI accessing personal data.

The project is composed of three distinct, albeit related, parts, run in sequence from January 2019 to December 2020:

Part 1: Application of AI for risk management in bank and peer to peer lending

Part 2: Application of AI for risk management in financial investments and robot advisory

Part 3: Application of AI for risk management in blockchain payments and crypto assets

International

Binance Launches Crypto Lending Service (CryptoGlobe), Rated: AAA

Binance has launched a lending service allowing its users to earn cryptocurrency without trading, in a passive way. Currently the service is open for only a few tokens – its Binance Coin (BNB), Tether’s USDT stablecoin, and Ethereum Classic (ETC). Annualized interest rates are of 15% for BNB, 10% for USDT, and 7& for ETC.

Alternative Finance is Experiencing an Unprecedented Boom Worldwide (Crowdfund Insider), Rated: A

Ten years after the financial crisis, Alternative Finance continues to exhibit strong growth. The sector is estimated to account for nearly €300 billion of inflows worldwide, a market exhibiting 25% annual growth and largely dominated by the Chinese (75%), which percentage was already recorded in 2015 by a study conducted jointly by KPMG and the University of Cambridge.

The United States takes second place with 19% of the market, while Europe currently represents just 6%, 60% of which comes from the United Kingdom. In France, alternative finance raised €1.4 billion in 2018, a year-on-year increase of 39% according to the annual report of KPMG and the non-profit group Financement Participatif France (FPF).

The latest crowdfunding trend is in real estate (Born2Invest), Rated: A

The global crowdfunding market is estimated to be expanding from 2018 to 2022 to $89.72 billion. From the first recorded successful crowdfunding in 1997, to how the first dedicated crowdfunding platform ArtistShare had come about in the year 2000,  crowdfunding has indeed disrupted many industries in different levels.

How and why the global centre of cryptocurrency moved back to Asia (Finder), Rated: A

The problem of investment scammers is much bigger than cryptocurrency though, Wong pointed out, and much bigger than Invest: Asia.

“I don’t think Invest: Asia is big enough to move the needle if you’re running a scam in China,” he said. “That just speaks to the size of the population in China. In general, I think there’s lots of financial scams in general in China, right? For example, a couple years ago there was a big peer to peer lending scandal.”

“The peer to peer lending was legitimately becoming a hot growth FinTech sector in China, but then people were running these peer to peer scams. Because it was so hot, everyone’s talking about it. It creates the conditions for scammers to launch whatever scheme that they want to launch.”

Australia/New Zealand

Prospa Full Year 2019 Results (Scoop), Rated: AAA

• FY19 loan originations of $501.7 million up 36.6% on the prior year (FY18: $367.3 million), 3.1% ahead of prospectus forecast.
• FY19 revenue of $136.4 million up 31.2% on the prior year (FY18: $104.0 million), in line with prospectus forecast.
• FY19 pro forma EBITDA of $6.8 million, ahead of prospectus forecast by 11.5%.
• Prospa has now delivered approximately $1.2 billion in loans since inception and total customer numbers in Australia and New Zealand grew to over 20,000 in FY19, up 58% on the prior year.
• Customer satisfaction remains consistently high, with Prospa’s annual average Net Promoter Score in excess of +77 in 2019. Prospa also has a rating of 9.8/10 on independent review platform TrustPilot.
• Business expansion has continued with the successful launch of new cash flow products and services and diversification into New Zealand.
• Further investment in executive strength, with new Chief Technology Officer, Chief Commercial Officer and Executive General Manager, Growth Channels appointed.

2019 Finder Awards winners (Finder), Rated: AAA

The 2019 Finder Awards recognise the market’s most competitive offerings across credit cards, home loans, personal loans, car insurance, banking, insurance, technology and superannuation.

Source: Finder
Source: Finder
Source: Finder
Source: Finder
Source: Up Bank
India

What future trends do you foresee in the startup ecosystem? (New India Express), Rated: AAA

P2P lending has also become increasingly popular as an alternative lending route as small businesses find it easier to obtain loans directly from other individuals. Going forward, we can expect more cloud-based services backed by advanced analytics that offer personalized loan limits and payback schedules, based on the borrower’s credit history.

Traditional players will also get into online lending and emulate the strategies of P2P lending companies. More businesses will start adopting work-from-home policies to increase cost savings and productivity. On the tech front, businesses will start investing more in AI and analytics to get a deeper insight into customer behaviour.

– Kewal Kapoor, director and creative strategist of CHAI Kreative and Return of Million Smiles  

Xiaomi is moving into India’s consumer-lending market (Business Insider), Rated: A

The fourth-largest mobile phone vendor plans to launch a consumer-lending business, dubbed Mi Credit, in India in the next few weeks, according to Reuters. It will offer loans of up to 100,000 rupees ($1,451), with interest rates starting at 1.8%.

Xiaomi is positioned as a leading smartphone manufacturer in India, with 70 million mobile phones in use throughout the country. It already launched its payment app, dubbed Mi Pay, in the country in March, which is reportedly “doing well,” per Reuters. For context, in China, Xiaomi’s lending business shows a loan book worth $8 billion.

Source: Business Insider

Furniture rental startup RentoMojo to raise Rs 27.7 Cr led by Samsung VC arm (YourStory), Rated: B

In July 2019, the company secured Rs 1.16 crore from Renaud Laplanche, the Co-founder and CEO of Upgrade, who earlier participated in the startup’s Series C funding round of Rs 77 crore in May, along with Accel Partners, Chiratae Ventures, IDG Ventures, and Bain Capital. At that time, the startup said the funds will be used for accelerating its growth and expansion to new cities.

Canada

IOU Financial Inc. Releases Financial Results for the Three and Six- Month Period Ended June 30, 2019 (PR Newswire), Rated: AAA

  • Loan originations increased 31.8% to US$38.5 million in Q2 2019 compared to Q2 2018.
  • Total loans under management increased 36.4% to $101.0 million as at June 30, 2019 compared to the same period in 2018.
  • Adjusted gross revenue increased 25.1% to $5.5 million in Q2 2019 compared to Q2 2018.
  • Adjusted Operating Expense Ratio decreased to 10.0% in Q2 2019 compared to 11.9% in Q2 2018.
  • Adjusted net earnings amounted to $0.3 million in the second quarter of 2019, representing the sixth consecutive profitable quarter. Adjusted net earnings amounted to $0.8 million year-to-date.
Africa

Why and how peer-to-peer lending had to become market place lending (Business Live), Rated: AAA

The linked dangers of an inverted yield curve and a slowing economy have hammered banks stocks in recent months, and profit margins are already compressing. But the banks’ worries pale in comparison to challenges confronting the peer-to-peer or “market place” lenders — the start-ups that have set out, over the past decade or so, to upturn the banking industry.

Authors:

George Popescu
Allen Taylor

The post Thursday August 29 2019, Weekly News Digest appeared first on Lending Times.

Thursday December 7 2017, Daily News Digest

Robinhood

News Comments Today’s main news: Credible raises $50M in Australian IPO. Kabbage considers IPO. Blockchain project gives New York homeless a digital identity. Funding Circle surpasses $5B global lending, $1B to U.S. businesses. RateSetter publishes 2016-17 accounts. Starling Bank gets full FCA, PRA approval. N26 launches premium debit card, partners with WeWork. Revolut rolls out bitcoin services. Vietnam gets first P2P lending platform. IOU […]

Robinhood

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Canada

News Summary

United States

Kabbage Mulling An IPO (Seeking Alpha), Rated: AAA

According to FT Partners, the FinTech market saw a record 412 financial deals during the third quarter of 2017. One of the largest deals in the quarter involved a $250 million investment by Softbank (OTCPK:SFTBY) in billion-dollar unicorn Kabbage (Private:KBGE).

Kabbage generates revenue from the fees on the loans. It expects revenue of over $200 million in 2017, roughly double the revenue in 2015. The company claims to have a loss rate lower than the rest of the industry, and that its direct lending business had turned profitable in the fourth quarter of 2016. It expected the whole business to be profitable in the second half of this year.

Kabbage plans to use the funds for expansion into Asia and build new products like insurance and payroll services. It will also be positioning the company for a possible IPO.

Securitizations Securing the Future (Lending Club), Rated: AAA

As we near year’s end, we’re excited to announce that LendingClub has closed its third self-sponsored securitization. The $330 million transaction saw immediate traction and has further increased access to consumer credit for the stable and scalable pool of investor capital in the liquid Asset-Backed Securities (ABS) investor market.

Of note, with 48 total securitization investors this year, over two-thirds 34 are new to LendingClub, including insurance companies, hedge funds, a bank and a pension fund.

We Analyzed 7 Of The Fastest-Growing Personal Finance Apps Of All Time To Figure Out The Secrets To Their Success (CB Insights), Rated: AAA

Ninety-two million millennials will soon be in what Goldman Sachs calls their “prime spending years.” In aggregate, they command $1.3 trillion in annual spending.

(Bankrate found 83% of millennials don’t think they’ll ever retire: they simply “don’t think they’ll have the money” to do so.)

Source: CB Insights

For three of the tools we looked at — Mint, Level Money, and Check — we studied how their product evolved all the way up to their acquisition (by Intuit, Capital One, and Intuit, respectively).

Source: CB Insights

What follows are the results of our analysis — six secrets to success in the world of personal finance management.

1. Use pre-launch marketing to build both trust and hype

Mint had by far the most significant growth in its valuation — from $0 to $170M in just two years.

Source: CB Insights

2. Making the first experience valuable

Keeping users around is hard: according to Localytics, the average mobile app loses 80% of its users within just three days of download.

The best apps retain about 70% of users after three days. The next-best retain about 60%.

Source: CB Insights

3. Design for The Specific User You Want

Source: CB Insights

Millions Are Hounded for Debt They Don’t Owe. One Victim Fought Back, With a Vengeance (Bloomberg), Rated: AAA

A few minutes later, Therrien’s phone buzzed. It was the same guy. He gave his name as Charles Cartwright and said Therrien owed $700 on a payday loan. But Therrien knew he didn’t owe anyone anything. Suspecting a scam, he told Cartwright just what he thought of his scare tactics.

Therrien had been caught up in a fraud known as phantom debt, where millions of Americans are hassled to pay back money they don’t owe. The concept is centuries old: Inmates of a New York debtors’ prison joked about it as early as 1800, in a newspaper they published called Forlorn Hope. But systematic schemes to collect on fake debts started only about five years ago. It begins when someone scoops up troves of personal information that are available cheaply online—old loan applications, long-expired obligations, data from hacked accounts—and reformats it to look like a list of debts. Then they make deals with unscrupulous collectors who will demand repayment of the fictitious bills. Their targets are often poor and likely to already be getting confusing calls about other loans. The harassment usually doesn’t work, but some marks are convinced that because the collectors know so much, the debt must be real.

The problem is as simple as it is intractable. In 2012 a call center in India was busted for making 8 million calls in eight months to collect made-up bills. The Federal Trade Commission has since broken up at least 13 similar scams.

This New Blockchain Project Gives Homeless New Yorkers A Digital Identity (Fast Company), Rated: AAA

Three thousand homeless people in New York are about to receive a special holiday gift: a free smartphone that allows them to manage their digital identity, access shelters and food pantries, and make use of financial services.

The project comes from Blockchain for Change, a New York City startup that has developed a mobile app called Fummi that’s preloaded on the phone. It has teamed up with Life Wireless, which provides phones to low-income groups using federal subsidies. Also involved are NYC service providers like Urban PathwaysPart of the Solution (POTS), Hakook, and the Robin Hood Foundation.

Life Wireless is distributing the phones, starting in the Bronx. The service groups create the blockchain identities for individuals. Once on the system, they can then open an account, receive money, and track their activity.

Blockchain for Change has raised more than $500,000 in a seed round, but it’s also planning a public initial coin offering where it hopes to raise up to $50 million. It generates revenue by charging fees to users at a rate of $3 per month.

On Earnings Calls, Which Tech Company Are Senior Execs Most Obsessed With? (CB Insights), Rated: A

More than Google, Apple, or Facebook, there’s one company that CEOs and public company execs are talking about the most. We analyzed earnings call transcripts to identify the new king of technology.

Amazon has been mentioned nearly 3000 times in the last year.  That’s more than Facebook, Apple, and Microsoft combined.

Source: CB Insights

 

Global Debt Registry joins Wall Street Blockchain Alliance (Finextra), Rated: A

Global Debt Registry (GDR), the asset certainty company, today announced its membership to The Wall Street Blockchain Alliance (WSBA).

WSBA is an industry non-profit trade association created for financial market professionals, by financial market professionals. The alliance engages market participants, regulators, policymakers and technology innovators to advocate the adoption of blockchain’s distributed ledger technology.

Discover Enables Apple Pay Cash (PYMNTS), Rated: A

Discover has announced that transactions made with Apple’s new Apple Pay Cash card will leverage the Discover Network.

The card is part of the new Apple Pay functionality, which allows U.S. customers to quickly, easily and securely send and receive money among friends and family. When Apple customers receive money on a supported device, the money is added to their new Apple Pay Cash card. They can use the money instantly to pay someone or to make purchases using Apple Pay in stores, apps and on the web.

Payday lender Curo to launch in New York with $ 620m valuation (Financial Times), Rated: A

One of America’s biggest payday lenders is launching on the stock market with a $620m valuation, cashing in on mounting hopes that the Trump administration and Republicans in Congress will ease regulatory restrictions on the sector.

Curo Group, which targets “underbanked” consumers and is behind WageDayAdvance in the UK as well as Speedy Cash in the US, begins trading on the New York Stock Exchange on Thursday.

Shares in the private equity-backed company were priced on Wednesday evening at $14 per share, according to Bloomberg data.

Jury Convicts Online Lender Of $ 220M (Mondaq), Rated: A

Recently, a Manhattan federal jury convicted Richard Moseley Sr., the head of an online network of payday lenders and loan servicers, on charges of wire fraud, aggravated identity theft, and violating the Racketeer Influenced and Corrupt Organizations Act and Truth in Lending Act, among other counts.

Moseley was convicted due to his leadership role over a vast and complicated system of interrelated companies that collected over $220 million from more than 600,000 borrowers and deceived regulators in the process. Convincing state and federal regulators and even his own lawyers that his companies were based offshore and not bound by U.S. law, Moseley coordinated a network of lenders and loan servicers that routinely misled both consumers and regulators.

Instamotor Customers Can Now Apply for Financing While Shopping For A Used Car (BusinessWire), Rated: A

Instamotor, the free online used car marketplace, announced today that its customers can now apply for and receive financing for vehicles on its platform.

An estimated 54% of used car buyers need financing according to Experian. By working with leading direct-to-consumer automotive lenders, Instamotor will become one of the few true automotive marketplaces to enable its users to shop for a used car and secure the financing more than half of them will need, all conveniently integrated in one place.

Loans enabled through Instamotor will be available to consumers with FICO scores as low as 500, which are people who commonly have trouble receiving optimal loan terms through traditional financing methods. Also, the application is optimized to be completed entirely in the comfort of one’s home rather than in a dealership office or credit union.

Lendio Opens New Franchise in Nashville (Crowdfund Insider), Rated: A

Marketplace lending platform Lendio, recently announced its has opened its new franchise located in Nashville, Tennessee. Lendio revealed that its franchise program makes accessing business loans easy by helping small business owners skip the legwork of looking for a small business loan.

Progressive Leasing and Marqeta Partner to Power New Lease-to-Own Financing Experience (BusinessWire), Rated: A

Marqeta, the open API payment card issuing platform, and Progressive Leasing, a virtual lease-to-own company and a division of Aaron’s, Inc., today announced a technology partnership that will enhance the checkout process for Progressive Leasing customers.

As one of the largest players in the lease-to-own industry, Progressive Leasing sought a partner who could support their needs today and provide innovative solutions to help build their future payment checkout roadmap. Through the partnership, Marqeta will enable Progressive Leasing to issue virtual cards at the point of sale and work with them to create additional innovative payment offerings.

With the partnership, Marqeta will enable Progressive Leasing to take advantage of a wide range of modern features, including virtual card issuance, tokenization, and its patent-pending Just-in-Time (JIT) Funding, allowing Progressive Leasing to authorize and reconcile transactions in real time.

Real estate crowdfunding expands into more niche markets (Curbed), Rated: A

To those unfamiliar with real estate crowdfunding, the Fair-Haired Dumbbell development in Portland may be just the kind of wacky, esoteric project one envisions when imagining what happens when strangers pool funds online, crossing Kickstarter with construction. A pair of six-story towers connected by a skybridge, the commercial project does in fact resemble a hand weight, with an ostentatious, colorful Italianate pattern sprawled across the facade for extra impact.

Funded in part by investors who pooled money via the Crowdstreet crowdfunding platform, the building, located in a former industrial neighborhood called Burnside Bridgehead, is also open for business and looking for tenants. It’s the city’s first crowdfunded building, and a sign that the growing world of real estate crowdfunding has developed and matured since a 2012 change in investment regulations made these platforms possible.

While reliable numbers about this growing and fragmented market prove difficult to come by, research firm Massolution estimated the global market for real estate crowdfunding surpassed $3.5 billion in 2016.

Hope grows that a larger SEC crackdown on ICOs is coming — and soon (TechCrunch), Rated: A

More than $3 billion has been raised through so-called initial coin offerings so far in 2017.

That wait-and-see stance looks to evolve into much more action in 2018, suggest those who’ve either spoken with the Securities and Exchange Commission or otherwise have a vested interest in its rulings. (The SEC isn’t commenting publicly on its specific plans.)

Just Friday, a new division of the agency that’s focused on ICOs filed charges against an outfit called PlexCoin that reportedly raised $15 million from thousands of investors by promising a 1,354 percent return in 29 days or less.

Credit score row as FICO chief hits out at banks over ‘Fako’ rivals (Financial Times), Rated: A

A row has erupted over credit scoring after the head of FICO, the company whose metric underpins trillions of dollars in lending decisions in the US, hit out at some lenders for supplying customers with a rival measure he dismissed as “Fako”.

The group that supplies lenders with the rival assessment, VantageScore, hit back, saying Mr Lansing was spreading “misinformation aimed at discrediting FICO’s only real competitor”.

The spat points to the opacity of credit scoring, a crucial part of America’s consumer finance economy that is in the spotlight after the huge data loss at the credit reporting company Equifax.

Tips for Reducing College Costs (Earnest Email), Rated: B

Source: Earnest

Roostify to Integrate With Black Knight’s LoanSphere Empower Loan Origination System (BusinessWire), Rated: B

Roostify, a provider of automated mortgage transaction technology, today announced that it has signed an agreement with Black Knight, Inc. (NYSE:BKI) to integrate its platform with Black Knight’s LoanSphere Empower loan origination system (LOS). The integration will enable Empower users to add further efficiency and transparency to the loan origination process – from application to closing.

Envestnet | Yodlee Incubator Unveils New Class of Fintech Disruptors (Business Insider), Rated: B

Envestnet | Yodlee(NYSE: ENV) today announced the members of the newest Envestnet | Yodlee Incubator class.

The members of the 2017–2018 Envestnet | Yodlee Incubator class are:

  • Amplifunds helps donors find non-profits that match their interests and performance expectations.
  • Datasine turns transactional data into psychometric insights, allowing banks to better serve their customers.
  • Golden helps families care for their senior parents’ financial health, wealth and security.
  • Peanut Butter offers a cloud-based software to help employers attract college-educated talent by managing student loan assistance programs.
  • Starbutter AI makes text and voice chat Artificial Intelligence (AI) agents that help consumers pick financial products like credit cards and mortgages.
  • Stessa enables property owners to manage, track, and communicate performance of their real estate assets.
  • Tangello improves home affordability by bridging the gap between renting and buying and offering a flexible, lower cost, and quicker way to finance homes, directly from mobile devices.
  • Veryfi provides mobile-first bookkeeping software that empowers business owners by automating the tedious parts of accounting through AI and machine learning.

AutoGravity Names Sheng Wang As Chief Technology Officer (PR Newswire), Rated: B

AutoGravity has announced the appointment of Sheng Wang as Chief Technology Officer (CTO) to drive the company’s global engineering efforts. Wang joins AutoGravity’s executive team with responsibility for leading product and engineering to deliver a trustworthy and innovative car buying experience that empowers the consumer.

Prior to her appointment as CTO, Wang led AutoGravity product development as the company’s first Director of Product, building cross-functional teams to develop and launch the award-winning AutoGravity platform, as well as branded platforms for Volkswagen Credit and Kia Motors Finance. Wang joined AutoGravity with more than fifteen years of leadership experience in the technology industry and an uncompromising dedication to building dynamic teams and high-impact products that people love.

QCash Financial Wins Financial Times Future of Fintech Awards for the Innovation Category (BusinessWire), Rated: B

QCash Financial, a Credit Union Service Organization (CUSO) providing automated, cloud-based small-dollar lending technology for financial institutions, announced that it was selected as the winner of Financial Times Future of Fintech Innovation Award.

The FT Future of Fintech awards recognize pioneering companies able to demonstrate innovative ideas capable of creating lasting change in the financial services sector on a global scale. Financial Times offers an Innovation Award for newer Fintech companies that are bringing out novel solutions. QCash Financial was awarded the Innovation Award.

United Kingdom

Funding Circle passes $ 5 billion lent globally, including $ 1 billion lent to US businesses (PR Newswire), Rated: AAA

Funding Circle today announced that investors have lent more than $5 billion globally to small businesses through the Funding Circle platform. This has supported a network of 40,000 businesses across the UK, USAGermany and the Netherlands and helped to create more than 100,000 new jobs.*

Today’s news follows a record November for Funding Circle globally with the business facilitating more than $260 million of lending, including $175 million in the UK (£130m), $70 million in the US and $15 million in Continental Europe (€14.5m). Together this has helped thousands of business owners to access fast, transparent finance to grow their businesses, and will lead to an estimated 7,500 new jobs.

With US businesses now having accessed more than $1 billion in funding through the platform, Funding Circle becomes the first lending platform anywhere in the world to have facilitated more than $1 billion across two markets.

Your December Review – Insight and Analysis (Funding Circle), Rated: AAA

Your lending has reached £3 billion in the UK! November was also a record month, with £129 million lent to small businesses in the UK.

Over half of Brits (56%) think they have the skills to run their own business, but only 13% believe they’re entrepreneurial.

Source: Funding Circle
Source: Funding Circle

RateSetter Publishes 2016-2017 Accounts (Crowdfund Insider), Rated: AAA

On Wednesday, UK peer-to-peer lending platform RateSetter released its accounts for the year ending on March 31, 2017. The online lender reported that revenues were £23.7m, up 38 percent from 2015-16; loans under management grew by 23 percent, from £581m to £714m; the number of active lenders grew by 36 percent from 31,036 to 42,049; and, over the same period, the number of active borrowers grew 27 percent from 161,000 to 204,000.

Peer-to-peer lender RateSetter’s losses jump as it takes a hit from bad loan to ad company (Business Insider), Rated: A

RateSetter booked a pre-tax loss of £23.3 million in the year to March 2017, compared to a £5.3 million in the previous year. The company operates a peer-to-peer platform that matches retail investors with individuals looking to borrow money.

Operating losses were £9.2 million last year but the figure was pushed higher by a one-off write-down relating to a loan the platform made to Adpod Limited, an advertising business RateSetter lent £12 million.
‘A resilient business’
RateSetter’s accounts also show that revenue rose by 38% to £23.7 million. Loans under management rose by 23% to £714 million. The number of active lenders on the platform rose by 36% to 42,049 and the number of borrowers rose by 27% to 204,000.

Goodwill impairment helps push Ratesetter further into to the red (Verdict), Rated: A

A goodwill impairment pushed pre-tax losses for RateSetter down to £23m in the year ending March 2017, despite revenue growth of 38% to £23.7m.

The company, which launched a consumer vehicle and commercial assets HP offer this year, saw a rise of 36% in the number of lenders and 27% of borrowers. However, operating losses of £9.2m were further weighed down by a £14.1m goodwill impairment on a loan to advertising company Adpop.

In 2015 Vehicle Trading Group, a company operating in motor finance for consumers and dealerships, used a wholesale facility from RateSetter to lend £12m to Adpop. Both Vehicle Trading Group and Adpop subsequently went into financial difficulties, and RateSetter then bought the two companies.

RateSetter thus decided to back Adpop’s repayments of third party loans, preventing its provision fund from absorbing the hit, as it normally would in case a borrower defaults.

Starling Bank Receives Full Regulatory Approval from FCA & PRA to Offer Broad Portfolio of Financial Products (Crowdfund Insider), Rated: AAA

Starling Bank has been granted approval by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) to offer customers a wide array of financial products by the mobile only bank.  Starling Bank received a licence to operate as a bank by the Bank of England in 2016. The digital only challenger bank will now be able to provide; mortgages, consumer loans, ISAs, and other investment products via their App. No bricks and mortar necessary.

Barnett backs P2P Global Investments for recovery (Citywire), Rated: A

P2P Global Investments (P2P), the largest of the listed alternative lending funds, has won the backing of Invesco Perpetual’s Mark Barnett, its largest shareholder, for the turnaround plan it outlined last week.

The future of advice is ‘Fintegration’ (Professional Adviser), Rated: A

The financial advisory sector has seen much change in the past few years, much of it driven by new technologies and a wave of new market entrants. While we are seeing consolidation and innovation in response, this is just the start. So if you thought the merry-go-round was slowing down, then grab hold tightly because it is only going to accelerate.

‘Fintegration’ – the integration with fintech services – is emerging as an important factor.

What is common to both groups is their appetite for financial online and digital services – from online banking and mortgage management to peer-to-peer lending platforms. There is no doubt we will shortly see the fully integrated dashboard becoming commonplace.

China

China targets booming online lending as crisis fears build (Hong Kong FP), Rated: AAA

The 24-year-old secretary is among millions of Chinese who have turned to proliferating online companies that dish out quick loans — and are worrying the country’s leadership.

Jia started accumulating her debt when she was in college, turning to tech titan Alibaba when she could not get a credit card.

The ease of a few taps on her phone and a four minute wait led Jia to borrow and borrow and when she was finally able to take out a card, she used it to repay Alibaba’s affiliate Ant Financial.

But her debt reached roughly US$9,000 this summer, and her monthly interest payments eclipsed her meagre salary.

‘Lending nirvana’ 

Alternative lending, with loans that can be wired to accounts within minutes, has taken off in China and accounts for 85 percent of the global market, according to a University of Cambridge report.

European Union

N26 launches a premium debit card for ‘the digital customer,’ partners with WeWork (TechCrunch), Rated: AAA

N26, the European mobile banking service, today announced the launch of N26 Metal, the company’s premium MasterCard-affiliated debit card “tailored to the needs of digital customers” at TechCrunch Disrupt Berlin. N26 Black customers in Germany, France, Italy and Austria will be able to sign up for the new NFC-enabled card, which obviously features a metal core made from tungsten and that makes the card weigh a lot, starting December 14.

It’s also worth noting that this is the first metal card in Europe that supports contactless payments.

What better company to partner with then than co-working and real estate startup WeWork. Using the N26 Metal service, N26 customers will also be able to join the WeWork network and get credits to reserve workspaces and conference rooms.

International

Currency trader Revolut’s offer to those champing at the bitcoin (The Times), Rated: AAA

Revolut, which provides foreign currency services to consumers and small businesses, said that from today its users would be able to buy bitcoin and other “cryptocurrencies” using 25 conventional currencies.

BFS Capital has Extended Over $ 1.7 Billion in Financing to Businesses across the US, UK and Canada (BusinessWire), Rated: A

Marking its 15th anniversary year, BFS Capital, a leading small business financing platform, announced it has now extended over $1.7 billion in financing since funding its first deal in 2002. The company also reported that over 75 percent of its originations have occurred in the last five years and more than 25 percent took place in the last 18 months. For full year 2017, BFS Capital expects to generate more than $300 million in originations, a new annual high.

Recent Origination Milestones in Online Lending (Lend Academy), Rated: A

Today, Kabbage announced they had crossed the $4 billion mark. They have now lent to more than 130,000 small businesses which they claim is the largest customer base of any online small business lender.

This week LendingHome announced it had crossed $2 billion in mortgage loans for homeowners and real estate investors.

Funding Circle UK crossed the £3 billion (approx. $4 billion) mark in small business lending for their UK business.

LendingClub quietly announced total small business originations of $500 million since 2014 in a recent blog post.

Emerging markets are under pressure, but I’m buying the dip (CNBC), Rated: A

The Chinese government instituted tough new regulations on online consumer lending platforms, which are made up of payday loans and peer-to-peer lending. Some of them are associated with large holdings in the emerging markets exchange-traded fund like Ant Financial, an Alibaba Group affiliate.

While much of this is a continuation of the Chinese debt bubble, the move suggests that it has gotten out of the regulators’ control.

We see a global trade boom continuing to drive emerging markets as global Purchasing Manager indexes show continued growth in demand for manufactured goods. For example, Korea is already registering signs of slowing Chinese demand but is still showing 9.6 percent year-on-year growth for November exports. However, we continue to watch the tone out of Washington, since a shift toward more protectionism could put a dent in this.

Viola FinTech is a new $ 100M Israel-based VC fund targeting fintech startups around the world (TechCrunch), Rated: B

Viola, the Israel-based technology investment group, is launching new independent VC fund targeting fintech startups from anywhere in the world. Dubbed Viola FinTech, the “cross-stage venture fund” has an initial closing of $100 million but will extend that towards $120-150 million. It is backed by global banks, insurance companies and asset managers from North America, Europe, APAC and Israel, including Scotiabank, The Travelers Companies, Inc and Bank Hapoalim.

Australia/New Zealand

San Francisco’s Credible Raises $ 50 Million in Australian IPO (Bloomberg), Rated: AAA

San Francisco-based financial technology company Credible Labs Inc. is going public, but not on a U.S. exchange.

The startup, a consumer loans marketplace, raised $50 million (A$66 million) in an initial public offering on the Australian Securities Exchange, according to a statement Thursday.

The IPO values Credible at A$300 million, about 50 percent higher than the valuation it got in its last fundraising round, according to people familiar with the matter, who asked not to be identified as the details aren’t public.

Yellow Brick Road Adds Prospa to Lending Panel in Boost to Aussie Small Business (Crowdfund Insider), Rated: A

Yellow Brick Road has added online lender Prospa to its lending panel. The move was described as an effort to diversify its lending offerings for Australian small business customers. Yellow Brick Road is a full service wealth management company that offers products and services for home loans, financial planning, insurance, superannuation, and investments.

Marketplace lenders must ‘start educating’ SMSFs on opportunities, discipline (Nestegg), Rated: A

Speaking to Nest Egg, CEO of fully licensed marketplace lender Zagga, Alan Greenstein said that self-directed investing is now a “very, very big part of SMSF investment” and that according to Zagga research, well over 30 per cent of SMSFs at a sophisticated wholesale level are self-directed investors.

Pointing to a recent whitepaper produced by Zagga, Mr Greenstein said SMSFs tend to be invested at either end of the spectrum; very high risk and high yielding opportunities, or very low risk opportunities.

He said that Zagga’s newly launched ZAG Fund offered a middle ground, with a targeted net return of 6.5 per cent.

Ngā Tangata Microfinance breaking hold of predatory lenders (Scoop), Rated: A

With loan capital provided by Kiwibank, Ngā Tangata Microfinance (NTM) provides no-interest loans to qualifying clients for family well-being and relief from high-interest debt.

An evaluation conducted by the University of Auckland’s Centre for Applied Research in Economics found NTM’s no-interest loans were crucial in helping low-income clients break the cycle of debt caused by predatory payday and fringe lenders.

Partnering with local budgeting advisors, NTM has now disbursed more than $660,000 in no-interest loans to more than 300 clients, with 70% of the support being for relief from high-interest debt. It is estimated these loans had potentially saved clients a total of more than $1 million in interest and additional costs. Requests for help continued to trend up – 30% more NTM loans were approved in the past 12 months compared to the previous year, amounting to nearly 130 loans worth $275,000.

India

Loans are easy to get, but are they for you? (livemint), Rated: AAA

When you buy a phone, you have the option to pay for it then or pay later. You have this option even when you are buying grocery or paying bills. Credit these days can be available relatively easily, even for amounts as low as Rs1,000. In fact, in a country where you need to have a good credit history and credit score to get loans from banks, you can now get loans on your phone—even if a bank would not lend to you.

According to data from the Centre for Monitoring Indian Economy Pvt. Ltd (CMIE), personal loans (incremental numbers) increased 179% and credit card outstanding rose 34.63% in value during April to October period in FY 2017-18. In comparison, incremental numbers during the same period for housing loans showed negative 32.7%.

Source: livemint

HDFC Bank Ltd saw a 35.75% growth in personal loans and 44.50% growth in credit card business in the second quarter (on a year-on-year basis). ICICI Bank, in its second quarter results this financial year said that its personal loan book saw a 40.1% year-on-year growth and the credit card business grew by 36.5%. And this is true for the non-banking finance companies (NBFCs) as well. Bajaj Finance Ltd saw a 42% growth in consumer lending in the same period.

Asia

Vietnam launches first peer-to-peer lending platform (XinhuaNet), Rated: AAA

Vietnam has launched its first peer-to-peer lending service Vay Muon, enabling people to borrow and lend money without having to go through a financial institution.

Matching lenders and borrowers via a smartphone application, the lending platform does not require mortgages and one-on-one meetings, local VTV online newspaper reported on Thursday.

First-time loan requests will be reviewed and disbursed within four hours and subsequent requests will be handled in just half an hour.

‘Korean startups should do what they are good at to get funding’ (The Investor), Rated: A

Korean startups flock to Silicon Valley hoping to become the next Facebook or Google. However, setting up a business from scratch where thousands of new startups come and go every year, is not easy, and becoming a “unicorn” is near impossible.

One fundamental reason is because they can’t get enough funding, according to Tim Chae, head of the Korean unit of US accelerator 500 Startups.

First of all, a company should either run a business in a certain sector for which Korea is widely famous worldwide, such as beauty and e-sports segments, rather than roll out me-too services and products.

Datarius Cryptobank Participates at BlockShow Asia 2017 (Digital Journal), Rated: B

On November 29–30 a large-scale event — Block Show Asia 2017 — was held, and Datarius Cryptobank participated in this event.

Datarius Cryptobank is a unique project. This is a first social cryptobank built on base of the distributed register technologies using neural networks and artificial intelligence. The main attractive features of the project for investors and future customers are the lowest transaction fees, as well as P2P-lending.

Canada

IOU Financial Surpasses US$ 500 Million in Loans Originated (Cision), Rated: AAA

IOU Financial Inc. (“IOU” or “the Company”) (TSXV: IOU), a leading online lender to small businesses (IOUFinancial.com), announces today that it has facilitated more than US$500 million in financing to thousands of merchants and small businesses across the United States and Canada since launching its lending platform.

Authors:

George Popescu
Allen Taylor

Friday December 1 2017, Daily News Digest

interest rate sensitivity

News Comments Today’s main news: Affirm partners with Shopify Plus.The Fed is thinking about starting a cryptocurrency.Payday lending group sues Consumer Financial Protection Bureau (CFPB).Funding Circle gets first IFISA sign-up within 15 minutes of opening.Assetz Capital to launch IFISA with manual lending.KappAhl to offer mobile payments in store with Klarna. Today’s main analysis: How should […]

interest rate sensitivity

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Canada

News Summary

United States

Affirm Joins Forces With Shopify Plus to Help High Growth Retailers Rapidly Scale Online Store Sales (BusinessWire), Rated: AAA

Affirm, Inc., the company started by Max Levchin to provide fair and honest consumer financing, today announced it has joined the Shopify Plus Technology Partner Program to help more retailers quickly scale their online store sales by giving their customers a quick and easy alternative to credit cards.

Affirm App Gives Loans For Designer Jeans, Holiday Flights And More (International Business Times), Rated: A

Affirm’s chief of staff and head of international expansion, Ryan Metcalf, told International Business Times the startup works with 1,200 retailers nationwide and issued $1 billion worth of loans in 2017.

“We are able to approve 126 percent more people than industry averages. A large portion of these people have no access to credit or if they do they are being mispriced in the market because their FICO score is outdated,” Metcalf said. “Around one in 10 Americans have ‘unscorable’ credit reports. That’s around 30 million people. So we’re also able to offer credit to those people as well.”

According to the Fair Isaac Corporation’s data, 20 percent of American credit card owners are ranked as “subprime” because their FICO score is 600 or lower.

Expert Commentary: how should equity investors position for a secular uptrend in rates? (INTL FCStone Email), Rated: AAA

In Four Interest Rate Myths, I made a theoretical case for higher rates by debunking the New Gospel of the New Normal. The Slow Agony of and Old Bull highlighted seven signs that the bond bull market was already over. This report discusses the most important question facing market participants for the next five years – how should equity investors position for a secular uptrend in rates?

The report reviews the performance of U.S. sectors, currencies, and international indices during prior hiking cycles and their recent correlations with yields. Six conclusions emerge:

  • Almost tautologically, bond proxies have consistently underperformed during prior hiking cycles.
  • Currently, only two sectors are positively related to interest rates: financials and energy. Since their valuations remain below average, these sectors are a cheap option against the risk of rising rates.
  • Investors should monitor the correlation between yields and tech stocks: higher rates would kill the bull market if the correlation between tech stocks and bond yields turned negative.
  • U.S. stocks and the dollar index have tended to fall in prior hiking cycles.
  • Korean equities and, to a lesser extent, Japanese stocks have outperformed during prior hiking cycles.
  • The performance of emerging markets and commodity-driven markets is mixed: they have outperformed massively during in the 2003-2006 cycles, but have suffered during the hiking cycles of the 90s.

Read the full report here.

Dudley Says Fed Has Started Thinking About Official Digital Currency (WSJ), Rated: AAA

Federal Reserve Bank of New York President William Dudley said Wednesday the U.S. central bank is beginning to explore whether it could adopt its own digital currency, in an appearance at Rutgers University where he also expressed optimism about the economy.

Bitcoin is “really more of a speculative activity,” Mr. Dudley said. But he said aspects of the technology are interesting and worthy of attention. “It’s premature to be talking about the Federal Reserve offering digital currencies, but it is something we are starting to think about,” he said.

Some academics have called for the Fed to offer its own digital currency. They believe it would afford the central bank better control over the economy by tweaking interest rates at the consumer level, bypassing fickle financial markets that often work at cross-purposes with Fed policy aims.

THE FINTECH EFFECT: AMAZON, GOOGLE, AND THE DISRUPTION OF SMALL BUSINESS LENDING (The Boss Magazine), Rated: AAA

If banking bigwigs and fintech entrepreneurs have seemed a bit queasy since October’s Lendit Europe conference, they might be blaming Karen Mills for daring to illuminate the elephants in the room: Amazon and Google, and their ability to disrupt the small business lending industry.

Mills, a former White House administrator for small business and current Harvard Business Review fellow, succinctly pointed out the obvious. With the tremendous amount of financial and personal data these behemoths collect, a broadening of scope into small business lending may be inevitable.

While Google hasn’t made any notable overtures into the lending business yet, Amazon launched its lending business to support its merchants in 2012. As reported by Bloomberg, the retailer issued $1 billion in loans in the 12 months between May 2016 and June 2017. To date, they have extended $3 billion to over 20,000 small businesses here, as well as in the U.K. and Japan.

The Magnificence of Micro Loans

Merchant services provider Square has given its merchants loans of over $1.5 billion since its in inception in 2014, and PayPal’s Working Capital program has loaned over 115,000 global businesses a total of $3 billion.

Amazon and Square merchants repay the loans automatically based on the amount of sales they make. PayPal’s maximum small business loan amount is 30 percent of a merchant’s annual PayPal sales, not to exceed $97,000 for the first loan.

Small Business Domination

Small businesses account for roughly 99.9 percent of all businesses in the U.S., and are responsible for 61.8 percent of the new jobs established from Q1 1993 to Q3 2016. About 80 percent of the nation’s 29.6 million small businesses are nonemployers.

Payday lending group plans to sue the Consumer Financial Protection Bureau (USA Today), Rated: AAA

The Community Financial Services Association of America plans to challenge one of the federal watchdog’s signature achievements could signal how the consumer bureau’s previous enforcement policies will shift under new Trump administration leadership.

The anticipated battle would target a new rule that was indeed published in the Federal Register on Nov. 17, capping a contentious 18-month public comment and lobbying battle between the payday loan industry and consumer advocates.

Federal budget director Mick Mulvaney, installed by Trump as the bureau’s acting director, has been critical of the payday lending rule and has received campaign backing from the industry. He received $31,700 in 2015-2016 federal campaign cycle contributions from payday lenders, ranking ninth among all congressional recipients, according to data analyzed by the Center for Responsive Politics.

Federal judge refuses to block Trump’s designation of Mulvaney as interim head of CFPB (Legal NewsLine), Rated: A

A federal judge on Tuesday rejected arguments by Leandra English, who was named the deputy director of the Consumer Financial Protection Bureau by outgoing director Richard Cordray, in a lawsuit she brought over the agency’s interim leadership.

Judge Timothy J. Kelly for the U.S. District Court for the District of Columbia, according to a minute order and entry on the case docket, denied English’s emergency motion for temporary restraining order after a motion hearing held Tuesday.

English filed her lawsuit Sunday night in attempt to block President Donald Trump’s naming of Office of Management and Budget Director Mick Mulvaney as the bureau’s acting director.

In a minute order filed Wednesday, Kelly said the parties will meet, confer and submit by Dec. 1 a joint proposed schedule for briefing the merits and/or for briefing a preliminary injunction, or separate schedules.

Payday lender going public as new sheriff takes over at CFPB (Seeking Alpha), Rated: B

Curo Group is looking to raise about $100M with the sale of 6.7M shares at hoped-for range of $14-$16 each. Prospectus here

Marlette Funding President Offers Insight on Personal Loan Market (LendEDU), Rated: A

Q: So we know that Fintech personal loan lenders are starting to attract more consumers and take up more of the market. How do you expect traditional banks to react to this over the next couple of years if the trend continues?

A: You’re starting to see banks wake up to this new way of lending. They’ve been impacted by a regulation-focused environment in recent years, driving them towards a compliance mindset. However, banks are starting to think of ways to grow their consumer lending businesses, and technology is a big part of this.

Q: What sort of future do you see for blockchain technology in the Fintech personal loanmarket? What sort of challenge would its implementation pose to Fintech lenders?

A: One use that I could see for Fintech lending is creating a more secured identity verification process for the customer. From the recent Equifax news, you have a single source of data where all relevant info is in one location, and a breach creates both chaos as well as problems with trust. Distributed ledger tech creates an interesting opportunity to limit this concern, but it’s going to take a long time before it can be implemented fully.

For Workers In A Pinch, Start-Ups Experiment With No-Interest Loans (Forbes), Rated: A

Dave is part of a new crop of financial technology companies that are trying to help consumers avoid nasty overdraft fees, as well as payday loans, pawn shops and other expensive forms of debt, via zero-interest loans. They’re going after workers who may struggle to make ends meet, but who could benefit from a minor influx of cash at the right time.

Dave analyzes a consumer’s bank account history to issue warnings about potential overdrafts up to seven days in advance. Then, for users who still find they’re in a pinch, it may approve a loan of up to $75. Dave doesn’t charge interest, but the app costs $1 a month and users are asked to leave a tip on advances. The Mark Cuban-backed service has amassed 100,000 users since it launched in April.

In 2016, financial institutions hauled in $33.3 billion on overdraft fees alone, according to Moebs Services, an economic research firm.

Dave, in addition to companies like Even and Earnin (formerly Activehours), are attempting to do away with the high interest rates and fees that they say put a financial institution’s incentives in contrast with those of the borrower. Their answer: Small, zero-interest advances on a person’s next paycheck with no hidden or punitive fees.

According to one study of low and moderate income families, household income spiked — or fell — by more than 25% in six months out of every year.

YieldStreet CEO Milind Mehere: Excited about Growth and YieldStreet’s Future (Crowdfund Insider), Rated: A

Launched in NYC in 2015, YieldStreet aims to allow people to invest in alternative investments that are backed by real collateral. With a world-class advisory board which recently added three new members Ron Suber (Prosper Group), Mitch Jacobs (On Deck)Alexandra Wilkis Wilson (Gilt Group) and a growing leadership team, including Volfi Mizrahi who just joined as Managing Director of Originations and Ivor Wolk as General Counsel, the platform’s growth is undeniable.

Erin: On what other elements of your YieldStreet street vision are you currently working?

Milind: Continuing to expand our product and audience offering – AutoInvest will let users choose their investment preferences such as asset class, yield and duration, then the algorithm our platform uses will match them as offerings become available. In 2018 we hope to open the platform to non-accredited investors, and we are working to provide liquidity on our platform, as well as creating products for the Financial Advisor/RIA market and IRA market.

Erin: How do you expect YieldStreet to grow? How do you source deals?

We work with a network of originators and asset managers, as well as many funds (from $50M to $10B) in the private credit space.

Erin: What lessons from Yodle — from its beginnings to its $342M sale to web.com in 2016 — have you applied to YieldStreet?

Milind: We have been incredibly efficient at YieldStreet because of that. We have just raised $3.7M in seed capital to reach $200M in originations, where some of our peers have raised anywhere from 6x-25x to achieve the same results. Yodle taught me to be extremely disciplined about where to invest and when.

Erin: What are YieldStreet’s future plans for growth by 2018? by 2020? by 2025?  How do you predict the sector will change and be disrupted?

Milind: According to a recent report by PricewaterhouseCoopers (PwC), the asset management industry is set for “transformational change” and booming growth in the next decade. Alternative asset classes, such as real estate and private debt are expected to grow to about $21.1 trillion by 2025.

Innovative Approaches to Expanding Home Availability and Affordability (Lend Academy), Rated: A

It seems like almost every day I see a story about increasing real estate prices in the major metropolitan areas of the US. Prices in cities like San Francisco, New York, Seattle, Washington DC have made homeownership unobtainable for many people.

SoFi comes to mind with their jumbo mortgage which allows borrowers to put just 10% down and offers loans up to $3 million.

Landed is taking a different approach. I spoke with Alex Lofton who is Head of Growth and Co-founder at the company. They first came on my radar this summer when TechCrunch profiled them. They are similar to companies like Unison (who recently was on the Lend Academy podcast) and Point with a slight twist. Currently, the company focuses on teachers to help purchase a home, providing up to 50% of the down payment. Like other similar products, Landed participates in either the upside or downside when the home is sold.

PWC CHARGE: ASSET MANAGERS ARE DIGITAL TECH ‘LAGGARDS’ (AllAboutAlpha), Rated: A

In filling out the particulars of this claim the authors of the new report make four more specific points: one, asset management is a buyers’ market and will become more so, in large part because “institutional investors have the tools to differentiate alpha and beta,” and they want to pay for the former not the latter. They also say that asset managers have been filling gaps in the financial system that emerged in the wake of the global financial crisis – they’ll need to capitalize on and expand these once-niche markets. Thirdly, while they make the common point that traditional active managers feel a squeeze between passive management on the one hand and alternatives on the other, they go further in that direction than other analysts have, saying that the way to react to this squeeze is not to try to beat back the competing forces but to join them, to turn a management firm into a “multi-asset solutions firm.”

But perhaps the most surprising of the four points is the contention that asset management has been a refuge of digital technology “laggards,” and that this will change in the near future, as “technology giants … enter the sector, flexing their data analytics and distribution muscle. The race is on.”

Lincoln Financial Network Launches Integrated Technology Platform to Drive Greater Client Engagement and Collaboration in Financial Planning (BusinessWire), Rated: A

Lincoln Financial Network (LFN), the retail wealth management affiliate of Lincoln Financial Group (NYSE:LNC), today announced that it has successfully launched a meaningful enhancement to its fully integrated wealth management platform for financial advisors and their clients – Automated Account Opening (AAO). AAO encompasses a full suite of new capabilities, integrated tools, and client-servicing solutions that will increase client satisfaction and collaboration with advisors.

Banks resist pressure to raise rates, but for how long? (American Banker), Rated: A

Online banks have been aggressively raising the rates they pay on consumer deposits, and that is putting pressure on mainstream banks to consider following suit or risk losing valuable deposits to their more nimble competitors.

A recent survey of 100 banks conducted by MoneyRates.com found that online banks such as Ally Bank, Goldman Sachs’ GS Bank and Sallie Mae Bank are paying significantly higher rates on savings and money market accounts than their brick-and-mortar counterparts.

U.S. regional banks delve deeper into advisory services to boost growth (NASDAQ), Rated: A

Smaller banks, like their bigger Wall Street rivals, have aggressively cut costs since the 2008 financial crisis and trusted ultra-low interest rates to increase loan volumes.

U.S. Bancorp, BB&T Corp, SunTrust Banks Inc, Fifth Third Bancorp, KeyCorp and Citizens Financial Group Inc together earned $6.97 billion in non-interest income in the third quarter, up 10.6 percent from a year earlier and 15.2 percent from the second quarter.

That compares with growth in net interest income of 7.7 percent and 2 percent, respectively.

RICH PICKINGS

The number of millionaires in the United States is at the highest since Chicago-based research company Spectrem Group started measuring it in 2004, but thresholds of – for example $250,000 to invest – mean many are too small to get personal attention from the big Wall Street firms.

Born between the early 1960s and 2000, Americans from Generations X and Y who have an average annual income of about $200,000, account for 18 percent of millionaires compared with 8 percent in 2012.

Yet only 58 percent have financial advisers compared to 72 percent five years ago, according to a study by Fidelity Investment.

KeyBank Forms Strategic Partnership With Snapsheet To Provide Powerful Insurance Claims Payment Solutions (PR Newswire), Rated: A

KeyCorp (NYSE: KEY) announced today its strategic investment and partnership with Snapsheet, an innovator of self-service claims solutions for insurance carriers. This investment follows the joint launch and announcement of Snapsheet Transactions, a payment platform on the back end of Snapsheet’s existing claims solution.

Snapsheet Transactions provides carriers with a payment hub that features a variety of payment options, without adding complexity or risk to insurance carriers’ back-end processes. Key and Snapsheet will continue to partner with each other to support the rollout and execution of enhancements and innovations related to Snapsheet Transactions.

Concord President & COO Shaun O’Neill to Lead Panel at Marketplace Lending Conference in New York City (PRWeb), Rated: B

Shaun O’Neill, President and COO of Concord Servicing Corporation, a leading force in the portfolio servicing and financial technology industry, has been invited to serve as moderator of a finance-related panel during the upcoming Information Management Network’s 3rd Annual Investors’ Conference on Marketplace Lending. O’Neill’s panel will focus on the highly topical “Trends and Best Practices for Loan Servicing” during the conference, to be held December 1st at the Marriott New York Downtown, in New York City.

LendingTree Logo To Appear On Greensboro Swarm Jerseys As Part of Company’s Partnership With Hornets (NBA.com), Rated: B

The Charlotte Hornets, Greensboro Swarm and LendingTree announced today that the LendingTree logo will appear on the jerseys of the Swarm as part of the Founding Level Partnership announced earlier this month between the Hornets and LendingTree.

Family loans: How to dodge the drama (Work IT, SOVA), Rated: B

There are advantages of a family loan for a borrower: no credit check, low or no interest and flexible payback terms.

Family loans may also come with tax considerations, whether the lender charges interest or not. Charge zero interest, and you may face a gift tax; a borrower who receives a gift may have to report it as taxable income. Tack on an interest charge and you must follow IRS-specified guidelines for the rate you charge and report it as income.

BORROWERS: EXHAUST OTHER OPTIONS FIRST

When weighing the pros and cons of a family loan, also consider alternative options, including a personal loan borrowed from a bank, credit union or online lender that can be used for any purpose.

Personal loans from credit unions and online lenders typically have more flexible qualification requirements than a bank loan.

LENDERS: ASSESS THE REASON FOR THE REQUEST

If you are lending the money, try to set your emotions aside and look at the reason for the loan. Has your family member been rejected by banks and other lenders? If so, why? Will your loan help promote good financial decisions?

United Kingdom

Funding Circle IFISA motors ahead with instant sign-ups (P2P Finance News), Rated: AAA

Funding Circle has begun rolling out its Innovative Finance ISA (IFISA) to investors and had a customer sign up within 15 minutes.

The peer-to-peer business lending giant started emailing users on Thursday morning, in order of when they opened accounts and started investing.

The IFISA account is a flexi-ISA, meaning you can withdraw any available funds without affecting your annual £20,000 ISA subscription limit, providing you transfer them back in by the end of the tax year.

Assetz Capital Announcement: Soon to Launch IFISA Set to Include Manual Lending (Crowdfund Insider), Rated: AAA

The online lender reported that the IFISA will be launched next month, with users able to use their £20,000 annual tax-free allowance on the Assetz Capital platform. Users will be able to transfer in past years’ ISA savings from their cash and shares ISAs. Assetz Capital also noted that new and existing investors will be able to open an IFISA wrapper on the platform and then invest into any automated Assetz investment account. The IFISA is also set to include the popular Manual Loan Investment Account (MLIA) in the New Year.

Digital banking: a tough way to make money (Financial Times), Rated: A

It’s been a busy period for the UK’s fledgling digital banks. Since January, eight UK digital banks have collectively raised $600m and two challenger banks were acquired for $2B+. Digital banks have built out the tech, landed banking licenses, and started winning customers – but they have arrived at a ‘now what’ moment. How can they capture a large enough customer base to validate their significant collective investment?

Monzo reported that its prepaid card scheme loses around £50 per active customer per year, and other digital banks face similar costs. While on the one hand the cost to acquire these current account customers is not very high, given the ‘buzz’ around the sector and banks’ word of mouth-driven growth – these current accounts, with their low average balances, are also inherently unprofitable. So it’s a steep climb for digital banks to recoup their operational costs, much less make a lot of money per customer.

P2PGI unveils new strategy that speeds up timetable for target returns (P2P Finance News), Rated: A

P2P GLOBAL Investments (P2PGI) has brought forward its timetable for reaching its target returns of six to eight per cent after unveiling its new portfolio strategy on Thursday morning.

The investment trust said it now expects to provide a dividend of at least 15p per quarter by the end of the second quarter of 2018, which analysts say reflects an annualised yield of 7.8 per cent.

LendInvest: How our BTL launch will fill the portfolio landlord lending gap (Mortgage Solutions), Rated: A

The prospects of the dinner party landlord, who picked up a property or two during the boom years, have been dented by moves like the additional rate of stamp duty on second homes and the changes to mortgage interest tax relief.

In contrast, it’s the professionals who are best placed to adjust their budgets and ride out such changes. These are the investors who spend their working hours – rather than just their spare time – focused on running their property businesses.

Countrywide’s letting index in August flagged up the fact that the number of homes on the market to tenants has jumped by 171,000 over the last two years, despite the number of landlords falling by 154,000 over the same period.

Three reasons why investors must consider alternative lending (Money Observer), Rated: A

With cash held at the bank slowly being eroded by inflation, many investors have been attracted to the enhanced return prospects offered by alternative – or ‘peer-to-peer’ – lending.

Alternative lending is very interesting from this perspective, as it is one of the few income options available to retail investors that may be shielded from market volatility. This has grown in importance recently as many markets are currently trading at historically high valuations. Markets follow a supply and demand dynamic and the traditional asset classes are definitely vulnerable to sudden downside pressures in stressed market environments.

China

Was 2017 the year that Chinese fintech grew up? (Ecns.cn), Rated: A

While investments in the Chinese fintech sector tripled to almost 10 billion US dollars in 2016 compared to the year before, 2017 has seen a significant drop in corporate fintech investments across Asia. KPMG reports that corporates have only put 840 million US dollars into the sector in 2017, compared to 6.8 billion US dollars in 2016.

Decline of P2P, robo-advisors

One other area that has struggled in 2017 has been robo-advisors. In 2016, China Merchants Securities predicted that by 2020, some 5.22 trillion yuan (758 billion US dollars) worth of assets would be managed by robot financiers.

China leverage and shadow banking biggest threats to growth (The Asset), Rated: A

FINANCIAL system leverage and shadow banking pose the biggest threat to China’s economic growth, according to a live poll of attendees at the Fitch on China Forum.

The forum was organized by The Asset in association with Fitch Ratings and held on November 30 at the Four Seasons Hotel in Hong Kong.

Source: The Asset

Ant Financial and QCash scoop FT fintech awards (Financial Times), Rated: B

A big Chinese group and a US not-for-profit have triumphed in the second annual Financial Times fintech awards, with Ant Financial taking the “impact” prize and QCash winning for “innovation”.

European Union

KappAhl first to offer mobile payments in store with Klarna (NB Herard), Rated: AAA

KappAhl is the first major fashion chain to offer its customers digital payment solutions in stores via their smartphones. Customers will have the option to make their purchases with Klarna In-Store, paying either on the spot or upon invoice.

This new payment solution will become one of the cornerstones in KappAhl’s digital transformation, with customers in stores benefitting from the same payment options that they have in Shop Online.

The service has been rolled out gradually and, as of 1 December, will be available in all 173 KappAhl and Newbie stores in Sweden. From 1 December, the service will be available in all 96 Norwegian stores, and, from 4 December, in all 58 stores in Finland.

Fintech company Deposit Solutions raises $ 20 million from existing investors (Tech.eu), Rated: A

Deposit Solutions, a German fintech company, has raised $20 million in a round led by e.Ventures and Greycroft, both existing shareholders.

The new funds will be used to grow the Hamburg-based company’s Open Banking platform for savings deposits for both B2B and B2C services, and to expand internationally. Its APIs allow banks to connect to the platform to build and offer deposit services. It has partnered with more than 50 banks.

Why Scandinavia’s Biggest Bank Is Setting Up Its Own Fintech Startup Fund (Forbes), Rated: A

The bank has announced that it’s setting up Nordea Ventures, to make strategic investments in fintech start-ups.

A case in point is Tink the Swedish-based fintech company, where Nordea provided capital and advice and integrated some of Tink’s own technology into its own digital products while preserving Tink’s name and brand.

Tink’s app helps consumers to aggregate financial transactions in one place, to compare and switch mortgages to a partner bank or open a savings account, for instance. Another Tink app for banks and payment services like Klarna provides account aggregation and payment capabilities.

Nordea invests in fintech company Betalo (Nordea), Rated: B

Nordea is investing in the fintech company Betalo. This takes our partnership with the Swedish company to the next level after a cooperation agreement was signed in March 2017.

PSD2 BRINGS DELAYED DISRUPTION TO THE FINTECH ECOSYSTEM (TechSavvy), Rated: A

A new EU-directive is about to force banks to open up their data vaults and allow third parties to access their user data. Nordea has chosen to embrace the change with open eyes, and a fintech startup predicts tough competition embarking on the opportunities it brings along.

The release of bank data is bound to cause a stir in an otherwise traditional and established sector. One of the incumbents that have already made an imprint is the fintech startup Spiir.

American tech giants might end up owning the financial space. Rune Mai looks to China to catch a glimpse of what the financial future might hold. The retail giant Alibaba owns half the payment market here with an all-encompassing app that offers everything from dating, financing to shopping.

Nordea is more inspired than afraid of Amazon. The bank has more than 10 million customers in the Nordic region, and they have decided to face the coming change with open eyes. They are actively pursuing a first mover strategy and has allocated more than 100 people to ready themselves for the coming digital disruption.

International

Blockchain P2P Lending, Sending, and Spending: Etherecash Garners Support from Over 40,000 Contributors During Pre-ICO (Digital Journal), Rated: AAA

A little over three weeks are left in the Etherecash token sale and it’s been a fantastic run so far; the success they have seen comes after a big appearance at the World Blockchain Summit, Dubai, which was closely followed by a heated Pre-ICO.

The platform is the remedy to the overly-complex and lengthy process of getting a traditional bank account, and will provide access to finances through a cryptocurrency-backed P2P (Peer-to-Peer) fiat currency loan marketplace. P2P loans are backed by the borrower’s own crypto-wealth allowing them to borrow up to 80 percent of their wallet’s value.

On top of this, once the crypto debit card is available, users will be able to store multiple types of cryptocurrency on it, allowing them to shop anywhere and everywhere as they please, even abroad.

Based on the Ethereum standard token ERC20, purchasable with Bitcoin or Ethereum, the exciting ICO Launch began 15th November, 2017 – ending December 19th, 2017.

Australia

Treasurer of Australia Scott Morrison Visits Online Lender Prospa’s New Office in Darlinghurst (Crowdfund Insider), Rated: AAA

Prospa, an online lender serving SMEs in Australia, had a visit from the Honorable Scott Morrison yesterday. The Treasurer of Australia help to open up Prospa’s new high tech Darlinghurst office, which apparently is quite large extending over two floors housing a team of 150.

Prospa expects to add another 50 hires over the next 12 months as it accommodates platform growth.

India

KrazyBee looks to expand in Tamil Nadu (The Times of India), Rated: A

Online lender KrazyBee says it is rapidly expanding its business in Tamil Nadu and its focus in the state will be on solving unique needs of the student community.

KrazyBee, which earlier operated in five cities (Bengaluru, Hyderabad, Pune, Vellore and Mysore), said that is expanding aggressively in over 11 cities, including Chennai. With more than four lakh registered student borrowers on its platform, KrazyBee says it currently processes over 3,000 loan applications and disburse around 1,700 loans per day.

Asia

Asian banks’ operating income could be hit by fintech disruption (Channel News Asia), Rated: A

Asian banks that do not take any action against the rise of financial technology (fintech) could see their operating income take a hit, said the Monetary Authority of Singapore (MAS) on Thursday (Nov 30) in its latest Financial Stability Review.

For lenders in Singapore that do nothing to stave off the disruption, that could mean a 5 per cent loss in operating income over the next five years, the central bank warned.

 

Mobile wallets taking hold in Asia (The Asset), Rated: A

WHILE the development of digital payments started with the launch of the first universal credit card in the 1950s, the space has rapidly evolved, and now the mantle is being passed to e-wallets, otherwise known as mobile wallets.

In 2014, credit and debit cards accounted for more than half of e-commerce payments in terms of transaction value. However, that share is predicted to drop to 49% in 2019 as mobile wallet options start to gain ground, according to a report by the United Nations Conference on Trade and Development.

Canada

Activists across Canada demand fair banking for low-income people (TheStar), Rated: AAA

At the Toronto rally held outside Finance Minister Bill Morneau’s constituency office, a 46-year-old man was holding the loan he got in August from a payday loan company and was trying to get pedestrians to look at it.

He took out a $5,500 loan to pay his rent in August, to be paid back at 60 per cent interest by 2020.

Don is a member of the grassroots activist group called Association of Community Organizations for Reform Now (ACORN), and one of thousands of people who, on Tuesday, rallied across Canada demanding fair banking.

Mobetize’ CEO to speak at first BC Tech Association FinTech Day (Globe Newswire), Rated: B

Mobetize Corp. (OTCQB:MPAY), a leading fintech service provider for payments, remittances and mobile banking solutions, today announced CEO Ajay Hans will be the keynote speaker at BC Tech’s Fintech Day event on December 5.

Authors:

George Popescu
Allen Taylor

Monday July 31 2017, Daily News Digest

credit card issuers

News Comments Today’s main news: RateSetter tops 2B GBP in lending. P2P Global Investments holds steady. P2P Finance Association reports new lending growth. One of China’s largest P2P lenders quits. BNI Europa invests 15M Euro in Creditshelf. Marqeta, Visa partner on global payments. Prospa secures $20M debt facility. Today’s main analysis: Bank and credit card issuer charge-off trends. Today’s thought-provoking articles: […]

credit card issuers

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Middle East

Africa

News Summary

United States

Earnings Season Continues—Bank and Card Issuer Charge-Off Trends (PeerIQ), Rated: AAA

As PeerIQ observed last quarter, we continue to see a “tale of two cities”–a divergence in charge-off rates of card issuers and large money center banks.

Discover reported a 55% increase in loan loss reserves citing re-normalization of credit performance, an increased supply of consumer credit, and an increase in consumer leverage. We also see observe increases in loan loss reserves from Synchrony Financial (30%), American Express (26%), and Capital One (13%).

Source: PeerIQ, Bloomberg

Outlook for Consumer Lending 

The backdrop for consumer lending businesses is strong. Although delinquencies have picked up, originators remain compensated for taking on credit risk. The ROE for Discover and American Express are both over 20% as compared to C, JPM, WFC, and BAC where ROE remains stubbornly low in the 6 to 11% range. Also, consumer loan demand continues to grow (total loan requests on Lending Tree increased 48% year-over-year to 5.4 Mn).

The biggest challenge to the above state-of-play is the latest scale entrant to the retail banking business–Goldman Sachs. GS’s new lending business, Marcus, is on pace to originate $2 Bn in loans this year–the fastest growth rate of any lender that PeerIQ tracks.

Inside seven plans for a faster U.S. payments system (American Banker), Rated: AAA

A task force convened by the Federal Reserve has released its evaluations of 16 proposals to build a faster U.S. payment system. The plans were judged by the task force’s consulting firm, McKinsey & Co., based on how well they satisfied 36 criteria related to speed, security and other attributes.

EastWest ties up with PLDT unit (Inquirer.net), Rated: A

Gotianun-led EastWest Banking Corp. has teamed up with FINTQ, the technology arm of PLDT and Smart’s Voyager Innovations, to offer consumer loans through digital lending platform Lendr.

With this partnership, consumer-focused lender EastWest will make available personal loans and auto loans through Lendr by the fourth quarter of this year. Eventually, the offering will also include EastWest home loans, small and medium enterprise (SME) loans and credit cards.

Providing well-rounded financial advice and servicing through automated technologies (CGI.com), Rated: A

While robo-advice may account for only a fraction of the total assets under management today, it is a technology that is here to stay—but not in the way that has dominated news stories. Rather than supplanting the financial advisor with technology, firms need to leverage new multi-channel automation to empower their advisors to focus on value-added, relationship-building activities. In this paper, we look at how wealth management players can focus on getting to the right combination of human advisors and automated investment advisory solutions in a hybrid model that seamlessly integrates the two.

Read the paper here.

Overstock’s TØ Has Already Built a Platform for Trading Regulated ICOs (Coindesk), Rated: A

US retail giant Overstock.com has been waiting for the US Securities and Exchange Commission (SEC) to tell the world exactly when a crypto token is a security.

Then, earlier this week, tØ got the news it had been waiting for when the SEC finally published the results of a landmark report in which it clearly laid out its rationale for why some tokens are still securities.

Long a detractor of a practice called “naked short selling” – where traders methodically bid down the price of stock by selling shares they haven’t first procured, Byrne set about using blockchain to cut out everyone who stood in the way of buyers and sellers.

BLOCKCHAIN AND INITIAL COIN OFFERINGS: SEC PROVIDES FIRST U.S. SECURITIES LAW GUIDANCE (Pepper Hamilton LLP), Rated: A

For those who hoped that the SEC would allow cryptocurrency and ICO markets to evolve unregulated, their hopes were dashed by the report and the bulletin. The SEC did not outlaw ICOs by any stretch of the imagination, but it did indicate that, depending on the facts and circumstances, an ICO may indeed involve an offering of securities. In that case, organizations that proceed without registering with the SEC or that structure the offering in such a manner so as to qualify for an exemption from registration will violate federal securities laws. The remedies for such a violation include rescission of the offering, cease-and-desist orders, fines and penalties, bans from participating in the securities industry, bans on serving as an officer or director of a public company, and, in the most egregious cases, referral to the local U.S. Attorney for possible criminal prosecution. So, whether an offering involves a “security” is a very important initial determination.

Inside the development of Erica, Bank of America’s AI-powered bot (Tearsheet), Rated: A

However, when Bank of America got a sense of the vision for its AI-enabled “digital assistant,” called erica, it didn’t take the bank long to gather the resources necessary to make her real.However, when Bank of America got a sense of the vision for its AI-enabled “digital assistant,” called erica, it didn’t take the bank long to gather the resources necessary to make her real.

The bot is now in the beta testing phase.

Fintech Apps and Banking Mobile App Development for Startups (Upwork), Rated: A

Paypal is the world leader in processing payment apps today. The app for Android and iOS devices provides the same functionality as the online Paypal.com service.

A good choice for small businesses Due.com lets users benefit from a convenient digital wallet, invoicing service and fast operations handled at low transaction rates.

iZettle also efficiently serves small businesses. What this fintech app does perfectly is that it allows small business owners accept cash and credit card payments from a smartphone or tablet. With additional cash drawers and receipt printers from iZettle one can also provide customers with printed or online receipts.

Another interesting example of a successful fintech app is Mobikwik. Now with the base of 50 million users Mobikwik offers a user-friendly digital wallet, which has become a real substitute of a physical purse for its users worldwide.

In regards to the ways of making personal loans an easier experience for users, LendUp offers just one of them. It’s a web application (also available for mobile) that lets users from selected US states apply for a short-term loan 24/7.

Citi Mobile is one of the leading mobile apps for iOS and Android mobile devices introduced by Citibank. According to Business Insider, the app has significantly grown in popularity mainly due to addition of FICO scorefeature.

Rating the Robo-Advisors (Barrons), Rated: A

By tech start-up standards, robo-advisors are already approaching middle age. Betterment, the pioneering robo-advisor and still the largest of the independent firms, turned seven in May. It now has $9.1 billion in assets under management.

Lawmaker Queries Alt-Lenders With Concerns Over ‘Trapped’ Small Biz Borrowers (PYMNTS), Rated: A

Rep. Emanuel Cleaver II (D-Mo.) has reportedly sent letters to five alternative SMB lending companies with questions regarding borrower protections, anti-discrimination efforts, transparency and other factors.

Cleaver is reportedly seeking details of the companies’ business models and products offered to small businesses, how those products are originated, information on fees and rates and whether these businesses offer borrowers a repayment plan based on future credit card receivables, reports said.

The lawmaker is also seeking information on how these lenders handle transparency and whether they make disclosures to SMBs the same way they do to consumers as required under the Truth in Lending Act. He is also asking about whether these firms pull a consumer credit report for small business lending.

The SEC’s ICO crackdown will help in the long-run. (The Financial Revolutionist Email), Rated: A

But unless your plan was to make a quick billion in ICOs in time to ring in 2018 with Payments deal activity is en fuego.

Also in payments land, 

What is “working capital”? And how can it help my small business? (OnDeck), Rated: A

For many business owners, it makes sense to borrow funds to create a liquid cash cushion to operate their business to the best of their ability. Before you decide to borrow, you need to understand what your working capital needs are and to make sure numbers make sense for you and your business.

3 Reasons Why the Finance Industry Needs VR (UploadVR), Rated: A

The finance industry is one of the most data-driven trades, and by visualizing and analyzing data in VR, early adopters can get a leg up on the competition. Not only can VR improve the way data is viewed, but it can also improve the level of communication through the use of a shared virtual office (SVO). This is immensely important because, in the high stakes world of finance, a mistake or lapse in communication could cost millions of dollars.

The Biggest Trends in Home Mortgage Loans We’ve Seen This Year (Huffington Post), Rated: B

Typical of hot real estate markets, there’s a cycle. Home prices rise, people catch on and want in, and then they decide to sell. Soon, even more people jump in the market and serious sellers make their sale, causing inventory to thin. Buyers get wise to the overheated marketplace and decide to wait until the prices come down. The sellers who are eager to make a buck overprice their houses and when they don’t sell, they become income properties. As a result, the rental markets fill up with income properties, and the inventory continues to thin out.

We are at historic lows for mortgage rates, and they are not going to spike that drastically in the next year that it would preclude you from getting a solid thirty-year fixed rate loan.  The important thing is that you do NOT overpay for a home.

GE Alum Brings Discipline to High-Growth Financial Firm (CFO), Rated: B

After 16 years at General Electric, Chris Capozzi was still a young man. That was because he’d joined the company upon graduating from Boston College, where he earned a degree in finance and management information systems.

Eventually, one of the alumni introduced Capozzi to Stone Point Capital, which had just become a major investor in Freedom Financial Network, a privately held financial services firm. Everything clicked with the company’s co-founders and co-CEOs, Bradford Stroh and Andrew Housser, so Capozzi moved across the country to start work as Freedom’s CFO at the beginning of this year.

What kinds of opportunities are you focused on?

Secondly, we’re in the process of developing a securitization platform to complement our existing sources of capital and further expand our investor base, which will enable the growth on the marketplace lending side. Initially the plan is to securitize unsecured consumer loans, very similar to what other marketplace lenders, like SoFi and Avant, have done.

United Kingdom

Peer-to-peer lender RateSetter passes £2 billion lending milestone (Yahoo! Finance), Rated: AAA

Peer-to-peer lender RateSetter announced on Monday that it has passed £2 billion in loans over its platform, with more than £1 billion of the total made since the beginning of 2016.

About £1.3 billion of the total lent has gone to individuals, with £700 million going to businesses. The company now has 423,000 customers, the majority of whom are borrowers, more than any other UK peer-to-peer lender.

P2P fund holds steady on dividend (AltFi), Rated: AAA

Onerous banking regulations will continue to hamper growth in regulatory capital‐intensive lending asset classes, according to the investment managers of the £821m P2P Global Investments trust.

The fund is moving away from a pure P2P play, instead transitioning more into direct lending and other Alternative Credit niches. Its manager MW Eaglewood is also merging with Pollen Street Capital, which while still on-going, is expected to close later this year subject to regulatory approval. Pollen Street is also the manager of £359m Honeycomb investment trust which invests in direct lending assets.

Source: AltFi Data

P2PFA reports growth in new lending as LendInvest departs (P2P Finance News), Rated: AAA

CUMULATIVE lending among the Peer-to-Peer Finance Association (P2PFA) members in the second quarter of 2017 fell slightly to £8.39bn, due to LendInvest’s departure from the trade body.

However, new lending among the members has still grown significantly year on year, the P2PFA said on Friday.

The number of investors in P2PFA member-platforms has now hit 185,652, the trade body said, while the number of current borrowers has risen to 435,267.

UK P2PFA: Peer to Peer Lending Rises in Q2 (Crowdfund Insider), Rated: A

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Folk2Folk

£139,344,302

£161,408,804

Funding Circle

£1,524,427,000

£1,830,397,245

£2,158,457,107

£2,455,740,443

Landbay

£42,948,000

£43,142,119

£43,975,419

£46,515,723

LendInvest

£776,112,000

£855,354,293

£971,875,952

Lending Works

£33,636,000

£39,368,050

£48,864,686

£58,441,220

MarketInvoice

£754,325,000

£837,793,900

£918,450,994

£1,018,021,696

RateSetter

£1,442,743,000

£1,604,406,564

£1,815,320,079

£1,995,142,453

ThinCats

£196,907,000

£211,446,000

£226,981,000

£242,540,000

Zopa

£1,731,685,000

£1,926,038,724

£2,172,561,894

£2,409,257,844

Total

£6,502,783,000

£7,347,946,895

£8,495,831,433

£8,387,068,183

The LendInvest bond promises to pay investors 5.25% with two payments a year until 2022 (This is Money), Rated: A

Alternative property lender and investment platform LendInvest has launched a five-year bond paying 5.25 per cent a year for investors with a minimum of £2,000.

In an era of one per cent savings rates and where yields ranging beyond 5 per cent are hard to come by in the equity markets, this deal is sure to whet the appetite of many investors – particularly as it comes with twice-yearly payouts.

LendInvest’s Christian Faes On Why Property Investing Is Still Going Strong (Forbes), Rated: A

According to Christian Faes, CEO and co-founder of LendInvest, the retail bond serves a number of purposes – it allows the business to diversify its funding and expand its capacity to lend to property professionals, but also creates a new entry point into property for investors.

He explains:

[The retail bond] is launching at a critical time when demand in the UK’s residential property market continues to outstrip supply. There’s a serious lack of capital available to professional property investors who buy, build, refurbish and renovate homes for UK streets. Our model allows us – and by extension our investors – to support these people and small businesses.

Faes says that it is difficult to pin down what a typical LendInvest investor looks like; the investor base ranges from those looking to build a portfolio of property loans on the firm’s online investment platform all the way up to pension funds, infrastructure funds and banks.

Fintech company DueCourse goes into administration (Manchester Evening News), Rated: A

Manchester fintech company DueCourse has called in administrators.

This comes less than a year after the cloud-based invoice financing service for SMEs was boosted by a £6.25m investment, the largest seen outside of London for a fintech firm.

Bosses said the money will be used to expand and grow its software with plans to raise a further £10-15m to grow its services worldwide.

Abundance Tops £50 Million in P2P Invesment into Renewable Energy Projects (Crowdfund Insider), Rated: A

Abundance Investment, a UK based peer to peer lending platform in the renewable energy sector, has just topped £50 million in investment, according to a company report. Management said the “huge” popularity of its IFISA and three highly popular renewable projects from tidal, geothermal and energy efficiency technologies helped to fuel the recent growth. Abundance says three projects have attracted more than £10 million of new investment in less than 2 months.

  • Atlantis tidal energy debenture has sold out raising £4.3 million,
  • Green Deal bond will close in 4 days’ time and has raised £3.95 million to date
  • United Downs Geothermal project has raised 60% of its £3.8 million target (£2.7m) in less than a week.

New products and milestones for ethical P2P platforms (AltFi), Rated: A

Investors looking for ethical options now have more choices when it comes to peer-to-peer lending.

Lending platform Downing Crowd has launched two regular access crowd bonds, with one for a renewable energy generation and storage company.

Cash management and peer-to-peer lending could boost your balance sheet (Director), Rated: A

With inflation on the rise but interest rates at an all-time low in the UK – and some high-street banks even raising the prospect of charging commercial customers to keep deposits – companies’ savings may actually be losing value in real terms.

If you can’t beat ’em, join ’em

Over the past few years a new way to potentially beat the banks has emerged – one that plays them at their own game. Called property-backed peer-to-peer lending, it gives companies the opportunity to be the lending bank themselves.

One of the fastest-growing products of this type is Choice, offered by Octopus Investments, an experienced investment company that manages more than £6bn of assets.

Working with a growing roster of challenger banks, Octopus can offer a savings product that currently provides an interest rate of more than one per cent.

This week in MoneyWeek: banks are back (MoneyWeek), Rated: A

Banks have been out of favour for the last ten years after they almost brought the global financial system to its knees.

So why would anybody invest in them? Oddly, one reason is “the failure by politicians to enforce a key promise” – that no bank would ever become “too big to fail” again. “In every developed country”, says Jonathan, the big banks have just got bigger. The “never again” promises have been replaced with “complex rules to strengthen bank capital, thus reducing the chances of collapse”. Another reason is that “banking has changed for the better” – governance has improved and customer satisfaction has shot up.

Why Banks Can’t Help But Help Fintechs (Fintech Weekly), Rated: B

It remains to be seen if any bank can ever do what the music industry is in the process of doing – taking back “their” industry by becoming the pre-eminent innovators. Such a thought might be laughable right now. But a word of caution on laughing too soon – if they do realise how to leverage their enormous power, accept that legacy systems must be overhauled and replaced wth the truly innovate, and execute such a strategy well, would you bet against them retaining and entrenching their dominance?

For now and the foreseeable future, most banks prefer to sit back and avoid risk. Really the risk lies in doing nothing and inviting a slow death by a thousand cuts. OK, yes, you can talk about record bank investment in fintech, cooperation between banks and fintechs – again, this is only helping fintechs move in on bank stomping ground.

China

One of China’s biggest P2P lenders quits ahead of clampdown (Financial Times), Rated: AAA

China’s pending regulatory crackdown on the $120bn peer-to-peer lending industry has claimed its first scalp before it has even begun, with one of the biggest players saying it will wind up its business in an industry full of bad loans and no profits.

P2P lending, in which borrowers are matched with investors via online platforms, has mushroomed in the past five years, with China boasting more than 2,100 such platforms, but so too have scandals. Last year was marked by multibillion-dollar scams in China and a governance scandal that rocked New York-listed LendingClub.

Please use the sharing tools found via the email icon at the top of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found here.

Beijing this month said it would delay regulations that will bar online lenders from guaranteeing principal or interest on loans they facilitate, cap the size of loans at Rmb1m for individuals and Rmb5m for companies, and force lenders to use custodian banks — a requirement only a fraction of the industry has met so far.

Three more Chinese banks join Swift’s global payments innovation (Banking Technology), Rated: A

Three local Chinese commercial banks have joined Swift’s global payments innovation initiative (gpi), bringing the number of Chinese banks involved to 16, the most in the world, according to Xinhua.

The new trio are Yinzhou Bank and Bank of Ningbo in eastern China’s Zhejiang province; and the Bank of Jiangsu, in the eastern Jiangsu province (and just south of Zhejiang).

Embrace the cardless era, CUP launched the electronic account cloud flash, or its Jedi fight back (TMT Post), Rated: A

A few days ago, UnionPay cloud flash together with Apple Pay launched promotional activities; early June, CUP also joined nearly 10 million businesses to create “62 CUP cloud flash to the whole people Sheng Hui.” Looks, CUP is imitating Alipay, WeChat to pay the subsidy routine.

Can you imagine using your Jingdong or US group (the new US big) account, you can pay through the UnionPay POS machine? Do not scan, do not have to swipe, do not open the APP, just need to close the POS machine and verify the fingerprint can be completed to pay.

The point is that you do not need to use the bank card account directly, but through the Jingdong or US group to pay the account, you can use the phone in the UnionPay POS machine to complete the payment.

European Union

BNI Europa invests EUR15 million in Creditshelf (Finextra), Rated: AAA

In Banco BNI Europa (“BNI Europa”), Creditshelf has succeeded in acquiring another strategic partner to help it provide financing to small and medium-sized undertakings (SMEs).

The online marketplace that specialises in SME financing, and the Bank, which operates throughout Europe, have agreed that Banco BNI Europa will invest up to 15 million Euro in the credit platform over the coming months.

Your Banker Is Always In: Sweden Rolls Out the Robots (Bloomberg), Rated: A

Aida is the perfect employee: always courteous, always learning and, as she says, “always at work, 24/7, 365 days a year.”

Aida, of course, is not a person but a virtual customer-service representative that SEB AB, one of Sweden’s biggest banks, is rolling out. The goal is to give the actual humans more time to engage in more complex tasks.

Besides Aida at SEB, there’s Nova, which is a chatbot Nordea Bank AB is introducing at its life and pensions unit in Norway. Swedbank AB is adding to the skills of its virtual assistant, Nina. All three are designed to sound like women, based on research suggesting customers feel more comfortable with female voices.

International

Marqeta & Visa Ink Global Partnership to Power Payments & Loans (Crowdfund Insider), Rated: AAA

Visa (NYSE: V) and Marqeta, a payment card issuing platform that can provide consumers with immediate loans, has announced a global partnership to propel innovations in commercial and consumer payments in lending. Visa has also made a strategic investment in Marqeta and led a $25 million funding round that included the participation of previous Marqeta investors including Commerce Ventures, 83 North, Granite Ventures, IA Capital, and CommerzVentures GmbH, as well as new investor CreditEase in China, one of the world’s largest alternative lender.

15 ‘RegTech’ Investors Every Fintech Startup Needs to Know (Entrepreneur), Rated: A

  1. Octopus Ventures
  2. SeventySix Capital
  3. Summer Capital
  4. Carrick Capital Partners
  5. EQT Ventures
  6. Insight Venture Partners
  7. JMI Equity
  8. Aquiline Capital Partners LLC
  9. Sageview Capital
  10. Accel Partners
  11. Warburg Pincus
  12. HarbourVest
  13. Digital Currency Group
  14. TTV Capital
  15. Balderton Capital
Australia

Online lender secures $ 20m debt facility (Australian Broker), Rated: AAA

Digital online lender Prospa has secured a $20m debt facility from the Australian arm of a US-based commercial finance provider, Partners for Growth (PFG).

Fintechs target millennials with online financial services (The Australian), Rated: A

Millennials are likely to fall into three categories:

• Inheritors: With wealthy parents, they are major consumers while they wait to inherit.

• Strivers: Coming from a more modest background, they are studying, saving and working hard with ambitions for promotion. They will borrow to support their lifestyle, not unlike inheritors.

• Given-ups: They are more likely earning a low salary but continue to consume as much as the other two categories. Buying a house is not on the agenda, so they do not see the point in saving.

And 71 per cent of millennials, according to Viacom’s Millennial Disruption Index, would rather go to the dentist than to the bank.

India

i2ifunding looks to break even by second half of FY20 (DNA India), Rated: AAA

i2ifunding.com, a peer-to-peer (P2P) lending platform, today said it aims to break even by the second half of 2019-20, given its robust growth in the last two years and promising outlook in the next two years.

It has a vision to scale up this disbursement up to Rs 200 crore over the next two years, i2ifunding.com said in a statement.

Fin-tech startup Finomena shuts down after failing to raise funding (The Indian Wire), Rated: A

Finomena, a startup which provided small ticket loans to students and young professionals, has shut down after failing to raise pre-Series A funding round.

The company is now no longer accepting new users on its website.

FinMomenta to introduce new products; targets SMEs (Deccan Herald), Rated: A

After working in a bank for many years, Brahma Mahesh and his friend decided to do something in the burgeoning FinTech space. They zeroed in on lending, as only 5-6% of the population is covered by banks and NBFCs. Mahesh, along with four other co-founders, started FinMomenta last year, and launched its first product ‘Tachyloans’, a peer-to-peer lending platform in May this year.

FreeCharge’s acquisition is proof that the Axis of Indian banking is changing (Quartz), Rated: A

In the next five years, almost 50% of the world’s financial services are planning to acquire fintech startups, according to a report by PricewaterhouseCoopers LLP. Collaborations, too, are expected to increase, with eight out of 10 companies waiting to partner with these new players, the report added.

Some 67% of senior Indian financial sector executives believe their business is at risk following the rise of fintech firms, and 95% of them were willing to explore partnership with them, a separate report by PwC released this April revealed.

On July 27, Axis Bank, the country’s third-largest private sector lender, acquired FreeCharge, a payments application and mobile-wallet company, for Rs385 crore ($60 million). This is the first such deal in the sector, potentially setting off more such transactions in the future, believe experts.

These serial entrepreneurs are offering bank products through an Ola-Uber model (YourStory), Rated: A

Five-month-old fintech startup Cashcow, which provides banking services and products to a customer at his doorstep, has expanded its operations to seven cities including Delhi, Kolkata, Pune, Ahmedabad, Hyderabad and Chennai. 

Joining fintech company Rubique as a chief product officer in 2016 introduced him to Manish Aggarwal, his future co-founder, who was leaving the startup at that point.

According to the founders, Cashcow is a platform providing banking services and products to a customer at his doorstep.

Can Regulatory Sandbox Nurture India’s FinTech Innovation? (CXO Today), Rated: A

The Indian financial services sector is undergoing major changes today. With more than 600 startups in the space of lending, payments, insurance and trading space, Fintech startups are not only spearheading innovation, but are also prompting traditional banks and financial institutions to explore new technologies and investing heavily in digital service delivery channels.

However, fintech startups unlike others face additional challenges of operating in a heavily regulated industry and have stiff competition as their key competitors are well established banking players. To overcome this challenge, experts believe, adopting a “Regulatory Sandbox” based approach where the regulator works closely with emerging Fintech firms make better sense.

Asia

Finca launches Pakistan’s first ever digital wallet (Daily Pakistan), Rated: AAA

FINCA Microfinance Bank, one of the fastest growing microfinance banks in Pakistan, has announced a movement to make digital commerce and payments free in the country.

SimSim, a mobile payment platform, was introduced in partnership with Finja – an internationally funded FinTech startup – at a launch event Thursday night at Mohatta Palace, Karachi. The event was attended by major industry stakeholders, government officials, artists, tech enthusiasts and media figures.

SimSim will give people access to frictionless payment options directed towards a diverse pool of merchants.

Middle East

Bahrain’s FinTech Sector Loses Ground to Dubai (Cryptocoins News), Rated: AAA

Africa

FINTECH Association of Nigeria debuts to support development of the financial technology industry (PR Share), Rated: AAA

Over 25 FinTech companies attended the recent inaugural meeting of FTAN – FinTech Association of Nigeria – which principal objective is to serves as a platform for the development of the financial technology industry in Nigeria and to be a forum for the exchange of ideas and dissemination of information by and between various stakeholders in the industry. 

Authors:

George Popescu
Allen Taylor

The Rise of UK Institutional Peer-to-Peer Lending

institutional lending

Institutional involvement in UK Peer-to-Peer lending remains low relative to the US, where institutions represent more than two thirds of the market. In 2015, institutions represented just 32% of consumer lending by total volume in the UK and just 25% and 26% of real estate and business lending respectively. So, why might this be? Well, […]

institutional lending

Institutional involvement in UK Peer-to-Peer lending remains low relative to the US, where institutions represent more than two thirds of the market. In 2015, institutions represented just 32% of consumer lending by total volume in the UK and just 25% and 26% of real estate and business lending respectively.

Source: 2015 Nesta Report

So, why might this be? Well, it’s fairly normal for institutional involvement to remain fairly low in the early stages of a new sector. On the most basic level, new sectors are simply not large enough for institutions to invest in, as they often require the ability to write large tickets, in the tens of millions, while also ensuring that they do not represent too large a proportion of a particular provider/platform. Also, until the sector gains the stamp of approval from the regulators and has a decent track record, those in charge of an institution’s wealth are simply unwilling to put their necks on the line for it. Instead, they’d rather invest in well-known, blue chip asset classes which their peers are all invested in too. There’s much less chance someone will get fired for those investments if they get into trouble. Furthermore, the P2P lending ecosystem is still in its early stages, which means that access to independent research and adequate due diligence tools are largely unavailable.

But, the sector is poised for change, and institutional involvement is growing. According to Nesta, in 2013 just 11% of P2P platforms reported some level of institutional funding. By 2015, this had increased to 45%. If we look at the big 3 platforms, which have the scale to accommodate institutions, this trend is certainly clear. Prior to 2014, these platforms had little to no institutional involvement, but institutional lending has increased significantly since then.

Institutional Lending (as a % of total volume)

Source: Orca Analysis and Assumptions. Data unavailable for Zopa in 2017

One of the key milestones for institutional involvement in P2P lending was the involvement of the British Business Bank. The British Business Bank is a UK Government-owned economic development bank established to increase the supply of credit to small and medium enterprises as well as providing business advice services. It has so far invested £135m through a number of P2P platforms including Funding Circle, through which it has invested £100m, Zopa, RateSetter and Market Invoice.

Additionally, there are a number of investment trusts available to investors which raise predominantly from institutions when they launch. Some of the larger investment trusts include P2P Global Investments (£730m), VPC Specialty Lending (£310m) and Ranger Direct Lending (£140m). Institutions have been attracted to these trusts thanks to their promise of high yields in this low yield environment and the belief that the teams involved have the skills to construct the best performing portfolios. Some of these investment trusts ran into a bit of trouble in 2016 when many began to trade at a large discount to NAV (>20%), having previously traded at a premium. Such price to NAV swings can be driven by numerous factors. Although it is likely that lacklustre performance of the underlying loans are a large contributing factor to declining sentiment, other short-term considerations are likely to also be at play. Some short-term explanations were provided by Cormac Leech, a principal at Victory Park Capital, who felt accounting quirks and Brexit / sterling weakening were causing the discount and that that these issues would be ironed out over time. Indeed, since the end of 2016, many of the discounts of the large investment trusts have narrowed by half.

Is this a good, or a bad, thing? There are a few different perspectives to take. Theoretically, institutional involvement is a great thing for borrowers, lenders and aggregators alike. Institutions mean more capital for lending, which in turn helps to grow the sector and stabilise the businesses of the platforms. Institutions help to also raise awareness with other investor groups, thus helping even more capital to flow into the sector. As platforms become larger and more profitable, we may also see cost savings passed on to investors.

This all sounds great, but there are a few snags to be aware of. Relying too heavily on institutional investors may cause investor concentration on the platforms, which leaves platforms vulnerable to being destabilised by just one investor withdrawing. Zopa and Funding Circle have both stated their commitment to retaining a diverse mix of investors, including retail, institutional and government funding. An issue that some of the larger platforms are already facing is that they are struggling to originate enough borrowers to keep up with the supply of lenders. This can cause issues for retail investors, as platforms may reject capital from retail investors (as Zopa has previously done) or platforms may be encouraged to take on riskier loans. The FCA recently stated that they were concerned about potential conflicts of interest that may be created by institutional involvement. The main concern here is that institutions may be able to cherry-pick deals to the detriment of non-institutional investors.

Another issue to be flagged is whether heavy institutional involvement undermines the social purpose surrounding P2P lending (i.e., finance ‘for the people, by the people’), which perhaps undermines the differentiating factor associated with the sector. While this is true to some extent, particularly in P2P equity crowdfunding and donations, P2P lending should ultimately be viewed as an investment opportunity which offers attractive yields with diversifying benefits in a well-constructed portfolio.

There may be some concerns but, on balance, institutional involvement should be seen as a positive sign for the P2P sector. So long as P2P participants remain well-versed on the risks involved and the FCA implements the necessary rules, institutions can help P2P lending to mature and grow in credibility.

Author:

Samantha McBride is a Director at Orca, which provides investors and financial advisors with the research required to perform in-depth due diligence on peer-to-peer investments. Samantha gained her Law degree in 2009 from the London School of Economics and has worked in financial services for the last eight years. Samantha began her career in mergers and acquisitions, working as an Investment Banking Analyst for both Nomura and Deutsche Bank, before moving into Investment Management. Prior to joining Orca, Samantha worked as a Senior Investment Associate at Partners Capital, a global outsourced investment office, and, most recently, a Portfolio Manager & CCO at Elm Partners, a quant-driven, low-cost investment manager.

Friday April 28 2017, Daily News Digest

10-year Treasury yields

News Comments Today’s main news: U.S. VC fintech investment rises to $1.2B. P2P Global Investments sees NAV bounce. Kuflink receives FCA authorization. Robo-advisor launches in Luxembourg. OnDeck Canada partners with Lightspeed. Ant Financial plans expansion into Japan. Today’s main analysis: Behind the 2017 bond-market rally. Today’s thought-provoking articles: China P2P industry news. Xero: Best overall fintech. Brazilians embrace robo. Who leads Africa’s fintech, […]

10-year Treasury yields

News Comments

United States

  • U.S. VC fintech investment rises to $1.2B. GP:”Total raise if you include non-VC sources is $1.5bil. New record since Q1 2016. Focs continues on lending and robo. “AT: “What I find interesting is in the report itself: The biggest deals of the quarter – SoFi’s Series G round, UniRush M&A, Zenbanx M&A, ProducePay early-stage, and Kensho Series C2 are the top 5 in the U.S. Also in top 10 are CommonBond and Upstart. Get the report here.”
  • Behind the 2017 bond-market rally. GP:”A very interesting piece worth reading to understand market reactions to the world and in fact cost of capital.”
  • Banks loosening up internally to work with startups. GP:”There is always a risk in relaxing control which translates into a cost, usually fines. To be practical, if the cost of the fines is significantly lower than the return from the business perhaps the fines become just the cost of doing business. On the other side, a regulator regularly fining a financing institution usually has a major impact on the institution reputation which has nonnegligible effects on the business. It is a very difficult to quantify where to relax by how much and the cost of doing so, especially the indirect costs. “AT: “What’s interesting are smaller banks are now starting to see the light.”
  • Mark Cuban backs an app that saves people overdraft fees. GP:”I don’t know anybody who never paid an overdraft fee. There shouldn’t be any overdraft fees, transactions should just be rejected by the bank. Or there should be a real product to compensate for it that has a reasonable cost, in line with the cost of a loan or or a credit card.”AT: “Overdraft fees are a huge frustration for a lot of young people learning how to manage their finances as an adult. It’s a part of growing up. The best solution is to learn how to balance a checkbook, but an app that does it for you on the fly isn’t a bad idea because most young people aren’t that great at balancing checkbooks.”
  • OCC: Fintech charter not a ‘ticket to light-touch supervision’. GP:”The OCC has always been very clear that the fintech charter is not light-touch; if anything it is the same-touch as for a bank while enabling them to offer a smaller amount of services. “AT: “When you’re being sued, the best course of action is to offer some sort of consolation. But you can’t say too much or it will be used against you.”
  • Chatting with PeerStreet’s founders. AT: “Expecting every type of real estate loan to go through a marketplace platform is a tall order, but I like the way BJ thinks.”
  • Debt is a deal-breaker for millennials considering marriage.
  • Quovo raises $10M in Series B. GP:”Quovo offers a series of finance APIs to enable innovation. Worth a look for sure.”
  • Robinhood hits 2 million users, raises $110M in Series C. GP:”RobinHood offers free stock trading. The consolidation that happened in the stock-brokers market from charging a large commission to free is an interesting lesson. The main driver of this cost cutting has been electronic and online trading which pushed brokers to seek an alternative business model, which happens to be in many cases selling order book data or ancillary services and products. “
  • Bitcoin values increases as SEC reconsiders ETF decision. GP:”I continue to believe that cryptocurrencies are a good remittance system. There is also a slew of new ICOs happening. And last but not least Ethereum and the smart contract world are also seeing a very large increase in demand. The main barriers to cryptos seem to be unclear regulation, unclear business model, and security risks.”AT: “It will be interesting to see if the SEC overturns its own decision to turn down the Bitcoin ETF.”
  • Easy Solutions launches AI anti-fraud service. GP:”Detection abnormal behavior on a credit card has been in place for sometimes. Government agencies have also been using abnormal behavior detection on large data for sometimes. Perhaps there is still space for improvement. “

United Kingdom

China

  • Top 5 P2P lending ratings. GP:”In China a lot of websites are trying to rate online lenders. And there is a rating of raters. Here people take a position of the top raters. Most lenders pay money to the rating websites to be rated in a process which can not always be impartial. Caution is advised and perhaps an index of the average rating per lender accross many rating websites is needed. “
  • MaizinJinfu raises Series B. GP:”Congratulations!”

European Union

Australia

India

Canada

South America

Africa

Asia

  • Ant Financial looks to expand into Japan. GP:”Japan is a mature financial system where the mentality is very conservative. I hope Ant has a Japan-adapted plan for the expansion which takes into account Japanese mentalities. In my experience this means at the minimum having Japanese employees, in Japan, and having everything done the Japanese way from the way the contracts are bound to the way you treat your customers. Japan is open to foreign products, but only if they have been well tested and are mature. In fact they seek them. I have brought multiple companies to Japan succesfully.”

News Summary

 

United States

VC Investment in Fintech Rises to $ 1.2 Billion in US: KPMG (Think Advisor), Rated: AAA

U.S. venture capital investment in fintech companies rose to $1.2 billion in the first quarter, the highest activity since last year’s first quarter, according to KPMG International’s Pulse of Fintech report, released Thursday.

Non-VC fintech investment in the U.S. reached $300 million, resulting in a total of $1.5 billion in fintech investment in the U.S. for the quarter.

“Payments and lending continue to attract the most funding globally, although we’re seeing increasing interest in a variety of technologies,” Brian Hughes, national co-lead partner in KPMG U.S. venture capital practice, said in the statement.

“In addition to continued growth in regtech and insurtech, areas such as artificial intelligence, machine learning and Internet of Things are gaining increasing investor attention.”

Next quarter, it said, robo-advisory, artificial intelligence and data analytics look to be “hot investment areas.”

KPMG reported that private equity firms in the U.S., including not-technology-focused ones, are proving robust actors in the late-stage fintech arena, with $1.2 billion in total deal value across 11 deals in the first quarter.

During the same period, however, U.S. fintech M&A got off to a slow start at just $200 million across 24 deals.

The West Coast continued to account for the largest concentration of U.S. fintech investment, with 67.6% of total value of deals in the first quarter and 39% of the total number of deals.

Get the report here.

Behind the 2017 Bond-Market Rally (WSJ), Rated: AAA

When the yield on the 10-year U.S. Treasury note fell to a record low in July, many investors agreed that the developed world was stuck in a “new normal” of ultralow growth, inflation and interest rates. Stronger U.S. economic data in subsequent months helped chip away at that view, lifting yields. They got another boost from Mr. Trump’s victory, as investors bet on a turn to expansionary fiscal policies–including an overhaul of the tax code–that would boost growth and inflation and allow the Federal Reserve to raise rates at a faster pace.

While the yield on the 10-year note is still well above its level on Election Day, that is partly because the Fed has raised short-term interest rates twice since then.

Banks are loosening up internally so they can work with startups (Tearsheet), Rated: A

With public confidence in them in the U.S. below 50 percent across the political spectrum, banks have a branding problem — one that gets even more problematic when they have to work with those outside the industry.

Wells Fargo is one of the banks that has taken active interest in facilitating dialogues with startups. While most most major banks have accelerator programs, Wells Fargo said one of the focuses of its startup program is helping banks understand startup culture and vice versa. Wells Fargo’s accelerator program mentors companies for six months and provides up to $500,000 of equity investments for selected companies. The companies may also work on proof of concepts across different business lines within the bank after the completing of the program.

For smaller banks, a focused approach ensures that the relationship will be productive. Boston-based branchless virtual bank, Radius Bank, has a staff member dedicated to partnerships with startups who carefully vets each startup for compatibility.

Mark Cuban is backing an app that’s trying to help people avoid overdraft fees (Business Insider), Rated: A

The billionaire has invested in a new app called Dave that aims to predict coming expenses for users to help prevent them from overdrafting on their bank accounts.

Once Dave connects with a user’s checking account it forecasts the account’s lowest possible balance in seven days based off the person’s spending habits.

Users are notified when their seven-day forecast is negative. That way they can be proactive and potentially avoid overdrafting and being burdened with bank fees.

According to a report by CNN Money, the top big banks – Chase, Wells Fargo, and Bank of America – raked in over $5 billion in ATM and overdraft fees in 2016. In total, overdrafts cost customers $36 billion a year.

OCC: Fintech Charter Not a ‘Ticket to Light-Touch Supervision’ (ABA Banking Journal), Rated: A

Gardineer emphasized that fintech firms granted a national bank charter would undergo the same supervision process and be held to the same capital, liquidity and consumer protection standards as OCC-supervised banks. She added that state laws on fair lending, debt collection and other things would still apply, just as they do for nationally chartered banks. Her comments came after a lawsuit filed earlier this week by the Conference of State Bank Supervisors, which said that in moving forward with the limited-purpose charter, the OCC overstepped its authority under the National Bank Act.

Chatting with Brew & Brett, Co-Founders of PeerStreet (Simple Innovative Change), Rated: A

Brew Johnson was in real estate law by chance back in the mid-2000’s, which is when he happened upon the dismal reality that our housing market was built on a house of cards through his deep research and desire to figure out what was going on. He knew something needed to change, and he had a plan for how to do it.

When the time was right he brought in Brett Crosby, Co-Founder and COO of PeerStreet to take his tech background from building Google Analytics to help revolutionize the housing market with a new approach to financing the mortgage markets.

BJ: A lot of what we’re doing at PeerStreet is informed by what I learned during that time as a real estate attorney within the securitization market.

Fast forward to 2013, and all the barriers to entry that existed in 2008 had been significantly reduced. After the market crash, government regulation started to favor the startup community, and with the advancements in technology, I felt that it would be a lot easier to create a company like this.

BJ: For me, it was about seeing the movement in marketplace lending, and the growing comfort in investing in this asset class through a new type of platform. This sudden shift in comfort coinciding with easing regulation led to a huge boom for private lending.

The reason we believe it’s so important to build a tech-enabled platform like this is because there are more independent lenders now than ever, and they’re scattered around the country, leading to a significant amount of fragmentation in the market.

What PeerStreet does is use technology to make sense of this fragmentation, and then layer a whole level of positives onto it.

BC: In other spaces like consumer credit, auto loans, and student loans, the location of the lender is not important so it’s possible to lend from a central position. In the mortgage and real estate development space, however, having local knowledge matters a great deal.

BJ: Since we partner with and provide capital to local lenders who lend to small businesses, who in turn lend to other small businesses or real estate entrepreneurs in their communities, we’re enabling our investors to support the value chain of local economies. Essentially, we are investing in communities and helping to promote the up-cycling of housing stock in those areas.

BC: The reality is many of the new business models may go out of business because they are simply taking too much risk on their loans. We’re positioning PeerStreet for the ups and downs of the American economy.

BJ: We think every type of real estate loan will go through a platform like ours eventually, so we are taking a very measured approach to how we decide to move into each of those asset classes.

Deal Breaker?! Dating and Debt (CBN News), Rated: A

According to a new study from online personal finance company, SoFi, debt is a big deal breaker to 20 percent of Millennials (ages 25-35).

“It depends on what they are paying for with their debt. If she has 10-15k in cc debt for B.S. that’s obviously a red flag. If it’s student loans, I can’t complain. If she’s not paying on any of it, run,” said another.

SoFi also looked into how much Millennials cared about a person’s future earnings when deciding whether to date them or not.

According to SoFi, Millennials don’t think debt needs to come up right away. 58 percent say it only needs to be talked about when the relationship gets serious.

Finally, SoFi asked Millennials if they would dump someone over debt. A majority, 55 percent, said no. (Still, 24 percent said they may not consider marrying someone with more than $100,000 in debt.)

Quovo Raises $ 10 Million in Series B Funding to Fuel Fintech Platform Expansion (Crowdfund Insider), Rated: A

Quovo, a Fintech company that leverages data to provide insights alongside connectivity for financial accounts, has raised $10 million in Series B funding.  Existing investors FinTech Collective and Long Light Capital were joined by F-Prime Capital and Napier Park Financial Partners to provide the capital. As one would expect, the cash will be used to fuel platform growth and build out the suite of data analytics offers which include the newly launched bank authentication API and Quovo Connect module.

Robinhood Hits Two Million Users & Raises $ 110 Million During Series C (Crowdfund Insider), Rated: A

California-based fintech company Robinhood announced on Wednesday it not only has reached two million users, but it also secured $110 million during its recent Series C funding round, which was led by DST Global, with participation from NEA, Index Ventures, Ribbit Capital, Thrive Capital and Greenoaks Capital. This brought the company’s total funding to $176 million.

Bitcoin’s value increases as the SEC reconsiders its ETF decision (The Merkle), Rated: A

Not long ago, the three-year effort put in by the Winklevoss twins to bring the Bitcoin ETF to the market was blocked by the SEC, after the agency ruled against them. What followed was a major crash bringing along a 15% decrease in Bitcoin value.

The initial Winklevoss proposal was to list the Bitcoin ETF on the Bats BZX exchange, which is one of the largest equities market operators in the United States. The exchange then decided to file a petition with the SEC, kindly asking the exchange commission to review last month’s decision. Luckily, the petition was accepted, therefore the SEC will proceed to reconsider their decision.

Optimism in the market has appeared all over again, and the price of Bitcoin again the U.S. dollar is further increasing due to these new speculations. Precisely, it has managed to increase to $1,294, from $1,251 in a single day.

Easy Solutions Launches Artificial Intelligence Anti-Fraud Service (Yahoo! Finance), Rated: B

Easy Solutions, the Total Fraud Protection company, today unveiled its new Detect TAArtificial Intelligence (AI) Fraud Assessment Service for banks and other financial institutions. Artificial Intelligence delivers a competitive edge to any business that leverages it effectively, and it is already being applied by leading financial institutions to improve fighting fraud.

United Kingdom

P2P Global Investments sees NAV bounce, expands into alternative credit (AltFi), Rated: AAA

The £833m P2P Global Investments fund saw its net asset value [NAV] rise 0.55 per cent in March, including a 0.16 per cent uplift from its share buybacks, prompting a boost to its latest quarterly returns.

Its latest numbers, however, show a boost in returns with total NAV return for Q1 2017 of 1.18 per cent, while its discount has narrowed to 15 per cent.

Kuflink’s P2P Lending Platform Receives FCA Authorization (Crowdfund Insider), Rated: AAA

On Thursday, Kuflink received full authorization from the Financial Conduct Authority (FCA) for its peer-to-peer lending platform. According to the registration, Kuflink has been given permission to provide regulated products and services, which includes accepting deposits, provide credit to consumers, offer investment advice, and arrange deals with investments.

B&C Awards 2017 shortlist announced (Bridging&Commercial), Rated: A

The top brokers, lenders and individuals in the bridging, commercial, development finance, peer-to-peer and specialist banking markets have been shortlisted and are now in the running to win one of the industry’s most prestigious awards.

The shortlist includes new categories ‘Best Use of Fintech’, ‘Specialist Product of the Year’ and ‘Best Bridging Lender Newcomer’.

Last year’s Bridging Lender of the Year, Octopus Property, has been shortlisted again in 2017 for the coveted title and will be up against fellow nominees Precise Mortgages, Together, Amicus, Funding 365, Masthaven, MTF and LendInvest.

The brand new category ‘Alternative Lender of the Year’ brought in scores of votes, with Assetz Capital, Funding Circle, LendInvest, RateSetter, Lendy and Kuflink making the shortlist.

Pariti adds second online lending partner (AltFi), Rated: A

Pariti, the personal finance management app which helps users to manage their debts, has teamed up with Lendable to broaden its range of loan options. Pariti made leading marketplace lender Zopa its first lending partner in September of last year. Pariti users looking to consolidate their debts will now receive offers from both lenders.

China

P2P Industry News (Xing Ping She Email), Rated: AAA

Top Five P2P Lending Ratings in China
Rating is an important reference for investors. A senior industry player taking the following as the top five P2P lending rating agencies in China: Online Lending House Rating, Xeenho Rating, Net Credit Eye Rating, Rong 360 Rating and Dailuopan Rating.

Online Lending House Rating
Online Lending House is one of the biggest P2P lending portal sites in China. It has been engaged in platforms’ rating since August 2013. Up to now, Online Lending House has issued 44 rating reports maintaining over 100 rated objects.

Xeenho Rating
Xeenho Rating is the first rating agency from the buyer’s perspective, and it was launched by the P2P lending funds Xeenho in October 2016. Yet it has issued its fifth report, with a selection of around 45 P2P lending platforms. The rating is neutral for it stand on the investors’ side, so its rating could be more reliable. Actually, Xeenho’s risk-control management keeping the Zero Bad Debt in the industry.

Net Credit Eye Rating
Net Credit Eye Rating is similar to Online Lending House Rating in terms of contents’ provision. It was launched in September 2015 and has issued 18 periods of reports with over 70 P2P lending platforms.

Rong 360 Rating
Rong 360 Rating is quarterly issued, so far it has 8 periods of rating reports on 70 platforms. Rong 360 includes a wider range of content compared by other agencies, therefore some low rating results may exists.

Dailuopan Rating
Dailuopan launched its own ratings services mainly based on big data method. It started from May 2016, and has issued 10 periods of reports on over 500 P2P lending platforms.

Jack Ma: We need a reliable credit system on P2P lending industry
On April 23rd, the 2017 Annual Summit of China Green Companies was held in Zhengzhou. Jack Ma attended the occasion and said, “Only when a reliable credit system has been built, the real P2P business could be exist.” He also pointed out that new finance is to create a share-benefited and fair environment for residents, which should reach the effect that “an old woman has the same rights with a bank CEO .”

In fact, Jack Ma has previously said that the P2P lending should based on three elements: data, credit system and risk control system with big data. Unlike the negative view on P2P lending five years ago, this time Jack Ma show an optimistic attitude to the industry.

MaiziJinfu Raises Series B Funding (Yahoo! Finance), Rated: A

UniFi ‘s parent company Shanghai Wheat Asset Management Co., Ltd. (“MaiziJinfu”, “Maizi” or “the Company”), a China -based Internet-based financial information service provider, today announced that it has received Series B funding,  at the Internet Finance Development and Innovative Application Forum (IFDIA), which was co-hosted by Money Weekly in Shanghai .

European Union

FINANCIAL ADVICE FROM A ROBOT LAUNCHES IN LUX. (Delano), Rated: AAA

From about $19bn under management by robo advisors in the US in 2014, this figure has since quadrupled. However, this is still small compared with traditional financial services. For example, the Luxembourg wealth management industry alone had four times these assets under management in 2015. Nevertheless, these are early days.

The grand duchy is now part of this trend with the launch of the KeyPrivate service by Keytrade Bank Luxembourg. Residents and non-residents alike can use the service. You tap in how much you want to invest, for how long, and with what risk profile, and then there’s a questionnaire to check that you have the necessary financial means.

The site will then design a portfolio based on 12 funds invested principally in shares and bonds in different international markets.

After investment, each portfolio is reviewed automatically by the robot to take the latest market developments into account. KeyPrivate chose exchange-traded funds (ETFs) to power this system. Not only is it easier and cheaper to move in and out only of ETFs than with standard funds, but these “tracker” products seek to mirror industry benchmark indexes that tend to give average returns.

The minimum investment is €15,000, and the service is provided at “a fee that is two or three times cheaper than a traditional wealth manager,” said Thibault de Barsy, CEO of Keytrade Bank Luxembourg. It is a flat fee on total assets of 0.75% plus VAT per year. There is no up-front fee, nor is there an extra charge even if the client rebalances their portfolio.

Australia

Xero wins Best Overall Fintech award (Xero), Rated: AAA

We feel humbled to be awarded the Best Overall Fintech platform by the Fintech Breakthrough Awards. It also provides validation that we’re truly changing the lives of our more than one million subscribers.

Award organizers report $36 trillion in digital payments will be processed by the end of 2017. In the past 12 months, Xero alone transacted $1.2 trillion worth of economic activity.

The very foundation of a small business owner’s financial web is secure bank integrations. These enable banking, accounting and business management to come together. Xero is building a strong, global financial web, working with 110 financial institutions and 500 ecosystem partners around the world.

Millennials fast losing interest in low-rate accounts (LendIt), Rated: A

  • Poor rates on savings accounts, pricey property and stock market volatility is leading to an influx of millennial money to P2P lending
  • The number of millennial investors has increased by >250% over the last 12 months as young savers join older investors in seeking out alternatives to traditional saving and investment products
  • Surge in millennial money has helped RateSetter reach $100m of loans funded in record time for an Australian lending platform
  • 80% of all lenders expect to increase the amount invested within the next 12 months
Source: RateSetter

RateSetter: Millennials are driving P2P growth in Australia(P2P Finance News), Rated: A

The London-headquartered P2P platform, which launched its Australian division to the public in 2014, argues that poor rates on savings accounts, high property prices and stock market volatility have pushed people aged 18-35 towards P2P lending.

RateSetter Australia said that its number of millennial investors had grown by 250 per cent over the last 12 months and now accounts for 58 per cent of total active investors.

India

Here’s all you want to know about alternative asset class – P2P lending (Financial Express), Rated: A

What P2P lending offers investors
– P2P lending in India currently gives a net return of 18-22%
– Borrowers repay principal & interest every month so there is a steady cash flow
– Investors can pursue legal recourse against the borrower in case of defaults
– By diversifying your investment across different borrowers, you will begin to mirror the overall default rate of the platform

P2P lending is like investing in debt; the capital risk is lower, and there exist ways to mitigate it. In case a borrower defaults, investors can pursue legal recourse against the borrower.

Cash in on P2P lending (Telengana Today), Rated: B

A good percentage of people in the world are involved in digitally enabled peer-to-peer exchange. This form of exchange has expanded dramatically in recent years, moving beyond simple retailing and free file exchange to personal, human-intensive services such as hosted accommodation, urban and city-to-city transportation, and peer-to-peer lending.

Here is the basic premise of P2P lending: People sign up on a P2P lending platform like PeerLend as a borrower or as a Lender. A borrower submits an application for a loan by providing his details, and KYC documents. The platform back office team performs a credit assessment of the profile and determines his credit worthiness.

From a lender’s perspective, peer to peer lending allows them to directly lend to other people by having them register on the platform by providing their ID and address proof. They also provide the bank account details that they will use to transact on the platform.

Interest rates – Various P2P platforms in India are charging a one-time registration fee ranging between Rs.500/- to Rs.1,500/-, and a loan servicing fee ranging from 3.5% to 6% of the loan amount.

Canada

OnDeck Canada Partners With Lightspeed (Yahoo! Finance), Rated: AAA

OnDeck Canada, a leading online lender to small businesses in Canada , and Lightspeed, a cloud-based point-of-sale platform for independent retailers and restaurants, have announced a partnership that will allow Lightspeed users to secure OnDeck loans. The new offering will be available to Lightspeed customers in Canada and the US providing up to $500,000 (US) term loans and $100,000 (US) lines of credit.

This strategic partnership between OnDeck and Lightspeed, who each share a focus on assisting small businesses, is a major step forward for Canadian businesses, especially those retail, restaurant, and e-commerce companies that can now acquire OnDeck financing to support their investment in the Lightspeed point of sale (POS) solution.

OnDeck loans will also enable Lightspeed clients to take advantage of growth opportunities such as buying inventory, purchasing equipment, and boosting their customer experience.

OnDeck’s advanced lending technology and staunch dedication to customer service has enabled it to deliver more than $6 billion dollars in capital to over 60,000 businesses across the United States , Canada , and Australia.

South America

Magnetis sees more Brazil investors embracing robo-advisory (NASDAQ), Rated: AAA

Magnetis Gestora de Recursos Ltda, Brazil’s first fintech asset manager, expects demand for affordable access to automated investment advice to surge in coming years as interest rates decline and economic uncertainty persists.

As the central bank undertakes the most aggressive rate cutting cycle in eight years, demand for cheap financial advice has fueled a surge in trials for robo-advisers, an automated form of passive money management that identifies a client’s risk-taking preference.

Since March 2015, Magnetis has conducted 30,000 trials for clients eager to understand a platform providing access to 15,000 different domestic tradable assets.

Growing scale has helped Magnetis cut management fees to 0.4 percent, well below the 0.8 percent to 1 percent that banks and brokerages typically charge customers.

Africa

Banks vs startups: Who leads Africa’s fintech innovation? (This is Africa), Rated: AAA

Only an estimated 34 percent of Africa’s adult population has any form of formal bank account. This is an improvement from a decade ago. Much of this progress can be credited to the growth of mobile and agent network-based banking solutions.

To scale up the trend, banks need to figure out how to effectively join Africa’s fintech innovation ecosystem.

A number of banks have launched bespoke accelerator programmes in a bid to reach out to African entrepreneurs and startups. Barclays, Standard Bank, Citi, and DBS Bank are just a few.  Others seek to partner directly with startups to develop new products and services.

In Cape Town, for example, Barclays has launched a business accelerator programme called Rise in a bid to encourage mutually beneficial collaboration between banks and startups.

Others agree. In east Africa, KCB Bank has partnered with more than 10 startups on projects and is involved with multiple projects supporting entrepreneurship in the region. This is bearing fruit: the bank’s mobile banking app was built by a startup.

Peach Payments took part in the Barclays accelerator in 2016. Upon completion, it signed a proof of concept with the bank to explore further collaboration.

However Keith Jones, co-founder at Sw7, believes that despite their efforts banks have so far failed to develop a mechanism to effectively engage with startups.

While the intent is there, he says, the strict corporate mindset of financial institutions has meant they are slow to adapt to new solutions and models. They can also have a tendency to “smother” small businesses rather than help them to thrive.

6 artificial intelligence startups in Africa to look out for (VentureBurn), Rated: A

South African startup DataProphet last year received a significant investment of an undisclosed amount from Yellowwoods Capital Holdings to expand its international offering. As part of the deal, DataProphet will act as the advanced analytics partner for the group.

The startup, based in Cape Town, has developed various machine-learning interventions, mainly for the finance and insurance sector.

Nigerian startup Kudi.ai has developed a chatbot which allows users to make payments and send money to friends and family in Nigeria via messaging. The company is a graduate of the YCombinator Winter 2017 batch.

The company uses AI to understand user requests, drive conversations, understand user spending habits and prevent fraud.

The startup has put together a business-to-business solution too, which it is piloting with banks and telecommunication companies.

Founded by former equity-derivatives specialist Annabel Dallamore (pictured here) together with Julian Dallamore and Mark Karimov in 2013, Johannesburg startup Stockshop.co.za offers a number of artificial intelligence solutions to financial institutions such as banks and insurance companies.

The startup has also developed a bot interface that completes real-time identity verification checks on behalf of banks and financial institutions in line with requirements under the Financial Intelligence Centre Act (FICA).

The startup has also developed a solution that uses an algorithm that pairs financial behaviour, spending and other data along with emotional cues and provides clients with assistance around financial matters such as payments, administration, rewards, education, analytics and tracking.

It’s also launched a micro-insurance platform in April that is unique to the African market.

Asia

Ant Financial Eyes Japan (Finews), Rated: AAA

China’s Ant Financial Services Group has said it wants to increase operations in Japan and is actively seeking a partner there.

With a deal in Korea already in the bag after a $200 million investment in South Korea’s mobile platform company Kakao Talk, the focus has turned to the world’s thrid-largest economy Japan.

Authors:

George Popescu
Allen Taylor 

Wednesday April 26 2017, Daily News Digest

robo-advisors deal share

News Comments Today’s main news: Wela pairs AI with financial advisors in mobile app. KBRA assigns prelim ratings to Avant Funding Trust 2017-A. Assetz Capital to launch property-only, longer-term accounts. Mint Bridging ups development as FC exits market. China Creation Ventures leads $16M IceKredit round. Today’s main analysis: Affordability of houses in U.S. cities relative to income. Today’s thought-provoking […]

robo-advisors deal share

News Comments

United States

  • Wela launches mobile app pairing AI with real financial advisors. GP:”In online lending the equivalent would be mixing AI underwriting and human underwriting. “AT: “It won’t be long before everyone is managing their finances with mobile apps: Household income, investments, savings, college education expenses, you name it. Artificial intelligence will be a major part of that movement.”
  • Kroll assigns preliminary ratings to Avant Loans Funding Trust 2017-A. GP:”Avant continues to securitize and the securitization continues to perform well. This is great news for Avant and their peers.”
  • Affordability of houses in major U.S. cities relative to income. GP:”Afforability of housing, as it is the largest budget item in most people’s budget, is correlated with all kind of useful parameters like affordability,etc. However, the correlation is not always in the direction one would expect: if housing is cheap it could mean people have no credit/only expensive credit options/no good income , etc. “AT: “While interesting data, this says nothing about whether these markets are good investment markets for real estate. Rather, its says a lot more about whether John Q. Homeowner can afford to buy a home in these markets. Looking at median incomes, I’d say the majority of income earners all across the country would have a difficult time buying a home in most of these markets. But the data can also be misleading. For instance, in Dallas, the median house value is $162,300, but the average middle-class home purchaser can get a home for half that. Medians don’t give a realistic view of on-the-ground reality, in my opinion.”
  • Upgrade to hire up to 300 in Phoenix. GP:”Renaud Laplanche is hiring up to 300 people after barely opening doors. Lending Club I believe has about 1,000 employees. In my personal experience in growing companies I made the mistake of hiring too many too fast and I now prefer to see what I can do with as few people as possible.” AT: “Upgrade is expanding fast. I wonder why they chose Phoenix.”
  • Reliamax now services $275M in private student loans. GP:”A decent size portofolio. We encourage as much transparency as possible. I wish more companies published their portofolio size and numbers.”
  • RIP MPL? AT: “This is an apologia for Misys, which I think is trying too hard to convince people that banks can compete with fintech companies on technology. One problem: They haven’t proven it yet, and it doesn’t appear as if they are working at it real hard. In order for the premise to be true, community banks will have to follow the larger banks in adopting emerging technologies, and very few of them are. I don’t even think it’s on their radars.”
  • Lending Technologies introduces Leads2Lend. GP:”We have on our database close to 20 tech companies who provide platforms to lenders. How many more will enter this space? Is this a crowded space yet?”
  • Banks to overhaul their technology. AT: “There are some valiant efforts here, but big banks are not agile. I don’t see these changes happening as rapidly as their digital competitors in fintech can operate.”
  • How the CRE industry is adapting to fintech.
  • Comparative look at REITs and MPL. GP:”REIT is very tax efficient.”
  • Roostify names Frank Gelbart as CRO.

United Kingdom

European Union

China

International

  • Mapping robo-advisors around the globe. GP:”Robos market is well correlated with online lending.” AT: “That the wealthiest nation in the world would lead in WealthTech funding is not surprising. But this is about investment. U.S. consumers have not adopted robo-advice as quickly as consumers in other nations, especially Asia.”
  • Fintech patents jump, U.S. leads. GP:”I am surprised China comes in as #2.” AT: “I think U.S. creators care more about protecting their intellectual property than creators in other parts of the world, or it could be that the U.S. mechanism for protecting patents is much more sophisticated and effective than in other parts of the world. Either way, you can’t judge the size of the fintech sector by patents alone. Otherwise, the UK would be way down the list.”

Australia

News Summary

United States

Wela Launches World’s First Financial Advice App Pairing Artificial Intelligence with Real Advisors (Yahoo! Finance), Rated: AAA

Wela today announces its free mobile app changing the way financial advice is delivered by pairing real financial advisors with Artificial Intelligence (AI) through the personification of its digital advising algorithm, Benjamin. The first true digital advisor, Benjamin utilizes AI to track users’ daily, weekly and monthly spending habits and provides personalized advice based on their financial needs and goals. Unlike other free consumer finance apps on the market, Wela pairs AI capabilities with a human touch, offering access to real financial advisors via phone, video chat or in-person at no additional cost.

The Wela iOS app enables users to track all their financial accounts in one place, protecting user privacy by leveraging bank-level security, as well as 256-bit SSL encryption and two forms of secure authentication. Capable of aggregating data from more than 13,000 financial institutions, Wela’s digital advising algorithm, Benjamin, uses linked account information to run a complete analysis, helping users take steps toward financial health based on three main pillars: creating an emergency reserve, paying off debt, and implementing an investment strategy. In addition to Benjamin’s foundational metrics, the algorithm delivers custom insights on demand, helping users stay on track to reach their short- and long-term goals.

Wela’s in-app budgeting tool, Benjamin, makes budgeting tangible and prevalent on a day-to-day basis. Once Benjamin is activated, the onboarding process begins with the creation of a personalized ‘Daily Spend Limit’. Benjamin then compares that number to actual daily spending and other transactions so users can understand how they are progressing toward the customizable goals they have set for themselves within the app. With real-time analysis of daily spending, rather than an end-of-month review, users are empowered with a better budgeting method and reassurance in their progress.

“Wela is the first free app to give comprehensive financial advice in real time in real-world scenarios personalized for you,” said Matt Reiner, Wela CEO and co-founder.

KBRA Assigns Preliminary Ratings to Avant Loans Funding Trust 2017-A (Yahoo! Finance), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Avant Loans Funding Trust 2017-A (“AVNT 2017-A”). This is a $192.6 million consumer loan ABS transaction that is expected to close on May 4, 2017.

This transaction represents Avant, Inc.’s (“Avant”, the “Servicer” or the “Company”) fourth rated securitization collateralized by a trust certificate backed by unsecured consumer loans originated through its online marketplace lending platform (“Avant Platform”). There have been four prior unrated securitizations, in which Avant or Avant’s institutional investors were the sponsors and the collateral was unsecured consumer loans originated under the Avant Platform.

Avant has a strategic partnership with WebBank, whereby WebBank, a Utah chartered industrial bank, originates loans through the Avant Platform. Avant utilizes technology and customized scoring models to assign credit grades. The Avant website is designed to provide customers with an easy interface and quick online loan decisions at competitive rates compared to traditional lending platforms.

Avant retains a portion of loans originated through the Avant Platform. Avant does not fund loans through a peer-to-peer platform, but instead partners exclusively with institutional investors for whole loan sales.

Affordability Of Houses In Major U.S. Cities (Relative To Income) (Investment Zen), Rated: AAA

Using median income data from the U.S. census and median home prices from Zillow, this map shows how many years of median income it costs to purchase a median house in each of these cities.

DETROIT

#1

  • Median House Value: $38,200
  • Median Household Income: $25,764
  • Amount of Income Needed to Purchase: 1.5x

SAN FRANCISCO

#27

  • Median House Value: $1,147,300
  • Median Household Income: $81,294
  • Amount of Income Needed to Purchase: 14.1x

California finance startup opening downtown Phoenix office, hiring up to 300 (Biz Journals), Rated: A

San Francisco-based financial services startup Upgrade Inc. is opening its first expansion office in downtown Phoenix, with plans to potentially hire up to 300 people.

The startup is opening an operations center in July on two floors of the Renaissance Square Building One at 2 N. Central Ave.

ReliaMax Now Services $ 275 Million in Private Student Loans (Yahoo! Finance), Rated: A

ReliaMax, the complete private student lending solutions provider for banks, credit unions and alternative lenders, says it services $275 million in loans, an increase of nearly 670 percent from the close of 2015, driven by portfolio conversions that helped banks, credit unions and alternative lenders enter the private student loan asset class.

The ReliaMax loan servicing platform was built with the latest technology and exclusively for private student loans, making it unencumbered by the infrastructure constraints facing other student loan servicers whose platforms were designed to principally serve federal student loans or other consumer loans.

Marketplace lending RIP? (Bankless Times), Rated: A

Once banks master financial technology, the marketplace lending industry is in deep trouble, Jean-Cedric Jollant believes. And the bad news is that’s starting to happen.

“The (fintech) challengers made the move by trying to build a hybrid model where they may not own 100 per cent, 50 per cent or even zero per cent of a loan, but the need the technology to do that,” Mr. Jollant said. “They need new underwriting material and servicing software which they don’t necessarily have.”

Once more banks embrace new technology, they will be able to capitalize on a long list of advantages they have over marketplace lenders, Mr. Jollant said. Their abilities to process payments, service credit and onboard customers are superior. Close the technology gap and the banks can provide much better service at competitive rates.

“So (the marketplace lenders) are just intermediaries. Eventually they will not be able to compete with banks. The only difference between what the marketplace lenders are doing today and the banks really is the underwriting model and that gap will be breached really fast.”

Mr. Jollant believes the venture capital industry will soon begin to sour on marketplace lenders, possibly as soon as later this summer. Those surviving that will then have to withstand the next downturn, which many models have yet to be tested by.

Lending Technologies Corp Introduces Leads2Lend CAM Solution (PR Newswire), Rated: A

B2B fintech firm Lending Technologies Corp, a pioneer in loan origination technology, announces Leads2Lend, its new marketing platform for alternative lenders. Produced in cooperation with Lead One Marketing, Inc. the Leads2Lend program provides alternative finance companies with an all-in-one digital solution to identify and engage with potential new customers—ultimately leading to a stronger bottom line.

The Leads2Lend platform combines Lending Technologies Corp’s white-label customer acquisition management (CAM) technology with a digital marketing program that connects alternative finance firms with new clients. Using Lending Technologies Corp’s proprietary digital onboarding and loan building tools, designated agents can individually download leads and create bespoke lending solutions for the clients. Other functionalities include tools to expedite credit decisions and facilitate loan package construction.

Lending Technologies Corp’s white-labeled CAM technology, serving customers in the U.S. and Switzerland, provides a fully digital, mobile-responsive, end-to-end process for banks and alternative finance companies that allows lenders to save time and money while reducing the risk associated with underwriting loans to small- and medium-sized enterprises. Lending Technologies Corp provides a seamless, paperless solution to all users and gives loan officers the latest digital tools for lenders to issue credit decisions—all with a comprehensive back end.

An omnichannel overhaul in 5 steps (American Banker), Rated: A

U.S. Bank and Bank of Montreal have begun multiyear overhauls of their websites, mobile apps, call centers and ATMs.

Fix what’s broken. Both U.S. Bank and Toronto-based BMO are starting with the “dissatisfiers” — the things that vex customers or make them give up on one channel (say, mobile) and switch to another (such as the call center). JPMorgan also made this part of its approach when it rewrote its mobile app last year.

Make incremental enhancements. 

U.S. Bank’s mobile app was improved 27 times in the past two years, with the help of so-called agile development methods.

BMO also has adopted agile development. “Gone are the days when our tech people took months and months and built detailed requirements,” Badarinath said.

Create a “unified customer experience.” For years, banks have talked about having a consistent experience across mobile apps, websites, branches, ATMs, video kiosks, call centers and text messages. Yet you would not want to talk with a teller the same way you tap on a mobile app or withdraw cash from an ATM.

This fits with recent Javelin research that found most consumers would prefer to apply for credit cards in digital channels: 48% said online, 13% mobile, and 34% said they would prefer a branch. For a checking account it was 41% online, 8% mobile and 49% in a branch.

Today, only 8% of successful applications start and finish in a smartphone or tablet.

Establish an innovation team.

BMO has a group whose job is to look for interesting fintechs the bank can partner with to augment his group’s work.

Test emerging technologies.

And it is exploring options for using chatbots to let people use text messages to request and perform transactions.

Gaston envisions using augmented reality to help customers who want to purchase a car, a house or a boat understand their options.

He foresees using machine learning in the bank’s decisions about online accounts.

How is the CRE Industry Adapting to the Emergence of Fintech Solutions? (NREI Online), Rated: A

NREI recently spoke with Frank Muhlon, head of transactions at CrediFi Corp., to hear more about what’s ahead for this segment of the market.

Frank Muhlon: For sales and financing, technology allows for faster and broader market reach, meaning you have the ability to get to multitudes of investors and lenders. Being able to get to those people faster is really helping to drive the business.

The other area is risk mitigation and the opportunity to reduce your risk, which goes hand-in-hand with more transparency and more information.

Frank Muhlon: At its heart, it has always been a people business and I really don’t foresee that changing. But tech and innovation have been a hallmark of commercial real estate for some time. Eight to 10 years ago we went through a significant and humbling downturn and going through that adversity brought innovation and numerous opportunities. Institutional capital, debt and equity capital got reshuffled, and it presented some opportunities in the marketplace.

I think there is a segment of our industry that is not completely convinced that tech is necessarily disrupting our business in the way that it is disrupting other industries.

Frank Muhlon: In the last five years, the crowdfunding space has grown. There were fewer than 10 pioneering real estate platforms focusing mostly on equity investment. Now there are arguably over 100 sites covering the entire capital stack.

Five years ago, crowdfunding as a whole was a few billion [dollars] in activity globally. In 2016, it was well over $50 billion. Real estate is a more modest piece of that, but it has grown substantially as well. There was about $3.5 billion in activity on real estate crowdfunding sites in 2016. That has been a tremendous growth market, and alternative financing and lending is seeing similar trends.

The online lending industry was about $40 billion last year and it could be upwards of $1 trillion in the next five years.

Frank Muhlon: CredifX is the first cloud-based and data-driven commercial real estate financing marketplace for borrowers, brokers and lenders. The platform focuses on loans of $1 million and up across all major property types nationally. We leverage technology to match loan applicants with financing based on their criteria and the extensive loan product offerings in our lender network.

Comparative look into REITs and Marketplace Lending (Realty Biz News), Rated: B

One reason to invest in REITs is the favorable tax treatment and dividend payouts. Unlike investing in businesses where you expect to see increasing profits from continued growth, 90% of the profits have to be issued in dividends from investments in REITs. Instead of waiting for a business venture to show profits before receiving a dividend, investors get their share quarterly or annually in regular dividend checks.

With Marketplace lending, investors can expect to receive monthly disbursements throughout the lifetime of the loan. Principal investments are typically returned to investors between 6 months to 24 months, depending on loan payoff dates and loan extensions. Servicing fees vary by marketplace lending platform, but typically range from 1% – 3%, compared to REIT management and servicing fees from 3% – 15%.

Finally, REITs instantly diversify your portfolio resulting in better returns. In one REIT you may be invested in a commercial building, an apartment building, and a couple of warehouse distribution centers. The more diverse the portfolio, the better the returns, and the better the hedge against volatility.

While this style of diversification may work to the benefit of experienced REIT investors. marketplace lending allows portfolio diversification controlled by the investor.

Roostify Names Frank Gelbart as Chief Revenue Officer (Yahoo! Finance), Rated: B

Roostify, a provider of automated mortgage transaction technology, today announced it has named Frank Gelbart as Chief Revenue Officer. Frank will be responsible for driving new and existing revenue streams as well as managing partner relationships for Roostify.

United Kingdom

Assetz Capital to launch property-only and longer-term accounts (P2P Finance News), Rated: AAA

ASSETZ Capital is launching two new investment accounts to capitalise on the surge of demand it has experienced on both the investor and the borrower side.

The peer-to-peer lending platform is expanding its account range to seven offerings, adding a longer-term and a purely property-backed account to its existing 30-day access, quick-access, green-energy, “great British business” and manual loan accounts, it told Peer-to-Peer Finance News.

The longer-term account will offer investors an interest rate of about 4.75 per cent over one-year investments, while the new specialist account, which caters for investors who want to focus exclusively on loans secured against property rather than other assets, will target returns of around five per cent.

Mint Bridging ups development lending as Funding Circle exits market (Financial Reporter), Rated: AAA

Mint Bridging has reported an “influx” of development finance business after Funding Circle announced plans to stop lending in this area earlier in the month.

Its product ranges can accommodate up to £5,000,000 at 80% LTV, with heavy refurbishment projects up to 100% of the purchase price & 100% of the refurbishment costs.

P2PGI keeps NAV growing through UK asset-backed market (P2P Finance News), Rated: A

P2P GLOBAL Investments (P2PGI) continued to shore up its finances in March, posting a 0.55 per cent increase in net asset value, from 0.38 per cent in February, which brings first-quarter growth to 1.17 per cent.

The P2P investor’s shift away from US and unsecured assets, as well as a share buyback last month, was the main driver of the improvement.

US consumer assets now dropped to 45.1 per cent of the London-listed fund’s portfolio, down from 46 per cent a month earlier and 48.4 per cent at the start of the year.

The firm is targeting a further reduction to 30 per cent of total investment, to boost its focus on UK property and asset-backed products, where it said new origination from partnering with P2P lenders has increased significantly in the last quarter

Growth Street Reports Rapid Growth as 600 Investors Sign Up in Just 5 Months (Crowdfund Insider), Rated: A

Peer to peer lender Growth Street is reporting solid growth. The online lender said it has captured over 600 investors since platform launch at the end of 2016. Growth Street is a platform that provides online financing options for UK SMEs. The company also touted its review on 4thWay that categorized the P2P lender as one of the lowest risk platforms in the industry.

High earners log-on for robo-advice (Finextra), Rated: A

The demand for robo-advice rises with income, despite it being widely seen as a low-cost financial advice solution, according to Deloitte, the business advisory firm.

Deloitte’s research shows over half (51%) of people earning £45,000 to £70,000 would use a robo-adviser for investments, compared with just 30% of those on incomes under £15,000.
Demand is highest amongst millennials, but the research suggests other age brackets could be interested in using robo-advice. Over two-fifths (43%) of 35-44 year old workers with a pension would use robo-advice on pensions, as would one-quarter (24%) for the 45-54 year olds and a fifth (21%) of those aged 55 and above. Also, 35% of defined contribution pension holders – more than three million people – would be willing to pay for robo-advice to invest their pension pots, with demand highest (45%) among those with the smallest pensions pots, many of whom cannot afford traditional advice.

An MBA Graduate Left Banking To Launch Online Lender Spotcap Overseas (BusinessBecause), Rated: A

When Niels Turfboer enrolled in the MBA program at IE Business School in Madrid, he looked beyond a traditional career in banking. He decided to join the fast-growing fintech industry instead.

Having worked at institutional lenders for over a decade, his MBA training enabled him to spot an opportunity in the business banking space. Four years after graduation, he joined fintech startup Spotcap as managing director.

Spotcap offers working capital lines of credit — up to £250,000 — to small and medium-sized companies online. Spotcap has a run rate of £100 million in loans per year. The company operates in Spain, the Netherlands and Australia. Spotcap also opened a branch in the UK last year, despite Brexit. The business employs 100 people and has raised €75 million in venture capital.

Q. Did you know you wanted to work in fintech before the MBA? 

I’m a traditional banker. I worked for over a decade in the banking industry. But I wanted to be more entrepreneurial. There were opportunities to be entrepreneurial in banking, but after the crisis, this was gone. I chose a very particular school — IE — because it is known for having a strong focus on innovation and for being entrepreneurial. A large part of the MBA course is focused on teaching people to build and run a company.

Q. You’ve launched in the UK. After the Brexit uncertainty, are you reconsidering?

No. We moved in after Brexit. We were surprised at the result, but having analysed the situation, we concluded it’s not a negative. I see downsides, but not for our business model. We know there will be two years of deal making and uncertainty over trade barriers and freedom of movement. It tends to be bad for the economy, and this has had an impact. But we already had this knowledge moving into the market. We might be able to be more selective about lending to companies in industries that are hit hardest by the uncertainty. We are not going to do cherry picking, but we might take precautions in lending money. At the same time, during uncertainty banks are risk-averse and take a step back, and that opens up opportunities for the alternative finance sector to fill that gap.

Q. Is the MBA curriculum relevant to entrepreneurs?

Yes, at least the MBA I’ve done. At IE, 30% of the courses I did had an entrepreneurial focus.

The House Crowd Celebrates Five Years of Property Crowdfunding (Crowdfund Insider), Rated: A

Manchester property crowdfunding, the House Crowd,  is celebrating five years of operations having raised more than £44 million since it launched it 2012. According to the platform, the House Crowd now serves over 15,000 investors who have received over £9 million in returns. The House Crowd received the ‘Crowdfunding Platform of the Year’ award at this year’s inaugural Property Wire Awards, in recognition of its position in the alternative finance industry.

Lend and earn annual returns of up to 6% with Kuflink (Property Investor Today), Rated: B

The Kuflink Group is offering investors an opportunity to earn up to 6% a year through its peer-to-peer (P2P) lending platform, while also providing short-term finance for those looking to invest in property.

When it comes to the option to lend against various properties on Kuflink’s P2P platform and earn up to 6% gross pa for short-terms, up to 12 months usually, interest is paid monthly.

Secondly, Kuflink offer short-term lending against property for business purposes for terms of up to 24 months.

European Union

The FT 1000: The complete list of Europe’s fastest-growing companies (Financial Times), Rated: AAA

7 Optal United Kingdom Fintech 6,161%

 

21 iZettle Sweden Fintech 3,036%

 

46 Epos Now United Kingdom Fintech 1,579%

 

65 Lemonway France Fintech 1,260%

 

78 RateSetter United Kingdom Fintech 1,176%

 

146 Innofis Spain FinTech 781%

 

150 Fonix United Kingdom Fintech 761%

 

167 orderbird Germany Fintech 703%

 

198 YouPass France Fintech 615%

 

242 Trustly Sweden Fintech 501%

 

335 Prepaid Financial Services United Kingdom Fintech 367%

 

433 Paymentsense United Kingdom Fintech 261%

 

763 Smart Currency Exchange United Kingdom Fintech 114%

 

780 Deus Technology Italy FinTech 110%

 

923 HPD United Kingdom Fintech 76%
China

China Creation Ventures Leads $ 16M Round In SME Credit Firm IceKredit (China Money Network), Rated: AAA

China Creation Ventures, a newly founded venture firm established by several former KPCB executives, has led a RMB110 million (US$16 million) series A round in IceKredit Inc., a Shanghai-based credit assessment service provider catering to small and medium-sized enterprises (SMEs).

Founded in 2015, IceKredit applies machine learning algorithms and big data related technologies to make all-rounded credit evaluations for individuals and SMEs in China.

Its products include an SMEs credit evaluation system and an individual credit assessment system, which consists of an anti-fraud engine, personal credit portrait and missing customer contact information restoration.

China’s new illegal fundraising topped $ 36 billion last year (Daily Mail), Rated: AAA

Chinese authorities vowed on Tuesday to step up a crackdown on illegal funding scams, after reporting 5,197 new criminal cases last year involving 251.1 billion yuan ($36.5 billion), state-run Shanghai Securities News reported.

More than 30 percent of illegal fundraising cases were related to private investment and financial intermediaries, including unlicensed investment advisers and providers of third-party wealth management products, the report said.

Moreover, financial fraud spread last year from China’s east to rural areas, where funds approached unsophisticated Chinese farmers, the office of the joint meeting said.

Last year China approved the arrest of 9,441 people on suspicion of illegal soliciting public deposits and prosecuted 14,745, according to a separate Shanghai Securities News report on Tuesday.

P2P Giant Dianrong is Preparing for Full Blockchain Integration (Coindesk), Rated: A

Already, Dianrong has co-founded a blockchain lending platform called Chained Finance; now, less than a week after the firm hired IPO expert Yawen Cui, he has revealed comprehensive plans to swap over much of the startup’s services to a blockchain.

By January of this year, Dianrong had released a statement showing that 3.62 million investors had originated a total of ¥16.2bn in loans last year alone, a 148% increase over the previous year, and its fourth year of growth.

Then, last month the firm revealed it had joined Taiwan-based Foxconn to launch Chained Finance, a blockchain trade finance platform built using technology from the Linux Foundation-led Hyperledger Project.

P2P Lending News (Xing Ping She Email), Rated: A

P2P Lending Funds Depository Cooperation Fair was held in Chengdu
On 24th April, “P2P Lending Funds Depository Cooperation Fair”was held in Chengdu by NIFA. The Fair is aiming at building bridges between P2P Lending institutions and banks.
Owing to the Fair, over 11 commercial banks, including Xingwang Bank, Ping An Bank, Beijing Bank, Shanghai Bank, Baoshang Bank, etc., reached agreements with over 50 P2P Lending institutions and five fintech companies. Officials from People’s Bank of China (Chengdu branch), Bureau of Finance of Sichuan Province, Chengdu financial services office and other relevant departments attended the Fair, with nearly 170 participants.
Chinese:
中国互联网金融协会首办P2P存管对接洽谈会
4月24日,中国互联网金融协会在成都举办“全国网贷机构资金存管对接洽谈会”。据悉此次洽谈会在网贷行业尚属首次,旨在搭建网贷机构与银行的沟通桥梁,促进双方合作。据透露,本次对接洽谈会共有新网银行、平安银行、北京银行、上海银行、包商银行等11家商业银行,与到会的全国50多家网贷机构、5家金融科技公司实现了对接洽谈。参会人数近170余人。人民银行成都分行、四川省金融工作局、成都市金融服务办公室等相关部门领导出席会议。

P2P Lending industry may acquire a bank-like license in the future
On April 22nd, China Fintech 50 Forum(CFT50) was found in Beijing. According to Yang Dong, the vice president of Renmin University Of China Law School and the director of Fintech and Internet Security Research Center(FTCS), who involved in making CBRC Regulations on P2P lending industry, revealed that although P2P is currently playing the role of Internet information intermediary, it may develop to a bank-like institution acquiring a new type of license and the industry also has huge space in the future.
Chinese:
行业整顿后,P2P或将获得类银行牌照
4月22日,在中国金融科技50人论坛成立现场,参与银监会网贷管理办法等新规制定的中国人民大学法学院副院长、金融科技与互联网安全研究中心主任杨东透露,尽管目前P2P定位于网络信息中介,但P2P下一步的发展可能会发放许可,是类似银行的新型牌照,未来的政策空间很大。

The scale of cash loan over 600billion RMB, who will be knocked down by regulations?
Due to the low threshold, lacking of supervision and disorderly development, problems such as violent collection, high commissions and usury, etc., cast a shadow on cash loan.
According to the instructions of the State Council and the requirements of Internet Financial Risk Special Rectification Office, cash loan has been incorporated into the rectification work of controlling Internet financial risk. In addition, Notice on carrying out the rectification work of “cash loan” business activities and its supplementary documents have been issued. Regulators also began to start the cash loan risk investigation.
Chinese:
现金贷规模超6000亿元 上千家平台谁会被监管重拳击倒?
由于门槛低、缺乏监管,无序发展所带来的暴力催收、砍头息、高利贷等问题在现金贷背后投下一片阴影。
根据国务院领导批示及互联网金融风险专项整治工作领导小组办公室要求,现金贷已纳入互联网金融风险专项整治工作,并下发了《关于开展“现金贷”业务活动清理整顿工作的通知》和《关于开展“现金贷”业务活动清理整顿工作的补充说明》两份文件。各地监管部门也由此开始启动现金贷风险排查。

Half-hearted crackdown dents case for Chinese P2P (NASDAQ), Rated: A

A half-hearted crackdown dents the investment case for Chinese peer-to-peer lending. While P2P lender China Rapid Finance is set for a $100 million initial public offering in New York, the timing looks bad. Sector heavyweight Lufax, last valued at $18.5 billion, is unlikely to list soon.

Instead, lending has accelerated and there are still more than 2,000 online platforms in operation, according to industry tracker Wangdaizhijia. Loan volumes in March hit a new record of 251 billion yuan ($36 billion), bringing the total outstanding to 921 billion yuan – up 83 percent in a year.

Shoddy local enforcement is the obvious culprit. Provinces and cities interpret the rules differently, according to an industry insider.

Investors are cautious too. China’s only U.S.-listed lender, Yirendai <YRD.N>, trades at just above 6 times forward earnings, down from more than 15 times last summer.

E.Sun launches new AI chabot to offer futuristic financial advice (The China Post), Rated: B

E.Sun Bank’s (玉山銀行) AI Chatbot (玉山小i) is the latest artificial intelligence financial advisor that Taiwan-based banks have launched to assist locals with any finance-related issues.

The AI Chatbot utilizes the IBM Watson Conversation Service to interpret commands and generate responses, local media reported.

At this stage, the AI Chatbot’s responses are limited to inquiries regarding exchange rates, mortgage assessments, and credit card recommendations. It has yet to acquire the knowledge to answer questions regarding personal financing.

International

Mapping Robo-Advisors Around The Globe (CB Insights), Rated: AAA

Since 2012, private robo-advisors have raised over $1.32B globally across 119 equity investments. Robo-advisors make up the largest sub-category of companies in wealth tech and account for roughly 30% of total funding.

Three of the earliest robo-advisors firms and largest in terms of total funding are Betterment, Personal Capital, and Wealthfront. Though they lead in the US, expanding internationally is a challenge because of the complex international regulatory environment, differing investment practices, and other barriers to entry.

US-based robo-advisors have received 57% of the global deal share since 2012. Germany took second with 9%, followed by the United Kingdom, and China.

The two largest robo-advisor deals outside the US went to Wacai, a robo-advisor and personal wealth management technology company based in China.

The third and fourth biggest deals went to UK-based Nutmeg, with a $37.5M Series C in Q4’16 preceded by a $32M Series B in Q2’14 that included Armada Investment Group, Balderton Capital, Pentech Ventures, and other investors.

Fintech patents jump in “arms race” between banks and startups: These are the 10 countries filing the most (City A.M.), Rated: B

Global fintech patents have grown by 49 per cent in the past five years, reaching 9,545 in 2016 according to official global filings.

The US led the way in terms of numbers of fintech patents with 4,523, more than double the number of the next country, China. The UK boasted more fintech patents than any other country in Europe, ranking seventh with 89 patents, in areas such as banking, exchanges, investment, insurance and payments architecture.

The top 10 countries filing fintech patents

  1. US
  2. China
  3. Korea
  4. Australia
  5. Japan
  6. Singapore
  7. UK
  8. Russia
  9. Canada
  10. Germany
Australia

Fintech firms that walk the talk (The Australian), Rated: A

The rush to judgment about the disruptive power of fintech is premature, given it’s not even clear which part of the financial services value chain will be most affected.

Also, no matter how you cut it, the fact remains that by the end of last year there were 39 fintech companies around the world with valuations in excess of $US1bn, including Xero, which offers cloud-based accounting software for small and medium-sized businesses and is the sole Australasian representative.

Not surprisingly, the dominant vertical where 16 of the 39 companies with valuations in excess of $US1bn ply their trade, is so-called alternative finance, which includes marketplace lending and crowd-funding.

“Consumer lending in the US is a $US1.5 trillion opportunity, and in Australia it’s $100bn and the leading players are yet to crack $1bn.

Authors:

George Popescu
Allen Taylor

Wednesday April 5 2017, Daily News Digest

Wednesday April 5 2017, Daily News Digest

News Comments Today’s main news: Colorado targets Marlette, Avant on ‘True Lender’ grounds. CRB sues Colorado. SoFi raises variable student loan refi rates. Kabbage extends $3B in funding to over 100K small biz customers. RateSetter adds expected losses committee. P2P Global Investments considers change of loan fund manager. Dango RECF platform celebrates 1M investors. Today’s main analysis: International P2P lending statistics. […]

Wednesday April 5 2017, Daily News Digest

News Comments

United States

United Kingdom

European Union

International

Australia

China

Asia

News Summary

United States

Colorado Attorney General Pursues ‘True Lender’ and ‘Madden’ Actions Against Major Non-Bank Online Lenders (JD Supra), Rated: AAA

On February 15, the Colorado Attorney General filed substantially similar, separate amended complaints in the U.S. District Court of Colorado against Marlette Funding LLC and Avant of Colorado LLC, alleging violations of Colorado’s Uniform Consumer Credit Code based on “true lender” and loan assignment cases. Both actions were originally filed in state court on January 27, 2017, and both were subsequently removed to federal court — on March 3, 2017 and March 9, 2017, respectively. In each instance, the complaint cites CashCall, Inc. v. Morrisey, 2014 W. Va LEXIS (W. Va. May 30, 2014), and Madden v. Midland Funding, LLC, 786 F.3d 246 (2d Cir. 2015), as legal authority for claims alleging usury and other violations of Colorado’s Uniform Consumer Credit Code.

The amended complaint filed in Mead v. Marlette Funding LLC d/b/a Best Egg asserts that Marlette paid all costs, including legal, marketing and other expenses, incurred by Cross River Bank in originating Best Egg loans. In addition, the complaint asserts that Cross River “bears no risk that it will lose its principal in the event consumers default on the Best Egg Loans that it sells to Marlette or to Marlette’s non-bank designees” because: (i) Marlette maintains a bank account in favor of Cross River in the amount of Marlette’s anticipated purchases; (ii) Best Egg loans originated by Cross River are sold to Marlette within two business days; (iii) the parties’ contract specifies that Cross River has no liability to Marlette for sold loans, and (iv) Marlette is obligated to indemnify Cross River “against any claim that any aspect of the Best Egg lending program violates the law.”

The amended complaint filed in Mead v. Avant of Colorado LLC, in turn, similarly asserts that Avant and not WebBank, which originated the subject loans, bears all cost and expenses, including the costs of evaluating loan applications and credit reports and the costs associated with dispersals of loan proceeds.

Cross River Bank Sues State of Colorado (Over the Transom), Rated: AAA

News Summary:

  • On April 3rd, Cross River Bank filed a Declaratory Judgment Action (Federal District Court) against the State of Colorado to protect its federal statutory and contractual rights to freely extend credit and to freely sell those loans on a nationwide basis
  • Previously (in January 2017), the Colorado Attorney General sued Marlette Funding in an attempt to prohibit Marlette from enforcing loans validly made by Cross River and validly sold by Cross River to Marlette
  • Cross River filed the declaratory judgment action in support of Marlette Funding (an MPL partner), and the broader bank-platform model
  • According to Cross River General Counsel, Arlen Gelbard, “the Colorado Attorney General is attempting to undermine the concept of federal preemption, and with it 150-years of established banking law.”
  • More specifically, Colorado’s action violates Federal Deposit Insurance Act (Section 27) and National Bank Act, as well as the “valid when made” doctrine
  • “It is clear to us that Colorado’s lawsuit against Marlette intentionally did not name Cross River as a party because Colorado knows that Cross River’s actions are protected by its status as a state-chartered, federally regulated Bank, which affords complete preemption over state law”

The Issue – Federal preemption/uncertainty:

  • The federal preemption provisions which allow small banks like Cross River to compete with larger entities, have come under attack by several states and in some recent court cases such as Madden v. Midland Funding and other so-called “True Lender” cases.
  • While we believe these cases were wrongly decided as a legal matter, the broader impact has been to encourage states and other plaintiffs to disregard or undermine key legal doctrines of federal preemption and loans as being “valid when made”, leading to market uncertainty.
  • The characteristics of the Cross River model are very different from many others in the marketplace, where the named lender has little to no involvement in the origination process and retains no “skin in the game”
  • This lack of certainty about what loan terms apply to subsequent purchasers has broad, adverse ramifications for US banking and financial markets. Specifically, certain investors have moved away from this asset class, which has reduced liquidity in the market.
  • “Although the action taken by the Colorado Attorney General is being positioned as one to protect the consumer, the actual result will likely have a negative impact on consumers and small businesses, as their access to this important source of credit is significantly reduced.”

SOFI RAISES THE VARIABLE STUDENT LOAN REFINANCING RATES (lendedu), Rated: AAA

The Federal Reserve’s interest rate increase last month is starting to show up in some loan products including student loan refinancing. Fixed rate borrowers are safe for now, but those with variable interest can expect to pay more.

As of April 1st the interest rate on a variable student loan at SoFi increased both on the low and high ends of the range. Borrowers will now pay anywhere from 2.565 percent to 6.490 percent interest on a variable refinance loan. That compares with 2.365 percent to 6.29 percent interest just a month ago. The interest rate on SoFi’s fixed rate products held steady at 3.375 percent to 6.74 percent from March to April.

Kabbage Extends $ 3 Billion in Funding to over 100,000 Small Business Customers (IT Business Net), Rated: AAA

Kabbage®, a pioneering financial services, technology and data platform, announced it has extended more than $3 billion to small businesses across all 50 U.S. states, covering every industry. The company has also now served over 100,000 small businesses through its platform, representing the largest customer base of any online small business lender.

ApplePie Capital CEO & Co-Founder Denise Thomas Makes Marketplace Lending Success Look Easy (Crowdfund Insider), Rated: A

“We have gained a foothold within the industry by partnering with 42 brands to date. Moving forward we will continue to innovate…”

Erin: You recently signed new investors plus funding capital, thus standing out in a challenging market. Please share details about your MO. How long did it take to raise the money?

Denise: It took five months. The two main sources of funding we closed were new strategic partners and existing investors. Our strategy was to continue to tell our story and educate investors about franchise debt as an asset.

Erin: Please share your experience about dealing with a prominent Bay Area VC saying, “You don’t look like Fintech.”

Denise: Statistically, there are far more men running fintech companies, clearly there are some biases out there around that. A study released by Peterson Institute for International Economics in 2016 found that “An increase in the share [on executive teams and boards] of women would be associated with a 15% rise in profitability.” At the end of the day, you want people in your board room who are supportive.

Erin: You have spoken quite positively about your relationship with Fifth Third. How and why does ApplePie’s relationship with this bank differ from others?

Denise: As opposed to our other loan purchasers, Fifth Third has made a strategic investment in our company and holds a stake in the growth of our business. They co-led our B round with QED Investors, with whom they have now also partnered to make strategic investments in VC-backed fintech companies. They have a long term vision for our industry and provide their expertise to create better financial solutions and a superior experience for our borrowers.

Erin: ApplePie Capital’s loans are backed by personal guarantee and unsecured. Personal assets are not required to back loans. Tell me more…

Denise: In franchising, there is a blueprint for the business owners to follow, in terms of cost analysis and every other aspect. This is measurable and people have a path to multi-unit ownership. We look at each brand and evaluate the sustainability of the business model, which has proven itself over the last 25 years through historical SBA data.

5W Public Relations Named Agency of Record for Sharestates (Yahoo! Finance), Rated: A

5W Public Relations, one of the 15 largest independently owned PR firms in the US, has been named PR Agency of Record by Sharestates, an online real estate investment marketplace that is an industry leader in crowdfunding for individual and institutional investors.

Could Real Estate Crowdfunding Help Millennials Retire Sooner? (Realty Biz), Rated: A

Real estate crowdfunding has proven a popular choice for one of the most fickle investing groups in the marketplace: Millennials.

On the surface, it seems improbable. Millennials investing in real estate? This is a group that has been loathe to purchase homes, with less than a third of Millennials becoming homeowners compared to 64 percent of the general population. After a little analysis, however, there are powerful reasons why real estate crowdfunding appeals to Millennials—enough that more are certain to join the crowd of investors in the coming years.

The stereotype, of course, is that Millennials are all underpaid with limited skills and few opportunities. That’s not reality, but even if it were, real estate crowdfunding has very low barriers to entry. Some of the best and most successful crowdfunding portals allow for investment minimums as low as $5,000. That lets Millennials get into the real estate investment game much earlier than previous generations.

Second, real estate crowdfunding is an investment option that allows Millennials to bypass banks. Having come of age during the Great Recession, many Millennials don’t trust financial institutions or Wall Street firms. They do, however, see the need to protect their money from the kind of financial breakdowns that hurt their parents’ retirement plans nine years ago by investing in hard assets. Real estate crowdfunding offers the chance to do just that.

PayPal Directors Hit With Class Action Suit from Shareholders Over Venmo (Crowdfund Insider), Rated: A

On March 24, 2017, shareholders of PayPal Holdings Inc., the parent company of mobile-payment provider Venmo, filed a derivative suit against its directors in the District Court of Delaware. A derivative suit is a form of class action in which shareholders can sue company officers or directors on behalf of the company.

The plaintiff shareholders claim in the suit that the directors of PayPal willfully or recklessly caused PayPal to make false or misleading statements which led to direct damages against PayPal. The false and misleading statements are alleged to have been made in PayPal’s quarterly reports, annual reports, and proxy statements which failed to disclose any of the alleged unfair and deceptive business practice or the fact that those practices would lead to increased regulatory scrutiny.

View the filing here.

Over 250,000 Shoppers And 1,400 Dealers Turn To AutoGravity (PR Newswire), Rated: A

AutoGravity, the FinTech pioneer transforming car shopping and finance with advanced mobile technology, today revealed that over a quarter million users – more than half of whom are millennials – have downloaded AutoGravity iOS and Android apps for car shopping and financing. AutoGravity also confirmed that its network of partner car dealerships has grown to more than 1,400 franchise dealers.

Since launching in 2016, AutoGravity has achieved significant growth across the United States, securing partnerships with the nation’s top automotive lenders, as well as four of the top five national dealer groups, representing all new and used car brands available in the country.

  • New cars remain popular with boomers. AutoGravity data shows two-thirds of car shoppers ages 50+ who pursue financing do so for new vehicles. In contrast, only half of AutoGravity car shoppers ages 18 to 25 who pursue financing do so for new vehicles
  • Japanese brands perform in California. Japanese economy and luxury car brands are more searched relative to American brands in California (as compared to the US overall)
  • Economy cars continue to be a popular choice. Economy brands rank in the top four most searched for vehicles across the US – luxury car brands round out the top seven
  • Millennials more cost sensitive than Gen X. Among car shoppers seeking financing on AutoGravity, millennials look to borrow ~15% less (finance amount requested) and seek to contribute ~25% less (cash down payment) relative to car shoppers ages 36+

Why FutureAdvisor orphaned its B2C book of business and other learnings at CFA Society’s robo-panel in San Francisco (RIABiz), Rated: A

The bad news: Selling robo financial advice to millennials — at least until they grow up and start acting like boomers — is a fool’s game.

Cianciolo provided the fullest update yet on FutureAdvisor since the firm’s eye-popping sale to BlackRock in 2015. See: Why BlackRock’s purchase of FutureAdvisor for $152 million could be a deal of destiny.

The robo — once the No. 3 retail player behind only Wealthfront and Betterment — no longer takes assets to millennials.

Standing up for retail and millennials was Zhang, a millennial herself, who questioned whether Roy and Ciancolo were being unduly pessimistic in capitulating to established players.

Jemstep had a brief period where it went for retail business but veered quickly to the B-to-B market.  “Can somebody [create a viable B-to-C robo advisor]?” Cianciolo asked. “Sure but you’re taking double and triple risks.”

Jamie Dimon Pushes for Simpler, More Coordinated Bank Regulations (WSJ), Rated: A

J.P. Morgan Chase JPM 0.33% & Co. Chief James Dimon laid out his wishlist of regulatory changes in his annual shareholder letter Tuesday, calling for simpler and better coordinated rules that could help to spur more lending and in turn economic growth.

Any changes are likely to help the bank. Mr. Dimon wrote that the “anticipated reversal of many negatives and the expectation of a more business-friendly environment” in addition to the bank’s results are among the reasons its stock price jumped about 30% in 2016.

Mr.. Dimon has previously said that rules should be coordinated among agencies, simplified and consistent, but in Tuesday’s letter spelled out what that meant for the first time.

He said banks have too much capital and that could be used instead to safely finance the economy.

Mr. Dimon reiterated that the so-called “gold plating” of international standards by U.S. regulators should be eliminated. Making U.S. rules stronger than international rules was in some cases a priority of Federal Reserve Governor Daniel Tarullo, who was the central bank’s regulatory point person but is stepping down this week.

Mr. Dimon also suggested reforms to the mortgage market since the housing sector has been “unusually slow to recover.”

Bond Street Partners With NerdWallet (Bond Street), Rated: A

Today, we are thrilled to announce that we’re partnering with NerdWallet to help more small business owners access fair and affordable financing. According to the Federal Reserve Bank, only 1 in 5 businesses that apply for a loan from a big bank are approved.

Together, we’ll create resources, guides and webinars to support the growth of businesses. In addition, entrepreneurs will now be able to access financing from Bond Street via NerdWallet’s Small Business Loan Tool.

Prominent Fintech Marketing Firm Leverage PR Sold to Caliber Corporate Advisors (Crowdfund Insider), Rated: B

Leverage PR, a prominent marketing firm engaged in the crowdfunding and Fintech sector, has been sold to Caliber Corporate Advisors.  Founded by Joy Schoffler, a well-known and highly visible participant in the emerging industry of financial innovation, shared the news with Crowdfund Insider, explaining she expects to remain engaged with the firm but in a different role.

Leverage PR was founded in 2010 and was the first marketing firm to recognize the potential of alternative finance.

United Kingdom

RateSetter continues to boost transparency with new expected losses committee (P2P Finance News), Rated: AAA

RATESETTER has set up a new committee on expected losses as part of a review of the way it monitors and reports on credit risk.

The panel, which will come into effect later this month, comprises the peer-to-peer lender’s chief executive Rhydian Lewis, its chief finance officer Harry Russell and various heads of consumer and commercial credit risk.

Boosting expected losses data is the latest of a batch of strategic changes RateSetter has put in place to price risk more accurately following higher-than-expected losses on its 2014 and 2015 loans.

Peer-to-peer loan fund considers change of manager (Financial Times), Rated: AAA

The UK’s first peer-to-peer loan fund is to review its investment manager as a swath of funds struggle to generate returns from the emerging asset class.

The listed fund, P2P Global Investments, buys loans from websites matching interest-paying borrowers with lenders in the UK, US, Europe and Australia, as well as holding stakes in the platforms.

It is currently managed by MW Eaglewood Europe, an asset manager majority-owned by UK hedge fund Marshall Wace. In a short announcement to the stock market on Tuesday, the board said it would review the arrangement following discussions with Eaglewood and “significant shareholders” and would update the market in due course.

Oakam Brings Gamification and Rewards to Consumer Finance with New Mobile App Feature (BusinessWire), Rated: A

Oakam has enhanced its mobile app with the launch of Oakam Grow, a new feature that uses gamification to make consumer finance more engaging, rewarding and inclusive. Oakam Grow builds on the UK-based consumer lender’s application of behavioural science to encourage the development of positive credit habits, and supports its strategy to bring digital disruption to the largely analogue micro-credit industry.

Oakam Grow gamifies the experience for Oakam’s mobile app users through the application of social currency theory, which enables customers to share in the financial upside of their responsible credit behaviour. Customers earn points when making repayments via the app or referring friends, redeemable for loan repayments, cash-back, store vouchers, lower rates on future loans, or to socially vouch for friends in the loan application process. Oakam’s award-winning mobile app first launched in 2015, and today more than 55 per cent of its customers are regular users. The addition of Oakam Grow will further drive app downloads and engagement.

Oakam has seized on the opportunity to disrupt the £1.8 tn global micro-lending industry through the use of AI, machine learning and cognitive science. The century-old industry has seen little innovation since its founding and today relies on the same analogue processes that keep cost-to-income ratios above 50 per cent, and prices high for consumers. The industry’s network of around 200,000 doorstep loan agents globally also leaves consumers with poor or no credit history, vulnerable to misleading offers and predatory practices.

Oakam’s omni-channel model, comprising its digital properties and UK retail network, confronts both the issues of inefficiency and consumer protection.

RateSetter Business Finance Adds Relationship Manager Amanda Sharp (Crowdfund Insider), Rated: A

RateSetter has appointed Amanda Sharp as Regional Relationship Manager for London and the South East. Sharp previously spent 35 years with RBS Group.

How to navigate the P2P maze (FT Adviser), Rated: A

Against a backdrop of rising inflation and continued low interest rates, it is no surprise that a growing number of the UK’s financial advisers are looking for ways to make their client’s money work harder.

And there is one solution in particular that has caught the attention of eagle-eyed advisers: peer-to-peer (P2P) lending.

Assuming current Bank of England inflation at 2.3 per cent, according to latest figures, and interest rate forecasts, money deposited in the average high street savings account today will shrink in real terms after both one and two years.

In fact, some high street bank cash savings accounts are offering just 0.01 per cent in savings – less even than the current Bank Base Rate of 0.25 per cent.

Even in its slowest year yet, 2015, the sector grew by over 80 per cent according to one report (Nesta, Pushing Boundaries: the 2015 UK alternative finance industry report).

P2P lending is likely to grow even faster as more and more P2P lenders receive their full FCA authorisation – heralding the arrival of the ‘Innovative Finance ISA’ (IFISA), which will almost certainly add to the momentum the sector is experiencing.

European Union

Why Stockholm is creating more unicorns than London per capita (elite business magazine), Rated: AAA

The result of the Swedish government’s tech drive of the 1990s is that while Silicon Valley may be the undisputed champion of the world when it comes to producing unicorns, Stockholm comes a close second. According to SparkLabs, the seed-stage fund, the Californian city has produced 10.7 unicorns per million inhabitants, the Nordic city produced three and Tel Aviv, which came third, birthed 1.2. So it’s no wonder the European Digital City Index ranked the metropolis as Europe’s second best city after London when it comes to supporting its digital entrepreneurs. “In Stockholm, we’re really freaking good,” says Stark.

But even though access to a solid infrastructure has proven vital in fostering this thriving entrepreneurial community, it isn’t the only factor. Equally important for the success of Sweden’s startups is the fact that that the nation has a population of just under ten million, which means new enterprises have to be thinking about international expansion from the get-go.

‘Shadow banks’ step into the spotlight (Financial Times), Rated: A

The growing influence of alternative capital is most evident in the US — in April 2015, nonbank lenders accounted for more than half of new government-backed mortgages. Banks are still the biggest lenders in Europe, but rivals are emerging. Many of the new players are linked to the securitisation industry, where loans are packaged up and sold on as bonds to capital markets investors.

Private equity-funded upstarts have quietly taken a more active role in the UK’s securitisation market, which used to be dominated by big banks.

Today one of the largest users of securitisation in the UK is not a bank. The Northview Group, which writes mortgages under the Kensington brand and is funded through securitisation, describes itself as a nonbank challenger lender.

A wave of nonbank lenders, including companies such as Munt and Dynamic Credit, have appeared in the past few years. These players now account for close to a fifth of new Dutch mortgages, according to IG&H, a consultancy. This is up from almost nothing just a few years ago. The companies take capital from institutions and lend to homeowners.

Technology companies that facilitate lending between investors and businesses make up another area of growth in shadow banking, and they are becoming more adventurous in the services they offer.

Funding Circle is one of Europe’s best known peer-to-peer lending platforms, where retail users can invest in loans made online. It lends £100m a month in the UK and is expanding in Europe.

As with other forms of shadow banking, European P2P lending lags far behind the US market. Investors who use Funding Circle, which is also active in North America, said they were disappointed last summer with the performance of US loans written by the company. The concerns followed losses that investors made on P2P loans securitised by OnDeck, a nonbank lender.

International

Statistic of International P2P Lending Services March 2017 (P2P-Banking), Rated: AAA

The total volume for the reported marketplaces adds up to 532 million Euro.

Milestones reached this month are:

  • Mintos crossed 150 million EUR in originations since launch
  • Moneything reached 50 million GBP since inception

Australia

Agri-lending helped drive SocietyOne to a new loan record (Finder), Rated: AAA

Peer-to-peer (P2P) lender SocietyOne has announced a new lending record, passing the $250 million lending mark in March of this year. Part of the lender’s success is due to increased demand for its two agri-lending products, which, combined with a surge in personal loans over the post-Christmas and New Year period, saw an additional $45 million lent to customers.

China

China P2P industry lending nears Rmb1tn despite crackdown, new regulations (Financial Time), Rated: AAA

Growth in China’s peer-to-peer lending sector has proven resilient in the face of new regulations and a year-long crackdown by authorities on online financing, with total P2P loans blowing past the Rmb900bn ($130.7bn) mark last month.

Outstanding P2P loans came to Rmb920bn at the end of March, according to new figures released today by lending platform Wangdaizhijia.

Month-on-month growth in outstanding loans slowed compared to before the new regulations were introduced in August, from 5.7 per cent in July 2016 to 4 per cent last month.But when viewed in renminbi terms, growth has ratcheted up, with the industry tacking on an average Rmb35.6bn a month in the seven months since regulations were introduced, compared to an average rise of Rmb29.1bn in the seven months ended August.

China curbs ‘Wild West’ P2P loan sector (Financial Times), Rated: AAA

Peer-to-peer lending in China is at an inflection point as state regulators aim to transform it from a “Wild West” industry rife with fraudsters into a respectable market in which legitimate lenders can offer funds to willing borrowers.

With their offer of attractive fixed returns over short periods, P2P investments appear similar to saving products that reputable commercial banks offer as an alternative to low rates available for deposits. P2P yields are typically higher than those available from banks, making them an easy sell to investors.

Since 2011, 3,556 platforms have collapsed, according to Online Lending House, a website that tracks the sector. In a third of the cases, law enforcement agencies closed the platforms or their owners or managers simply disappeared.

Asia

Dangoestate.com Real Estate Crowdfunding Platform Celebrates 1,000,000 Investors (Digital Journal), Rated: AAA

Dango estate, the now five months old Singapore based investment platform is growing by leaps and bounds. The mood at their three offices around the world was very high yesterday as they celebrated the 1,000,000’th investor on the platform.

Dango estate has achieved great success in the crowdfunding industry in the shortest time, the platform has already funded more than $500,000,000 in loans worldwide and delivered over $350,000,000 in principal and interest to investors, with yields as high as 10%.

Authors:

George Popescu
Allen Taylor

Tuesday February 14 2017, Daily News Digest

Tuesday February 14 2017, Daily News Digest

News Comments Today’s main news: New York looks to further regulate FinTech lenders. BofA testing employee-less digital bank branches. Today’s main analysis: PeerIQ’s interpretation for Marketplace Lending of Trump’s Trump’s Executive Order on Core Principles for Regulation the United States Financial System Today’s thought-provoking articles: Banks look to replace ATM cards with cellphones. When will Innovative Finance Isas […]

Tuesday February 14 2017, Daily News Digest

News Comments

United States

United Kingdom

European Union

India

  • Monexo to rope in strategic partner. GP:” I personally don’t believe in news that state getting close to signing a partnership. I would recommend announcing it after it’s signed. There are so many ways for these partnerships not to happen.”

Asia

 

United States

NEW YORK LOOKS TO FURTHER REGULATE FINTECH LENDERS (Goodwin Law), Rated: AAA

Tucked away in the Transportation, Economic Development and Environmental Conservation Bill portion of the New York State 2018 Executive Budget is a proposed amendment to New York’s Licensed Lender Law that would “[a]llow the Department of Financial Services . . . to better regulate the business practices of online lenders.”

The Bill would make three significant changes to the Licensed Lender Law:

1.  Licensing would be required for making consumer loans of $25,000 or less and business loans of $50,000 or less at any interest rate.

2.  Potentially Implicate Licensing for Marketplace Lending Platforms Using a Bank Partnership Model. In a bank partnership model, platform companies may both solicit loans made by the bank partner and later purchase some of the platform loans.

3.  Potentially Cover Merchant Cash Advances and Invoice Factoring. The Bill would also expand the meaning of “engaging in the business of making loans in New York” to a person that “solicits [covered] loans . . . and, in connection with such solicitation . . . purchases or . . . acquires . . . other forms of financing.”

If the bill is passed by the legislature and signed by the governor, these changes would take effect January 1, 2018.

Bank of America is testing employee-less branches to serve digital-first customers (Tradestreaming), Rated: AAA

Enter the stripped-down, employee-less branch with just an ATM and a meeting room for video conferences with bank employees. The yet-to-be-named mini-branches are part of a Bank of America pilot program, with two located in Denver and one in Minneapolis. After a senior executive mentioned the concept at an investor conference last week, rumors proliferated as to whether this was a sign that the bank branch may be going the route of the bricks-and-mortar bookstore, the CD shop or the mall. The Washington Post even suggested bank branches may become what it calls “robo-banks” – automated and impersonal.

To ensure everything goes smoothly, the bank deploys “digital ambassadors,” or customer service agents who answer customers’ questions about the technology. Pace said that the digital ambassador – a role that’s only been around for a year – is focused on making sure customers are comfortable with the technology and can use the mobile app.

Weekly Industry Update: February 12, 2017 (PeerIQ Email), Rated: AAA

Federal Reserve Governor, Daniel Tarullo, announced his plan to resign in the spring, providing Trump with a clear path to accelerate his deregulatory agenda.

Jeb Hensarling (R-TX), introduced plans to relieve banks from annual stress tests and remove key powers from the CFPB.

U.S. Representatives Ed Royce (R-CA)., Kyrsten Sinema (D-AZ)., and Terri Sewell (D-Al). reintroduced the Credit Score Competition Act. The bill seeks to end the “government-backed monopoly in credit scoring” by enabling GSEs to use competitive scoring models to FICO when underwriting mortgage loans.

Potential Impact of Trump’s Executive Order on Financial Regulation

Trump’s Executive Order on Core Principles for Regulation the United States Financial System was issued on February 3rd.

We highlight Principle (c) in the Executive Order–concerning market failures, systematic risk, and information asymmetries–whose concerns are consistent with the spirit of several Dodd-Frank regulations.

Ram Ahluwalia of PeerIQ Shares the Future of Online Lending (Crowdfund Insider), Rated: A

As online lending has morphed from a novelty to the future of debt, PeerIQ has been there chronicling the growth with its deep dive analysis of securitization and portfolio monitoring.

Ram Ahluwalia: Last year highlighted that securing access to a diverse mix of low-cost capital is necessary to compete and win. Lenders that could tap many channels saw little to no slowdown in origination growth and maintained a healthy differentiation in funding cost and access to capital from their peers.

The effects we’ve seen has been tremendous. ABS issuances grew 60% in 2016 versus prior year, and virtually every major platform has established a securitization program and a bank partnership.

Ram Ahluwalia: The decline in originations is overstated and misunderstood.  The third quarter saw some origination decline, particularly for a couple of originators who encountered funding crunches, but year over year originations are still up across the industry.

Ram Ahluwalia: We project securitization to continue to be a favored funding channel, with total ABS issuance volumes growing 50% in 2017. 

Further, as consumer credit trends remain positive, there is a lot of demand for this ABS paper; the majority of deals remain oversubscribed.

Ram Ahluwalia: The OCC Charter is not a panacea. It does not address other financing and liquidity challenges for the industry. As a result, we believe partner funding banks such as WebBank and Cross River Bank will continue to have an important role to play.

Ram Ahluwalia: Scaling up origination operations that can compete with online lenders (who have established brands now) requires significant investment in marketing, technology, servicing, and risk management.

While there is a large opportunity here for traditional financiers (with their noted cost of capital advantages), on balance, we predict most banks will try to partner with nimble lending platforms, acquiring benefits from the partnerships, while minimizing risks associated with such a major strategic push.

Banks Look to Cellphones to Replace A.T.M. Cards (The New York Times), Rated: A

Customers who don’t want to fumble around in their wallet for their A.T.M. card — or who have misplaced it for the umpteenth time — will soon be able to unlock cash dispensers’ coffers by using their phone.

JPMorgan Chase, which has more A.T.M.s in the United States — 18,000 — than any other bank, has activated this technology on a few hundred machines in four test cities, including Miami and San Francisco. Six thousand more are already upgraded and ready to go.

For decades banks have battled “skimming,” in which criminals sabotage A.T.M.s to steal the information off a card and use it to clear out people’s accounts. The replacement of magnetic stripe cards with chip cards significantly reduced that problem, but mobile access brings in new worries.

One Chase customer recently had $2,900 stolen from her account through the bank’s new cardless system — which she had never used.

At Bank of America, customers with compatible phones and a digital wallet app can tap their phone on the cash machine’s wireless pad to authenticate their identity. From there, customers enter their personal identification numbers and carry out transactions in the usual way.

Some banks have gone further and let customers ditch even their phones. With biometrics, a unique body part is enough to unlock cash.

At Banco Bradesco, one of Brazil’s largest banks, customers can gain access to an A.T.M. by tapping their palm on a scanner, which reads the pattern of their veins. (The system handled more than 700 million transactions without any reported fraud, according to Fujitsu, which built the technology.) Banks in Japan, India and elsewhere have used fingerprints for authentication.

A compromised bank card can be reissued. If a hacker figures out how to imitate someone’s eyeball — which has been done in laboratory settings — it can’t be replaced.

About 2.5 percent of the 425,000 A.T.M.s in the country are currently set up for cardless access, according to an estimate from Crone Consulting, which researches the payments industry. By the fall, it expects that number to rise to 25 percent.

Venmo, the digital payment system of choice for many millennials, is owned by PayPal. Giving PayPal and Venmo customers direct access to their money through A.T.M.s is not currently in the works, but it “isn’t something I would rule out,” said Chris Gardner, the product head for PayPal’s mobile wallet software.

31 FinTech Companies Transforming Institutional Investments and Trading (Let’s Talk Payments), Rated: A

DarcMatter is an online investment platform that provides transparent institutional-level access to private investment opportunities such as venture capital, private equity, hedge funds and commercial debt products.

DealMarket is a global online platform enabling Private Equity buyers, sellers, and advisors to maximize opportunities around the world – a one‐stop-shop for Private Equity professionals. DealMarket counts more than 15,000 users, over 3,000 deals and service providers listed on the platform.

EquityZen is a marketplace for private secondary investments in companies worth more than $50 million.

ForwardLane is a cloud-based investment advisory platform that enables investors to invest in particular hedge funds using machine intelligence software.

Orchard provides products and services for institutional investors to understand, execute and manage marketplace lending investments.

PeerIQ provides a credit risk analytics platform that helps institutional investors analyze, access and manage consumer credit risk. It aggregates P2P lending marketplace players and provides high-end analytical analysis of the player’s loan portfolio.

Quantopian is a crowdsourced hedge

RealtyShares describes itself as the Lending Club for real estate. They have created a marketplace for real estate investing through which individual and institutional investors can purchase shares in pre-vetted residential and commercial real estate properties for as little as $5,000 from the convenience of a laptop or tablet. fund that provides the world’s first browser-based algorithmic trading platform.

Venovate Marketplace is an online platform that matches investment advisors, qualified purchasers, accredited investors, institutions and investing companies with a curated selection of alternative assets.

A US online lender keeps its millennial customers by helping them find jobs (and friends and life partners) (Quartz), Rated: A

When Joanna Mathews was laid off from her job as an advertising strategist in Dallas, Texas, she called her online lender to get forbearance on her credit consolidation loan. The lender agreed, but only one condition: It would have to let it help her find a new job.

Mathews, 31, and the counselor provided by SoFi, a US online finance company, spoke at least once a week as she looked for work. She also took advantage of SoFi webinars on how to write resumes and interview. Her conversations with her coach focused on job-search strategies and, eventually, salary negotiation. With her coach’s help, she landed 15 interviews. After three months of searching, she found a position at another firm in Seattle, a city where she once lived and where was eager to return.

How Investors Can Earn 7% Returns In A 2.5% World (Forbes), Rated: B

A new asset class that offers investors market-beating returns is Peer-to-Peer (P2P) Lending. The P2P sector has grown rapidly in recent years and is an excellent new source of fixed income.

In 2016, P2P investors earned net annualized returns north of 7%. Even those who took the most conservative approach saw returns of 5%. That’s more than double the average S&P 500 yield.

Although the industry started out as peer-to-peer, the likes of Citibank and Morgan Stanley now fund around two-thirds of P2P loans.

Avoiding loans in Oroville flood zone (zip code 959xx) (LendingCalc), Rated: B

On Sunday evening, February 12, authorities issued evacuation orders below Oroville Dam because of a hazardous situation involving the northern California dam’s emergency spillway.

In the meantime, we would obviously avoid exposure to any loans in zip codes starting with 959. Investors without access to personal identifiable information (PII) typically view only the first 3-digits of borrowers’ zip code. Drilling down further, the 5-digit zip codes are: 95965, 95966, 95917, 95948.

United Kingdom

When will Innovative Finance Isas actually be available? (BT), Rated: AAA

Recently published figures from the Peer-to-Peer Finance Association (P2PFA) show that its eight members, including the UK’s three biggest providers, collectively lent £843.9 million in the final quarter of last year, with a total of almost £3 billion lent across the whole of 2016.

We spoke to Neil Faulkner, managing director of 4thWay, a comparison and information site devoted to peer-to-peer.

“They’re coming, they really are,” he says. “There are currently four platforms offering them: Abundance, Crowd2Fund, Crowdstacker and LandlordInvest; and there are two more coming very soon, both Lending Works and Landbay have their approval.”

Neil predicts that over the next year or so we’re likely to see a new platform a month announcing it is ready to offer Innovative Finance Isas.

Interestingly, Neil hypothesises that the reason none of the ‘big three’ P2P platforms – Zopa, RateSetter and Funding Circle – have yet been approved is that the regulator will wait until they are all ready for approval so as not to give one a competitive advantage.

Investors sneeze at P2P trust’s ‘seasoning’ (Citywire), Rated: A

P2P Global Investments (P2P +) has pinned some of the blame for its poor performance on the maturing or ‘seasoning’ of its £840 million loan portfolio.

P2P, the largest of the alternative lending investment trusts on the London Stock Exchange, saw its share price plunge 20.7% last year. This was bad news for shareholders, including star fund managers Mark Barnett and Neil Woodford, who in the previous two years pumped over £700 million into the fund, which invests in loans from peer-to-peer lending platforms.

Even including its quarterly dividends the total loss to P2P shareholders in 2016 was just over 16%.

The performance of the underlying portfolio was much better, but with a total return of just 4.1% from its assets falling short of its 6-8% dividend target, investors grew disillusioned and de-rated the shares, which now trade at a 20% discount below net asset value.

P2P’s run of sub-par monthly returns saw it make a return of only 0.67% in the last quarter of 2017.

The increase in defaults in the last three months of 2016 was largely in US consumer loans, which makes up 56% of the portfolio.

European Union

Interview with Eduards Lapkovskis, CEO of VIAINVEST (P2P-Banking), Rated: A

What are the three main advantages for investors?

VIAINVEST is a truly customer-oriented company, and we strive to provide the most satisfying investing experience possible. Great deal of investors’ concerns are related to investment safety, so all loans listed on VIAINVEST are secured with a Buyback Guarantee. Also, to guarantee that one investor will never be 100% committed to particular loan, originators keep 5% “skin in the game” for each loan.

What ROI can investors expect?

Currently investors can choose to invest in loans originated in the Czech Republic with 12% annual ROI and Spain – up to 12,2% annual ROI depending on the loan.

VIA SMS Group is active in more countries than in Spain and the Czech Republic. Will loans from other countries be listed on the VIAINVEST marketplace soon?

This is actually the next update planned for VIAINVEST – in following weeks we will publish loans originated in Poland and Latvia, Sweden will also follow in the nearest future.

Is VIAINVEST open to international investors?

VIAINVEST is open to any investors holding a bank account within the European Union or other country to which the requirements arising from European Union legislation on the prevention of money laundering and terrorism financing apply. Currently there is no legislation in Latvia regulating operations of peer-to-peer lending platforms, but it may be developed in 2017, so VIAINVEST is already implementing existing regulations.

Equator Celebrates 2016 Successes Highlighted by New Products and Customers (Yahoo! Finance), Rated: B

Equator, a leading provider of default software solutions for many of the country’s top servicers (including four of the top five largest servicers and a leading GSE), real estate agents and vendors, today released its end-of-year performance metrics. Equator’s REO, short sale and loss mitigation modules have now processed transactions totaling more than $315 billion since its inception with more than 2.2 million distressed properties sold to date.

India

Peer-to-peer lender Monexo to rope in strategic partner to fund growth (BusinessLine), Rated: AAA

Monexo — an online peer-to-peer lending marketplace — is close to roping in a “local strategic partner” to fund its growth in the Indian market, Mukesh Bubna, its Founder-CEO, has said.

In its journey so far, Monexo India has, through its high-end digital platform, processed loans worth ₹24 crore with most of the applicants being salaried 25-30-year-olds.

Going forward, the Chennai-headquartered Monexo plans to start offering small and medium enterprise (SME) loans from the third quarter (July-September).

Bubna said Monexo was not looking at foreign venture capital or a foreign private equity fund, but was closing a conversation with a domestic investor.

Asia

BetaSmartz Automated Investment Launches in Asia (Yahoo! Finance), Rated: A

BetaSmartz, the B2B automated investment platform for all sizes of investors, from institutional to retail, today announced it had opened offices in Hong Kong.

BetaSmartz offers ‘hybrid ‘ digital investment or ‘robo’ advice that combines automated and face-to-face financial advice. Newly appointed Managing Director Asia, Zak Allom, said this model had been well received since its launch in 2015, with several clients now live including two in the U.S.

BetaSmartz will run sales and service from the Hong Kong office, complementing its headquarters in Singapore.

Authors:

George Popescu
Allen Taylor

Wednesday December 14 2016, Daily News Digest

Wednesday December 14 2016, Daily News Digest

News Comments Today’s main news: SoFi’s student loan refis serve as models for super prime jumbo mortgages. LendInvest launches first auction finance product. Today’s main analysis: If it walks like a bank and quacks like a bank, it’s a bank. Share buybacks continue at P2P Global Investments. Today’s thought-provoking articles: FCA bashes CFDs, yet invests in P2P. China’s […]

Wednesday December 14 2016, Daily News Digest

News Comments

United States

United Kingdom

  • LendInvest launches first auction finance product. GP:” LendInvest has been at the tip of the innovation, growth and online lending space. I am not surprised they continue innovating. Combined with their growth and their executive team recent hires, I would expect they are probably eyeing an IPO in the year or two.”  AT: “If this goes over big, I predict copycats.”
  • Share buybacks continue at P2P Global Investments trust. GP:” This is a valid strategy to help support the company , it’s NAV and take advantage of market innefficiencies.”
  • FCA bashes CFDs but invests in P2P – what gives? GP:” There is a huge different in CFDs (like FX spot) vs P2P. CFDs , nearly always, see investors losing money. P2P , nearly never sees investors losing money. How do I know this ? I run one of the main companies helping FX Spot and CFD brokers setup from tech, liquidity , legal and everything else. It was called Boston Technologies. ” AT: “I must admit, this does seem to be a double standard.”
  • Future outlook and predictions for UK P2P lending. GP:” All positive as you would expect.”
  • Expend to raise 750,000BP on Crowdcube. AT: “I find it ironic that FinTech companies are using crowdfunding sites to raise capital. Last week, it was Sharestates on SeedInvest. On the one hand, I understand that they are companies like any other and need operating capital. On the other hand, it could lead to a perception of robbing Peter to pay Paul, like a bank taking out a loan to pay off loans. Whether true or not, a perception could lead to detrimental effects in the market. I’m not sure this is a trend we want to see developing.”

Australia

China

India

News Summary

United States

SoFi’s Debut Prime Jumbo RMBS Is Big Play on Silicon Valley (National Mortgage News), Rated: AAA

SoFi Lending Corp.’s securitization of its student loan refis for high net worth individuals is now a model for its recent expansion into super prime jumbo mortgages.

SoFi has launched a $169.8 million bond issuance backed by 270 super-sized mortgages that SoFi has originated primarily to wealthy homeowners in California.

SoFi Mortgage Trust Series 2016-1 will issue four classes of super senior notes, and two tranches of supportive senior notes, secured by 15- and 30-year fixed rate home loans that the San Francisco-based lender began underwriting in late 2014.

The senior notes have preliminary AAA ratings from Fitch Ratings, DBRS and Kroll Bond Rating Agency.

The OCC’s Proposed Fintech Charter: If It Walks Like a Bank and Quacks Like a Bank, It’s a Bank (Paul Hastings), Rating: A

The OCC recognizes that the demographics of the financial marketplace also are changing with 85 million millennials becoming consumers of financial services—a demographic that has come of age using and relying on technology. As the Whitepaper notes, these market forces have resulted in technology-driven nonbank companies seeking new ways to deliver financial products and services. While frequently viewed as competition to traditional banks, given the challenges of bank regulation, technology companies frequently consider whether to become banks themselves. The Fintech Bank Charter may be a vehicle to do so. Whether the Fintech Bank Charter would carry with it all of the obligations of being a full-service bank, including the application for and receipt of FDIC insurance, and the significant regulation of bank holding companies under the Bank Holding Company Act (“BHCA”)[2]remains uncertain.[3] To be clear, and we think this thought has been lost by some commentators on the Whitepaper, this entity will be a bank and will be regulated as a bank with all of the requisite burdens and obligations of being a bank.

The Whitepaper is significant for its reaffirmation that the OCC has the authority to grant special purpose charters for national banks and federal savings associations under the National Bank Act and the Home Owners’ Loan Act (“HOLA”), respectively.[4] Existing OCC regulations define a “special purpose national bank” as a bank that conducts activities other than fiduciary activities that engages in at least one of the following three core banking functions: receiving deposits; paying checks; or lending money.[5]

While the OCC would be the primary prudential regulator and supervisor of a special purpose national bank, depending on the structure of the bank and the activities it conducts, other federal regulators may have oversight roles over its ownership structure and/or the operations of the bank.

The chartering process for a Fintech Bank would be the same as for a full-service national bank, applying supervisory standards involving safety and soundness, as well as requirements to provide fair access to financial services, treat customers fairly, and comply with all applicable laws and regulations. The OCC traditionally tailors these standards based on a bank’s size, complexity, and risk profile.

A special purpose national bank clearly will benefit:

  • Fintech companies seeking to operate under one national license rather than on a state-by-state regime (e.g., lenders, mortgage lenders, mortgage services, and money transmitters);
  • Nonbank lenders, mortgage originators, and servicers with less than $10 billion in assets, which can avoid CFPB supervision;
  • Payment processors or prepaid card program managers, which can control their own operations without being subjugated to a bank partner; and
  • Full service banks, which no longer will have to compete with nonbank Fintech companies, which they perceive are operating on an uneven playing field, as the laws and regulations applicable to all banks will apply to Fintech Banks.

Peer-to-Peer Lending Market: Small Business Units to Act as Building Blocks (OpenPR), Rate: A

TMR findings suggest that the opportunity in the global peer-to-peer market will be worth US$897.85 bn by 2024 from US$26.16 bn in 2015. The market is anticipated to rise at a whopping CAGR of 48.2% between 2016 and 2024. The biggest contributor to this growth will be small business end user segment that was likely to pace ahead at an impressive CAGR of 48.8% during the forecast period, very much retaining its leading stance.

The key trend likely to be adopted by leading players in the global peer-to-peer (P2P) lending market is to build strategic alliances to expand its small business loan divisions. For instance, Prosper Marketplace, Inc. joined hands with OnDeck and bought American Healthcare to improve its product portfolio. Similarly, LendingClub Corporation is also targeting startups by collaborating with trustworthy investors in the market.

Small Biz Loan Approval Rates at Banks & Institutional Lenders Reach New Heights (Crowdfund Insider), Rated: A

On Tuesday, Biz2Credit released its latest small business lending index, which reportedly revealed that loan approval rates at big banks and institutional lenders continued their recent surge and improved to new highs last month (November 2016).

According to the report, small business loan approval rates at big banks improved to 23.7%  during the month of November, which was up by two-tenths of a percent from October 2016. This marked the eighth time in the past nine months that lending approval rates increased at big banks. In addition to the increase, approval percentages at small banks improved 48.8%, up one-tenth of a percent from October.

Fintech Startup BlueVine Raises $ 49 Million in Series D Funding (Yahoo! Finance), Rated: A

BlueVine, a leading online provider of everyday financing to small businesses, announced today it has closed $49 million in funding. The Series D funding round was led by existing investors, including Lightspeed Venture Partners, Menlo Ventures, 83North, Citi Ventures, Rakuten FinTech Fund and Silicon Valley Bank.

Since launching in March 2014, BlueVine’s cloud-based financing solutions have helped thousands of small businesses obtain quick, easy access to the funds they need to purchase inventory, cover expenses and expand operations.

This financing will support BlueVine’s rapid growth as it expands its team and range of offerings. BlueVine has already funded more than $200 million in working capital for SMBs and is on track to fund more than $500 million in working capital during 2017.

BlueVine also announced it has once again increased its maximum credit lines based on client demand:

  • For invoice factoring the maximum credit limit has been increased from $250,000 to $2,000,000
  • For the business line of credit the maximum credit limit has been increased from $50,000 to $100,000

BlueVine offers credit lines starting at $5,000 for a business line of credit and $20,000 for invoice factoring.

Even Financial Milestone: Surpasses $ 1.5 Billion in Loan Requests & Increases Online Loan Originations by 205% (Crowdfund Insider), Rated: A

On Tuesday, fintech firm Even Financialannounced it increased loan originations by 205% quarter over quarter since the beginning of 2016. The company reported that, with more than $1.5 billion in loan requests, its platform has grown to serve over one million customers with its proprietary API and a broad network of consumer portal partners, backed by leading analytics and funnel optimization designed specifically for online finance.

2017 predictions from 4 top tech investors (Yahoo! Finance), Rated: B

More innovation in financial technology, though it could be the most regulation-prone sector

  • Many companies are working on elegant solutions to provide financing at point-of-sale that is either less expensive than today’s credit cards and/or available to consumers who may not qualify for credit cards. Loans will finally join the ranks of products and services available on demand.
  • Much of the fintech legislation to date has begun in the House or the Senate; the choices made at the bottom of the ballot are just as important as the one at the top, and investors and startups should remain hyper-aware of regulatory shifts.
  • Money center banks take the next step in 2017. We’ll see a handful of notable fintech acquisitions, but these companies will strive to continue to operate like startups, and will pay top dollar, in order to retain and attract top talent.
United Kingdom

LendInvest launches first auction finance product (Mortgage Introducer), Rated: AAA

The product, which is offered up to 75% loan-to-value, is designed for borrowers who need their deals to be fast-tracked by their lender to ensure certainty of funding within tight timeframes.

It features a 50% discount on valuation fees and no exit fees, terms from one to 12 months and loans from £75,000 to £7.5m.

Share buybacks continue at P2P Global Investments trust, nears 2 per cent of issuance (altfi), Rated: AAA

The largest closed-ended portfolio offering exposure to the P2P/marketplace lending space P2P Global Investments has entered into another round of share buy-backs in the past three weeks, according to regulatory filings.

In the past two months, the fund has engaged in share buybacks on 14 separate days, with tranches of buybacks ranging from 3,400 to 50,000 in a single day, the latter has occurred on four separate occasions.

British regulator bashes CFDs, yet allows £85 million of taxpayers money to fund potentially detrimental P2P lending sector (Finance Feeds), Rated: A

The Financial Conduct Authority (FCA) in Britain finds itself at a crossroads in terms of priorities once again today, as barely a week has passed since the national financial markets regulator released a set of proposed rulings which seek to limit the method by which contracts for difference (CFDs) are provided by large, publicly listed, well capitalized and very stable OTC electronic trading firms, yet allows other unregulated and potentially problematic businesses to flourish.

Today, just one week later, the FCA finds itself in a difficult position as the peer to peer lending industry – a particular sector which the FCA only recently deemed worthy of concerns around the growing complexity of the peer-to-peer market – has been the subject of an £85 million taxpayer funded round of investment.

Falling transparency and rising complexity among peer-to-peer lenders is a theme throughout the FCA’s 48-page report. The FCA writes at one point: “Firms’ desire to maintain confidence in platforms has occasionally led to firms acting in a nontransparent manner, masking true loan performance and exposing investors to risks.”

Future Outlook and Predictions for UK P2P Lending Market (TechBullion), Rated: A

Over the last few years, P2P lending has grown exponentially with cumulative lending reaching about £3.7 billion October last 2015in the UK.

Currently, the UK is the leading market in Europe, accounting for about 85 percent of the European market. In the next few years, P2P sector will grow fast, forcing some banks to change their ways.

According to Research and Markets, by 2018 P2P lending in the UK might be worth more than £5 billion.

In a new report, BI Intelligence predicts that UK P2P lending will grow at a 45 percent five-year compound annual growth rate, to reach $23 billion by 2020. The report also forecasts consumer, property, and business P2P lending volume in the UK, factors driving the growth, and how some unique features of the market are helping the country develop its P2P lending industry.

UK Fintech Startup Expend Looks to Raise £750,000 on Crowdcube (Crowdfund Insider), Rated: A

Expend, a UK-based fintech app startup, has launched a crowdfunding campaign on Crowdcube. The company is seeking £750,000 for growth and is offering 5.27% in equity. 

Australia

Turnbull says fintech is switched on (Investment Magazine), Rated: A

He acknowledged that financial services technology, or fintech, is ripe for investment in the industry by big companies, as well as by the private equity and venture capital industry. Peer-to-peer lending, crowdfunding, robo-advice and digital currencies were among the emerging fintech industries the PM name-checked in the speech.

Turnbull told the audience that working in the “fintech hub” of Sydney meant that they were in “one of the most exciting industries in the most exciting region” in the world.

China

China’s ‘Big Four’ banks still keeping a safe distance from burgeoning peer-to-peer lending sector (South China Morning Post), Rated: AAA

China’s major banks are seemingly taking a “wait-and-see” approach to being future custodians for the nation’s growing number of peer-to-peer (P2P) lending firms, whose reputation has been hit hard by a series of high-profile fraud cases.

By law, all P2P platforms now need to have the backing of a registered bank by August 2017, after being given effectively a 12-month grace period to meet the mandatory requirement.

So far, however, the country’s so-called “Big-Four” state-owned banks are yet to act as custodian to any P2P platforms, with only smaller lenders – mostly city commercial banks – dominating the segment.

India

RBI guidelines to act as a growth catalyst for P2P business (Your Story), Rated: AAA

For many individuals, P2P lending is an alternate source of securing finance. However, at present, it is  an unregulated sector. There are lines of reasoning in favour of as well as against regulating P2P lending. The jury is still out on whether and how the RBI should oversee this sector.

Those who don’t favour the RBI issuing guidelines often ask a question — why do we need a regulatory framework for P2P lending marketplaces? Arguably, the sector is in a nascent stage of development and poses no systemic risks. P2P lending is not perceived to have any significant impact on monetary policy transmission mechanism either. Further, it is often said that regulations may limit the progress of this innovative, efficient, and accessible avenue of alternate finance.

The RBI had released a consultation paper on P2P lending in April 2016 and had also welcomed feedback and suggestions.

The scope of regulations…

  • Permitted activity
  • Prudential regulations on capital
  • Governance
  • Business continuity plan (BCP) and customer interface
  • Regulatory reporting

Serious buyers always prefer to enter a sector that is regulated.

Strict regulations = greater accountability = higher transparency = big growth opportunities for serious players 

Authors:

George Popescu
Allen Taylor