Thursday January 24 2019, Weekly News Digest

millennials loan money

News Comments Today’s main news: Funding Circle, Stripe partner on small business expansion. Goldman, Citi drop Chinese P2P lenders. RateSetter attracts 75K investors. MarketInvoice gets 56M GBP in equity, debt funding. Hexindai shares credit data with Baihang Credit. Today’s main analysis: PeerIQ on bank earnings. Today’s thought-provoking articles: The link between marketplace lending and personal bankruptcy. 10 best places to […]

The post Thursday January 24 2019, Weekly News Digest appeared first on Lending Times.

millennials loan money

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United States

United Kingdom

China

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United States

Goldman, Citi Drop Chinese Peer-to-Peer Lenders After Crackdown (Bloomberg), Rated: AAA

First came a sweeping government crackdown and a surge in defaults and failures at thousands of China’s peer-to-peer lenders. Now, in another troubling sign for the industry, some of the biggest investment banks have stopped taking them public.

Wall Street firms including Goldman Sachs Group Inc. and Citigroup Inc. walked away from U.S. initial public offerings of Chinese P2P lenders in recent months, people with knowledge of the matter said. Their concerns mainly stemmed from the timing of the deals, with an uncertain outlook for P2P companies and a slumping market knocking down valuations. In each case, the businesses went ahead with their offerings after finding new underwriters.

Marketplace Lending & Personal Bankruptcy: Cause and Effect (Lend Academy), Rated: AAA

A national wave of personal bankruptcies that began in 2008 reached a peak in the year ending September 2010, when nearly 1.6 million bankruptcies were filed.

Filings fell by 1.8 percent for the 12-month period ending March 31, 2018, compared with the year ending March 31, 2017. The data continues a national trend of declining bankruptcy filings since 2010-2011.

An interesting white paper (The Real Effects of Financial Technology: Marketplace Lending and Personal Bankruptcy) co-authored by Dr. Piotr Danisewicz, University of Bristol and Ilaf Elard, Assistant Professor of Finance at Shanghai University of International Business and Economics was released last summer.

Among the many additional conclusions Danisewicz and Elard reach in the white paper are:

  • The Madden win triggered Lending Club and Prosper, the two largest U.S. marketplace lenders, to reduce lending in the states affected by the verdict.
  • The co-authors attribute the increase in the incidence of personal bankruptcy following Madden to the reduction in marketplace lending. This hypothesis is supported by a number of further results.
  • The consequences of Madden are limited to the enforceability of marketplace loans and suggest that the increase in bankruptcy rates following Madden arises predominantly from changes in marketplace lending.
  • Danisewicz and Elard also rule out that the rise in bankruptcy following the verdict could be the result of an increase in defaults by marketplace borrowers in the affected states. This may occur if marketplace borrowers are over-indebted and default after being unable to obtain additional marketplace loans in the affected states.

Strong Bank Earnings (PeerIQ), Rated: AAA

Banks had a rough quarter for trading revenues. FICC revenues at MS dropped by 30% YoY and by 18% YoY at GSBank of America’s 15% YoY drop in trading revenues was offset by a 10% increase in consumer banking revenuesRevenues at Wells Fargo dropped by 5% YoY driven by lower consumer loan balances. WFC faces a regulatory asset cap until the end of 2019 which is hampering loan growth. JPM was the only bank where the provision for credit losses increased, driven by a reserve build for credit cards due to loan growth.

Source: PeerIQ

10 Best Places to Pay Down Debt (LendingTree), Rated: AAA

Americans’ debt balances continued climbing in 2018, with total consumer debt tracking to top $4 trillion by the end of that year. With balances climbing high, many borrowers will want to use the new year to take their debt down a peg. For those who do so, prioritizing paying off debt can bring major rewards both in the near and long distance future.

86 Million Americans Fear Maxing Out Plastic on Large Purchases (WalletHub), Rated: AAA

The holiday shopping season is over now, and many Americans are seeing the impact on their credit card bills and bank statements. During the holidays, people often make a lot of large purchases, and sometimes max out their cards in order to do so. In a nationally representative survey conducted by WalletHub, 34 percent of respondents say they worry about maxing out their card with a large purchase.

Source: WalletHub

Credit Line Increases Drive Consumer Engagement and are Most Likely to Happen at the Beginning of the Year (AP News), Rated: A

According to a new study from TransUnion (NYSE: TRU), consumers are 50% more likely to receive a credit line increase (CLI) between the months of January and May. However, credit line decreases (CLD) occur at twice the normal rate during the month of January.

Lendio Provides More Than 5,000 Kiva Loans to Support Women-Owned Businesses Around the World (Lendio), Rated: A

Lendio announced today that through continued efforts to support business growth around the world, the Lendio Gives program has funded more than 5,000 Kiva microloans. To-date, Lendio’s employee contribution and employer matching program has provided more than $130,000 in loans to underserved business owners in 78 countries.

Lendio Franchising Named No. 1 Financial Services Brand in Entrepreneur’s Franchise 500 (Lendio), Rated: B

Lendio Franchising recently ranked in Entrepreneur magazine’s Franchise 500, the world’s first, best and most comprehensive franchise ranking. Named #1 in the Business Financial Services category for the second year running, Lendio Franchising was recognized for its outstanding performance in areas including unit growth, financial strength and stability, and brand power. Placement in the Franchise 500 is a highly sought-after honor in the franchise industry; Entrepreneur received more than 1,000 applications this year, making it one of the company’s most competitive rankings ever.

Commercial Real Estate Finance Platform CrediFi Milestone: Total Capital Raised Has Surpassed $ 29 Million (Crowdfund Insider), Rated: A

CrediFi, a fintech and commercial real estate finance platform, on Wednesday it has raised an additional $6 million in funding. This funding comes on the heels of the $13 million previously raised in Series B funding. The company reported that the total amount it has raised has surpassed $29 million.

Lending Express Celebrates $ 100M Lending Milestone & California’s Golden Opportunities (Crowdfund Insider), Rated: A

Lending Express, an Israeli tech company dedicated to creating a better world of funding for SMBs, has surpassed $100 million in financing facilitated between small and medium business owners and online lenders. Lending Express also obtained state permission to open for business in California.

Fundation Launches Digital Lending Capability with Banc of California for Small Business Customers (OAOA), Rated: A

Fundation announced that it has recently launched a digital lending solution in partnership with Banc of California, enabling the California-based bank to offer a new, streamlined end-to-end solution for small businesses seeking a business loan or line of credit. The solution enables small businesses to apply for loans and lines of credit through a simple online application at Bancofcal.com and receive funds in a little as one business day.

Entrepreneurs Take Note: Success Is Within Reach (WWD), Rated: A

With insight from 600 “thriving” U.S. small business owners, a study by global financial services platform Kabbage, Inc. reveals one-third of small businesses started with less than $5,000 in start-up capital.

According to the report, particularly scrappy or thrifty entrepreneurs may want to consider starting a business in one of the three categories costing $5,000 or less “during the first six months.” Accounting; at 45 percent, online retail; at 44 percent and construction and landscaping; at 39 percent represented the least amount of start-up capital, or lowest entry barriers.

Officials caution federal workers of predatory online payday lenders during federal shutdown (News 8), Rated: A

Attorney General William Tong and Department of Banking Commissioner Jorge Perez cautioned federal workers on Wednesday to avoid predatory online payday lenders who may seek to exploit the struggling workers during the partial government shutdown.

Most People Would Not Loan Their Loved Ones Money to Start a Business (Fundera), Rated: A

The time and effort it takes to raise the funds for your startup can quickly get out of hand, which may be the reason that 29% of new small businesses run out of cash and fail.

In fact, 38% of startups are funded by friends and family members.

We surveyed 1,000 Americans on whether or not they would loan a friend or family member money to start their business and found that 82% of people would not loan a friend or family member money to start a business.

Source: Fundera

No Pay Stub? No Problem. Unconventional Mortgages Make a Comeback (WSJ), Rated: A

Lenders issued $34 billion of these unconventional mortgages in the first three quarters of 2018, a 24% increase from the same period a year earlier, according to Inside Mortgage Finance, an industry research group. While that makes up less than 3% of the $1.3 trillion of mortgage originations over that period, the growth is notable because it came as traditional home loans declined. Those originations fell 1.2% over the same period and were on track for a second down year in 2018.

North Capital Launches REITless Impact Income Strategies (PR Newswire), Rated: A

North Capital Investment Technology Inc. recently launched a new investment vehicle, REITless Impact Income Strategies (REITless), focused on lending and strategic debt investments to primarily single- and multi-family real estate development and redevelopment projects that aim to produce positive social impact in communities nationwide. The impact initiatives targeted by the company are energy efficiency, employment generation, affordable housing, and green-housing improvements that promote environmental sustainability. REITless is managed by North Capital Inc., an SEC-registered investment advisor (RIA).

BFS Capital Achieves $ 2 Billion in Financing (BusinessWire), Rated: A

BFS Capital, a leading small business financing platform, today announced it has now issued more than $2 billion in financing to over 22,000 small businesses across the United States, Canada and, through its United Kingdom subsidiary, Boost Capital.

KeyBank To Acquire Online Lending Business Laurel Road (PR Newswire), Rated: A

KeyBank National Association today announced that KeyBank and Laurel Road Bank have entered into a definitive agreement for the acquisition by Key of Laurel Road’s digital lending business; Laurel Road’s three bank branches located in southeast Connecticut are not part of this transaction. Through the acquisition, Key will enhance its digital capabilities with state-of-the-art, customer-centric technology and will leverage Laurel Road’s proven ability to attract and serve professional millennial clients.

GROUNDFLOOR Launches Real Estate Investments Specific To Georgia Residents During Federal Shutdown (PR Newswire), Rated: A

Today, Atlanta-based GROUNDFLOOR is launching new investment opportunities specific to Georgia residents. The crowdsourced real estate investing and lending platform regularly offers investment opportunities to accredited and non-accredited investors throughout the country. Due to the federal shutdown and furloughs at the Securities and Exchange Commission, GROUNDFLOOR is now resurfacing state-by-state securities to continue to offer investors the opportunity to invest on a fractional, self-directed basis in Georgia real estate.

Is community banks’ loan growth too much of a good thing? (American Banker), Rated: A

Total loans at publicly traded banks with assets of less than $20 billion rose 9.2% in the fourth quarter from a year earlier, based on Jan. 18 data compiled by FIG Partners. Publicly traded banks above that threshold have reported a 2.7% increase in loans.

Breakout Capital Finance expands Board of Directors, appoints Neil Gurvitch and Firoze Lafeer (PR Newswire), Rated: B

Breakout Capital Finance, a leading fintech innovator, announces the expansion of its Board of Directors by appointing Firoze Lafeer, company CTO, and Neil Gurvitch as an independent director.  In making the appointments, Carl Fairbank, Breakout’s Founder and CEO, said, “We continue to see rapid growth in our lending- and technology-focused endeavors.  Adding more seasoned leadership continues our expansion and growth plans.”

Samsung NEXT, NBKC Executives and Ellie Mae Veteran Join ProPair Advisory Board (BusinessWire), Rated: B

ProPair, a Silicon Valley innovator using machine learning and predictive decision-making to change how mortgage lenders are assigning and prioritizing their leads, today announced the additions of Leo Chang, Chad Cronk and Nick Hedges to its advisory board.

United Kingdom

RateSetter attracts over 75,000 investors (Bridging and Commercial), Rated: AAA

RateSetter has announced that over 75,000 investors have put money into its platform.

Since its launch in 2010, investors have earned £120m through the P2P lending platform at an average interest rate of 4.4% per year.

RateSetter currently has £830m of investment under management, including £170m invested through its Isa.

MarketInvoice secures £56m equity and debt funding (MarketInvoice), Rated: AAA

Fintech business MarketInvoice today announced it has raised £26m in new equity funding. This Series-B funding round was led by Barclays and Fintech fund, Santander InnoVentures with significant participation from European venture fund Northzone, an existing investor in the company. Technology credit fund Viola Credit, who also participated in the equity round, will provide a debt facility of up to £30m. The facility will help scale the MarketInvoice business loans offering that sits alongside their core invoice finance solutions.

Goldman Sachs’ Marcus platform reveals AUM (AltFi), Rated: A

The US investment giant said its digital bank attracted has more than £5bn in UK savings just three months after its launch.

The US investment giant debuted its online lending and deposit platform, Marcus, in the UK at the end of last summer, and pulled in 100,000 customers and £5.4bn in the final quarter of the year.

Metro Bank shares crash after loans blunder revealed (The Guardian), Rated: A

Metro Bank has revealed a major blunder in how it classifies its loan book, an admission that drove its share price down by nearly 40% on Wednesday, wiping £800m off the value of the company.

The bank, which has been opening new branches as established rivals cut back, revealed that hundreds of millions of pounds of commercial property loans and loans to commercial buy-to-let operators had been wrongly classified in risk terms, and should have been among its “risk-weighted assets” (RWAs).

Glenhawk grows team with LendInvest hire following strong start to 2019 (Property Funds World), Rated: B

Having originated GBP28.4 million of potential loans since the start of the year, and completed on just over GBP4 million, early indications are that 2019 will see accelerated demand for Glenhawk’s fast and flexible short term property finance. Wareham joins Glenhawk’s 20-strong team of real estate professionals, supporting an increasingly diverse range of borrowers across the South of England and Midlands.

China

Hexindai Begins Sharing Credit Data with Baihang Credit (PR Newswire), Rated: AAA

Hexindai Inc. (NASDAQ: HX) (“Hexindai” or the “Company”), a fast-growing consumer lending marketplace in China, announced today that it has connected its systems and begun sharing credit data with Baihang Zhengxin (“Baihang Credit”).

China crackdown aims to push peer-to-peer lenders out of the industry (Australian Financial Review), Rated: A

Chinese authorities have further tightened controls on the peer-to-peer lending industry, aiming to clear out as many P2P platforms as possible, according to an official document seen by Caixin.

Microlenders need to obtain licences from the regulators and meet certain minimal capital requirements. For instance, a microlender in Shanghai needs to register its business with more than 200 million yuan ($41.2 million). P2P platforms usually don’t have to meet such requirements.

Chinese investors try to storm company after P2P lender failure (Business Times), Rated: A

In the latest sign of turmoil in China’s once booming peer-to-peer (P2P) lending sector, around 80 investors in failed lender Xinhehui protested outside the Hangzhou headquarters of a related company on Tuesday, demanding a US$330 million bailout.

Mrs Xue, who would only provide a surname for fear of retaliation, said she arrived at 8am with around 80 other investors from Zhejiang and neighboring provinces, demanding payment for 2.26 billion yuan (S$452 million) of products that Xinhehui had sold, including 860 million yuan (S$172 million) worth that were due for repayment on Jan 6.

Xi Tells Cadres to ‘Prevent and Control’ Risks as China’s Economic Woes Mount (The Epoch Times), Rated: B

At a high-level meeting of senior Chinese Communist Party officials held in Beijing, Chinese leader Xi Jinping gave an opening speech on Jan. 21 that hinted at the severity of China’s economic downturn.

European Union

Fellow Finance Launches Peer to Peer Lending in Denmark (Crowdfund Insider), Rated: AAA

Finland based peer to peer lender Fellow Finance is now operating in Denmark. The company says it will offer Danish consumers access to credit while Fellow Finance investors will be able to fund Danish loans. Currently, Fellow Finance provides consumer loans in Finland, Germany, Poland, and Sweden.

Note to Irish and US parents: college not the only path for your cherished offspring (Irish Central), Rated: A

According to the student loan marketplace www.lendEDU.com, the average debt per borrower at a public college is $26,872. This rises to $31,710 if you’re inclined to a private college experience. For graduate school students – whose parents have by now presumably said, “Time to pay your own way, sunshine” – the average debt is a staggering $57,600.

International

Funding Circle partners with Stripe to help small businesses expand (PR Newswire), Rated: AAA

Funding Circle, the global small business loans platform, today announced that it has joined the Stripe Partner Program, providing businesses using Stripe with access to affordable business financing through Funding Circle. As a verified extension partner, Funding Circle now enables Stripe users to import their data directly and securely to apply for a business loan up to $500,000 — making the process faster and easier so they can get back to running their businesses.

Boost Capital ups firepower as US parent hits $ 2bn lending milestone (AltFi), Rated: A

Small business lender Boost Capital has refinanced its credit facility lifting its funding capacity to $60m, as its US parent targets European growth.

The Chelmsford-based platform, which provides business loans and merchant cash advances, said it upped its credit firepower from $40m after signing a deal with New York-based investment firm Atalaya Capital Management.

India

Matrix Partners invests in P2P lending platform LiquiLoans (Techstory), Rated: AAA

Mumbai based peer to peer lending platform LiquiLoans, one of the few players to have secured a P2P license, has now secured an undisclosed amount of funding from some of the existing investor that is Matrix partners India.

Fintech startup floated by ex-Lendingkart execs MoneyOnClick raises funding (VC Circle), Rated: A

Two former executives from online lending platform Lendingkart have quit the firm to set up a new venture in the alternative lending space, catering to consumers.

According to their respective LinkedIn accounts, the startup, which has been operational since October 2018, has already raised $2.25 million (Rs 16.02 crore at current exchange rates) as part of its first institutional funding round from undisclosed investors.

Women, non-metros topping up on credit, says BankBazaar survey (MoneyControl), Rated: A

Non-metro cities have emerged as the bigger market for unsecured credit in terms of volume than the metros in 2018, according to BankBazaar Moneymood 2019 report.

The average personal loan ticket size in non-metros is Rs 2.80 lakh compared to Rs 2.55 lakh in metros. The unsecured credit portfolio includes personal loans and credit cards which are used more for consumption activities than secured loans.

Online rental marketplace Sacorooms Rises fresh funding Pre-Series A (Times of India), Rated: A

Sacorooms, a start-up that is building co-living spaces, has closed a pre-Series A round of funding for an undisclosed amount from Mr. Broadway. The investment comes after a strategic round led by Incubate Fund and a group of investors from the real estate industry this year.

Asia

OJK Zero Down Payment Policy Drives Multifinance Growth (Tempo.co), Rated: AAA

The recent policy of zero percent down payment for vehicle credit issued by the Financial Services Authority (OJK) believed to be able to drive the performance of the multifinance industry. Businesses are confident that multi-finance companies will perform better with the new regulation.

Chairman of the Indonesian Financing Company Association (APPI) Soewandi Wiranto, said that the business expansion stated in the new regulation can increase financing industry growth. Based on APPI’s calculation, industrial asset growth for 2019 can reach up to 9 percent while the growth rate of receivables is predicted to be in a range of 6 to 7 percent.

Authors:

George Popescu
Allen Taylor

The post Thursday January 24 2019, Weekly News Digest appeared first on Lending Times.

What’s Going On With China’s P2P Lending Crisis?

P2P lending China

According to a Bloomberg article, China houses the biggest P2P lending industry in the world, an achievement that has now become an albatross around the country’s neck. According to one report, outstanding P2P loans in China are worth an estimated $217.96 billion. This is more than the combined outstanding loans for the rest of the […]

P2P lending China

According to a Bloomberg article, China houses the biggest P2P lending industry in the world, an achievement that has now become an albatross around the country’s neck. According to one report, outstanding P2P loans in China are worth an estimated $217.96 billion. This is more than the combined outstanding loans for the rest of the world. But the high-flying industry is now facing an existential crisis in China.

It is first important to understand the fundamental difference in the P2P lending ecosystem in the China versus the U.S. In the U.S., the platform is not on the hook if the borrower defaults. In China, P2P lenders provide explicit guarantees in the majority of the cases. This was the reason for the common sense-defying growth of P2P lending, and now it has become the iceberg that could sink the entire industry.

The Current P2P Lending Scenario in China

In 2018, nearly 247 Chinese P2P lenders defaulted in June and July, and around 2,305 platforms suffered from some kind of financial and operating issues. The count of operating P2P lenders has shrunk from 3,383 in 2016 to just 1,645 in August 2018. The flunked P2P platforms include those who ceased operations because either they were not able to repay investors or operators absconded with investors’ funds. A ‘domino’ effect is now taking place due to the collapse of these P2P lending platforms.

It all started in June 2018 when the number of platforms having problems was just 63. In July, this figure surged to 118. The initial months before June had only a paltry 20 firms facing such issues. Contributing to the downturn were outright scams. The biggest happened in 2016: Ezubao scammed investors over $7.6 billion through its well-known Ponzi scheme.

According to an estimate by the China International Capital Corp., only 10% of current P2P lending platforms would be able to survive the coming three years. Liquidity issues is one of the major reasons responsible for the failure of approximately 73% of the P2P lending platforms. As per analysts, the number of failures have risen primarily due to three factors:

  • Panicked withdrawals from investors
  • Increasing compliance costs
  • And a stiffening credit environment, which prompted defaults

The Regulation Perspective

A critical reason for this meltdown is the harsh regulations ushered in post-Ezubao. The new rules set by authorities were intended to give existing surviving players a tough set of prerequisites for operating in the industry. China Banking and Insurance Regulatory Commission (CBIRC) has transformed the role of P2P lending platforms to something that will only assist lending between parties and will not engage directly in handling the funds. Promising any kind of guarantee has been expressly disallowed.

CBIRC has proposed several measures to keep a check on the business of P2P lending platforms. The new measures include:

  • A mandate for P2P companies to self-review and report statistics like unpaid and non-performing loans.
  • Inspection powers are vested with the National Internet Finance Association and local industry associations.
  • Penalties have been set for deterrence.
  • Setting up of communication windows to assist customers with complaints.
  • Carrying out compliance inspections on platforms.
  • A ban has been imposed on setting up of a new P2P lending company.
  • P2P borrowers who fail to repay loans will be penalized in China’s social credit rating system.
  • Platforms now cannot use independent capital pools to fund the business. They have to count on real investors who want to fund loans.
  • Platforms are bound to make detailed disclosures with respect to their working.
  • Legal consequences for operators of Ponzi schemes.

An Analytical Overview of P2P Lending in China

These new regulations issued by the Chinese regulators were termed by Moody’s as “credit positive.” According to the agency, the changes made to the system and the regulations introduced will provide better protection to individual lenders and help in avoiding risk spilling over into the overall financial system.

The regulations have had a positive effect in the sense that weaker and/or dodgy online platforms will not be able to survive in the industry. This will rehabilitate the image of P2P lending in China and allow strong genuine players to grow the P2P lending market again. Though the P2P lending industry has been known for its over-exuberance, it was many times the only source of borrowing for small businesses and individuals.

But the mess still remains for millions of investors who have been left high and dry by such errant platforms. These investors had hoped government will step in and make them whole. Instead, the government’s measures have centered only on policy changes. This has led to mass protests and have been covered extensively by local and international media.

Conclusion

Regulators have framed measures to tackle the online lending crisis, but there is still no official guideline on how to recover already lost assets. It is unlikely that investors will be able to recoup their invested money. The write-offs are devastating for some. Reports of investor suicides are common on Chinese social media platforms. The new regulations address the issues at hand, but an awareness campaign educating investors about the pros and cons of investing in P2P lending attempts to curb a similar showdown in the future. It has become all the more critical as, now, risk consolidates into fewer (though, hopefully, regulated and well-managed) players as the industry continues to shrink.

Author:

Written by Heena Dhir.

Monday April 2 2018, Daily News Digest

PeerIQ

News Comments Today’s main news: Landbay raises 1.2M GBP on Seedrs. Yirendai issues quarterly earnings results. Betterment boosts human advice. Flender to raise 50M Euro. Cash Suvidha raisess $1M. Today’s main analysis: The VC and PE markets in Canada. Today’s thought-provoking articles: PeerIQ’s credit facility management suite. Is community bank SMB lending eroding? Africa’s big blockchain potential. United States Betterment’s rise […]

PeerIQ

News Comments

United States

United Kingdom

China

European Union

International

India

Other

News Summary

United States

Robo Pioneer Betterment Goes Upscale, Boosts Human Advice (ThinkAdvisor), Rated: AAA

Now with $13.5 billion in assets under management, the firm claims to be the largest independent online financial advisor. Indeed, its high-net-worth offering, or Prime Plan, has been embraced by investors with accounts ranging from $100,000 to many millions, according to Holeman.

Betterment, founded in 2008 as an automated digital-only advice platform, now has 340,000 customers, ranging from millennials to 85-year-olds, with an average age of 37 and an average balance just under $40,000.

How have your fees changed?

Before, we didn’t have the ability to talk with a human advisor; now we have certified financial planners. There are two levels of pricing: the basic digital plan [no minimum account size], which is 0.25% per year and our premium plan [$100,000 minimum account] for 0.4% per year to talk with a certified financial planner on an unlimited basis.

PeerIQ’s Credit Facility Management Suite (PeerIQ), Rated: AAA

US GDP growth for the 4th quarter was revised upwards from 2.5% to 2.9%, capping an impressive 2017. Consumer spending has driven the bulk of GDP growth and it will be relevant to see if this trend continues given the weak retail sales in Q1 and softening in some leading economic indicators. Core PCE, the Fed’s preferred inflation indicator rose 1.8% YoY in February. Personal spending rose 0.2% while incomes rose 0.4% MoM suggesting that Americans are saving more – a long-term positive for growth – although a short-term pressure on retail sales and consumer spending.

PeerIQ’s Credit Facility Management Suite

The Credit Facility Management Suite provides:

  • Dashboard overview of multiple facilities across various asset classes
  • Daily Covenant Calculation and Monitoring
  • Time Series Visualization and Projections
  • Automated Borrowing Base Report Generation
  • Collateral Cashflow Projections
  • Scenario Analysis
Source PeerIQ

 

Is community bank small business lending eroding? (Banking Exchange), Rated: AAA

Quarles, speaking March 26 at a HOPE Global Forum, told of recent meetings he had had with owners of very small businesses. He noted that their comments jibed with trends the central bank has seen. A key one is that small businesses still face gaps in available credit although more than two-thirds of those studied by the Fed request less than $100,000 and many less than $25,000.

Who’s lending to small businesses?

“Large banks’ share of small business lending has grown,” said Quarles, “especially among the smallest loans. This represents a change from 20 years ago when small businesses relied more on a relationship with local community banks for access to credit.”

Quarles shared figures for loans under $100,000. He said that small banks of less than $1 billion hold 19% of such loans—versus 60% two decades ago. By contrast, he said, that 60% share is now held by banks with $50 billion or more in assets.

Quarles next discussed nonbank alternative lenders. This included fintech specialists as well as large technology firms that extend credit to merchants who are part of their customer bases. (Quarles did not mention names, but examples of the former would include online lender Kabbage and the former would include Amazon, which grants credit to small firms that are part of its base.)

Tech ever-widening domain for community banks (Banking Exchange), Rated: A

“Anybody who doesn’t believe that is kidding themselves,” says James Beckwith, president and CEO at $972.8 million-assets Five Star Bank in Rocklin, Calif.

The attractiveness of tech-based marketplace lending, for example, is only going to increase, Beckwith says. Also, payments innovations, going on inside and outside banking, can’t be ignored by consumer or business bankers.

Marlin Secures $ 300,000,000 Forward Flow Agreement to Expand Equipment Financing for Small Businesses (GlobeNewswire), Rated: A

Marlin Business Services Corp. (NASDAQ:MRLN) a leading provider of credit products and services to small businesses, today announced that it has entered into a forward flow sale agreement with Varadero Capital, L.P., a leading alternative asset management firm, to sell up to $300,000,000 in equipment leases and loans to be originated by Marlin.

Technology jobs in the Chicago area are up, but that’s not the whole story (Chicago Tribune), Rated: A

Unlike at Enova, the overall number of technology jobs in the Chicago region grew at a modest pace last year, both at tech firms and in other industries.

Even before Chicago entered the cutthroat competition last fall to win Amazon’s second headquarters, dubbed HQ2, the city promoted the growth. Emanuel’s office issued at least eight news releases in 2017 on technology companies planning to hire. One of them named more than a dozen companies with hiring goals by the end of 2017.

Enova was on that list, with an aim to hire 75. Instead, it brought on 128 new people, raising its total employee count to 1,145.

And analytics was only the second-fastest-growing team at Enova last year.

 

LendIt Fintech USA 2018 Preview Show (Lend Academy), Rated: A

This year we have the LendIt Content Team on the show discussing all the different aspects of the event and how attendees can get the most out of their time at LendIt Fintech USA 2018.

 

United Kingdom

Landbay Returns to Seedrs & Quickly Raises £1.2 Million in Funding (Crowdfund Insider), Rated: AAA

UK-based peer-to-peer lender Landbay has launched another equity crowdfunding campaign on Seedrs and quickly secured more than £1.2 million in funding. This news comes less than a month after the online lending platform announced it hit its £100 million in lending milestone.

Deposit rates are a joke, so investors should consider peer-to-peer lending (The Times), Rated: A

Irish investors who want a regular return on their capital but are not happy to hand their money to the banks — where deposit rates are in the doldrums — have been exploring peer-to-peer (P2P) lending.

EasyMoney launches second IFISA with higher returns (Peer2Peer Finance), Rated: A

EASYMONEY, part of Sir Stelios Haji-Ioannou’s easy family of brands, has launched a second Innovative Finance ISA (IFISA) that offers higher returns than its first tax wrapper.

The recently-launched peer-to-peer lending platform said on Saturday that its ‘balanced’ IFISA allows individuals to invest in a broader range of property-backed loans, with a target interest rate of 7.28 per cent. Loans written for the ‘balanced’ IFISA are limited to 75% loan-to-value (LTV).

China

Yirendai (YRD) Issues Quarterly Earnings Results (The Lincolnian Online), Rated: AAA

Yirendai (NYSE:YRD) announced its earnings results on Wednesday, March 14th. The technology company reported $1.11 EPS for the quarter, topping the consensus estimate of $0.86 by $0.25, Briefing.comreports. Yirendai had a return on equity of 66.32% and a net margin of 24.69%. The company had revenue of $280.50 million for the quarter, compared to analysts’ expectations of $244.27 million.

China’s P2P lenders brace for renewed regulatory crackdown (Financial Times), Rated AAA

Thousands of online lenders could be facing extinction as China rolls out a new licensing framework, amid complaints about a lack of clarity on how the regime will work. The peer-to-peer, or P2P, lending sector is braced for a second regulatory crackdown as a new “record filing” system kicks off in April. But with the first batch of approvals expected by the end of the month, lenders say they are still in the dark on the filing process itself.

The peer-to-peer, or P2P, lending sector is braced for a second regulatory crackdown as a new “record filing” system kicks off in April. But with the first batch of approvals expected by the end of the month, lenders say they are still in the dark on the filing process itself.

 

European Union

Peer-to-peer lending start-up Flender to announce €50m debt round (The Irish Times), Rated: AAA

Dublin-headquartered fintech start-up Flender, whose backers include former EY Entrepreneur of the Year award winner Mark Roden, is set to announce a €50 million debt financing round to fund its expansion.

Having secured more than £500,000 (€569,000) to fund itself through crowdfunding, Flender announced plans to raise a £2 million (€2.2 million) funding round and £20 million (€22.7 million) in leveraged debt finance last August after receiving full authorisation from the UK financial regulator to operate in Britain.

Dutch Startup Aims To Boost Earnings Of P2P Services (Cointelegraph), Rated: A

Dutch Startup “BotBird” is launching a set of services that aims to bring together different aspects of the blockchain. While the services alone are well known amongst crypto investors the set combined might make a big difference in the scene altogether.

Lending

Crypto lending took a flight last year with lending programs popping up nearly every day. The promise was simple: Invest some bitcoin or Ethereum, get the counter value returned in alt coins minted by those lending programs and earn a certain percent of interest daily.

Escrow

Besides the fact that they actually focus on operating a sustainable service by offering a maximum of up to 10% monthly interest they also offer investment protection by 

International

Big banks on notice as tech groups ramp up pressure (Financial Times), Rated: AAA

Technology companies are set to take a big chunk of customers from banks, as they intensify their challenge to traditional lenders across a range of mass-market financial services, say industry executives and analysts. Carlo Messina, chief executive of Intesa Sanpaolo, has told the Financial Times that Italy’s biggest bank by market capitalisation expects to lose market share to digitally focused rivals in many mainstream areas such as payments.

Carlo Messina, chief executive of Intesa Sanpaolo, has told the Financial Times that Italy’s biggest bank by market capitalisation expects to lose market share to digitally focused rivals in many mainstream areas such as payments.

SALT: Leverage Your Blockchain Assets to Secure Cash Loans (SludgeFeed), Rated: A

One such project is SALT, a lending platform that was a built to facilitate the creation of lending agreements using blockchain assets as collateral. Through the SALT platform, individuals and businesses are able to access the largely illiquid value of their blockchain assets by putting these assets up as collateral in return for fiat loans. These lending agreements are secure, as their terms are automatically enforced through smart contracts and once a loan is repaid, crypto assets are returned to the borrower. Therefore, the SALT platform is designed for individuals and businesses that are needing immediate cash infusions but are unwilling or unable to liquidate their cryptocurrency holdings.

Source SludgeFeed

It’s important to note that there are no origination fees, closing costs, or prepayment penalties on any fixed rate term loans arranged through the SALT platform, which is very different than traditional lending systems.

Why ZPER is a Smart Investment Choice (NewsBTC), Rated: B

Against this backdrop, P2P financing has now added a new twist with a decentralized P2P finance platform, ZPER. The platform has its basis on blockchain technology and will transcend borders and currency limitations, generating innovation in the global P2P market.

 

India

Fintech Startup Cash Suvidha Raises $ 1 M in Pre-Series A Funding (Next Billion), Rated: AAA

Delhi-based online lending platform Cash Suvidha has raised $1 Mn in a Pre-Series A funding round from Initia Holdings; Vipin Agarwal, Partner in India Industrial Growth Fund and others.

The company will use the funding to increase the loan books of the company and to further strengthen its technological infrastructure.

Peer to Peer Lending Market is Anticipated Significant Growth due to Earliest Adopters of Latest Technologies (Digital Journal), Rated: A

The ‘Global and Chinese Peer to Peer Lending Industry, 2013-2023 Market Research Report’ is a professional and in-depth study on the current state of the global Peer to Peer Lending industry with a focus on the Chinese market. The report provides key statistics on the market status of the Peer to Peer Lending manufacturers and is a valuable source of guidance and direction for companies and individuals interested in the industry.

Firstly, the report provides a basic overview of the industry including its definition, applications and manufacturing technology. Then, the report explores the international and Chinese major industry players in detail. In this part, the report presents the company profile, product specifications, capacity, production value, and 2013-2018 market shares for each company.

Canada

THE VC AND PE MARKETS IN CANADA (AllAboutAlpha), Rated: AAA

The Canadian Venture Capital and Private Equity Association (CVCA) has posted what it calls an “overview” of the VC and PE Markets in that country in 2017. It reports growth in both of those markets, although growth at distinct velocities.

In 2016 there were 542 deals in the PE space. In 2017 there were 603. In 2016 the total valuation of those deals was $13.8 billion. In 2017 nearly twice that, $26.3 billion.

Looking at exits, 2016 was a slump and 2017 was a recovery. In 2016 there were only 33 exits with a total value of $0.6 billion. In 2017, though, there were 39 exits with a total valuation of $1.7 billion. A little arithmetic indicates that the average value of one of those 2017 exits was about $43 million. The average value of one of the 2016 exits was about $18 million.

More about Private Equity

Breaking down the PE highlights by city, the paper tells us that 15% of the action (89 deals totaling $6.7 billion) went to Montreal-based companies. Companies based in Calgary and Montérègie each received a 9% share. This meant 54 deals for Calgary and 53 for Montérègie.

Breaking down the highlights by sector, 19% of the PE deals closed in industry/manufacturing. The next largest share was in information and communications technology (ICT), a 16% share. The report tells us that both of these two top sectors “have been receiving a steadily increasing share of PE deal flow since 2013 when industrial and manufacturing captured only a 14% share” and ICT got 10%.

Download the full report here.

Africa

Blockchain’s big potential in Africa (Venture Beat), Rated: AAA

At the beginning of March, some of the brightest minds from the blockchain world joined representatives from the financial, legal, and global technology industries to discuss widespread blockchain adoption. But the event wasn’t held in fintech hub London, or startup mecca San Francisco. It was in Johannesburg, South Africa, at the fourth edition of the Blockchain Africa conference hosted at the Microsoft HQ.

Emerging blockchain hubs

While still in their early growth stages compared to the crypto hubs in central and eastern Europe and Switzerland, blockchain communities in Kenya, South Africa, Nigeria, and Sudan are growing steady.

BitHub Africa , based in Nairobi, is a blockchain accelerator for local startups founded in December 2015.

Tackling real problems

To date, blockchain adoption has been sporadic across Africa, but the emerging use cases are tackling real social, economic, and political problems affecting hundreds of millions of people every day:

Fighting corruption.

Combatting inflation.  In Zimbabwe, which has seen rapid inflation in recent years, Bitcoin sales have soared as locals rush to protect their savings before they devalue.

Authors:

George Popescu
Allen Taylor

Monday April 2 2018, Daily News Digest

PeerIQ

News Comments Today’s main news: Landbay raises 1.2M GBP on Seedrs. Yirendai issues quarterly earnings results. Betterment boosts human advice. Flender to raise 50M Euro. Cash Suvidha raisess $1M. Today’s main analysis: The VC and PE markets in Canada. Today’s thought-provoking articles: PeerIQ’s credit facility management suite. Is community bank SMB lending eroding? Africa’s big blockchain potential. United States Betterment’s rise […]

PeerIQ

News Comments

United States

United Kingdom

China

European Union

International

India

Other

News Summary

United States

Robo Pioneer Betterment Goes Upscale, Boosts Human Advice (ThinkAdvisor), Rated: AAA

Now with $13.5 billion in assets under management, the firm claims to be the largest independent online financial advisor. Indeed, its high-net-worth offering, or Prime Plan, has been embraced by investors with accounts ranging from $100,000 to many millions, according to Holeman.

Betterment, founded in 2008 as an automated digital-only advice platform, now has 340,000 customers, ranging from millennials to 85-year-olds, with an average age of 37 and an average balance just under $40,000.

How have your fees changed?

Before, we didn’t have the ability to talk with a human advisor; now we have certified financial planners. There are two levels of pricing: the basic digital plan [no minimum account size], which is 0.25% per year and our premium plan [$100,000 minimum account] for 0.4% per year to talk with a certified financial planner on an unlimited basis.

PeerIQ’s Credit Facility Management Suite (PeerIQ), Rated: AAA

US GDP growth for the 4th quarter was revised upwards from 2.5% to 2.9%, capping an impressive 2017. Consumer spending has driven the bulk of GDP growth and it will be relevant to see if this trend continues given the weak retail sales in Q1 and softening in some leading economic indicators. Core PCE, the Fed’s preferred inflation indicator rose 1.8% YoY in February. Personal spending rose 0.2% while incomes rose 0.4% MoM suggesting that Americans are saving more – a long-term positive for growth – although a short-term pressure on retail sales and consumer spending.

PeerIQ’s Credit Facility Management Suite

The Credit Facility Management Suite provides:

  • Dashboard overview of multiple facilities across various asset classes
  • Daily Covenant Calculation and Monitoring
  • Time Series Visualization and Projections
  • Automated Borrowing Base Report Generation
  • Collateral Cashflow Projections
  • Scenario Analysis
Source PeerIQ

 

Is community bank small business lending eroding? (Banking Exchange), Rated: AAA

Quarles, speaking March 26 at a HOPE Global Forum, told of recent meetings he had had with owners of very small businesses. He noted that their comments jibed with trends the central bank has seen. A key one is that small businesses still face gaps in available credit although more than two-thirds of those studied by the Fed request less than $100,000 and many less than $25,000.

Who’s lending to small businesses?

“Large banks’ share of small business lending has grown,” said Quarles, “especially among the smallest loans. This represents a change from 20 years ago when small businesses relied more on a relationship with local community banks for access to credit.”

Quarles shared figures for loans under $100,000. He said that small banks of less than $1 billion hold 19% of such loans—versus 60% two decades ago. By contrast, he said, that 60% share is now held by banks with $50 billion or more in assets.

Quarles next discussed nonbank alternative lenders. This included fintech specialists as well as large technology firms that extend credit to merchants who are part of their customer bases. (Quarles did not mention names, but examples of the former would include online lender Kabbage and the former would include Amazon, which grants credit to small firms that are part of its base.)

Tech ever-widening domain for community banks (Banking Exchange), Rated: A

“Anybody who doesn’t believe that is kidding themselves,” says James Beckwith, president and CEO at $972.8 million-assets Five Star Bank in Rocklin, Calif.

The attractiveness of tech-based marketplace lending, for example, is only going to increase, Beckwith says. Also, payments innovations, going on inside and outside banking, can’t be ignored by consumer or business bankers.

Marlin Secures $ 300,000,000 Forward Flow Agreement to Expand Equipment Financing for Small Businesses (GlobeNewswire), Rated: A

Marlin Business Services Corp. (NASDAQ:MRLN) a leading provider of credit products and services to small businesses, today announced that it has entered into a forward flow sale agreement with Varadero Capital, L.P., a leading alternative asset management firm, to sell up to $300,000,000 in equipment leases and loans to be originated by Marlin.

Technology jobs in the Chicago area are up, but that’s not the whole story (Chicago Tribune), Rated: A

Unlike at Enova, the overall number of technology jobs in the Chicago region grew at a modest pace last year, both at tech firms and in other industries.

Even before Chicago entered the cutthroat competition last fall to win Amazon’s second headquarters, dubbed HQ2, the city promoted the growth. Emanuel’s office issued at least eight news releases in 2017 on technology companies planning to hire. One of them named more than a dozen companies with hiring goals by the end of 2017.

Enova was on that list, with an aim to hire 75. Instead, it brought on 128 new people, raising its total employee count to 1,145.

And analytics was only the second-fastest-growing team at Enova last year.

 

LendIt Fintech USA 2018 Preview Show (Lend Academy), Rated: A

This year we have the LendIt Content Team on the show discussing all the different aspects of the event and how attendees can get the most out of their time at LendIt Fintech USA 2018.

 

United Kingdom

Landbay Returns to Seedrs & Quickly Raises £1.2 Million in Funding (Crowdfund Insider), Rated: AAA

UK-based peer-to-peer lender Landbay has launched another equity crowdfunding campaign on Seedrs and quickly secured more than £1.2 million in funding. This news comes less than a month after the online lending platform announced it hit its £100 million in lending milestone.

Deposit rates are a joke, so investors should consider peer-to-peer lending (The Times), Rated: A

Irish investors who want a regular return on their capital but are not happy to hand their money to the banks — where deposit rates are in the doldrums — have been exploring peer-to-peer (P2P) lending.

EasyMoney launches second IFISA with higher returns (Peer2Peer Finance), Rated: A

EASYMONEY, part of Sir Stelios Haji-Ioannou’s easy family of brands, has launched a second Innovative Finance ISA (IFISA) that offers higher returns than its first tax wrapper.

The recently-launched peer-to-peer lending platform said on Saturday that its ‘balanced’ IFISA allows individuals to invest in a broader range of property-backed loans, with a target interest rate of 7.28 per cent. Loans written for the ‘balanced’ IFISA are limited to 75% loan-to-value (LTV).

China

Yirendai (YRD) Issues Quarterly Earnings Results (The Lincolnian Online), Rated: AAA

Yirendai (NYSE:YRD) announced its earnings results on Wednesday, March 14th. The technology company reported $1.11 EPS for the quarter, topping the consensus estimate of $0.86 by $0.25, Briefing.comreports. Yirendai had a return on equity of 66.32% and a net margin of 24.69%. The company had revenue of $280.50 million for the quarter, compared to analysts’ expectations of $244.27 million.

China’s P2P lenders brace for renewed regulatory crackdown (Financial Times), Rated AAA

Thousands of online lenders could be facing extinction as China rolls out a new licensing framework, amid complaints about a lack of clarity on how the regime will work. The peer-to-peer, or P2P, lending sector is braced for a second regulatory crackdown as a new “record filing” system kicks off in April. But with the first batch of approvals expected by the end of the month, lenders say they are still in the dark on the filing process itself.

The peer-to-peer, or P2P, lending sector is braced for a second regulatory crackdown as a new “record filing” system kicks off in April. But with the first batch of approvals expected by the end of the month, lenders say they are still in the dark on the filing process itself.

 

European Union

Peer-to-peer lending start-up Flender to announce €50m debt round (The Irish Times), Rated: AAA

Dublin-headquartered fintech start-up Flender, whose backers include former EY Entrepreneur of the Year award winner Mark Roden, is set to announce a €50 million debt financing round to fund its expansion.

Having secured more than £500,000 (€569,000) to fund itself through crowdfunding, Flender announced plans to raise a £2 million (€2.2 million) funding round and £20 million (€22.7 million) in leveraged debt finance last August after receiving full authorisation from the UK financial regulator to operate in Britain.

Dutch Startup Aims To Boost Earnings Of P2P Services (Cointelegraph), Rated: A

Dutch Startup “BotBird” is launching a set of services that aims to bring together different aspects of the blockchain. While the services alone are well known amongst crypto investors the set combined might make a big difference in the scene altogether.

Lending

Crypto lending took a flight last year with lending programs popping up nearly every day. The promise was simple: Invest some bitcoin or Ethereum, get the counter value returned in alt coins minted by those lending programs and earn a certain percent of interest daily.

Escrow

Besides the fact that they actually focus on operating a sustainable service by offering a maximum of up to 10% monthly interest they also offer investment protection by 

International

Big banks on notice as tech groups ramp up pressure (Financial Times), Rated: AAA

Technology companies are set to take a big chunk of customers from banks, as they intensify their challenge to traditional lenders across a range of mass-market financial services, say industry executives and analysts. Carlo Messina, chief executive of Intesa Sanpaolo, has told the Financial Times that Italy’s biggest bank by market capitalisation expects to lose market share to digitally focused rivals in many mainstream areas such as payments.

Carlo Messina, chief executive of Intesa Sanpaolo, has told the Financial Times that Italy’s biggest bank by market capitalisation expects to lose market share to digitally focused rivals in many mainstream areas such as payments.

SALT: Leverage Your Blockchain Assets to Secure Cash Loans (SludgeFeed), Rated: A

One such project is SALT, a lending platform that was a built to facilitate the creation of lending agreements using blockchain assets as collateral. Through the SALT platform, individuals and businesses are able to access the largely illiquid value of their blockchain assets by putting these assets up as collateral in return for fiat loans. These lending agreements are secure, as their terms are automatically enforced through smart contracts and once a loan is repaid, crypto assets are returned to the borrower. Therefore, the SALT platform is designed for individuals and businesses that are needing immediate cash infusions but are unwilling or unable to liquidate their cryptocurrency holdings.

Source SludgeFeed

It’s important to note that there are no origination fees, closing costs, or prepayment penalties on any fixed rate term loans arranged through the SALT platform, which is very different than traditional lending systems.

Why ZPER is a Smart Investment Choice (NewsBTC), Rated: B

Against this backdrop, P2P financing has now added a new twist with a decentralized P2P finance platform, ZPER. The platform has its basis on blockchain technology and will transcend borders and currency limitations, generating innovation in the global P2P market.

 

India

Fintech Startup Cash Suvidha Raises $ 1 M in Pre-Series A Funding (Next Billion), Rated: AAA

Delhi-based online lending platform Cash Suvidha has raised $1 Mn in a Pre-Series A funding round from Initia Holdings; Vipin Agarwal, Partner in India Industrial Growth Fund and others.

The company will use the funding to increase the loan books of the company and to further strengthen its technological infrastructure.

Peer to Peer Lending Market is Anticipated Significant Growth due to Earliest Adopters of Latest Technologies (Digital Journal), Rated: A

The ‘Global and Chinese Peer to Peer Lending Industry, 2013-2023 Market Research Report’ is a professional and in-depth study on the current state of the global Peer to Peer Lending industry with a focus on the Chinese market. The report provides key statistics on the market status of the Peer to Peer Lending manufacturers and is a valuable source of guidance and direction for companies and individuals interested in the industry.

Firstly, the report provides a basic overview of the industry including its definition, applications and manufacturing technology. Then, the report explores the international and Chinese major industry players in detail. In this part, the report presents the company profile, product specifications, capacity, production value, and 2013-2018 market shares for each company.

Canada

THE VC AND PE MARKETS IN CANADA (AllAboutAlpha), Rated: AAA

The Canadian Venture Capital and Private Equity Association (CVCA) has posted what it calls an “overview” of the VC and PE Markets in that country in 2017. It reports growth in both of those markets, although growth at distinct velocities.

In 2016 there were 542 deals in the PE space. In 2017 there were 603. In 2016 the total valuation of those deals was $13.8 billion. In 2017 nearly twice that, $26.3 billion.

Looking at exits, 2016 was a slump and 2017 was a recovery. In 2016 there were only 33 exits with a total value of $0.6 billion. In 2017, though, there were 39 exits with a total valuation of $1.7 billion. A little arithmetic indicates that the average value of one of those 2017 exits was about $43 million. The average value of one of the 2016 exits was about $18 million.

More about Private Equity

Breaking down the PE highlights by city, the paper tells us that 15% of the action (89 deals totaling $6.7 billion) went to Montreal-based companies. Companies based in Calgary and Montérègie each received a 9% share. This meant 54 deals for Calgary and 53 for Montérègie.

Breaking down the highlights by sector, 19% of the PE deals closed in industry/manufacturing. The next largest share was in information and communications technology (ICT), a 16% share. The report tells us that both of these two top sectors “have been receiving a steadily increasing share of PE deal flow since 2013 when industrial and manufacturing captured only a 14% share” and ICT got 10%.

Download the full report here.

Africa

Blockchain’s big potential in Africa (Venture Beat), Rated: AAA

At the beginning of March, some of the brightest minds from the blockchain world joined representatives from the financial, legal, and global technology industries to discuss widespread blockchain adoption. But the event wasn’t held in fintech hub London, or startup mecca San Francisco. It was in Johannesburg, South Africa, at the fourth edition of the Blockchain Africa conference hosted at the Microsoft HQ.

Emerging blockchain hubs

While still in their early growth stages compared to the crypto hubs in central and eastern Europe and Switzerland, blockchain communities in Kenya, South Africa, Nigeria, and Sudan are growing steady.

BitHub Africa , based in Nairobi, is a blockchain accelerator for local startups founded in December 2015.

Tackling real problems

To date, blockchain adoption has been sporadic across Africa, but the emerging use cases are tackling real social, economic, and political problems affecting hundreds of millions of people every day:

Fighting corruption.

Combatting inflation.  In Zimbabwe, which has seen rapid inflation in recent years, Bitcoin sales have soared as locals rush to protect their savings before they devalue.

Authors:

George Popescu
Allen Taylor

Monday April 2 2018, Daily News Digest

PeerIQ

News Comments Today’s main news: Landbay raises 1.2M GBP on Seedrs. Yirendai issues quarterly earnings results. Betterment boosts human advice. Flender to raise 50M Euro. Cash Suvidha raisess $1M. Today’s main analysis: The VC and PE markets in Canada. Today’s thought-provoking articles: PeerIQ’s credit facility management suite. Is community bank SMB lending eroding? Africa’s big blockchain potential. United States Betterment’s rise […]

PeerIQ

News Comments

United States

United Kingdom

China

European Union

International

India

Other

News Summary

United States

Robo Pioneer Betterment Goes Upscale, Boosts Human Advice (ThinkAdvisor), Rated: AAA

Now with $13.5 billion in assets under management, the firm claims to be the largest independent online financial advisor. Indeed, its high-net-worth offering, or Prime Plan, has been embraced by investors with accounts ranging from $100,000 to many millions, according to Holeman.

Betterment, founded in 2008 as an automated digital-only advice platform, now has 340,000 customers, ranging from millennials to 85-year-olds, with an average age of 37 and an average balance just under $40,000.

How have your fees changed?

Before, we didn’t have the ability to talk with a human advisor; now we have certified financial planners. There are two levels of pricing: the basic digital plan [no minimum account size], which is 0.25% per year and our premium plan [$100,000 minimum account] for 0.4% per year to talk with a certified financial planner on an unlimited basis.

PeerIQ’s Credit Facility Management Suite (PeerIQ), Rated: AAA

US GDP growth for the 4th quarter was revised upwards from 2.5% to 2.9%, capping an impressive 2017. Consumer spending has driven the bulk of GDP growth and it will be relevant to see if this trend continues given the weak retail sales in Q1 and softening in some leading economic indicators. Core PCE, the Fed’s preferred inflation indicator rose 1.8% YoY in February. Personal spending rose 0.2% while incomes rose 0.4% MoM suggesting that Americans are saving more – a long-term positive for growth – although a short-term pressure on retail sales and consumer spending.

PeerIQ’s Credit Facility Management Suite

The Credit Facility Management Suite provides:

  • Dashboard overview of multiple facilities across various asset classes
  • Daily Covenant Calculation and Monitoring
  • Time Series Visualization and Projections
  • Automated Borrowing Base Report Generation
  • Collateral Cashflow Projections
  • Scenario Analysis
Source PeerIQ

 

Is community bank small business lending eroding? (Banking Exchange), Rated: AAA

Quarles, speaking March 26 at a HOPE Global Forum, told of recent meetings he had had with owners of very small businesses. He noted that their comments jibed with trends the central bank has seen. A key one is that small businesses still face gaps in available credit although more than two-thirds of those studied by the Fed request less than $100,000 and many less than $25,000.

Who’s lending to small businesses?

“Large banks’ share of small business lending has grown,” said Quarles, “especially among the smallest loans. This represents a change from 20 years ago when small businesses relied more on a relationship with local community banks for access to credit.”

Quarles shared figures for loans under $100,000. He said that small banks of less than $1 billion hold 19% of such loans—versus 60% two decades ago. By contrast, he said, that 60% share is now held by banks with $50 billion or more in assets.

Quarles next discussed nonbank alternative lenders. This included fintech specialists as well as large technology firms that extend credit to merchants who are part of their customer bases. (Quarles did not mention names, but examples of the former would include online lender Kabbage and the former would include Amazon, which grants credit to small firms that are part of its base.)

Tech ever-widening domain for community banks (Banking Exchange), Rated: A

“Anybody who doesn’t believe that is kidding themselves,” says James Beckwith, president and CEO at $972.8 million-assets Five Star Bank in Rocklin, Calif.

The attractiveness of tech-based marketplace lending, for example, is only going to increase, Beckwith says. Also, payments innovations, going on inside and outside banking, can’t be ignored by consumer or business bankers.

Marlin Secures $ 300,000,000 Forward Flow Agreement to Expand Equipment Financing for Small Businesses (GlobeNewswire), Rated: A

Marlin Business Services Corp. (NASDAQ:MRLN) a leading provider of credit products and services to small businesses, today announced that it has entered into a forward flow sale agreement with Varadero Capital, L.P., a leading alternative asset management firm, to sell up to $300,000,000 in equipment leases and loans to be originated by Marlin.

Technology jobs in the Chicago area are up, but that’s not the whole story (Chicago Tribune), Rated: A

Unlike at Enova, the overall number of technology jobs in the Chicago region grew at a modest pace last year, both at tech firms and in other industries.

Even before Chicago entered the cutthroat competition last fall to win Amazon’s second headquarters, dubbed HQ2, the city promoted the growth. Emanuel’s office issued at least eight news releases in 2017 on technology companies planning to hire. One of them named more than a dozen companies with hiring goals by the end of 2017.

Enova was on that list, with an aim to hire 75. Instead, it brought on 128 new people, raising its total employee count to 1,145.

And analytics was only the second-fastest-growing team at Enova last year.

 

LendIt Fintech USA 2018 Preview Show (Lend Academy), Rated: A

This year we have the LendIt Content Team on the show discussing all the different aspects of the event and how attendees can get the most out of their time at LendIt Fintech USA 2018.

 

United Kingdom

Landbay Returns to Seedrs & Quickly Raises £1.2 Million in Funding (Crowdfund Insider), Rated: AAA

UK-based peer-to-peer lender Landbay has launched another equity crowdfunding campaign on Seedrs and quickly secured more than £1.2 million in funding. This news comes less than a month after the online lending platform announced it hit its £100 million in lending milestone.

Deposit rates are a joke, so investors should consider peer-to-peer lending (The Times), Rated: A

Irish investors who want a regular return on their capital but are not happy to hand their money to the banks — where deposit rates are in the doldrums — have been exploring peer-to-peer (P2P) lending.

EasyMoney launches second IFISA with higher returns (Peer2Peer Finance), Rated: A

EASYMONEY, part of Sir Stelios Haji-Ioannou’s easy family of brands, has launched a second Innovative Finance ISA (IFISA) that offers higher returns than its first tax wrapper.

The recently-launched peer-to-peer lending platform said on Saturday that its ‘balanced’ IFISA allows individuals to invest in a broader range of property-backed loans, with a target interest rate of 7.28 per cent. Loans written for the ‘balanced’ IFISA are limited to 75% loan-to-value (LTV).

China

Yirendai (YRD) Issues Quarterly Earnings Results (The Lincolnian Online), Rated: AAA

Yirendai (NYSE:YRD) announced its earnings results on Wednesday, March 14th. The technology company reported $1.11 EPS for the quarter, topping the consensus estimate of $0.86 by $0.25, Briefing.comreports. Yirendai had a return on equity of 66.32% and a net margin of 24.69%. The company had revenue of $280.50 million for the quarter, compared to analysts’ expectations of $244.27 million.

China’s P2P lenders brace for renewed regulatory crackdown (Financial Times), Rated AAA

Thousands of online lenders could be facing extinction as China rolls out a new licensing framework, amid complaints about a lack of clarity on how the regime will work. The peer-to-peer, or P2P, lending sector is braced for a second regulatory crackdown as a new “record filing” system kicks off in April. But with the first batch of approvals expected by the end of the month, lenders say they are still in the dark on the filing process itself.

The peer-to-peer, or P2P, lending sector is braced for a second regulatory crackdown as a new “record filing” system kicks off in April. But with the first batch of approvals expected by the end of the month, lenders say they are still in the dark on the filing process itself.

 

European Union

Peer-to-peer lending start-up Flender to announce €50m debt round (The Irish Times), Rated: AAA

Dublin-headquartered fintech start-up Flender, whose backers include former EY Entrepreneur of the Year award winner Mark Roden, is set to announce a €50 million debt financing round to fund its expansion.

Having secured more than £500,000 (€569,000) to fund itself through crowdfunding, Flender announced plans to raise a £2 million (€2.2 million) funding round and £20 million (€22.7 million) in leveraged debt finance last August after receiving full authorisation from the UK financial regulator to operate in Britain.

Dutch Startup Aims To Boost Earnings Of P2P Services (Cointelegraph), Rated: A

Dutch Startup “BotBird” is launching a set of services that aims to bring together different aspects of the blockchain. While the services alone are well known amongst crypto investors the set combined might make a big difference in the scene altogether.

Lending

Crypto lending took a flight last year with lending programs popping up nearly every day. The promise was simple: Invest some bitcoin or Ethereum, get the counter value returned in alt coins minted by those lending programs and earn a certain percent of interest daily.

Escrow

Besides the fact that they actually focus on operating a sustainable service by offering a maximum of up to 10% monthly interest they also offer investment protection by 

International

Big banks on notice as tech groups ramp up pressure (Financial Times), Rated: AAA

Technology companies are set to take a big chunk of customers from banks, as they intensify their challenge to traditional lenders across a range of mass-market financial services, say industry executives and analysts. Carlo Messina, chief executive of Intesa Sanpaolo, has told the Financial Times that Italy’s biggest bank by market capitalisation expects to lose market share to digitally focused rivals in many mainstream areas such as payments.

Carlo Messina, chief executive of Intesa Sanpaolo, has told the Financial Times that Italy’s biggest bank by market capitalisation expects to lose market share to digitally focused rivals in many mainstream areas such as payments.

SALT: Leverage Your Blockchain Assets to Secure Cash Loans (SludgeFeed), Rated: A

One such project is SALT, a lending platform that was a built to facilitate the creation of lending agreements using blockchain assets as collateral. Through the SALT platform, individuals and businesses are able to access the largely illiquid value of their blockchain assets by putting these assets up as collateral in return for fiat loans. These lending agreements are secure, as their terms are automatically enforced through smart contracts and once a loan is repaid, crypto assets are returned to the borrower. Therefore, the SALT platform is designed for individuals and businesses that are needing immediate cash infusions but are unwilling or unable to liquidate their cryptocurrency holdings.

Source SludgeFeed

It’s important to note that there are no origination fees, closing costs, or prepayment penalties on any fixed rate term loans arranged through the SALT platform, which is very different than traditional lending systems.

Why ZPER is a Smart Investment Choice (NewsBTC), Rated: B

Against this backdrop, P2P financing has now added a new twist with a decentralized P2P finance platform, ZPER. The platform has its basis on blockchain technology and will transcend borders and currency limitations, generating innovation in the global P2P market.

 

India

Fintech Startup Cash Suvidha Raises $ 1 M in Pre-Series A Funding (Next Billion), Rated: AAA

Delhi-based online lending platform Cash Suvidha has raised $1 Mn in a Pre-Series A funding round from Initia Holdings; Vipin Agarwal, Partner in India Industrial Growth Fund and others.

The company will use the funding to increase the loan books of the company and to further strengthen its technological infrastructure.

Peer to Peer Lending Market is Anticipated Significant Growth due to Earliest Adopters of Latest Technologies (Digital Journal), Rated: A

The ‘Global and Chinese Peer to Peer Lending Industry, 2013-2023 Market Research Report’ is a professional and in-depth study on the current state of the global Peer to Peer Lending industry with a focus on the Chinese market. The report provides key statistics on the market status of the Peer to Peer Lending manufacturers and is a valuable source of guidance and direction for companies and individuals interested in the industry.

Firstly, the report provides a basic overview of the industry including its definition, applications and manufacturing technology. Then, the report explores the international and Chinese major industry players in detail. In this part, the report presents the company profile, product specifications, capacity, production value, and 2013-2018 market shares for each company.

Canada

THE VC AND PE MARKETS IN CANADA (AllAboutAlpha), Rated: AAA

The Canadian Venture Capital and Private Equity Association (CVCA) has posted what it calls an “overview” of the VC and PE Markets in that country in 2017. It reports growth in both of those markets, although growth at distinct velocities.

In 2016 there were 542 deals in the PE space. In 2017 there were 603. In 2016 the total valuation of those deals was $13.8 billion. In 2017 nearly twice that, $26.3 billion.

Looking at exits, 2016 was a slump and 2017 was a recovery. In 2016 there were only 33 exits with a total value of $0.6 billion. In 2017, though, there were 39 exits with a total valuation of $1.7 billion. A little arithmetic indicates that the average value of one of those 2017 exits was about $43 million. The average value of one of the 2016 exits was about $18 million.

More about Private Equity

Breaking down the PE highlights by city, the paper tells us that 15% of the action (89 deals totaling $6.7 billion) went to Montreal-based companies. Companies based in Calgary and Montérègie each received a 9% share. This meant 54 deals for Calgary and 53 for Montérègie.

Breaking down the highlights by sector, 19% of the PE deals closed in industry/manufacturing. The next largest share was in information and communications technology (ICT), a 16% share. The report tells us that both of these two top sectors “have been receiving a steadily increasing share of PE deal flow since 2013 when industrial and manufacturing captured only a 14% share” and ICT got 10%.

Download the full report here.

Africa

Blockchain’s big potential in Africa (Venture Beat), Rated: AAA

At the beginning of March, some of the brightest minds from the blockchain world joined representatives from the financial, legal, and global technology industries to discuss widespread blockchain adoption. But the event wasn’t held in fintech hub London, or startup mecca San Francisco. It was in Johannesburg, South Africa, at the fourth edition of the Blockchain Africa conference hosted at the Microsoft HQ.

Emerging blockchain hubs

While still in their early growth stages compared to the crypto hubs in central and eastern Europe and Switzerland, blockchain communities in Kenya, South Africa, Nigeria, and Sudan are growing steady.

BitHub Africa , based in Nairobi, is a blockchain accelerator for local startups founded in December 2015.

Tackling real problems

To date, blockchain adoption has been sporadic across Africa, but the emerging use cases are tackling real social, economic, and political problems affecting hundreds of millions of people every day:

Fighting corruption.

Combatting inflation.  In Zimbabwe, which has seen rapid inflation in recent years, Bitcoin sales have soared as locals rush to protect their savings before they devalue.

Authors:

George Popescu
Allen Taylor

Impact of Interest Rates on P2P Lenders

bank of england base rate

Every time there are talks of a rise in interest rates, financial institutions go into a frenzy. The 2008 recession had forced central banks around the world to drop their rates to historical lows. But with the global economy stabilizing, the US Fed and other central banks have started tightening rates. We will be covering […]

bank of england base rate

Every time there are talks of a rise in interest rates, financial institutions go into a frenzy. The 2008 recession had forced central banks around the world to drop their rates to historical lows. But with the global economy stabilizing, the US Fed and other central banks have started tightening rates. We will be covering effects of the rising interest rates on three of the biggest P2P markets in the world: the UK, US, and China.

United Kingdom

Last year, Bank of England (BoE) reduced the interest rate by 0.25 percent along with a sling of monetary policies to encourage growth. But in October of this year, BoE increased the interest rate, though only marginally by 0.25%. Both of these times, banks and other financial institutions immediately reviewed the mortgage and saving rates, and the effect was passed on to customers. But the change is too small to have any damaging effect on P2P lenders.

Source:

 

Moreover, P2P lenders do not fall directly under the scope of BoE, hence, are not immediately affected by the BoE base rate. Lender return is directly proportional to the demand and supply in the market. For the short term, P2P lenders will not be making any headline-grabbing changes to their rate structure. If the rate does end up crossing 2%, the P2P market will definitely ring up some changes in their rate structure.

Zopa, the pioneering UK-based P2P platform, was able to thrive even when rates were above 5%. But the real reason P2P gained a substantial foothold in the UK was because of the low yield environment. With saving rates below inflation, money lost its value over a period of time when held in savings accounts. This prompted people to go for P2P platforms as alternative saving options even though it had a way higher percentage of risk attached to it. If rates do reach a certain level, the lender might go for the safer option of saving accounts returns rather than the high-risk high-profit approach offered by P2P platforms. But if P2P lending is considered an investment, the yield will always be attractive for a certain class of investors.

United States

During the last decade, the US economy endured the worst financial recession in 80 years. And to counter that, the Fed dropped the rates to 0-0.25% for an extended period of time. But with US unemployment rates at multi-decade lows, the rate has been slowly yet steadily hiked to a range between 1%-1.25%.

Impact of increase in the interest rates

Lending Club, the largest P2P platform in the United States, has mentioned in its prospectus the adverse effect hike in interest rate will have on its business

“… fluctuations in the interest rate environment may discourage investors and borrowers from participating in our marketplace, which may adversely affect our business.”

Many retail investors use the P2P platform as an investment option. Since they lend directly to the borrowers, the non-involvement of the intermediaries allows them to enjoy handsome returns as compared to returns they get for depositing into saving accounts.

Source:

As the chart above clearly depicts, a number of delinquencies are directly impacted by the increase in the interest rate. The higher the interest rates, the higher are delinquencies. Thus, the low rate environment had led to lower delinquencies. But now, there is a growing fear that a hike in interest rates will be detrimental to peer-to-peer lending platforms.

Ben McLannahan of the Financial Times believes that an increase in Fed rates can actually devastate the nascent peer-to-peer lending industry.

  1. Increasing default rates for peer-to-peer lending notes might trigger an exodus by institutional investors, thus triggering liquidity concerns and
  2. Traditional investment options would see returns revert to historical means, rendering moot the allure of higher returns offered by the p2p industry. (Source)

China

China is one of the biggest markets in terms of size and population. Even new regulations and the crackdown by authorities cannot halt China’s P2P market juggernaut. In March this year, it crossed $130 billion (Rmb 900bn), and it is widely expected that lending will cross Rmb 1 trillion mark this year.

With outstanding loans weighing heavy on the balance sheets of lenders, the regulatory body PBOC is worried this will lead to yet another economic recession, and that is the reason it is clamping down on the P2P industry. For the most part of its journey, the P2P industry in China has been unregulated. The sudden onslaught of regulators led to a major decline in the number of players. Case in point: There were 2,281 P2P platforms in the country, and now the number has come down to 331.

Interest Rates

The basic interest rate is hovering around 4.35 percent. Chinese regulators believe the global economic situation is still shaky, therefore, raising the open market rate is much more appropriate than raising the benchmark rates. In February this year, PBOC raised the interest rate on open market operation to reverse repurchase agreements (repos) by 10 basis points, and furthermore, it increased the lending rates on standing lending facility (SLF). The overnight rate for the SLF loan was raised to 3.1 percent from 2.75 percent. The SLF rate acts as a de facto ceiling for interbank lending.

Source:

A change in short and medium lending rates were executed to address the rapid build-up in debt and to safeguard the economy against the consequent financial risk. Increase in interest rates along with regulatory reforms being put in place by PBOC will help the industry to grow in a safe and structured environment.

Conclusion

Rising interest rates pose a threat to the P2P industry as the initial adoption was triggered by the low yield offered by traditional banks. P2P lenders were able to circumvent this and offer a win-win for both borrowers and lenders. With interest rates inching up, many feel the P2P lenders will be facing higher delinquency and lower investor interest. But this does not take into account the evolution of the industry; the players have been extremely nimble and understand the predicament facing them. Many have tightened lending norms, and almost all players now have long-term institutional money on board. With credit algorithms leveraging artificial intelligence and machine learning, profitability for the nascent industry is not a distant dream. In such a scenario, interest rates offered by P2P lenders will adapt to the demand-supply ratio in the market.

Author:

Written by Heena Dhir.

Wednesday September 20 2017, Daily News Digest

low credit scores

News Comments Today’s main news: PayPal to fully integrate Swift Financial after closing acquisition.GoCardless raises $22.5M.Qudian poising for U.S. IPO.Varengold Bank AG to give $61M to MarketInvoice.Bondora hits 100M Euro milestone.Reserve Bank of India to treat P2P lenders as non-banking financial companies. Today’s main analysis: Public distrusts regulators as much as Wall Street.(a must-read) Today’s […]

low credit scores

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Latin America

Africa

News Summary

United States

PayPal will fully integrate Swift Financial ‘over the next year’ after loan provider acquisition closes (VentureBeat), Rated: AAA

A little over one month after revealing plans to acquire Swift Financial, PayPal has announced that the deal is now complete.

PayPal said that it plans to fully integrate Swift Financial into its payment service “over the course of the next year,” according to Darrell Esch, PayPal’s vice president and commercial officer of global credit, in a blog post.

PayPal has actually offered a working capital program for lending money to small businesses since 2013, and it has loaned more than $3 billion through the program to date. This compares to the $3 billion Amazon has loaned SMEs since the launch of Amazon Lending back in 2011, and the $1.5 billion in loans Square has doled out since launching Square Capital in 2014.

Public Distrusts Wall Street Regulators as Much as Wall Street (Cato.org), Rated: AAA

The new Cato Institute 2017 Financial Regulation national survey of 2,000 U.S. adults released today finds that Americans distrust government financial regulators as much as they distrust Wall Street. Nearly half (48%) have “hardly any confidence” in either.

Americans have a love-hate relationship with regulators. Most believe regulators are ineffective, selfish, and biased:

  • 74% of Americans believe regulations often fail to have their intended effect.
  • 75% believe government financial regulators care more about their own jobs and ambitions than about the well-being of Americans.
  • 80% think regulators allow political biases to impact their judgment.

But most also believe regulation can serve some important functions:

  • 59% believe regulations, at least in the past, have produced positive benefits.
  • 56% say regulations can help make businesses more responsive to people’s needs.

Americans want regulators to focus on preventing banks and financial institutions from committing fraud (65%) and ensuring banks and financial institutions fulfill their obligations to customers (56%).

  • 77% believe bankers would harm consumers if they thought they could make a lot of money doing so and get away with it.
  • 64% think Wall Street bankers “get paid huge amounts of money” for “essentially tricking people.”
  • Nearly half (49%) of Americans worry that corruption in the industry is “widespread” rather than limited to a few institutions.
Source: Cato Institute

Few Americans Want “More” Financial Regulations—They Want the Right Kinds of Regulations, Properly Enforced

Polls routinely find that a plurality or majority of Americans want more oversight of Wall Street banks and financial institutions. This survey is no different. A plurality (41%) of Americans think more oversight of the financial industry is needed. However, only 18% think the problem with federal oversight of the banking industry is that there are “too few” rules on Wall Street. Instead, 63% say the government either fails to “properly enforce existing rules” (40%) or enacts the “wrong kinds” of regulations on big banks (23%).

Despite Distrust of Wall Street, Americans Like Their Own Banks and Financial Institutions

  • 90% are satisfied with their personal bank; 76% believe their bank has given them good information about the rates and risks associated with their account.
  • 87% are satisfied with their credit card issuer; 81% believe their credit card issuer has given them good information about the rates, fees, and risks associated with their card.
  • 83% are satisfied with their mortgage lender.
  • Of those who have used payday or installment lenders in the past year, 63% believe the lender gave them good information about the fees and risks associated with the loan.
Source: Cato Institute

Democrats and Republicans Want a Bipartisan Commission to Run CFPB, Divided on CFPB Independence

  • Nearly two-thirds (63%) of Americans think the CFPB should be run by a bipartisan commission of Democrats and Republicans, rather than by a single director. Support is post-partisan with 67% of Democrats and 64% of Republicans in favor of a bipartisan commission leading the agency.
  • A majority (54%) of Americans think that Congress should not set the CFPB’s budget and should only have limited oversight of the agency.
  • Few Americans (26%) believe the CFPB has achieved its mission to make the terms and conditions of credit cards and financial products easier to understand. Instead, 71% say that since the CFPB was created in 2011 credit card terms and conditions have not become easier to understand—including 54% who believe they have stayed the same and 17% who think they have become less clear.

Most Support Risk-Based Pricing for Loans, Say Low Credit Scores are Due to Irresponsibility

Nearly three-fourths of Americans (74%) say they’d be “unwilling” to pay more for their home mortgage, car loan, or student loan to help those with low credit scores access these loans.

Source: Cato Institute

PayPal Officially Adds Swift Financial to Fuel More Dreams (PayPal), Rated: A

The acquisition will expand PayPal’s ability to provide access to business financing options to the millions of small business owners who rely on PayPal and our partner platforms to run their businesses. As we’ve said before, increasing access to capital is vital to the success of small businesses and is a strategic offering for PayPal, which drives merchants’ sales growth, increases processing volume, and reduces merchant churn.

A Manifesto to All Men: We Have to Do Better (Lend Academy), Rated: AAA

Like many of you I was shocked and infuriated by the news out of SoFi last week. I think we all expected better from the company and its leaders. Some of the behavior that has been reported is reprehensible and it points to a much deeper problem that goes way beyond fintech. The problem of sexual harassment in the workplace is bigger than any one company, any one industry or even any one country. It is rampant throughout the globe.

Men: we cannot keep behaving this way.

I have been drinking at the bar late at night at enough conferences to know that many men believe it is still ok to treat women as objects. This kind of attitude has consequences in the workplace. And if the leaders of the company condone this behavior there will be a culture that is at best unwelcoming towards women and at worst so toxic it can endanger the very survival of the company.

Women in Fintech

People often complain to me about the lack of women in fintech. People say that LendIt does not have enough female speakers and there are not enough women in general at our events.

This article is the first step in what I expect will be a long journey towards making fintech a more welcoming place for women. I want to see us do better as an industry. We should do everything we can to make fintech an attractive career choice for young women. We have several initiatives around this that are in the planning stages that we hope to roll out at LendIt USA in San Francisco next year.

Today In Data: SoFi’s Woes (PYMNTS), Rated: A

In addition, there are rumors circulating that improperly funded SoFi loan products were sold to investors.

Here are the numbers:

  • $4 billion | Valuation of SoFi as of Sept. 15
  • $3.1 billion | Value of loans funded by SoFi in Q2 2017
  • $1.9 billion | Total venture capital funding raised by investors like Baseline Ventures, Discovery Capital and SoftBank
  • $134 million | SoFi revenue generated in Q2 2017
  • 350,000 | Number of borrowers who have used SoFi’s lending services, totaling more than $20 billion in loans
  • $75,000 | Settlement SoFi reached with a former executive assistant, as detailed by The New York Times
  • 30 | Number of employees who have leveled accusations against SoFi’s former CEO

Sallie Krawcheck’s Ellevest just landed a big new round of funding (TechCrunch), Rated: A

Ellevest, a nearly three-year-old, New York-based digital investment platform built for women and led by former Wall Street titan Sallie Krawcheck, has raised $34.6 million in fresh funding.

It’s technically a Series A round, according to the company, which says a widely reported $10 million round that closed last year was seed capital.

The round — which was led by Rethink Impact, and includes participation from PSP Growth, Salesforce Ventures, CreditEase Fintech Investment Fund, LH Holdings, SK Impact Fund, Morningstar, Khosla Ventures, Mellody Hobson, Ulu Ventures, Contour Venture Partners and Astia Angels — brings the company’s total funding to $44.6 million.

Ant Financial to try again for U.S. approval of MoneyGram deal (Reuters), Rated: A

Chinese payments company Ant Financial is planning to resubmit its application for U.S. review of its deal to buy MoneyGram International Inc (MGI.O) for $1.2 billion, a source familiar with the matter said on Friday.

Ant Financial and MoneyGram have already refiled for clearance from Committee on Foreign Investment in the United States (CFIUS) when they were unable to secure it within an assessment period after the first application, Reuters reported in July, citing sources.

Ant Financial’s latest attempt for approval would be its third as the maximum time of 75 days for assessing such applications nears completion.

JPMorgan Seeks to Banish Paper Payments With a Fintech Venture (Bloomberg), Rated: A

JPMorgan Chase & Co. is partnering with another fast-growing technology firm, this time to help business clients eradicate paper checks.

The bank is working with Bill.com, the largest U.S. business-to-business payments network, to enable customers to send and receive electronic payments and invoices, according to Stephen Markwell, a product strategy head for JPMorgan’s commercial bank. The New York-based lender will pilot the service in early 2018 and plans to offer it to more business and commercial clients later in that year, Markwell said.

While many consumers already are embracing digital tools for sending money, like PayPal Inc.’s Venmo or the banking industry’s Zelle, more than half of business payments are still via check, according to Markwell. Companies write 8 billion checks a year, each costing about $4 to print and handle, he said.

In an ongoing acquisition streak, LendingTree buys another online loan marketplace (Biz Journals), Rated: A

LendingTree Inc. (NASDAQ:TREE) has acquired an online loan platform for businesses called Snap Capital, known as SnapCap, in a potential $21 million deal. SnapCap is LendingTree’s fifth acquisition since June of 2016.

LendingTree says the acquisition has a potential value of $21 million. The online marketplace will pay $12 million in cash upfront and if SnapCap hits certain performance targets over time, it will receive contingent payments of up to $9 million.

Charlotte-based LendingTree has been diversifying its business over the last several years beyond mortgages. And its stock price has been on the rise as a result. LendingTree’s stock was up about 7% Tuesday afternoon after the acquisition announcement. The company’s shares were trading at $251 Tuesday afternoon, up from about $93 per share a year ago.

LendingPoint Closed On $ 500M Credit Facility In August (PYMNTS), Rated: A

Online lender LendingPoint announced Tuesday (Sept. 19) that it had closed an up to $500 million credit facility on Aug. 22.

In a press release, the company said the credit facility was arranged by Guggenheim Securities. LendingPoint noted it drew down $138.5 million of the facility at the closing, and it took an additional $32.7 million on Sept. 15. The proceeds are being earmarked to bankroll the growth of its consumer installment loan portfolio, a business element which has roughly doubled between August 2016 and August 2017.

According to the company, the up to $500 million credit facility is among the largest credit facilities raised in the online consumer lending market in 2017.

Pine River Capital Shutting $ 1 Billion Flagship Hedge Fund (WSJ), Rated: A

Pine River Capital Management is closing its $1 billion flagship hedge fund after clients asked to withdraw more money than the firm was expecting, according to a person familiar with the matter.

The move will further shrink the Minnetonka, Minn.-based firm’s assets under management to $7.5 billion, half the roughly $15 billion it managed in 2015.

Don’t let court squander online lenders’ chance to reach underserved (American Banker), Rated: A

Most of the country has never heard of Madden v. Midland Funding and the common law doctrine of “valid-when-made,” but the impact of the misguided decision by the 2nd U.S. Circuit Court of Appeals on consumers is far-reaching.

Rate exportation has been key to the rise of standardized nationwide financial products, like credit cards, allowing banks to lend to borrowers across state lines without necessarily establishing a physical presence in every state, giving consumers better choices.

Following the Madden decision, it is unclear in the 2nd Circuit whether certain bank loans transferred to a marketplace lending platform would be ruled valid or not. Are loans bound by the bank’s “home” state rate cap, or the borrower’s “host” state rate cap? No one knows for sure. This legal uncertainty has caused nonbank investors in these loans to pull back, which, in turn, has led to a reduction in responsible and affordable online lending. Borrowers who are still trying to build credit have lost better options. According to an August study by professors at the Columbia, Stanford and Fordham law schools, “the decision reduced credit availability for higher-risk borrowers in affected states.”

Reliant Funding and Merchants Capital Access to be known as Reliant Funding (PR Newswire), Rated: A

San Diego-based Reliant Funding and New York-based Merchants Capital Access are now joined as one under the Reliant Funding name.

Four Facts about Reliant Funding

  • Reliant Funding’s business model provides access to capital for businesses that traditional banking typically does not serve. With innovative pricing and cutting-edge risk management, it gives businesses the fuel they need to penetrate their market and grow.
  • Since its founding, Reliant has funded businesses over thirty thousand times, providing over $900 million in working capital to America’s small businesses.
  • Reliant Funding speaks directly with thousands of American small and medium sized businesses each month and services thousands more. The focus is always on the individual client, their business story and meeting their needs.
  • Reliant Funding’s Wholesale Division currently works with hundreds of partners, providing them with funding for their clients as if those clients were directly originated in-house. The key is a commitment to strategic alliances, ensuring the relationship lasts longer than a single transaction. It’s just one aspect of many which sets Reliant Funding apart from the competition.

Randstad Professionals addresses technology’s impact on finance and accounting (Business Insider), Rated: A

Cloud computing, big data and financial technologies have raised the stakes for finance and accounting professionals according to Randstad Professionals‘ new whitepaper, Technology’s Impact on Finance and Accounting.

There are three broad areas in which emerging technologies and digital tools are causing significant disruption to the way things are done:

 

  • Breaking down big data for strategy: Finance and accounting employees can use big data to their advantage by forecasting trends, pinpointing behavioral patterns and suggesting probable outcomes — all of which can tie into a company’s strategy and impact their bottom line.
  • Leaving repetitive work to the cloud: Cloud actions have the ability to handle inventory management, generate invoices and provide accurate financial data. The software also delivers convenience for employees who want to digitally share company finances among coworkers, financial advisors, customers and other key stakeholders at a moment’s notice.
  • Putting the functionality in finance: Finance is making its way into fixed markets that provide mobile phone applications and access on everyday devices. Over the years, we have revolutionized how we pay, view our bank statements and transfer money through start-ups such as Bitcoin and Linden Dollar. Technologies that also integrate peer-to-peer lending or personal loan requests allow for a frictionless experience for customers.

 

Opponents Ready For US Payday Loan Rule (America Now), Rated: A

The Consumer Financial Protection Bureau (CFPB) is expected in coming days to release a long-anticipated rule curbing payday lending, now that a final review by other regulatory agencies has concluded, three people familiar with the matter said.

The rule pits the country’s consumer financial watchdog against payday lenders who say the new regulation will wipe out much of their established industry, currently overseen by the states, and push poor and rural customers to use illegal loan sharks.

Because the loans can carry interest rates as high as 390 percent, borrowers can become trapped in devastating cycles of taking out new loans to pay outstanding ones, the CFPB said.

When The Payday Lending Rule Drops, Opponents Are Ready To Attack (PYMNTS), Rated: A

Payday and short-term lending is an approximately $6 billion-a-year industry, one that both critics and supporters of payday lending agree will take a major hit if the CFPB’s proposed rules on payday lending go through.

To make that block happen, Republicans in the House of Representatives added a “rider,” or amendment, to a spending bill banning the CFPB from regulating the payday loan industry.

The CFPB rules on payday lending have been in the works for some time and would require lenders to conduct background checks showing borrowers can afford the loans and to limit the number of loans made to a single borrower.

First Associates Loan Servicing Earns Morningstar’s Highest Ranking  (PR Web), Rated: B

First Associates Loan Servicing announced today the release of the Morningstar ranking report certifying their overall excellence in loan servicing. Morningstar awarded First Associates a MOR RV1 ranking of ‘stable’ which is the highest certification possible and deeply assesses risk management, call center performance, quality assurance, technology, security protocols, project management and disaster recovery protocols.

Low-cost loans help hurricane victims rebuild (TheStreet), Rated: B

Since the majority of consumers lacked insurance coverage for flood damage, the costs keep adding up from replacing furniture and appliances to renting another home or apartment until the costly repairs are completed.

The Small Business Administration offers both homeowners and renters disaster loans ranging from 1.75% to 3.5% of up to $40,000 for property damage such as furniture, clothing, cars and appliances and up to $200,000 for repairs to the house.

Using money from your IRA or 401(k) account is likely a better option than asking friends or family or seeking a loan from a payday lender.

RealtyShares Gives Investors Access To Real Estate With Just A Few Clicks (Benzinga), Rated: B

What makes it so diverse? The markets available or the types of real estate?

Amy Kirsch: All of the above. We’ve done deals in 39 states, we offer debt and equity, commercial and residential, and we’ve done basically every asset class.

Do you have a minimum for investment?

The lowest limit we have now is $5,000, but it varies on how large of a fundraise we’re completing.

What’s innovative about RealtyShares? The technology, or what it lets you access?
A combination of both—I’ve invested in real estate in the past, and it’s always come through people I knew, and it was concentrated to where I was living at the time. When you’re looking at middle-market opportunities or don’t have hundreds millions of dollars to invest, the opportunities become a little more rare. So access is definitely a differentiator here.

Prime-Ex Perpetual Launches Pre-ICO for Residential Real Estate Crowdfunding Effort (EIN News), Rated: B

On Monday, Prime-Ex Perpetual‘s real estate crowdfunding effort began in earnest with the launch of their PEX-Token cryptocurrency sale, aimed at generating $25,000,000 in USD equivalent cryptocurrencies. The PEX-Token is a dividend token in which the company will pay 80% of company profits back to the PEX-Token holders. Beginning Monday people purchasing PEX-Tokens will receive 15% bonus PEX-Tokens for purchasing PEX-Tokens early.

United Kingdom

GoCardless, a fintech that makes recurring payments easy for subscription businesses, raises $ 22.5M (TechCrunch), Rated: AAA

Once again, Accel, Balderton Capital, Notion, and Passion are backing GoCardless, this time to the tune of $22.5 million and on the back of what the startup says is record annual growth in the U.K. and strong, early traction in new markets. Outside of Blighty, the company operates its bank-to-bank payments network in the Eurozone and Sweden.

GoCardless isn’t disclosing revenue. Instead the company says it processes over $4bn worth of transactions across more than 30,000 organisations in the U.K. and Europe, working with small startups and large enterprises across a number of industries. It offers an API and off the shelf integrations with over 100 partners including Xero, Sage and Zuora. Customers include Sage, Thomas Cook, Box and The Guardian.

Artificial intelligence: the legal and regulatory challenges (Lexology), Rated: A

Artificial intelligence (AI) will soon be everywhere. The insurance industry is facing huge changes as AI steps boldly into every aspect of its internal operations and external relationships wearing the bright new clothes of InsurTech.

It has brought new players into the insurance market with some, like Lemonade, the world’s first peer-to-peer insurance carrier powered by AI and behavioural economics, experiencing phenomenal growth over a very short time.

It is estimated that around £1.32 billion was invested globally in the InsurTech arena in 2016, up 32% on the previous year. The lion’s share of this was in the United States but the UK and Europe are increasing their investment (see chart below).

Other innovations, such as fractional insurance where customers buy on a pay-as-you-go basis or peer-to-peer insurance, will have a deeper impact.

For Rutter, one of the key cultural challenges for the insurance industry is going to be its cautious approach to regulation.

he Financial Conduct Authority is the lead regulator in this area and it has been trying to engage the industry, setting up a ‘sandbox’ to encourage insurers to work with it to explore the impact of regulation on technological innovation. In particular, it will be aiming to test the boundaries of legislation such as the Insurance Distribution Directive (IDD).

There will be some InsurTech applications that get it wrong, predicts Rutter, potentially selling large numbers of policies to the very people underwriters don’t want on their books: “Insurers need to understand that once automated decisions have been made, you can’t pull back from them by cancelling policies. That is hardly treating customers fairly”.

Source: Lexology

Peer-to-peer lending: should you be worried about falling returns and the poorly-performing Innovative Finance ISA? (love money), Rated: A

Falling returns, big loans going bad and news that new Innovative Finance ISA has failed to attract investors is leaving questions hanging over the future of peer-to-peer lending.

The bad news began last month when RateSetter, one of the biggest peer-to-peer lenders, was forced to cough up nearly £9 million to stop customers losing money after a big loan went wrong.

It’s not just Ratesetter

At the same time, another peer-to-peer lender is coming under fire from its customers. Zopa is being criticised by customers who are seeing falling returns on their investments.

Paltry take up on the Innovative Finance ISA

Finally, interest in the new Innovative Finance ISA (IFISA) has been disappointing. New stats from HMRC shows that just 2,000 IFISAs were opened in the 2016/17 tax year.

Abundance boss joins government’s Green Finance Taskforce (AltFi), Rated: B

Bruce Davis, co-founder and MD of green energy-focused P2P platform Abundance, has been appointed to the government’s Green Energy Taskforce. The group has been set up to help accelerate the growth of green finance and the UK’s low carbon economy.

Abundance is the UK’s biggest green energy-centric peer-to-peer site, with roughly £50m in finance facilitated for projects to date, according to AltFi Data. Its investors are able to invest in debentures for projects such as wind turbines and solar farms, and can hold those investments in an Innovative Finance ISA.

China

Online lender Qudian set for New York IPO (China Economic Review), Rated: AAA

Online consumer microlender Qudian said it plans to raise up to $750 million in a New York IPO, in the second of two major fintech deals this month which are expected to kick off a wave of similar listings by year-end. But a source with direct knowledge of the situation told Caixin the final fundraising amount is likely to exceed $1 billion, possibly making it the largest IPO by a Chinese company in the US this year.

European Union

German Bank Hands $ 61 Million to U.K. Online Lender Amid Brexit (Bloomberg), Rated: AAA

Uncertainty around Brexit may be mounting as political leaders from the U.K. and the European Union clash on the terms of separation, but that isn’t slowing down foreign investors from betting on Britain’s top peer-to-peer lenders.

Varengold Bank AG, a Hamburg-based private banking firm, will provide 45 million pounds ($61 million) in annual funding for loans to small businesses arranged by MarketInvoice Ltd., the British finance company said in an emailed statement.

28,639 investors have already invested EUR 102 million through Bondora and have received EUR 15 million in interest (Bondora), Rated: AAA

2017

Company reaches cash-flow profitability 100 million euro of loans issued.

Source: Bondora

Pan-European P2P Lender Younited Credit Raises €40 million from Historical Investors & the French Public Investment Bank (Crowdfund Insider), Rated: A

Younited Credit, the Paris-headquartered consumer lender announced a capital increase of €40 million subscribed by a panel of the top of the crop growth investors in France. Next to its historical shareholders, EurazeoCrédit Mutuel Arkema, AG2R La Mondiale and Weber Investissements which are already very active in Fintech and alternative finance financing, the startup now takes on board new major investors: Bpifrance, Matmut Innovation, and Zencap Asset Management.

GoldMint, Provider of Gold-Backed Cryptoassets Launches ICO Today (The Merkle), Rated: A

Today, on the 20th of September, GoldMint is launching its ICO.

GoldMint is celebrating the beginning of its ICO by attending 3 major events on the same day the crowdsale kicks off.  One of these events is BlockchainLive in London  – Europe’s leading Blockchain conference bringing together over 75+ global experts in various fields.

Another one is Moscow’s ICO Event which this time mainly focuses on how legislation will impact the cryptocurrency space.

Today GoldMint is also present at the Global Blockchain Summit in Hong Kong gathering iconic speakers from various industries to discuss about the real-world applications of blockchain technology, as well as its potential benefits, risks, and regulatory concerns.

To spread the word about GoldMint in the USA  – GoldMint’s advisor and business developer Evgeniy Volfman has recently completed the official Northern American road trip representing the project in New York, Los Angeles, San Francisco and Miami.

Simultaneously, GoldMint is opting to expand its campaign globally, with the Middle East & Singapore regions being the current primary focus.

International

Nominations open to global Women in Fintech Powerlist (Disrupt-Africa), Rated: A

Nominations are open to Innovate Finance’s Women in Fintech Powerlist, which recognises women shaping the future of fintech around the world.

UK-based membership organisation Innovate Finance compiles its Powerlist of Women in Fintech each year, with the aim of closing the fintech gender gap by showcasing the women driving the global fintech space.

SegWit2x, NYA Bitcoin Agreement Loses Another Signatory (Cryptocoins News), Rated: A

Bitcoin peer-to-peer lending platform Wayniloans has withdrawn its support for the SegWit2x bitcoin scaling proposal and the New York Agreement (NYA).

Wayniloans joins several other companies in withdrawing support for SegWit2x and the NYA. Banking and payment processor Bitwala announced last month it will only follow the SegWit2x blockchain if it receives support from Bitcoin Core, which does not appear likely.

Australia

FinTech loans and payments (Choice), Rated: A

FinTechs are certainly in competition with other FinTechs, but the real competition is the established financial service industry, epitomised by the big four banks. Consumer banking is where FinTechs aim to cause the most disruption – and many would say it’s an area where disruption is long overdue.

One recent startup, Spriggy, is out to grab its fair share of the kids’ bank accounts market, for instance.

Over the past 10 years, consumers have lost about $5.7 billion to financial advisers and financial services providers who put their own interests first. The scandals have included Opes Prime, Storm Financial, Timbercorp/Great Southern, Bridgecorp, Fincorp, Trio/Astarra, Westpoint and Commonwealth Financial Planning.

The size of the market in Australia has grown substantially year on year. In 2014, $9.45 million changed hands by way of P2P consumer lending platforms, for instance; in 2015, the P2P consumer lending figure stood at $43.15m.

And when it comes to money raised through crowdfunding, the figure jumped from $8.2m to $26m over the same time period.

At the moment, there are at least 86 FinTech tools operating in Australia through which you can borrow money, most of which are P2P lending services.

And there are at least 24 crowdfunding services on offer. It’s no surprise, then, that the biggest external challenge for FinTechs these days is finding customers.

Nine Australian FinTech companies made the 2016 list of the top 100 FinTech innovators around the world, an annual roundup compiled by the FinTech investment firm H2 Ventures and KPMG Fintech.

  • Prospa – Offers small business loans from $5000 to $250,000 with payback terms from three to 12 months, “for any business purpose”
  • Tyro – A payment system technology designed for businesses.
  • Society One – A P2P lender that says it provides “simple, investor funded personal loans with low rates based on your good credit history”.
  • Afterpay – Allows you to pay for goods in instalments direct debited from your credit card or other payment option.
  • Brighte – Offers 0% interest loans to approved homeowners for household energy efficiency improvement, such as solar panels or more efficient windows.
  • Data Republic – A customer data exchange service to help businesses better target their services to customers.
  • Identitii – Allows banks and other financial institutions to get more information about where and when payment transactions occur.
  • HashChing – An online home loan service that connects you with mortgage brokers.
  • Spriggy – Allows parents to manage kids’ bank accounts using digital tools.
India

RBI notifies P2P lending platforms as NBFCs: Agencies (India Times), Rated: AAA

The Reserve Bank of India on Wednesday notified that peer-to-peer (P2P) lending platforms would be treated as non-banking financial companies (NBFCs), an agency reported. This suggests the lending interface will now come under the purview of RBIs regulation under the RBI Act.

Company Name : Rubique (Business Wire India), Rated: B

Rubique, India’s leading FinTech company, is now taking giant strides in enhancing the level of education and training in the FinTech domain in India. In view of the highly lucrative opportunities that await young professionals in the landscape, it is leveraging its expertise to co-certify courses in FinTech at the prestigious SP Jain School of Global Management.

Latin America

Fintech Startups Attract Capital In Latin America (Forbes), Rated: A

Many Latin Americans are hard pressed to obtain credit for their businesses or family needs, as 49% of adults do not have bank accounts.

The region’s fintech industry secured $186 million in venture capital investments last year, according to the Latin America Venture Capital Association (LAVCA) – with more than one-third going to startups. Deal count increased by 81%, with 38 transactions.

In Brazil, 160 million adults have some type of banking relationship, but only 55 million are borrowers, according to the country’s central bank. This, combined with more than 20 million unbanked people, turns Latin America’s largest economy into a fertile ground for fintechs, says Jose Prado, founder of Conexao Fintech, an online hub for fintech entrepreneurs and enthusiasts.

Creditas raised $19 million in a Series B funding round. The Sao Paulo-based firm provides asset-backed debt focused on auto and mortgage loans.

In Mexico, where 55.9% of adults have no access to any form of savings deposits, fintechs are offering digital, user-friendly alternatives to traditional banking products, according to Jorge Ortiz, founding president and CEO of non-profit organization Fintech Mexico.

Ripio Credit Network Announces ICO Pre-Sale, Crowd Sale Starts on October 17 (Crowdfund Insider), Rated: A

Ripio Credit Network, a company that has raised $5 million in funding from VC like Tim Draper, Pantera, DCG, Overstock (Medici Ventures) and others. Has launched their Initial Coin Offering pre-sale as they gear up for the crowd sale scheduled to launch on October 17th. This comes just as Ripio has received a nice recognition, along with a check, from the d10e Pitch competition.

Ripio, a prominent crypto-based company in Latin America, is building a global credit network solution that aims to enhance transparency and reliability in credit and lending. Ripio is designed to enable connections between lenders and borrowers located anywhere in the world, regardless of currency.

Africa

FMO and above & beyond launch Fintech platform for African Banks to accelerate financial inclusion (FMO), Rated: AAA

FMO together with Miami based Fintech and digital transformation strategists above & beyond (a&b),  launched “ FinForward”, a marketplace where Fintech companies, Financial Institutions (FIs) and Mobile Money Providers (MMPs) in Africa are matched.

The objective of the new platform is to accelerate the digitization of the financial industry in Africa by supporting innovation of the core business with digital solutions. The matching and integration tool will make global Fintech companies accessible and top-of-mind to African financial institutions in order to help them to reduce costs, innovate, add services, tap into new revenue streams and work towards open banking platforms. It will also enable them to service difficult to reach segments such as the bottom of the pyramid, women and small entrepreneurs.

The matching and integration tool will make global Fintech companies accessible and top-of-mind to African financial institutions in order to help them to reduce costs, innovate, add services, tap into new revenue streams and work towards open banking platforms. It will also enable them to service difficult to reach segments such as the bottom of the pyramid, women and small entrepreneurs.

How does it work?

  • Outreach  – Banks, Mobile Money Providers and Fintechs are invited to join
  • Fintech Opportunity Scan – Participating banks and mobile money providers define their problems and needs
  • Matching – Pairing of Fintechs based on problem definition
  • Acceleration & Integration – Testing of Fintech solutions in a sandbox and integrating the technology into the bank’s operations
  • Showcase – demonstrate success during showcase days

Authors:

George Popescu
Allen Taylor

Analysis of the P2P Market in China After the Regulatory Crackdown

p2p lending China

China is the second largest economy in the world with a GDP of $11.8 trillion, and it’s the home to many mega banks and lenders. Like the US, savers investing in bank deposits were not getting good enough returns and small borrowers were being crowded out of the formal lending system by big corporations. P2P […]

p2p lending China

China is the second largest economy in the world with a GDP of $11.8 trillion, and it’s the home to many mega banks and lenders. Like the US, savers investing in bank deposits were not getting good enough returns and small borrowers were being crowded out of the formal lending system by big corporations. P2P lending looked like the perfect solution; it cut out the middlemen and democratized borrowing. As a result, China rapidly became the largest P2P market in the world. But the explosive growth of the P2P market in recent years has exposed the gulf of problems that have been plaguing the online lending market in China.

Numbers don’t lie

According to Beijing Bureau of Financial Work, nine out of 10 P2P lending platforms will find it difficult to survive 2017 once the government fully rolls out its stiff regulatory supervisions. Only 500 (approx 10%) P2P companies out of the total 4,856 across the country are expected to remain in operation after this year, according to the same report.

Chinese regulators have introduced tougher requirements for P2P lenders to stay in business. Every P2P lender now needs to appoint a custodian bank and needs to provide a full disclosure of the use of deposits. There are other variables like risk management, shareholder credibility, and the scale of business in play, as well. A lender not passing the review will eventually have to liquidate.

Raison d’être

In the beginning of 2016, Ezubao was one of the largest P2P lending platforms in the country. It was launched in 2014, but because it offered a lucrative rate of return (9%-15%) it quickly managed to attract a lot of investors. The company was actually running a Ponzi scheme and scammed 900,000 investors out of over $7.6 billion. It was the biggest Ponzi scheme in Chinese financial history. Reports said 95% of all listed borrowers were fraudulent. Such a massive fraud obviously woke up the regulators, and they came cracking down on the entire industry.

Fall of the giant: Hongling Capital

Hongling Capital was founded in 2009; it was one of the earliest and biggest P2P lending platforms in China. The pioneer P2P lending platform, once considered a benchmark in the industry, declared it will exit the online lending business and pay off investors by selling collateral properties. Though Hongling Capital was the largest P2P platform in terms of trade volume, the platform has barely made any profits. In 2016, the platform lost 183 million Yuan ($27.4 million).

Hongling Capital was established to provide small and medium enterprises easy access to capital, something they were not able to get from traditional banks and financial institutions. But it was its “guarantee of principal and interest” which set the platform apart from its contemporaries.

“Big Loan Model”

Another bet that went wrong for Hongling Capital was its “Big Loan Model.” Projects which required financing over 100 million CNY were considered “Big Loans” and Hongling matched the investor money with big projects. Considering that the majority of these projects had been rejected by traditional banks and were subprime meant it was a risky proposition from the get-go. The company, for example, granted 50 million Yuan in loans to China Huishan Dairy Holding. The company defaulted on its debt in late March. Loans like these were a major reason for Hongling Capital’s deep troubles.

The platform now has over 20 billion Yuan ($3 billion) assets to settle, which includes 5 billion Yuan ($750 million) of non-performing assets and 800 million Yuan ($120 million) of bad debts. As of August, Hongling Capital has 1.85 million investors, and the accumulated trade volume is 274.7 billion Yuan ($41 billion).

Regulation by Chinese Banking Regulatory Commission (CBRC)

In August 2016, CBRC released “Interim Measures for the Management of Business Activities of Internet Lending Information Agencies.” The report clearly stated “on a single platform, the personal borrowing balance shall not exceed 200,000, and the enterprise shall not exceed one million” and “p2p platform must not provide vouching or principal and interest warranty for investors.”

This regulation hit the two cornerstones of Hongling- guaranteed payments and big loan models and rendered the company’s business model obsolete.

The online lending industry knows there are more restrictions to follow. People’s Bank of China and 17 other regulatory authorities issued a notice in July stating: “Effective measures must be taken to ensure that the number of internet financial entities and the scale of business operation are cut down.”

This goes to show that there is a concerted effort by the regulators to curb the P2P lending sector and ensure that all non-serious and fraud actors are removed from the ecosystem

Conclusion

Well, it is clear that Ezubao is not the only bad apple in the system. There are hundreds of P2P lenders which have evaporated in thin air and the existing regulations will lead to a major shakeup. Though this might be detrimental in the short term, it was necessary for the survival of the industry in the long run. Now investors will understand the risks facing them while investing in such schemes, and would be focused on collaborating with only compliant P2P lenders. It will force platforms to re-look at their business models and ensure sustainability is given precedence over growth.

Author:

Written by Heena Dhir.

Friday September 8 2017, Daily News Digest

mobile payments APAC

News Comments Today’s main news: Square makes big move on banking. Folk2Folk CEO to step down. ZhongAn approved for $1B Hong Kong IPO. KBRA  and DBRS  assigns preliminary ratings to SoFi Consumer Loan Program 2017-5. Assetz Capital to set up in Belfast. ZhongAn approved for $1B Hong Kong IPO. Citi Singapore launches Facebook Messenger banking chatbot. Today’s main analysis: Using digital assets to […]

mobile payments APAC

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United Kingdom

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International

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United States

KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2017-5 (BusinessWire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by SoFi Consumer Loan Program 2017-5 (“SCLP 2017-5”). This is a $527.12 million consumer loan ABS transaction.

Preliminary Ratings Assigned: SoFi Consumer Loan Program 2017-5

Source: BusinessWire

DBRS Assigns Provisional Ratings to SoFi Consumer Loan Program 2017-5 (DBRS), Rated: AAA

DBRS, Inc. (DBRS) assigned provisional ratings to the following classes of notes issued by SoFi Consumer Loan Program 2017-5 (SCLP 2017-5):

— $287,200,000 Class A-1 Notes at AA (sf)
— $173,800,000 Class A-2 Notes at AA (sf)
— $66,120,000 Class B Notes at A (sf)

RATINGS

Issuer Debt Rated Rating Action Rating Trend Notes Published Issued
SoFi Consumer Loan Program 2017-5 LLC Class A-1 Notes Provis.-New AA (sf) Sep 7, 2017 US
SoFi Consumer Loan Program 2017-5 LLC Class A-2 Notes Provis.-New AA (sf) Sep 7, 2017 US
SoFi Consumer Loan Program 2017-5 LLC Class B Notes Provis.-New A (sf) Sep 7, 2017 US
US = USA Issued, NRSRO
CA = Canada Issued, NRSRO
EU = EU Issued, NRSRO
E = EU Endorsed
Unsolicited Participating With Access
Unsolicited Participating Without Access
Unsolicited Non-participating

Square Makes Its Big Move On Banking (PYMNTS), Rated: AAA

According to WSJ reports, Square intends to submit an application later today (Sept. 7) to form a wholly owned and operated bank in Utah.

That business unit would be called Square Financial Services Inc. — and it would be designed to offer loans and deposit accounts to small businesses. The bank would be capitalized with around $56 million in cash.

Online lender SoFi made a similar move, as did mobile banking start-up Varo Money Inc. The timing is not quite a surprise — federal regulators have been more open to the idea of new banks recently than they have been at any time since the Great Recession.

Square Wants to Be a Bank, Sort of (Paybefore), Rated: AAA

Mobile point-of-sale pioneer Square Inc. is applying for an Industrial Loan Company (ILC) charter to support the expansion of its lending business, the volume of which grew 123 percent year-over-year in the second quarter to $189 million.

The news was met with immediate rancor by at least one community banking group, which also lodged complaints about blurring the lines between commerce and banking when online lender SoFI applied for the same charter in June.

Before Square made its move, the Independent Community Bankers of America (ICBA) wrote in an August blog post that it would fight “tooth and nail” against attempts to remove the “historic separation of banking and commerce in federal law and regulation.” It reiterated that sentiment in news reports about Square’s plans on Sept. 7.

For more than a decade, CFSI has been conducting research and bringing various stakeholders—industry, regulators, consumer advocates—together around using technology to increase access to financial services. Its 2016 research estimates the size of the financially underserved market in the U.S. to be $140.7 billion.

The Dodd-Frank Act had placed a moratorium on such charters that ended in 2013, but the FDIC has been “gun-shy” since Walmart’s failed attempt to secure an ILC charter in 2006, Moeser notes.

Walmart and Affirm: A match Amazon will find hard to beat (RetailDive), Rated: AAA

At the end of August, news flashed across the wire that Walmart and Affirm were close to finalizing a pilot deal with each other. This is a game changer for three critical reasons:

  1. Affirm was started by PayPal wunderkind Max Levchin – Through a simple online application process, Affirm customers can obtain loan financing with interest rates in the range of 10% to 30% for their desired online purchases. Customers can clearly and easily see what they will owe at the time of checkout online, with no hidden costs or surprises.
  2. Walmart is involved – All indications are that Walmart is aggressively going after scan-and-go/checkout-free shopping in their stores. Scan-and-go quite possibly will be the technology that most impacts physical retail in the next 10-15 years.
  3. Affirm and Walmart are a match made in heaven for budget conscious America – Affirm’s digital financing capabilities and Walmart’s scan-and-go capabilities, when combined, will stretch the bank accounts of all Americans — especially Americans who cannot afford Prime membership fees (uh oh Amazon).

A screen pops up, and what used to be a three-pack of Crest for $5.00 is now suddenly the same three-pack but for $0.83/month for six months, or for $0.42/month for 12 months instead.

Lima One Capital Acquires RealtyShares’ Residential Debt Origination Business (Broadway World), Rated: A

Lima One Capital, the premier lender for residential real estate investors, announced today that it has acquired the residential debt origination business of RealtyShares, an online marketplace for real estate investing and financing.

Lima One Capital began partnering with RealtyShares as an institutional investor in early 2017, drawn by the quality of deals listed on the marketplace platform.

New Credit Card Option for Those With Scant Credit Histories (The New York Times), Rated: A

A New York start-up aims to use everyday financial information to qualify people with scant or no credit histories for its credit cards.

The company, called Petal, considers an applicant’s standard credit scores, when available. But it also analyzes their digital financial records, like checking accounts or, in some cases, prepaid debit cards, to rapidly assess their income and spending habits.

The company plans to target consumers who are “new to credit,” like young adults, recent immigrants and lower-income consumers, as well as others who may lack traditional credit scores, Mr. Gross said.

The idea is that by sharing information about their personal cash flow, consumers can get a quick decision on a card application and access to a low-cost card, even if they don’t fit the traditional profile of a top-tier credit customer.

The company’s Petal Visa card isn’t widely available yet, but is being tested privately starting this month. Consumers can sign up online to receive an invitation to apply.

Introducing Petal — a simple, no-fee credit card (Medium), Rated: A

Today, it’s hard to exist without a credit score.

You need one to get a credit card, finance a car, purchase a home, or qualify for a small business loan. And, increasingly, you need credit to do things that seem to have little to do with credit, like sign a lease for an apartment, set up a cell phone plan, or even get a job — nearly 50% of employers today are checking credit reports as part of a job application.¹

That access is important. The cost of a poor credit score can be as much as $250,000 in additional interest and fees over the course of your lifetime.²

The number of American adults that lack access to credit because they are new to credit is staggering:

Over 65 million, and growing as a percentage of the total population.³

The 65 million credit invisible, unscorable and thin-file consumers in the U.S. are not a snapshot of America. They are disproportionately likely to be young, black and Hispanic, first- and second-generation immigrant, and/or low- and moderate-income. The same groups that have been historically underserved by the banking system are routinely denied access and opportunity because of how the credit system works.

Two years later, we’re launching Petal — a simple, no-fee credit card, designed to make life easier for everyone.

Petal makes money from merchants when customers swipe the card, and on interest when customers carry a balance past their due date. And before customers carry a balance, we show them exactly what it will cost — in dollars, not just in interest rates and APRs. It’s our belief that customers should be able to use credit safely and affordably, without falling into costly debt.

SoFi’s Career Incubator, SoFi Accelerate, Going to Chicago (LendEDU), Rated: A

Social Finance, Inc., a fintech and student loan refinancing company, announced this week that SoFi Accelerate, the company’s career incubator, will be visiting Chicago this September.

On Sunday, September 24th, SoFi Accelerate will head to the Windy City to offer professionals a chance to hear from a couple of speakers and to develop their own path for career success.

The career incubator will only last one day and is open to SoFi members and non-members as well. There will be two speakers, Adam Foss and Ryan Holiday, that guests will have the chance to listen to.

The event will be held at the Chicago Botanic Garden at 1000 Lake Cook Road in Glencoe, Illinois from 9:30 AM to 6:00 PM central time. For SoFi members, the price of admittance will be $75, while non-members will have to pay $125 upon entry. However, the first 50 non-members will receive a special discount so that they only have to pay $100 to attend.

Americans Are Spending Mind-Blowing Money on Lotto Tickets in These Top States (TheStreet), Rated: A

In some states, buying lottery tickets is an extremely popular pastime that borders on obsession. The U.S. generated $66.78 billion from lottery sales with the exception of seven states who have not legalized lotteries — Alabama, Alaska, Hawaii, Mississippi, Nevada, Utah, and Wyoming — based on an analysis of data conducted by LendEDU, a Hoboken, N.J.-based student loan marketplace, utilizing 2015 data released by the U.S. Census Bureau. Out of the total amount, $42.27 billion was allocated for prizes, $3.18 billion was allocated for administration and $21.35 billion was allocated for proceeds.

For 2016, the Census Bureau projected there were $323 million people living in the U.S. which means the average amount spent on various types of lottery tickets is $206.69 per year, LendEdu said.

Some residents are diehard fans of playing the lottery, and Massachusetts natives spend the most money per capita at $734.85 annually while Rhode Island follows a close second at $513.75 each year. The third highest amount was spent in Delaware at $420.82, New York with $398.77 and West Virginia at $359.78.

The states with the largest amount of people generated the largest revenue – New York’s total was $7.78 billion, followed by California at $5.52 billion, Florida at $5.27 billion, Massachusetts at $5.01 billion and Texas at $4.28 billion.

Leading Carrier and Reinsurer Partner with Insurtech Startup Bestow on its Highly Anticipated, On-Demand Platform (PR Web), Rated: A

Bestow Inc., the company behind a revolutionary new approach to life insurance, today announced a partnership with Munich American Reassurance Company, the U.S. life and disability reinsurance division of Munich Re, and North American Company for Life and Health Insurance®, a top-rated carrier in the United States and member company of Sammons® Financial Group, to develop new life insurance products for Bestow’s anticipated on-demand life insurance platform.

Together, the three brands are actively working on products that will premiere as part of Bestow’s full stack, digital platform later this fall. Upon launch, the platform will give consumers an entirely new way to research, buy, and manage life insurance with product options that are affordable, simple to understand, and seamless to purchase.

Bestow’s partnership with Munich Re and North American follows the company’s recent announcement of closing $2.5 million in seed funding, led by NEA.

How to Leverage Crowdfunding to Invest Like a Millionaire (Inc.com), Rated: A

You probably don’t think of relatively small investments and passive income opportunities when talking about commercial real estate. But the new standards for commercial real estate investing are surprisingly simple and potentially profitable. Here’s what Jilliene Helman shared about the industry-disrupting platform.

Platforms like RealtyMogul let you crowdfund multi-million dollar commercial real estate investments with as little as $1,000 to $5,000. Depending on your cash flow, you can make an investment immediately and continue reinvesting the profits.

Anyone who has ever been a landlord knows that dealing with tenants and all the hands-on work that comes with it is cumbersome. But commercial real estate can be a completely passive opportunity that doesn’t require you to do anything. Jilliene agrees that you don’t need to be active in all of your investments.

Jilliene shares that in RealtyMogul’s case, they’ve now gone through 12 months at 8% distribution annualized. While some investors might take that distribution and spend it, others will take that 8% and keep reinvesting it to turn it into a compounding investment. In the second month of a payout, investors will be earning on that original 8% in addition to interest earned each subsequent month of distribution.

Affirm: The San Francisco Startup Using Fintech To Simplify Lending (Benzinga), Rated: A

Rob Pfeifer, chief risk officer at the San Francisco fintech startup Affirm, remembers the moment the company began lending: 7:57 p.m. on Aug. 21, 2014.

Since going live, Affirm has made more than 1 million loans totaling more than $1 billion.

The platform originally targeted millennials, but has drawn a wider clientele, said Pfeifer, 35, who’s scheduled to speak at the Benzinga Fintech Summit Sept. 28 in San Francisco.

BitX Funding takes online middleman approach to small-business lending (Westfair Online), Rated: A

“About four to five years ago, I worked for OnDeck Capital in Manhattan,” said Rowe, referring to a non-bank lender to small businesses, where he was a senior business development manager. “Back in 2008, when we had the market correction, banks stopped lending and small-business owners had nowhere to go to get funds. OnDeck, at the time, filled that gap.”

In 2013, Rowe in Southport launched BitX Funding as an online marketplace for small-business owners and aspiring entrepreneurs to seek financing for their endeavors.

BitX Funding works with a borrower in fill out data on the company regarding how much money they want to borrow, the time frame they are working in to receive their funds and how long they have been in business. Rowe reviews the information and contacts the applicant to receive more information about the depth and scope of the requested loan. The BitX founder Rowe, who is now working with 20 banks as his company’s financing outlets, determines which applicants have the best chance of moving forward.

To date, Rowe has secured 100 small-business loans for clients. Applicants do not pay him a fee or a commission for the service, he noted, with his revenue coming from the participating lenders.

“I’m actually pre-underwriting the applications. Because of Dodd-Frank and all of the other regulations and paying an underwriter a $100,000 salary for a $50,000 loan, it’s not really in their (lending banks’) wheelhouse.”

Washington DC-based RegTech Startup Securrency Joins Forces With International FinTech Firm Humaniq (PR Newswire), Rated: A

Securrency, a RegTech company with a platform designed to streamline regulatory compliance for token offerings, has just signed an extensive strategic partnership with Humaniq, an Ethereum-based Blockchain ecosystem looking to bring financial inclusion to over 2 billion unbanked people globally.

The partnership included an investment into Securrency by Humaniq as the lead investor of their current investment round. Humaniq will also provide additional technological capabilities which will be used for their collective efforts on a LegalTech platform. This LegalTech platform is designed to efficiently match capital to opportunity in transformational emerging technologies. The platform will provide efficient access to capital for startups, liquidity for frontier markets, and a scalable securitization process for established global industries. By automating certain compliance functions and connecting legacy financial services to the power of the blockchain, the team sees a path to revolutionize technology finance.

Payments firm Baton Systems adds former Citi vice chairman Kaden to advisory board (Finextra), Rated: B

Baton Systems (“Baton”, formerly known as Ubixi), the platform for clearing, settling and managing payments between financial institutions, has appointed former Citigroup Vice Chairman Lewis B. Kaden to its Advisory Board.

He joins Arjun Malhotra, Co-Founder of HCL Technologies and Headstrong, as the newest addition to Baton’s Advisory Board.

Kaden was labeled “The Most Powerful Banker You’ve Never Heard of” by Bloomberg Businessweek in 2009. He joined Citigroup in 2005, where he oversaw the bank’s global functions and advised the CEO on numerous strategic and business matters. Kaden has also served as Chairman of the United States Government Overseas Presence Advisory Panel, as well as Chairman of the Industrial Cooperation Council of the State of New York and Governor Mario Cuomo’s Commission on Competitiveness. He holds degrees from both Harvard College and Harvard Law School.

Home Point Financial Names Ross Gloudeman Chief Compliance Officer (Business Insider), Rated: B

Home Point Financial Corporation (“Home Point”), a national, multi-channel mortgage originator and servicer, today announced that Ross Gloudeman has been named Chief Compliance Officer.

Prior to joining the Home Point team, he was a Principal at AIMD Consulting, LLC, providing advisory and contract risk or compliance expertise to financial services clients. Previously, he was Senior Vice President, Executive Risk and Compliance Officer, at Walter Investment Management Corp.

United Kingdom

Industry reacts to 2,000 IFIsas opened (Bridging&Commercial), Rated: AAA

Data also showed that the average investment into IFIsas during 2016/17 was £8,500, while £17m was invested collectively.

Octopus Choice launched its IFIsa last month, allowing investors to deposit as little as £10 in loans underwritten by Octopus Property.

Folk2Folk launched its IFIsa in July to its existing lenders.

Giles Cross, CMO of Folk2Folk, said: “Since the introduction of our IFIsa in July, we have seen a huge amount of interest from investors looking for an alternative income with tax-free returns.”

Some peer-to-peer platforms have found the HMRC’s figures promising, including Landbay, which launched its IFIsa early in the year.

John Goodall, CEO of Landbay, said the number of accounts that had been opened had exceeded expectations.

Folk2Folk CEO to step down (Bridging&Commercial), Rated: AAA

Peer-to-peer lending platform Folk2Folk has announced the resignation of its chief executive officer Jane Dumeresque (pictured above), who will step down during September.

During her tenure, Folk2Folk opened new regional offices in Yorkshire, Somerset and the Three Counties, built further representation in Cumbria, Dorset, Cheshire and East Anglia and grew the platform’s cumulative loan book from £30m to over £170m.

Peer-to-peer lenders pledge to set up base in Belfast (Irish News), Rated: AAA

PEER-to-peer lending platform Assetz Capital, which to date it has lent more than £300 million to businesses across the UK, is expanding its operations into Northern Ireland.

Get bigger profits from mini bonds (MoneyWeek), Rated: A

But in the past year we’ve seen a steady rise in the quality of these bonds, partly because reputable alternative asset managers have moved in with asset-backed propositions (ie, companies that own physical assets, providing a certain amount of security for lenders). Downing, for instance, has its own “crowd bond” business that provides debt capital to businesses, usually within an Innovative Finance Individual Savings Account wrapper. Currently Downing has two projects that allow instant access (ie, no maturity), paying a 3% yield on an energy-backed business. This is a bit on the low side, but Downing also advertises an imminent bond that involves lending to a pub business for 18 months at 5.5%.

Property lender LendInvest raised £50m when it issued the alternative finance sector’s first retail bond, paying 5.25% a year over five years. The bond issue was oversubscribed, and the bonds now trade at £102 (implying a net yield to maturity of just over 5% a year).

In the news…

• Peer-to-peer lender RateSetter has reignited the debate about transparency after it admitted placing loans via rival platforms without telling its customers, reports The Times. It placed around £10m in property development loans on Wellesley, and an unspecified sum via Archover, which lends to small businesses. Both Wellesley and Archover offer investors a higher return than RateSetter. A spokesman for RateSetter said it would not lend via either platform again. RateSetter withdrew from industry body the P2P Finance Association last month after admitting it had “breached the principles of the Association”, but stressed that “no customer has experienced any loss from our actions”.

A third of financial technology startups expect to IPO within five years (City A.M.), Rated: A

The UK’s ambitious fintech startups are eyeing success on the public markets with a third of them planning an IPO in the next five years, new figures reveal.

Transferwise, Revolut and World Remit are among the country’s innovative financial technology companies with long-term ambitions of going public, signalling the burgeoning industry’s confidence.

Of the 250 fintechs surveyed in fresh research from EY and Innovate Finance on behalf of HM Treasury measuring the health of the industry, more than half also said they expect revenue to more than double over the next 12 months. Collectively, they expect to raise more than £2.5bn in their next funding rounds, having already raised £3.5bn to date.

Digital challenger bank Revolut told City A.M. it has an ambition to go public “later down the line”, while co-founder of “unicorn” startup Transferwise Taavet Hinrikus said over the summer it was time to think seriously about becoming a public company “in a few years”.

Using Digital Assets to Secure a Bitcoin Loan (Cryptocoins News), Rated: A

Ledgermark Ltd develops, markets and issues distributed ledger technology, specifically; various forms and implementations of distributed ledgers that can be used in combination with technologies like Bitcoin.

The company is launching a new digital asset; Meridian (MDN). Meridian represents a fork in the road as it is different from traditional digital assets. Instead of being positioned as a bitcoin alternative, Meridian is being designed to be used in combination with bitcoin. In short, via their Bitcoin Loans Platform, Ledgermark Ltd will be accepting Meridian tokens as collateral for bitcoin loans of higher value.

Is the P2P lending industry working with Bell Pottinger? (P2P Finance News), Rated: B

The P2P industry – and those linked to it – have a relatively small exposure to Bell Pottinger, with most firms opting for smaller PR agencies.

Basset & Gold, which advises and provides financing to P2P platforms and direct borrowers, is still a client of Bell Pottinger as of 6 September 2017, but is reviewing its relationship.

P2P lender Wellesley & Co previously had a relationship with Bell Pottinger, but is no longer using them.

MangoPay – which provides payment technology for P2P lenders – was still a client of Bell Pottinger as of 2 June 2017.

Darktrace in UK’s top three fastest-growing tech companies (Business Weekly), Rated: B

Norwich-based Know Your Money is the other new entrant – in at 97.

Cambridge company CashFlows surges from 94th last time to 58th in the pantheon with annual sales growth of 72 per cent to £37.3m.

Norwich’s strength in FinTech is further demonstrated by the inclusion of  Epos Now, a payment systems developer, which is placed 53rd (down from 32nd) with growth of 81 per cent to £13.9m.

The companies in the East appear with businesses from around Britain, including designer fashion website Farfetch, peer-to-peer lending platform Funding Circle and money transfer provider WorldRemit.

China

Chinese online insurer ZhongAn wins HK approval for $ 1 billion IPO (Reuters), Rated: AAA

ZhongAn Online Property and Casualty Insurance Co Ltd, China’s first internet-only insurer, secured Hong Kong stock exchange approval for its planned initial public offering which could raise more than $1 billion, sources with direct knowledge of the deal said on Friday.

The company plans to start gauging investor appetite for the IPO as soon as Monday after receiving the nod from the listing committee of the Hong Kong stock exchange, added the sources. It plans to launch the IPO and take orders from investors on Sept. 18.

The IPO would be the biggest by a financial technology company (fintech) in the city, which wants to lure more new listings of so-called new economy startups. Hong Kong has had $5.73 billion worth of new listings so far in 2017, compared with $21.3 billion in all of 2016, Thomson Reuters data showed.

Sino Fortune buys $ 2.8m equity interest in online lender TouZhiJia (Deal Street Asia), Rated: A

Chinese fintech solutions firm Sino Fortune Holding Corp has acquired a 4.45 per cent stake in Shenzhen TouZhiJia Financial Information Service Co Ltd (TouZhiJia) for about $2.8 million (RMB19.1 million).

Sino Fortune is making the 4.45 per cent equity interest acquisition through Puhui Equity Investment Co Ltd (Puhui).

Founded in September 2014, TouZhiJia’s main businesses include vertical P2P search engine, private wealth management, and secondary loan exchange services.

TouZhiJia has reportedly accumulated 2.74 million registered users and facilitated 1.98 million transactions with aggregate transaction value of more than $2.30 billion (RMB 15.63 billion). TouZhiJia is an affiliate of Yingcan Group.

European Union

LendIt Europe Agenda Released, Discounted Pricing Ends Soon (Lend Academy), Rated: AAA

The full agenda is on the LendIt website, but here are a few topics I am most excited about:

  • How to Navigate Open Banking (Imran Gulamhuseinwala, Ernst & Young)
  • Digitization of Finance How Customer Expectations are Changing (Anne Boden, Starling Bank, Rhydian Lewis, Ratesetter Giovanni Daprà, Moneyfarm)
  • Implementing AI in Financial Services: Case Study (Francesco Brenna, IBM, Roberto Mancone, Deutsche Bank)
  • How Big Banks Are Approaching the New Connected World (Gilad Amir, Lloyds Banking Group, Benoit Legrand, ING, Raman Bhatia, HSBC, Gustavo Vinacua, BBVA)
  • Renaud Laplanche of Upgrade talking about Online Lending 2.0 and the state of the US fintech market.

Summer pricing of £1,295 ends at midnight on September 8th. After that, ticket prices will rise to £1,495. As always Lend Academy readers can receive an additional 15% discount by using the code LENDACADEMYVIP at checkout.

What Kinds of Fintech Platforms Help Startups with Fundraising (TechBullion), Rated: A

By the way, the alternative funding market in Europe is not just a developed one, but it is often supported by the state in every way. Moreover, crowdlending currently is a major competitor for the conventional banking area. In the future, it will consolidate its position because, due to introducing new Basel lll requirements to banks, including a reduction of risk assets, the requirements to bank lenders will become ever more stringent.

For instance, in 2015, Austria adopted an act that governs and legalizes the operation of companies involved in non-banking lending. But at the same time, in the biggest fintech country in Eastern Europe – Russia – and in several EU countries, there is yet no such document. Germany has a credit rating of companies that protect the investor.

What kinds of non-banking business lending platforms exist?

According to data of KPMG studies, the last 3 years period demonstrated a 131% growth of the share of mutual business lending, with the share of peer-to-peer consumer lending having increased merely by 54%.

  • Crowdfunding– investments for a remuneration from a company.
  • Crowdlending– this is mutual business lending assuming a return on investments (Funding Circle).
  • Crowdinvesting – an investor receives a share in a company with a view to growth of the value of one’s purchased share and, certainly, receiving dividends from company operations (Crowdcube, Seedmatch).
  • Refinancing receivables or online factoring. A loan is provided on collateral in the form of expected payments or accounts receivable.
  • Invoice discounting – this is in essence factoring, but with a somewhat other funding structure. Within its framework, funding is not split into deliveries but is paid in full on spot. In case of assignment of claims, the lender will bear the obligations of reimbursing the factor the funds underpaid by the borrower.

The Microfinance Centre’s (MFC’s) Alternative Finance Forum; October 5, 2017; Warsaw, Poland (MicroCapital), Rated: B

Event Location: Copernicus Conference Centre; Warsaw, Poland

Summary of Event: This forum aims to “introduce new forms of financial services” while covering topics including equity-based crowdfunding, social impact bonds, online lenders to small businesses and peer-to-peer lending platforms. The event has support from the European Union and its European Investment Bank Institute.

Cost: Participation is free of charge

Event Website: 

International

How digital assets are revolutionizing payments (The Asset), Rated: A

Experian, an information services group, estimates that the average error rate of bank account data is around 12.7%, indicating that there is a lack of understanding of foreign bank codes and account numbers.

A key problem with cross-border payments today is the fact that transactions are at the mercy of correspondent banking relationships.

Ripple, a global digital payment provider, has designed its XRP digital asset solely the cross-border transfer of value between enterprises.

Aside from Ripple, other companies have started to look at the usage of digital assets for transactions. Visa for instance recently filed a patent with United States Patent and Trade Office (USPTO) on the creation of a digital asset network to eliminate third parties and simply their transaction process.

Fintech Companies Disrupting Finance, Creating Bank of Tomorrow (Cointelegraph), Rated: B

One popular recent development in the Blockchain community is the creation of multi-crypto/fiat debit cards. These cards allow users to interchange between the given set of currencies in a seamless manner.

Luhaaar notes that fintech companies have consistently delivered better results in individual financial system services. He says that Change Bank wants to bring these companies together to create a global fintech bank of tomorrow.

India

Capital Float Digitally Removes Credit Gap (CXO Today), Rated: A

In an exclusive interaction with CXOToday, Rohan Angrish, CTO, Capital Float, takes us through how they have made it possible with the aid of technology which helped reduce wait times for SMEs, and enabled disbursement of funds in just three days. Last month, the company announced an equity raise of $45 Million (Rs. 293 crores) in Series C funding.

CXOToday: Tell us about your expansion plans across India. Any plans to go global in the near future?

Angrish: Over the past year alone, we have disbursed loans of over Rs. 2,100 crores to 12,000 plus customers across 300 cities. We will continue to identify and serve under-served SME segments. We have also ventured into financing micro-entrepreneurs like taxi drivers, travel agents, and Kirana store owners. Although these are small-ticket loans, the sheer size of these segments indicates immense potential. India will keep us busy for the short term. By the end of the financial year, we expect to have our geographic footprint spread across 500 cities from our current number of 300 cities, without increasing headcount.

CXOToday: Who are your customers?

Angrish: These include SMEs who have traditionally been denied finance due to ineligibility based on credit parameters set by formal financiers, lack of collateral and inability to furnish the required documentation.

CXOToday: Please throw light on your corporate partnerships.

Angrish: The company has partnered with ecosystem leaders across various verticals such as e-commerce (Amazon, Flipkart, Snapdeal, PayTM, Shopclues, eBay, Alibaba, etc.), travel and hospitality (VIA and Yatra), retail (Mswipe, Pine Labs, Bijlipay, ICICI Merchant Services) and taxi aggregators (UBER and Ola) etc. Through these partnerships, we are able to effectively expand our reach to SMEs operating on these platforms.

Fintech startup EarlySalary raises Rs 5cr in debt financing from IFMR Capital (YourStory), Rated: A

Fintech startup EarlySalary, which offers instant cash loans and salary advances, has raised debt financing of Rs 5 crore from IFMR Capital. Previously, this past May, the company had raised a Series A round of $4 million (Rs 28 crore) in equity funding from IDG Ventures India and DHFL and plans to leverage its equity multiple times over the next few months.

In an earlier interaction with YourStory, Co-founder and CEO Akshay Mehrotra had said that almost 75 percent of the Rs 28 crore would be utilised for building their lending book. The remaining amount was to go into expanding their team, with a specific focus on machine learning skill sets, and helping grow the customer base.

EarlySalary has already disbursed more than 7,000 loans last month. Currently operating in eight cities including Mumbai, Pune, Chennai, Bengaluru, Hyderabad, New Delhi, Jaipur, and Ahmedabad, it is looking at expanding into other cities as well.

Growth deals drive VC investments in August (The Times of India), Rated: B

Online lender Capital Float attracted $45 million, while Treebo Hotels took $34 million. Bioinformatics company MedGenome attracted $30 million from investors led by Sequoia India and fitness chain operator Curefit raised $25 million from existing investors including Accel Partners and IDG Ventures.

With seed funding becoming more challenging, early stage investors are asking questions on whether the business is viable and if it can raise follow on capital, which is an indication of the market maturing, he adds.

APAC

Citi Launches First Facebook Messenger Banking Chatbot in Singapore that Provides Customer Account Information (Fintech News), Rated: AAA

Citi Singapore today announced the launch of Citi Bot – the bank’s new natural language chatbot on Facebook Messenger. Singapore is the first market for the launch of the chatbot which will be introduced progressively in the Asia Pacific region over the next few months.

This landmark initiative furthers Citi’s open architecture approach to digital banking as the bank taps on its global network to form strategic partnerships and to co-create with leading players in digital ecosystems globally and locally.

Citi Bot will first be made available to some 600 Citi customers and employees who will form Citi Singapore’s Beta Testing Community, referred to as the Citi Beta Community.

The second phase of the Citi Bot will introduce more new features such as card activation, ability to lock and unlock credit cards and transaction alerts for cards among others.

India, Indonesia lead growth in mobile payments (The Asset), Rated: AAA

Asia-Pacific now leads the way in the adoption of mobile payments, according to a report by ACI Worldwide (ACI) entitled “Global Consumer Survey and Consumer Trust and Security Perceptions.”

Within the Asia, India and Indonesia saw the biggest growth of mobile wallet use with 56% of Indian and 47% Indonesian participants of saying that they used mobile wallets. This represents a significant increase from 2014 results which saw 47% of Indian and 32% of Indonesian survey participants using mobile wallets.

Source: The Asset

Authors:

George Popescu
Allen Taylor

Wednesday September 6 2017, Daily News Digest

fintech bank investment map

News Comments Today’s main news: Upgrade appoints Western Union exec at general counsel. Assetz Capital now claims to be second largest P2P lender in the UK. Perseus has the solution for EU cyber threats. Amartha partners with Jamkrindo in Indonesia. Today’s main analysis: How banks are investing in fintech. Today’s thought-provoking articles: LendingClub CEO Scott Sanborn interviews with […]

fintech bank investment map

News Comments

United States

United Kingdom

China

European Union

Australia

India

Asia

News Summary

United States

Upgrade, Inc. Appoints Western Union Executive as General Counsel (Upgrade Email), Rated: AAA

Upgrade, Inc. (), the new consumer credit platform launched by LendingClub founder Renaud Laplanche earlier this year, today announced the appointment of John Dye as General Counsel. Prior to joining Upgrade, John was Executive Vice President, General Counsel and Secretary of The Western Union Company. He was also Chairman of the Board of Directors of the Western Union Foundation.

Before joining Western Union in November 2011, John was Senior Vice President, Interim General Counsel and Corporate Secretary of Freddie Mac from July 2011. From 2007 to July 2011, John served as Senior Vice President, Principal Deputy General Counsel, Corporate Affairs of Freddie Mac, where he worked on corporate transactions and managed attorneys in the areas of corporate disclosure, securities, intellectual property, contracts and human resources.

Prior to joining Freddie Mac, John spent 13 years at Citigroup Inc. in New York City, where he held senior leadership positions, and served as Senior Vice President and Senior Counsel at Salomon Smith Barney.

Upgrade also hired Louis Shansky, a partner on the securitization team at the law firm of Mayer Brown, as Deputy General Counsel.

Back and Better Positioned than Ever—CEO Scott Sanborn Interviews with Bloomberg (LendingClub), Rated: AAA

  • The macroeconomic backdrop: While macro trends are generally positive—low unemployment, low interest rates, low inflation and low oil prices with an increase in consumer confidence—credit card debt levels are near all-time highs. Today, there is more than $1 trillion in outstanding credit card debt in the U.S.
  • Borrowers are not alone: LendingClub borrowers are not alone in seeking a lower interest rate solution: credit card debt in the U.S. is at an all-time high1 and credit cards tend to carry high interest rates. Sixty to 70% of our customers are currently taking advantage of our personal loans to pay off credit cards which helps them to get on the path to financial success.
  • LendingClub is enabling more new investors access to an old asset: Fifteen percent of our investor base still invests directly through the retail website, with the balance accessing the asset through other means.
  • Institutions want more: In Q2 2017, we had record high subscription from more than 100 institutional investors participating on the platform. Banks were 44% of our overall investor mix last quarter, attributed to LendingClub’s assets offering solid returns with a short duration.
  • Reaching new investors through securitization: More than 20 new investors engaged with LendingClub via the first deal, which demonstrated high demand for the asset.

The Top Fintech Trends Driving the Next Decade (ABA Banking Journal), Rated: AAA

Here is a glimpse at the technologies driving bank innovation today—as well as a look ahead to the technologies coming down the pipeline that will change the way banking is done over the next 10 years.

  1. Digital Lending (here and now) – Unsecured consumer lending is the first market where digital lending has made an impact and is by far the most mature. Today, the two leading consumer lending platforms (Lending Club and Prosper) originate roughly $2.5 billion in loans quarterly. Small business lending has quickly followed and is rapidly digitizing. ABA has endorsed the digital commercial lending solutions offered by Akouba, providing banks of all sizes the use of these platforms to enhance customer service and significantly reduce underwriting costs.
  2. Biometrics (1-2 years) – Passwords are only secure to the extent that they are kept private and cannot be guessed by a keen observer. The problem is that these passwords often rely on observable pieces of our life like our birth date, our children’s names, or our pets (my personal favorite), which are all readily available to criminals using social media and public databases. A 2015 study by TeleSign indicated that one in five people use passwords that are over 10 years old, with 73 percent of accounts being secured by the same password. Compounding this problem is the fact that we now have so many accounts that require a password, that it is impossible to keep them straight.
  3. Customer Data (1-3 years) – Today, customer data at banks is often unstructured—housed in systems that are inconsistent and may not talk to each other. A single customer may have multiple accounts with a bank that are all housed in different systems, with inconsistent identifiers. A number of banks, as well as core processors, are working to reconcile these systems. Some are working to build additional data warehouses that aggregate disparate customer data to create a unified view of customers.
  4. Regtech (3-5 years) – Regulatory reporting is one area that seems ripe for digital disruption. Today, filing call reports is a quarterly activity that requires significant time. It would not be hard to imagine a software solution that was tied into a bank’s back-end systems and prepopulated all of the key reporting fields. Moreover, it would be possible for regulators to receive a steady feed of data from a bank that would give them an ongoing view into the bank and may reduce the frequency with which exams are necessary.
  5. Artificial Intelligence (5-10 years) – One way this could help bankers is by improving fraud detection. Traditional fraud monitoring systems rely on specific non-personal rules (like geography) to detect fraudulent transactions. Machine learning could be applied to analyze the transactions of each customer, flagging transactions that are out of their normal habits.
  6. Internet of Things (8-10 years) – For example, banks may be able to use internet-connected devices to make better loans and monitor collateral. Inventory or livestock for a small business can be monitored in real time. This would allow a bank to monitor a customer’s balance sheet on an ongoing basis, giving it the tools to make better decisions about lending or adjusting credit lines in real time.

The biggest long-term impact that IoT is likely to have is in payments. Connected devices are already able to talk to each other, but will also require the ability to make payments back and forth. Today, this may be as simple as using your smart watch to settle a bill, but could evolve to the point at which your refrigerator pays for groceries that are running low. A number of auto makers are experimenting with enabling cars to make payments.

Scott Zoldi of FICO (Lend Academy), Rated: A

The Chief Analytics Officer at FICO talks about their use of artificial intelligence in credit models, fraud, alternative data, financial inclusion and more.

In this podcast you will learn:

  • Why his background in theoretical physics was perfect for studying fraud and credit risk.
  • What the company FICO actually does and how it interacts with the credit bureaus.
  • What his role as Chief Analytics Officer entails.
  • Some examples of the 130+ patents that FICO has been granted.
  • The importance of being able to explain how a credit model works.
  • How their advanced machine learning models can be explained to regulators.
  • How FICO has been using artificial intelligence for decades.
  • What Scott thinks about the sudden embrace of artificial intelligence in the last couple of years.
  • What he worries about with so many new companies coming into the AI fray.
  • How Scott views alternative data and using new data sources.
  • His thoughts on disparate impact and the use of alternative data.
  • How the FICO XD score helps expand access to credit.
  • How FICO’s fraud product called Falcon became the industry standard for banks.
  • Scott’s views on how a 700 FICO score today compares with the same score 10 years ago.
  • What Scott is most excited about today in his work at FICO.

Citizens Financial Starts Robo-Adviser With SigFig Partnership (Bloomberg), Rated: A

Citizens Financial Group Inc. is the latest bank to start a robo-advisory product as part of its larger push into wealth management.

Citizens, a regional bank based in Providence, Rhode Island, is providing the technology to customers beginning Wednesday through a previously announced partnership with SigFig Wealth Management LLC, which uses algorithms to provide financial advice at lower fees than traditional human advisers.

The minimum initial investment in the Citizens offering will be $5,000, according to the firm. The annual asset-management fee is 50 basis points, or about half the typical cost of a traditionally advised account.

Real Estate Crowdfunding Shows Signs of Maturation (Real Estate Tech News), Rated: A

Last month, crowdfunding giant RealtyShares bought smaller rival Acquire Real Estate. This news was a significant in the multibillion-dollar sector, which is not even five years old. It begged the question as to whether this deal was a product of synergies between two platforms or a case of a larger player protecting its turf by taking a smaller rival off the board?

Whatever the answer, one thing is clear: We are likely looking at the start of a push toward consolidation in real estate crowdfunding. While there are hundreds of platforms now vying for a capital pool that is almost halfway to 12 figures, some clear-cut market leaders have emerged, and a movement toward economies of scale would signal continued maturation. Over the next year or so, it would not be surprising to see companies like FundriseCrowdStreet and Patch of Land join the market for acquisitions, especially as the space continues to establish mainstream legitimacy.

MPL Market Shows Growing Origination Volume, With Tightening Credit Stance (dv01 Digest/LendIt), Rated: A

Looking at origination characteristics for the four largest MPL originators, we see origination volume continue to rise: 21% for 2Q17 over 1Q17, and up 52% over 2Q16. Loan coupons have risen from a 14.20% GWAC for the 2Q16 vintage to a 14.31% GWAC for the 2Q17 vintage, while the two year treasury has rallied approximately 50bps over the course of the year. PTI is relatively unchanged, coming in at 9.05% for 2Q17 versus 8.99% for the 2Q16 vintage.

Average FICO has increased significantly: 703 for the 2Q16 vintage to 711 in 2Q17.

Prosper closed its second $500MM Consortium securitization, PMIT 2017-2, on which dv01 was loan data agent. Data from PMIT 2017-2 is available for accredited investors through dv01’s Securitization Explorer, and is updated monthly.

Download and read the full report (with charts) here.

Debit cards, a trillion in debt, and millennials: What could go wrong? (American Banker), Rated: A

Fifth Third Bancorp is borrowing inspiration from the fintech world as part of its effort to woo millennial customers and compete with megabanks for consumer deposits.

The Cincinnati bank on Tuesday is scheduled to roll out a stand-alone app designed to help its customers pay student loan debt. The app, called Momentum, lets customers link Fifth Third debit cards to student loan accounts held by more than 30 servicers. Customers can have their debit card purchases rounded up to the next dollar, or have a dollar added to every purchase; the money is applied weekly to the balances on designated loans once a minimum of $5 is contributed.

“I see Momentum as being complementary” to apps such as Acorns and Digit, she said. “This [millennial] generation is sitting on $1.3 trillion of [student loan] debt. We wanted to take a relatively simple concept and offer something to help them in their day-to-day life.”

Op-Ed: Regulatory Sandboxes Can Help States Advance Fintech (American Banker), Rated: A

The U.S. captured 54% of the $127 billionin global venture capital invested in 2016. This access to capital has allowed some American fintech startups to succeed despite the regulatory burdens. Yet, the U.S. underperforms in fintech venture capital compared to our share of overall venture capital. In 2016, the U.S. obtained only 33% of the $13.6 billion in worldwide fintech venture capital investment.

I am working with Arizona policymakers to introduce a sandbox in Arizona that would reduce entrepreneurs’ barriers to entry without sacrificing core consumer safeguards. This would be the first state sandbox in the United States.

Op-Ed: Regulatory Sandboxes Can Help States Advance Fintech (Arizona Attorney General), Rated: B

Attorney General Mark Brnovich is calling for Arizona to become the first state in the country to adopt a “sandbox” like regulatory environment that would reduce fintech entrepreneurs’ barriers to entry into local markets in a new op-ed penned for American Banker magazine. Key to creating sandbox regulatory systems is ensuring core consumer safeguards are not sacrificed. Sandboxes have already been implemented in countries such as the United Kingdom, Singapore, UAE, Malaysia, and Australia.

‘Fintech’ Loans: A Sometimes Costly Lifeline for Small Business (KQED News), Rated: A

Che Al-Barri remembers feeling like he was drowning in debt last year. He had taken out a $70,000 loan for his small cleaning company, but was struggling to repay it.

The lender, a financial technology — or fintech — company, automatically collected $331 from his bank account daily, Monday through Friday. The frequent hits depleted his income and took a toll on his business, he said.

For Al-Barri, taking a big loan seemed like a great opportunity at first. Large clients were taking months to pay him, he said, and he wanted to buy equipment and hire employees to expand. But he underestimated how much he would earn, making it very difficult to repay the loan plus the $30,000 in interest he owed.

Stanford study examining Airbnb users and data suggests that reputation can offset social bias (Stanford.edu), Rated: A

new Stanford study analyzing Airbnb users and data suggests measures that enhance a user’s reputation, like stars or reviews, can counteract these harmful prejudices. The results, the researchers said, indicate sites that use reputational tools create a fairer and more diverse online marketplace.

The share economy, also referred to as “collaborative consumption” and “peer-to-peer lending,” has allowed everyday citizens to turn into entrepreneurs, taking advantage of an industry that’s projected to grow to $335 billion by 2025, according to the Brookings Institution.

The researchers in this study focused on a certain type of bias called homophily, a natural tendency to develop trustful relationships with people similar to themselves, and how best to counteract it. The study is part of a broader research project analyzing trust and technology at Stanford.

The 36k-population neighborhood that’s hot for real estate investors (Mortgage Professional America), Rated: A

Data from real estate crowdfunding firm Sharestates says there has been a 650% increase in demand from investors wanting to put their cash into property in Fishtown.

That’s because of an attractive 11.8% return on investment and the ratio of the total loan amount compared with after repair value is 14%.

Cordray Remains Mum About Political Plans in Ohio Speech (Credit Union Times), Rated: B

Speaking at an AFL-CIO Labor Day picnic in Cincinnati, Cordray did not address one of the most—if not the most—crucial issue facing the agency—whether Cordray will resign to run for the Democratic nomination for governor in the Buckeye State.

And when questioned afterward, he declined to comment on his intentions.

The CFPB is working on its most high profile set of rules—those governing the payday lending industry. The bureau is believed to be planning to release those final rules this month.

LendingTree Partners With Benzinga to Award $ 10,000 to Winner Of Fintech Innovation Challenge At The Benzinga Fintech Summit (Baystreet), Rated: B

Benzinga, a leading financial media and events company, announced Thursday that it will team up with the nation’s leading online loan marketplace LendingTree to award $10,000 to the winner of an on-site fintech demo competition at the inaugural Benzinga Fintech Summit in San Francisco September 28.

The Fintech Innovation Challenge Presented by LendingTree will award $10,000 to the company whose product best demonstrates scalable, material innovation to the Summit’s audience.

United Kingdom

Assetz Capital Now Second Largest UK P2P Lender (Crowdfund Insider), Rated: AAA

Assetz Capital, one of the largest peer-to-peer lending platforms in the UK, has announced it has received full authorization from the Financial Conduct Authority (FCA).  Additionally, Assetz Capital has claimed second place in the ranking of UK’s largest P2P lenders as it reports lending in excess of £25 million per month on average to SMEs throughout the UK.

To date, Assetz Capital has lent over £316 million to businesses across the UK.

£17m invested into Innovative Finance Isas (Bridging&Commercial), Rated: AAA

HMRC has revealed that 2,000 Innovative Finance individual savings accounts (IFIsas) were opened during the last tax year.
The average investment into IFIsas during 2016/17 was £8,500 which meant £17m was invested collectively.

HMRC also reported that the amount invested in cash Isas had fallen from £58.7bn in 2015/16 to £39.2bn in 2016/17, while investment in stocks and shares Isas edged up from £21.1bn to £22.3bn.

Peer-to-peer Isas failed to gain much popularity in their first year, with just 2,000 Innovative Finance Isa (IF Isas) accounts opened in the tax year 2016/2017, according to the latest statistics from HMRC.

The biggest problem is that many peer-to-peer platforms have struggled to gain approval from regulators to become IF Isa providers. There are currently around 60 firms that have received approval from financial regulators, with most of these only starting to operate within the past few months.

Across the 2,000 IF Isa accounts opened, £17 million worth was subscribed. The average subscription per account was £8,500 – about the same as the average stocks and shares Isa account subscription.

Peer-to-peer platform Abundance claims it sold the majority of IF Isas in the last tax year. It says 1,436 Abundance IF Isas were opened, representing 72% of all IF Isa products opened last year.

Overall, the amount held in Isas in 2016/17 fell to £61.5 billion, compared with £80 billion the previous tax year. This decline was largely driven by a steep fall in the amount held in Cash Isas. In 2015/16, a total of £58.7 billion was held in Cash Isas; in the latest tax year this fell by a third to £39 billion.

Lucky Generals bangs out a new tune for Funding Circle (More About Advertising), Rated: A


The theme of the campaign seems to be “for those made to do more.” Here’s another in the campaign, not quite so striking.

If peer-to-peer lenders lack anything, it is not ambition (The Times), Rated: A

Samir Desai, co-founder and chief executive of Funding Circle, Britain’s largest peer-to-peer lender, says that his business, which has arranged $2.7 billion of loans to small companies, could be lending at least $100 billion within a decade.

Peter Behrens, co-founder of Ratesetter, one of Funding Circle’s main rivals, believes that his platform could double its annual loans within the next two years to £4 billion.

China

China’s fintech firms eye overseas IPOs to fund growth as regulations tighten at home (South China Morning Post), Rated: AAA

The A-share market, due to its profitability requirements, remains off-limits to most Chinese fintech firms, particularly peer-to-peer (P2P) lending platforms that were once regarded as an important part of the mainland’s reform of the banking system.

The increasing demand for financing has prompted a clutch of fintech firms to kick off their overseas IPO processes, most of which plan to complete fundraising in the next 12 months.

Zhong An Online Property and Casualty Insurance, China’s first online-only insurer, is seeking to raise as much as US$1.5 billion via a Hong Kong IPO.

After five years in business, Zhong An has developed a customer base of about 500 million people.

Views on China’s coin fundraising ban: someone still have an illusion (Xing Ping She), Rated: A

The Chinese regulators’ ban on ICO has heightened, and the financing of various tokens of the virtual currency has been put to death. In a consequence, the ICO asset value has evaporated nearly $20 billion, and more than 100,000 investors may be affected.

However, some ICO initiators still don’t want to stop. ”I don’t think the central bank’s oversight of ICO is going to be that severe,” a charger of the Digital Currency Asset Exchange said, ”and we would wait and see the specific notice of the local financial office and then decide what to do with it.” But in some communities of the ICO, we can see initiators start to announce the withdrawal of investors’ assets.

European Union

Perseus start-up seeks to shield German SMEs from cyber threats (Banking Technology), Rated: AAA

According to fintech incubator FinLeap, which is behind the venture, more than 70% of German companies were affected by cybercrime activities within the last two years, but only one out of ten SMEs holds an insurance policy that covers the resulting damages. Because Perseus offers a platform, it can connect services and offer “best-of-fit” tech solutions.

There is no specific date yet, but it also plans to add an industry-specific cyber insurance proposition to its portfolio of services.

Irish P2P lender GRID Finance rules out UK as part of growth plans (P2P Finance News), Rated: A

IRISH peer-to-peer lending platform GRID Finance has ruled out the UK as part of its current expansion plans.

The business lender announced it had received €3m (£2.7m) of finance yesterday that will help to fund expansion into new markets, but chief executive Derek Butler says the UK market is already very competitive.

He said he was focusing on scaling the business in Ireland first and competing with the country’s two main banks, Allied Irish Bank and Bank of Ireland.

Fintech Pushes EU to Explore Changes to Bank Software Rules (The New York Times), Rated: A

EU banking rules treat software as a cost rather than an investment, forcing lenders to cover expenditure on digital applications with an equal amount of capital.

If expenditure on software, which amounts to roughly half of banks’ total digital investment, were treated in the EU as it is in the U.S. it could free up more than 20 billion euros ($24 billion)in capital this year alone, one banking lobbyist said.

Many European banks have been slow to invest in adapting to rapid changes in the way consumers use technology for finance, with so-called fintech firms starting to steal market share in a variety of sectors from payments to lending.

Timing problem with Klarna and possibly other payment providers (Our Umbraco), Rated: A

There are cases when the authorization callback from Klarna doesn’t get processed until after the user arrives at the confirmation page. The reason is that the callback and the redirect are made almost simultaneously by Klarna, so it’s a bit random which wins.

Workaround: If currentOrder is null, sleep for 500 ms and try again (GetCurrentFinalizedOrder). Repeat for 10 seconds.

CrowdExplorer Wins Fintech Award at Digitale Innovations Competition (Crowdfund Insider), Rated: B

CrowdExplorer, a marketplace for “Crowd-investing”, has won the special prize for “Fintech” at this year’s “Digitale Innovations” competition.

CrowdExplorer is designed to provide investors with a platform to compare access to the international Crowd Investments. CrowdExplorer has launched with the following four categories: Equity, Real Estate, Loans and P2P lending.

Index Ventures is coming in force to TechCrunch Disrupt Berlin this December (TechCrunch), Rated: B

Index Ventures started as a European firm in 1996, but 20 years on, it has a strong presence on both sides of the Atlantic and has backed startups in 39 cities in 24 countries.

Among well-known Index-backed companies are Dropbox, Slack, Farfetch, Funding Circle, Adyen, Squarespace, Deliveroo, Just Eat, King and Supercell.

Australia

Spotcap launches $ 10,000 Fintech Scholarship program (Finder), Rated: AAA

Online lender Spotcap has this week announced the launch of a Fintech Scholarship program, with $10,000 being awarded to an Australian student attending university in a fintech-related field. The lender launched the program with the aim of supporting local fintech talent and ensuring the longevity of financial innovation in Australia.

Spotcap is also offering one paid internship placement at its offices in Sydney alongside the program.

Tech-tock, the tech clock is ticking (Bluenotes), Rated: AAA

The Bank for International Settlements – known as the ‘central banks’ central bank’ – says the rapid adoption of financial technology or ‘fintech’ and the emergence of new business models pose an increasing challenge to incumbent banks “in almost all the scenarios considered”.

According to the venture capital analysis group CB Insights non-technology companies now invest more in technology than tech companies.

In the firm’s recent report into fintech investments by major US banks, six – Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo — have made strategic investments in 30 fintech companies since 2009.

The key sectors banks are investing in – and this is true across the globe, to differing degrees – are payments, data analytics, personal technology, distributed ledgers and/or digital currencies and peer-to-peer lending.

India

Here’s why smart Investors in India should opt for P2P lending (Money Control), Rated: A

Peer-to-peer loans are the perfect alternative investment instrument for income-seeking investors. It enables you to offer personal loans to borrowers for an array of purposes while eliminating intermediaries such as banks, NBFCs, and unorganised lenders.

Furthermore, a good P2P lending platform can make available all the relevant information on borrowers to lenders, assisting them in assessing the credit profile of a borrower in an efficient manner. It can provide each lender with a customized dashboard with relevant informatics and data to help make an informed decision.

As per our research, lenders on our platform can earn gross returns to the tune of 18 to 24 percent p.a on an average by building a diversified borrower portfolio. These returns are not merely comparable, but often preferable to returns from other investment instruments such as mutual funds, stocks, real estate, bank deposits, and gold. Income-seeking investors who specifically want to diversify their investments get good returns at the end of the day. As a rule of thumb, at least 20 percent of total investments should be in alternative investments like art, commodity, P2P lending etc.

Asia

Peer to Peer Lender Amartha Partners with Largest State Owned Micro-credit Company in Indonesia (Crowdfund Insider), Rated: AAA

Peer to peer lender Amartha has formed a partnership with the largest state-owned micro credit guarantee company in Indonesia, Perum Jamkrindo. This follows a similar partnership with Bank Mandiri. Amartha is an online lender designed to connect Micro Businesses and SMEs that seek affordable working capital with investors who want to fund their business based on credit risk and expected return. This is a significant agreement for Amartha. Indonesia is the fourth most populous country in the world and support of small business is vital to the economy.

Jamkrindo is a state-owned enterprise that has been given a special mandate by the Government to guarantee credit and financing, as well as financial transactions particularly in the SME and micro segments. Jamkrindo is the largest credit guarantee company in Indonesia with total guarantee value of more than Rp 270 Trillion and 8 Million credit.

Regulatory ‘Sandboxes’ in Asia Can Foster Fintech Innovation (Brink), Rated: AAA

Two years ago the Financial Conduct Authority (FCA) in the UK launched the first formal global regulatory sandbox.

There are a few technologies in fintech that haven’t launched but are being tested around the world—these include using bitcoin as a remittance channel, using electronic health records for life insurance underwriting and a financial robo-adviser/wallet that has a holistic view of an individual’s finances.

Things are altogether different in Asia’s developing economies. First, in these countries, the infrastructure is developing. Apart from India, the concept of digital identity is only evolving in countries such as the Philippines and Indonesia. Moreover, in these countries, bureaucracy is generally a bottleneck since multiple government agencies work in silos with differing incentives.

Developing Asian countries need to prioritize different issues depending on their economies. For example, remittances are of utmost importance in the Philippines and Bangladesh.

For example, robo-advisers are a great way to enable the burgeoning middle class to put their savings into equities with a view toward investing and long-term retirement preparation; Thailand has none of those at the moment. There are international brokerages such as interactive brokers that enable robo-advisers to operate in other parts of the world and are licensed in Thailand. However, there are no traditional Thai banks/ brokerages that provide these new services to their consumers. Elsewhere in Asia, Indonesia is a great example of where the regulators have worked with new businesses to create regulations around peer-to-peer (P2P) lending.

Source: Brink

Senturia Capital Announces Partnership With Funding Societies to Expand Alternative Financing Access to Malaysian Businesses (Crowdfund Insider), Rated: A

Private equity fund manager Senturia Capital has reportedly announced a partnership with peer-to-peer financing platform Funding Societies to expand alternative financing access and capital solutions for Malaysian businesses.

MUFG plans ‘fintech’ unit to focus on cashless settlements, automation (Japan Times), Rated: A

Mitsubishi UFJ Financial Group Inc. will launch a financial technologies unit Oct. 1 in collaboration with 32 regional banks nationwide.

MUFG will put up ¥3 billion in capital to start Japan Digital Design Inc., which is expected to develop new services including those for cashless settlements using smartphones at small shops. It will also promote the automation of operations through artificial intelligence.

Authors:

George Popescu
Allen Taylor