- Today’s main news: SoFi discussed acquisition with Schwab. Victory Park Capital dumps Avant loans, moves away from MPL. Banco BNI Europa partners with Parcela Já on payments solution. Skystar Capital to raise third fund in 2018.
- Today’s main analysis: Mosaic prices, Nelnet, and Avant.
- Today’s thought-provoking articles: Asian stocks outpace U.S. since Alibaba IPO. When payday loans die, something worse could replace them. China fintech funding hits speed bump. European Crowdfunding Network issues paper on EU, Israeli, and U.S. regulation.
- SoFi discussed acquisition with Schwab. AT: “It appears as if these discussions took place before the recent scandal leading to CEO Mike Cagney’s resignation. If that is the case, then the scandal likely had nothing to do with the parties not reaching an agreement on valuation.”
- Mosaic prices and Nelnet.
- Asian companies sell more stock than U.S. companies since Alibaba’s IPO. AT: “And there doesn’t appear to be any signs of this letting up any time soon. China tech companies are hot.”
- When payday loans die, something worse could replace them. AT: “If there is demand, there will be supply. I don’t know how online lenders could offer a product that is ‘worse’ than payday loans. That depends on what you mean by ‘worse’. I would guess that competitive lenders will seek to find a product that offers consumers the loans they need at prices that are more favorable to the marketplace and the squeaky wheels.”
- How often do mortgage lenders follow-up via phone call and email? AT: “This is interesting data, but what I find most interesting is that very few follow-up by email. Even online mortgage lender loanDepot prefers the phone.”
- Varo Money announces new product features.
- SmartBiz Loans brings banks back to SBA lending.
- 4 signs of subprime auto ABS market vulnerability.
- Fundera says traditional SME lending process sucks. AT: “No surprise, really.”
- Dave makes loans for overdraft avoidance.
- First RealFund targets institutional investors.
- CircleUp’s Rory Eakin: AT: “Lend Academy podcast.”
- OneMain increases eSignLive e-signatures rollout to 1,700 branches.
- Real estate crowdfunders turn to auto-invest. AT: “The best part is how auto-investing helps lenders.”
- Noreika says fears of commercially-owned banks are unfounded.
- LendingClub stock fraud lawsuit judged as class action.
- Payments mergers & acquisitions and other deals.
- Lendio joins Innovative Lending Platform Association.
- Victory Park Capital dumps Avant loans.
- Crowdfunder addresses a need.
- ThinCats appoints new origination manager.
- Wonga chairman appointed as Cabot chairman-elect.
- Banco BNI Europa, Parcela Já partner.
- PayKey launches smart mobile payments keyboard.
- PSD2 means a return to relationship banking.
- Cryptocurrencies an banks to integrate.
- European Crowdfunding Network updates review on EU, Israeli, U.S. regulation.
- Sovereign funds’ corporate deals cut in half.
- Trade Ledger helps bank fight off global tech giants.
- How cryptocurrency loans reinvent credit.
- How alternative finance became a big boon.
- Online lending startups thrive.
- A safer loan marketplace.
- FundPitch to cater to SMEs.
- Skystar Capital to raise third fund, targeting late-stage funding.
- Lifestyle inflation may cause millennials to struggle.
- Singaporean SMEs and fintech.
- Promoting consumer finance with policy.
- United States
- SoFi held talks for possible $ 8bn sale this year (Financial Times), Rated: AAA
- Mosaic Prices, Nelnet Acquires Great Lakes, FinTech Financings (PeerIQ), Rated: AAA
- Asian Companies Sell Most Stock in U.S. Since Alibaba’s IPO (Bloomberg), Rated: AAA
- When Payday Loans Die, Something Else Is Going to Replace Them (The Atlantic), Rated: AAA
- How Often Do Mortgage Lenders Follow-Up via Calls And E-mails? (Tenfold), Rated: A
- Varo Money Announces New Product Features to Help Customers Save More Money (Varo Money Email), Rated: A
- SmartBiz Loans brings banks back to SBA lending (Biz Journals), Rated: A
- Davis & Gilbert experts finds 4 signs of subprime auto ABS market vulnerability (SubPrime), Rated: A
- Fundera Report: The Traditional SME Lending Process Pretty Much Sucks (Crowdfund Insider), Rated: A
- This App Will Loan You $ 75 Interest Free to Avoid Overdraft Fees (Lifehacker), Rated: A
- Real Estate Crowdfunding Firm Targets Institutional Investors (InstitionalInvestor.com), Rated: A
- Rory Eakin of CircleUp (Lend Academy), Rated: A
- OneMain Increases eSignLive E-Signatures Roll-Out to 1,700 Branches (Globe Newswire), Rated: A
- Real Estate Crowdfunders Turn to Auto-Invest (Patch of Land), Rated: A
- Fears of commercially owned banks are unfounded: OCC’s Noreika (American Banker), Rated: A
- Why Fintechs Want More Access to State Banking Regulators (Law.com), Rated: A
- Judge OKs LendingClub Investor Class, Competing State Suit (Law360), Rated: B
- Payments M&A, deals and financings all happened (The Financial Revolutionist), Rated: B
- Lendio Joins Innovative Lending Platform Association (OnDeck), Rated: B
- United Kingdom
- VPC offloads Avant loans as part of shift from marketplace lending (P2P Finance News), Rated: AAA
- Why investing in your neighbour is the new finance revolution and Cornwall’s leading it (CornwallLive), Rated: A
- ThinCats Expands in Midlands By Appointing Ravi Bagri As New Origination Manager (Crowfund Insider), Rated: B
- Debt collector Cabot plans to float on London Stock Exchange (Financial Times), Rated: B
- Third-quarter funding for China’s fintech hits a speed bump as state tightened reins on capital outflow (SCMP), Rated: AAA
- European Union
- BANCO BNI EUROPA AND PARCELA JÁ SIGN STRATEGIC PARTNERSHIP TO LAUNCH SOLUTION FOR PAYMENT OF PURCHASES (Global Bnking & Finance), Rated: AAA
- PayKey Launches Smart Mobile Payments Keyboard (PYMNTS), Rated: A
- PSD2 signals a return to relationship banking, says Temenos (AltFi), Rated: A
- ENEMY TURNED INTO BROTHER: CRYPROCURRENCIES AND BANKS TO INTEGRATE IN JUST ONE YEAR (Bitcoinist), Rated: A
- The ECN Updates Review of Crowdfunding Regulation in the EU, Israel & the USA (Crowdfund Insider), Rated: AAA
- Sovereign funds’ corporate deals halve in Q3, Asians stay active (The Star), Rated: A
- Fintech startup, Trade Ledger, launches world-first tech to help banks fight off global tech giants (Business Insider), Rated: A
- How Cryptocurrency Loans Are Reinventing Credit (International Business Times), Rated: A
- How alternative financial services ecosystem has become big boon for India (Financial Express), Rated: AAA
- Online lending startups thrive as banks with bad loans become cautious (Deal Street Asia), Rated: A
- Now, a safer marketplace for loans (The Hindu Business Line), Rated: A
- FundPitch to cater to SMEs (The Hindu), Rated: B
- Indonesia’s Skystar Capital to raise third fund in 2018, to target late-stage funding (Deal Street Asia), Rated: AAA
- Lifestyle inflation could be the reason you’re struggling (The Star), Rated: A
- Propelling Singaporean SMEs to greater heights with fintech (SBR.com.sg), Rated: A
- Improve policy framework to promote consumer finance (Viet Nam News), Rated: A
- Brace yourselves for the future of finance (Khaleej Times), Rated: A
- HONEST FINANCING FOR TURKISH FARMS (Delano.lu), Rated: A
- Ghanian FinTech Bloom Impact attracts Canadian investment (CFO), Rated: AAA
SoFi held talks for possible $ 8bn sale this year (Financial Times), Rated: AAA
SoFi, the highly valued online lender, explored a sale earlier this year, holding talks with companies including Schwab, the San Francisco-based broker, according to people familiar with the matter.
The sale discussions at SoFi, which has since been rocked by sexual harassment allegations, were triggered by an indicative offer of $6bn from a foreign bank, according to two people familiar with the matter. That offer came soon after SoFi raised $500m in a fundraising round led by Silver Lake, which valued it at more than $4bn.
After the initial approach, SoFi held talks with other possible acquirers with a targeted price of $8bn-$10bn. Several US companies, including Schwab, discussed a possible deal but none matched the desired price. SoFi decided to wait for an initial public offering, tentatively scheduled for 2019.
Mosaic Prices, Nelnet Acquires Great Lakes, FinTech Financings (PeerIQ), Rated: AAA
Earlier this week, Mosaic priced MSAIC 2017-2, their second solar ABS. The deal was heavily oversubscribed, with over $1.7 Bn in orders for a $307.5 Mn deal.
On Thursday, Nelnet announced it would acquire Great Lakes Education Loan Services for $150 Mn in cash.
In other securitization news this week Avant filed ABS 15-G for is AVNT 2017-B deal. KBRA assigned preliminary ratings to three classes of notes issued by Avant Loans Funding Trust 2017-B (“AVNT 2017-B”). The transaction is a $232.648 Mn consumer loan ABS transaction that is expected to close on October 31, 2017. We took a close look at Avant’s first deal of 2017 in a prior newsletter.
With over $1.1 Bn loans funded, Mosaic maintains a proprietary origination channel consisting of a high-quality network of approved solar installers. These installers are carefully screened as Mosaic must rely on these partners to refer quality borrowers because the loans are secured by the installed solar systems.
Last month, Mosaic inked a deal with Goldman Sachs for a $300 Mn forward purchase agreement. In addition to the ~$450 Mn the company has raised through securitizations, other significant sources of financing include a $220 Mn series C equity raise led by Warburg Pincus in 2016 and $650 Mn in warehouse commitments from a diverse mix of banks.
Asian Companies Sell Most Stock in U.S. Since Alibaba’s IPO (Bloomberg), Rated: AAA
Fifteen Asian companies have raised $3.2 billion in U.S.-listed IPOs and seen their shares climb 46 percent since their listings this year, according to weighted-average share price data compiled by Bloomberg. That compares to an 11 percent climb for the 105 U.S. businesses that listed domestically and raised a combined $23.6 billion.
Combined with other listings, those three have put October on track to be the biggest month of the year for U.S. IPOs. The $29 billion raised in 2017 has already outpaced the $15.2 billion in stock offered by new U.S.-listed companies through this time last year, according to data compiled by Bloomberg.
The 13 Asian companies that raised a combined $1 billion in 2015 are up 117 percent, beating the 19 percent rise for U.S.-based companies that had domestic listings that year. In 2014, 20 Asian companies including Alibaba raised a combined $30 billion. Those stocks are up 152 percent on average. The $50 billion in U.S.-based companies’ shares sold that year have climbed only 35 percent.
When Payday Loans Die, Something Else Is Going to Replace Them (The Atlantic), Rated: AAA
But the regulations will do little to address the other side of the problem: consumers’ demand for small, fast, easy-to-obtain loans. Solving that problem, while ensuring that new predatory loans options don’t pop up, will fall to the financial industry and state legislators—who’ve struggled in the past to protect financially vulnerable Americans.
Some of those options are already out there, and won’t be covered by the CFPB’s new rule, says Nick Bourke, the director of the consumer-finance program at Pew Charitable Trusts. According to Bourke, many of the same payday and auto-title lenders that will be shelving shorter-term loans ahead of the CFPB’s onerous new rules already have other loan options available. And they’re available in about half of all states.
To prevent that, Bourke says, states could mandate that small and installment loan options include affordable repayment structures, reasonable repayment times, and lower fees. That’s an option that has already been implemented in some states such as Colorado, and one that might work elsewhere.
There are few places for poor, underbanked Americans to turn when they’re in need of a couple hundred dollars in a pinch. In the past, many traditional banks have said that the risk and cost of underwriting small-dollar loans simply isn’t worth it: Small loans, coupled with borrowers with low incomes and spotty or nonexistent credit history, don’t really appeal to large, profit-seeking banks.
One of the main alternatives provided by credit unions is the Payday Alternative Loan—which allows federally backed credit unions to provide their members with small loans in amounts ranging from $200 to $1,000, with repayment terms of one to six months. But when you compare the accessibility of PAL loans to the demand for payday products, it’s clear that they can’t meet the need. In 2016, only about 20 percent of the country’s fewer than 4,000 federal credit unions offered the loans. And to get one, a borrower must be a member of a credit union for at least a month, and sometimes complete a financial-education requirement in order to fulfill a loan application. That’s an imperfect swap for many of the 12 million Americans who use payday loans each year to receive an instant cash infusion.
How Often Do Mortgage Lenders Follow-Up via Calls And E-mails? (Tenfold), Rated: A
I conducted a study where I applied for home loans with nine different lenders and then tracked their follow-up attempts over two weeks. During this time, I also did not respond to their follow-up calls and e-mails.
- Over the course of two weeks, Quicken Loans made the most follow-up attempts. 18 to be exact.
- Lenders at Citigroup came second with 17 follow-up attempts.
- loanDepot, in third place, attempted 13 follow-ups.
- During the same period, Chase Mortgage and PennyMac Loan Services tied for fourth with 11 follow-up attempts.
- Sales reps at Bank of America only followed-up on the home loan application five times.
- U.S. Bancorp followed-up twice, and CapitalOne and HSBC Mortgage Services tied for last with just a single follow-up attempt.
Varo Money Announces New Product Features to Help Customers Save More Money (Varo Money Email), Rated: A
SmartBiz Loans brings banks back to SBA lending (Biz Journals), Rated: A
The company, which offers an online Small Business Administration loan marketplace, was the top facilitator of traditional SBA 7(a) loans under $350,000 in fiscal 2016.
Davis & Gilbert experts finds 4 signs of subprime auto ABS market vulnerability (SubPrime), Rated: A
As S&P Global Ratings noticed collateral performance in the U.S. subprime auto loan asset-backed securities (ABS) market deteriorated moderately on a sequential basis in August, Davis & Gilbert’s Insolvency, Creditors’ Rights & Financial Products Practice Group fears investors could be in for a surprise if that market segment makes a more notable move.
S&P Global Ratings indicated the subprime net loss rate increased to 7.95 percent in August 2017 from 7.38 percent in July but decreased year-over-year from 8.35 percent.
Between August of last year and the same month this year, analysts noted about 35 new deals with a total collateral amount of approximately $17 billion were added to their index. These additions pushed the outstanding collateral amount up to approximately $35.6 billion compared to $32.0 billion a year earlier.
Fundera Report: The Traditional SME Lending Process Pretty Much Sucks (Crowdfund Insider), Rated: A
Fundera, an online lending comparison site, has partnered with Oliver Wyman on a report about SME lending. Entitled, “Great Expectations: Improving the loan application process for small business borrowers, the document effectively labels the traditional borrowing process as broken.
On the flip side, banks still have an advantage in a lower cost of capital so if you can suffer through the frustration you loan (if ever approved) may come at a lower cost.
So what is the big takeaway from all of this?
The report explains that alternative lenders have a higher cost of capital because they lack access to low cost deposits that banks and credit unions use to fund their loans. The average cost of funds for a bank is around 0.06%. In comparison, OnDeck reported a cost of funds in Q1 2017 of 5.9%.
This App Will Loan You $ 75 Interest Free to Avoid Overdraft Fees (Lifehacker), Rated: A
Another solid solution: Dave. Not your buddy from college, the app.
Once it’s tied to your bank account (using the same military-grade 128-bit SSL encryption technology used by big banks), the app will monitor your finances and reoccurring expenses and then let you know when you’re running at risk of overdrafting your account.
Within the app you can ask to borrow $25, $50, or $75 to get you through until your next paycheck comes. Loans are free, but when you pay them back you’re given the option to leave a 5-15% tip. For every % of tip you give, the app will plant a tree.
Using the app costs $1 per month.
Real Estate Crowdfunding Firm Targets Institutional Investors (InstitionalInvestor.com), Rated: A
First RealFund will offer property investments in high-growth neighborhoods such as Brooklyn.
The New York-based firm will provide short-term real-estate investments in high-growth neighborhoods, according to co-founder and Chief Executive Officer Dan Drew. First RealFund will offer opportunities to co-invest alongside the firm in residential and commercial real-estate deals.
He projects returns of 12 percent to 24 percent on investments lasting one to three years.
First RealFund has a $5 million pipeline of deals and plans to co-invest $100,000 in each of its first two offerings, according to Drew. He said investors can allocate between $500,000 and $3 million in each of the real estate assets offered by First RealFund.
Rory Eakin of CircleUp (Lend Academy), Rated: A
In this podcast you will learn:
- The circuitous route Rory took through South Africa before founding CircleUp.
- The huge untapped opportunity that Rory and his co-founder discovered.
- Some examples of consumer goods companies that have raised capital on CircleUp.
- How they approach the due diligence process.
- How and why they are tracking 1.2 million companies in the consumer sector.
- Why building their own data analysis tools has been a key ingredient in their success.
- The typical size of the companies that are raising money and the typical equity rounds.
- The number of companies that have raised money on the platform.
- The average revenue CAGR for those companies.
- Their current mix of investors and the average investment on the platform.
- Why they decided to launch a loan product earlier this year.
- The typical loan terms they are offering.
- Who is providing the capital for their loan product.
- Why they remain focused on the consumer goods vertical for this loan product.
- What the future holds for CircleUp.
OneMain Increases eSignLive E-Signatures Roll-Out to 1,700 Branches (Globe Newswire), Rated: A
VASCO Data Security International, Inc. today announced that longtime customer OneMain Financial, the largest responsible personal loan company in the U.S., has extended its use of eSignLive e-signatures for loan applications to more than 1,700 U.S. branches in 44 states. The lender has seen 99 percent adoption of the technology, which translates into an annual savings of approximately 500,000 administrative hours and $500,000 in toner costs alone, and enables OneMain to deliver an omni channel experience to improve the customer experience while reducing in-branch costs.
OneMain selected eSignLive in 2012 to enable virtual personal lending, including unsecured loans across online and call center channels.
Real Estate Crowdfunders Turn to Auto-Invest (Patch of Land), Rated: A
Automatic investment tools are gaining traction with real estate crowdfunding platforms as a way for investors to obtain greater access to transactions that meet their investing criteria.
The benefits of automatic investing to the real estate investor are multifold:
- It levels the playing field.
- It improves flexibility.
- It may allow for higher investments.
- It increases portfolio diversity.
- Investors gain access even when demand is high.
How auto investing helps lenders
While the multiple benefits of automatic investing are fairly obvious to investors, real estate crowdfunding lenders stand to benefit as well. Using data gathered from investor parameters selected in a respective platform’s auto invest feature, the lender is able to see if a loan will fully fund or by what percentage it will fund before the loan documents are ever signed or approved.
This data helps determine whether an appetite exists on a particular real estate crowdfunding platform for a specific loan. If there’s a huge appetite for a particular loan type, then more of those types of loans may be offered.
Lenders who have built-out this type of auto-investing technology in an intelligent way will have an audit history to see how investing parameters have changed over time, which will help to make smarter lending decisions now and into the future.
Lenders, armed with auto-investing data, will be able to draw trend lines on how investors are or are not changing their investing parameters.
This could mean making a decision to deny a loan application because “crowd” investors have no appetite to fund it while prioritizing another loan through the approval and funding process because of high demand from investors.
Fears of commercially owned banks are unfounded: OCC’s Noreika (American Banker), Rated: A
Acting Comptroller of the Currency Keith Noreika on Thursday pushed back against concerns that his agency’s proposed fintech charter will unduly benefit nonfinancial firms.
Why Fintechs Want More Access to State Banking Regulators (Law.com), Rated: A
This week, the Conference of State Bank Supervisors (CSBS) announced more than 30 companieswill participate in its newly formed Fintech Industry Advisory Panel. The panel is part of the CSBS’s Vision 2020 initiative, which seeks to “modernize state regulation of non-banks, including financial technology firms.”
At financial startup Social Finance Inc. (SoFi), general counsel Rob Lavet, who oversees compliance professionals and is used to interacting with state and federal regulators, will be the one to serve on the panel. Kabbage’s head of global privacy, Sam Taussig, will represent the Atlanta-based small-business lending company.
Some companies have chosen other executives to participate in the regulatory conversation. At CommonBond, for instance, CEO and co-founder David Klein will represent the student loan company.
Judge OKs LendingClub Investor Class, Competing State Suit (Law360), Rated: B
Investors in LendingClub Corp. who accused the online lender of stock fraud were recognized as a class in California federal court on Friday, but the judge allowed a competing state-court case to advance despite his skepticism that it would result in a better outcome for investors.
Payments M&A, deals and financings all happened (The Financial Revolutionist), Rated: B
Lendio Joins Innovative Lending Platform Association (OnDeck), Rated: B
The Innovative Lending Platform Association (ILPA), consisting of the nation’s leading online small business lending platforms, today announced that small business platform Lendio has joined the trade organization as an associate member. Lendio will work with other ILPA members to advance online small business lending education, advocacy, and best practices.
VPC offloads Avant loans as part of shift from marketplace lending (P2P Finance News), Rated: AAA
VICTORY Park Capital (VPC) Specialty Lending Investments has offloaded the majority of its loans from US personal loans platform Avant.
The alternative lending investment trust said in a portfolio update on Monday that the move is part of its strategy of shifting from marketplace to balance sheet lending.
The investments sold represent 7.6 per cent of the company’s net asset value as at 31 August 2017.
Why investing in your neighbour is the new finance revolution and Cornwall’s leading it (CornwallLive), Rated: A
Crowd sourced funding has transformed the way we do business, whipping up a sense of entrepreneurship and encouraging all of us to think about investing more locally.
According to SWIG Finance which has a base in Truro, more than £10billion has been loaned to UK businesses and consumers by the alternative finance sector as a whole since 2005.
Crowdfunder’s growth has been meteoric with 25,000 members joining the platform every month and raising some £2m a month for UK projects.
ThinCats Expands in Midlands By Appointing Ravi Bagri As New Origination Manager (Crowfund Insider), Rated: B
Peer-to-peer lending platform ThinCats announced on Friday it has appointed Ravi Bagri as its new Origination Manager, who will cover the Midlands region. According to the online lender, Bagri is considered one of the most well-established names in the Midlands finance sector and has nearly 30 years of experience in retail and commercial banking.
Debt collector Cabot plans to float on London Stock Exchange (Financial Times), Rated: B
Cabot has also appointed Andy Haste, chairman of payday lender Wonga, as independent chairman-elect, to help oversee the debt management group’s transition to a public company.
Third-quarter funding for China’s fintech hits a speed bump as state tightened reins on capital outflow (SCMP), Rated: AAA
Total funding raised by China’s venture capital-backed financial technology start-ups fell to US$800 million across 26 deals between July and September, a drop of 27 per cent from last year, as the central government kept a tight rein on capital outflows from this sector.
That amount was down from US$1.1 billion in the same period last year and below the US$1 billion recorded in the quarter to June, according to a recent online briefing by Lindsay Davis, an intelligence analyst at venture capital research firm CB Insights.
Davis said deal activity of mainland fintech start-ups in the third quarter dropped 19 per cent from 32 transactions recorded in the second quarter.
Dianrong, the Shanghai-based operator of a popular online lending marketplace, recorded the region’s largest fintech deal last quarter – a US$220 million Series D funding round led by China Minsheng Investment, Singapore sovereign wealth fund GIC and South Korean private equity firm Simone Investment Managers.
That was followed by the US$200 million Series C financing round of Shenzhen Suishou Technology, which runs a personal finance management platform on the mainland. Its investors included Hong Kong-listed conglomerate Fosun International, global investment firm KKR & Co, Sequoia Capital China and Beijing-based venture capital company Source Code Capital.
BANCO BNI EUROPA AND PARCELA JÁ SIGN STRATEGIC PARTNERSHIP TO LAUNCH SOLUTION FOR PAYMENT OF PURCHASES (Global Bnking & Finance), Rated: AAA
Banco BNI Europa and Parcela Já, Portuguese Fintech, have entered into a partnership to launch an innovative solution for the Portuguese market, which aims to enable any retailer to offer its customers the instalment of any purchase without costs to the consumer.
This product is open to all consumers with a credit card. To benefit from this service, the final customer will only have to make the purchase with his usual credit card, deciding at the terminal, at the time of purchase, the instalment he intends to make, between 2 and 12.
PayKey Launches Smart Mobile Payments Keyboard (PYMNTS), Rated: A
Mobile banking startup PayKey, which offers a smartphone keyboard designed for millennial banking customers, has raised $10 million in Series B funding, bringing its total raised to $16 million.
According to news from TechCrunch, this latest round was led by MizMaa Ventures, with participation from other investors that include SBI Group, Siam Commercial Bank’s financial tech subsidiary Digital Ventures, SixThirty and Fintech71.
PSD2 signals a return to relationship banking, says Temenos (AltFi), Rated: A
Jeroen Broekema, online lender Funding Circle’s lead in the Netherlands, recently told us that PSD2 “has the potential to be a game-changer”, but that its success in the short-term will depend on the willingness of the big banks to engage.
Temenos is a software provider to banks and other financial services firms, helping them to keep pace with a rapidly changing market. It’s the fourth largest software company in Europe, with profits of over $185m and a market capitalisation of more than $5bn. (Clearly, selling technology to banks is big business.)
ENEMY TURNED INTO BROTHER: CRYPROCURRENCIES AND BANKS TO INTEGRATE IN JUST ONE YEAR (Bitcoinist), Rated: A
Two factions have formed on their own – people who stay loyal to banks and observe the cryptocurrency market from afar, only dreaming about 30–60% p.a. deposit rates. And then there are those who have switched over to cryptocurrencies and are happy with the state of things but shudder every time they hear about the latest hacking of cryptocurrency wallets. Why make this choice? The market needs a service at the intersection of these factions.
We are finally solving the issue of debit card linkage to cryptocurrency wallets. About 10 companies promise to issue their Master Card or VISA cards – all to no avail… Our marketplace will solve the problem of online lending, including p2p lending, as well as deposits in cryptocurrency assets. Sure, the market may offer similar services, however only Narbonne has the team with that much experience in finance.
Many microfinance companies like to mention that 2–3 billion people are currently unable to get a loan in a bank.
The ECN Updates Review of Crowdfunding Regulation in the EU, Israel & the USA (Crowdfund Insider), Rated: AAA
On October 20, at its 6th Convention in Vilnius, Lithuania, the European Crowdfunding Network (ECN), the European association of alternative finance platforms, released its Third Edition of the Review of Existing Regulations of crowdfunding and related alternative financing in the 28 countries of Europe, as well as in North America and Israel.
The 720-page long report was written by local offices of law firms in each country coordinated by international law firm Osborne Clarke under the direction of Tanja Aschenbeck-Florange and her colleague Thorge Drefke.
In response to the new alternative financing models, some 11 EU countries have implemented national level regulations for securities-based and lending-based crowdfunding:
Belgium, Finland, France, Germany, Greece, Italy, Lithuania, The Netherlands, Portugal, Spain, and The United Kingdom.
A few other countries, such as Romania and Ireland, are preparing to issue such crowd-funding-specific regulations.
The result of this lack of regulatory harmonization is a market fragmentation which clearly hampers the development of the industry.
A Call for Action
The aim of the report, in addition to providing a reference document for the platforms and their partners, is to present the European and national regulators and legislators with a clear picture of the fragmented regulatory landscape and to suggest directions for improvements inspired from the best practices observed in each country.
Sovereign funds’ corporate deals halve in Q3, Asians stay active (The Star), Rated: A
The value of corporate deals with sovereign wealth fund (SWF) participation halved in the third quarter as oil-driven funds continued to take a back seat.
GIC participated in the top three deals, the largest being a US$6.4bil offer for Danish payments processor Nets by newly-formed company Evergood 5. The deal was backed by a consortium that included GIC, led by private equity firm Hellman & Friedman.
The second largest was the US$1.6bil acquisition of Hong Kong-based insurer MassMutual Asia by another investor group that included GIC.
GIC also led a US$220mil funding round for Chinese peer-to-peer lending platform Dianrong.
Fintech startup, Trade Ledger, launches world-first tech to help banks fight off global tech giants (Business Insider), Rated: A
Career technologists, Martin McCann and Dr. Matthias Born, are launching a world-first lending tech for banks and traditional lenders that will help to equip them against competition from tech giants such as Facebook, Tencent, and eBay wanting to enter financial services.
Trade Ledger is the world’s first business lending platform that transforms digital data from business supply chains in real time, allowing banks to assess and regularly update credit and default risk of businesses they lend to. Currently this is only done on a one-off or infrequent basis on a very small sample of invoices, and not on any other trade documents.
How Cryptocurrency Loans Are Reinventing Credit (International Business Times), Rated: A
One of the biggest barriers for taking out a loan is credit worthiness. The traditional way banks and lenders assess credit is widely considered outdated in the modern economy.
Users will download the app and log in through Facebook or LinkedIn to authenticate their identities. Ebay or Amazon sellers can upload their transaction histories to show their reliability. Borrowers can even have a guarantor, say a friend anywhere in the world with a cryptocurrency wallet, put up her digital assets to boost your Celsius credit limit.
Borrowers receive their credit in dollars even though lenders are giving them ether.
The plan is to eventually go global. Meanwhile, a Buenos Aires-based startup called the Ripio Credit Network will soon offer similar cryptocurrency services in Latin America. Ripio will focus on short-term microloans, ranging in value from $20 to $2,000. Ripio founder and CEO Sebastian Serrano told IBT the bitcoin wallet platform already has 140,000 users, mostly in Argentina and Brazil.
Like Nubank in Brazil and the fintech startup Tala in Africa and Asia, Ripio will also use cellphone data to help bolster the user’s credit score.
NerdWallet reported the average credit card rate was around 12.3 percent in 2016, accounting for inflation.
Salt has a KeepKey hardware wallet and a digital lending platform set to launch near the end of this year, altogether bringing in more than $45 million in revenue thanks to 25,0000 users.
The Cambridge study estimated there are between 5.8 to 11.5 million active cryptocurrency wallets worldwide.
How alternative financial services ecosystem has become big boon for India (Financial Express), Rated: AAA
J Venkatesh had always wanted to gift his college-going daughter a phone. But the machine operator, who works in a tobacco-manufacturing unit in Secunderabad, could never save enough money to buy a smartphone. Though he had a savings account in a large nationalised bank, he wasn’t able to procure a personal loan due to poor credit score. That’s when Home Credit India, a consumer finance provider, came into the picture. Last year, the company gave Venkatesh a small-ticket loan of Rs 10,000 to buy a smartphone. The small-ticket loan boosted his credit score, following which he was able to avail two personal loans of Rs 1 lakh and Rs 73,000 within a gap of less than six months between the two loans.
“With less than 20 million consumers in this country having credit cards and 70% of the formal consumer credit availed by only 24 million households, the opportunity for fintechs is immense,” says Lizzie Chapman, co-founder and CEO, ZestMoney, a fintech firm. At ZestMoney, the ticket size of loans ranges from Rs 3,000 to Rs 3 lakh. “But our sweet spot is in the Rs 20,000-Rs 50,000 space. These are purchases that are too small to warrant taking a personal loan for, but too big to put in one lumpsum for most people,” Chapman adds.
Today, nearly one-third of the customers availing loans through these financial institutions are new to credit.
As per data released in 2016 from the finance ministry, only 28-32% of Indians have access to financial institutions, including post offices and banks.
Online lending startups thrive as banks with bad loans become cautious (Deal Street Asia), Rated: A
Online lending start-ups such as Faircent, Wishfin and Loantap as well as large e-commerce firms are helping expand consumer credit at a time when banks burdened by bad loans have become cautious about lending.
Personal loans advanced by banks grew 15.7% in August, slower than the 18.1% growth that the segment reported a year ago, according to the Reserve Bank of India (RBI) data.
Faircent (Fairassets Technologies Pvt. Ltd) is now processing around 300 loans per month, with an average loan size of Rs1.5 lakh on a monthly basis, compared with 130 loans given in November and December last year.
Wishfin (Mywish Marketplaces Pvt. Ltd), a company which aggregates loan and credit products from banks, has also experienced a huge increase in loans after demonetisation. The firm claims to get around 300,000 applications every month for various financial and credit products, up 2.75 times from a year ago.
LazyPay (owned by PayU) and Simpl (owned by Get Simpl Technologies Pvt. Ltd) also provide a buy-now, pay-later option to customers on their platforms by tying up with online vendors.
Loantap (LoanTap Financial Technologies Pvt. Ltd) is one such platform that provides instant finance to salaried consumers. It has categorized loans for specific-use cases including weddings, holidays, car/bike loans and credit card re-financing, among others.
Now, a safer marketplace for loans (The Hindu Business Line), Rated: A
If you want to raise money quickly for business or personal use, the peer-to-peer (P2P) lending platform has now become more transparent and safer. The RBI last week laid down directions that bring more credibility to the online platform.What is it ?A P2P lending platform brings lenders and borrowers together.
FundPitch to cater to SMEs (The Hindu), Rated: B
While Bodhtree Consulting Limited will launch its operations in the Fintech Valley-Vizag within a few days, two other companies Lycos Internet Ltd (erstwhile Ybrant Digitals) and Kissht will also invest in the city.
The three companies have given the commitment to start their operations in Fintech Valley-Vizag with a total job opportunity for 600.
Besides Bodhtree, its subsidiary FundPitch would also facilitate funding for SMEs — a long needed requirement for innovative entrepreneurs in Andhra Pradesh — J.A. Chowdary, Special Chief Secretary and IT Advisor to Chief Minister, told The Hindu.
Indonesia’s Skystar Capital to raise third fund in 2018, to target late-stage funding (Deal Street Asia), Rated: AAA
Indonesian early-stage venture capital firm Skystar Capital is expected to hit the fundraising course for its third fund by the second half of next year, a top executive told DEALSTREETASIA.
The VC is now deploying its second fund – which it closed mid-2016 – with check sizes ranging between $100,000 and $1 million. It plans to start the fundraising process when it has utilized at least 50-60 per cent of the current fund.
Lifestyle inflation could be the reason you’re struggling (The Star), Rated: A
WHAT is lifestyle inflation? Quite simply it’s when you increase your spending when your income level goes up, for instance, each time you get a salary increment. It’s a simple idea that when you make more, you spend more.
But aside from that, did you know the Malaysia Employers Federation (MEF) has reported that the average salary increase in 2017 is estimated at 5.3% for executives and 5.43% for non-executives.
Inflation is floating between 3.6% to 3.9%, that only gives you a salary increase of 1%-2%.
Propelling Singaporean SMEs to greater heights with fintech (SBR.com.sg), Rated: A
According to the January 2017 report by Hootsuite and We Are Social Singapore, there are currently 644.1 million people in Southeast Asia. Of which, 53% are internet users making the region ripe for growth and expansion for Fintech adoption.
Paired with the Smart Financial Centre, with funding of $225 million, this has reduced the barriers to entry for fledgling startups and SMEs.
As a sector that contributes between 23 and 58 percent of the Gross Domestic Product of the region’s various countries, many transactions arise from SMEs. These may include the use of paper money or cheques, processes that are labour-intensive and time-consuming. However, with the rise of payment services like Omise in Thailand, M_Service in Vietnam, and Doku in Indonesia, SMEs can now reach customers without credit cards to transact on an e-commerce platform.
In Singapore, the introduction of PayNow, a payment service that allows transactions to be made to the user’s mobile number on mobile banking apps, has made banking transactions more convenient than ever.
Lending & Financing
Whilst SMEs are key to driving economic growth in Southeast Asia, the fact that they are small and medium enterprises also mean that they encounter difficulties in securing loans from traditional financial institutions. A report by Deloitte states that less than 60% of SMEs in five countries the region have access to bank loans.
Another key issue SMEs face is the lack of financial literacy or financial literacy tools available to managers.
Improve policy framework to promote consumer finance (Viet Nam News), Rated: A
Experts agreed that the consumer lending market has high potential in Việt Nam, given the low penetration and significant size of the population that remained unbanked and unserved despite increasing income.
Statistics of the State Bank of Việt Nam revealed that total outstanding consumer loans were at VNĐ960 trillion (US$42.1 billion), or 15.7 per cent of the total outstanding loans in the economy, in 2016, of which VNĐ74 trillion was provided by finance companies.
She cited the World Bank’s statistics according to which the population with loans accounted for 46.84 per cent in Việt Nam, but the percentage of population with loan at financial institutions was much smaller at 18.45 per cent.
Brace yourselves for the future of finance (Khaleej Times), Rated: A
The financial services industry is experiencing a time of unprecedented change. And the principal driver for this change is fintech.
Investment in fintech in the Middle East alone for 2017 was forecast to increase by 270 per cent at the beginning of the year, with this figure expected to rise exponentially in the short to medium-term.
With the number of people owning at least one smartphone in the UAE – forecast to reach 789 million by 2019 – mobile banking plays a large and very important part in our everyday lives. Indeed, research leading up to the annual Gitex Technology Week in Dubai shows substantial growth in the banking habits of the high-earning, always-connected under-35s who require and expect constant mobile banking access.
In addition to mobile banking apps – robo-advisers, peer-to-peer lending and cryptocurrencies such as bitcoin and Ethereum – have all played a role in this colossal upheaval of the financial services industry.
HONEST FINANCING FOR TURKISH FARMS (Delano.lu), Rated: A
We caught up with founders from each of the 12 selected startups, this time with Mehmet Memecan, founder of Tarfin:
What does ’financial inclusion’ mean to you?
In farming, you achieve higher profitability by either planting more value-added crops, or plant more acres of the same crop. Both of these options require additional to capital.
Could you describe the mission of Tarfin?
Tarfin uses technology and its vast retailer network to deliver competitive financing options for farmers’ purchases of farm inputs. Farmers can buy fertilisers, seeds and chemicals today, and only pay after harvest. We bridge the financing gap, and we do it at a cheaper rate than what’s otherwise available to the farmer.
What are the unique challenges and opportunities of your home market?
Unfortunately, we have very low financial literacy in Turkish agriculture.
Ghanian FinTech Bloom Impact attracts Canadian investment (CFO), Rated: AAA
Ghana’s Bloom Impact, a machine learning loans marketplace accessible from smartphones has raised undisclosed funding from Engineers Without Borders Canada, EWB Ventures, an early-stage investor in innovative Africa-based social enterprises.