Monday October 2 2017, Daily News Digest

marketplace lending uk

News Comments Today’s main news: CEO-less SoFi will have to wait to get a bank. Zopa partners with Saffron Building Society. Zopa updates credit risk model. Assetz Capital lowers commercial mortgage interest rate to 6.9%. RateSetter reports 56% of investors switch from cash. Beehive raises $5M. African billionaire invests in digital bank. Today’s main analysis: UK marketplace lenders struggle to find […]

marketplace lending uk

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

APAC

MENA

South Africa

News Summary

United States

SoFi’s CEO Hiatus Stalls Its Big-Time Banking Ambitions (The New York Times), Rated: AAA

One of the most valuable private financial technology startups in the United States, SoFi’s $4.3 billion valuation was based on expectations it could develop into a major lender but Cagney’s departure this month and the circumstances around his exit complicate efforts to create a new-generation bank that could compete against JPMorgan or Bank of America.

The company has hired headhunters over the past few days to help find his replacement, but an appointment is not expected to take place until the end of the year, a source familiar with the matter told Reuters.

The gap at the top is likely to stall SoFi’s application for a banking license, according to the source, because regulators assess whether a company has a capable CEO before allowing it to accept deposits.

A banking license was a key part of Cagney’s push to grow SoFi beyond its core business of student loans and unsecured personal loans.

But without Cagney at the helm, the emphasis is expected to shift.

The company will be more disciplined about testing new products before selling them widely, a source close to the company said.

Square Wants To Be A Bank, And Real Banks Are Pissed (BuzzFeed), Rated: AAA

Small businesses love Square because it charges them less than the bigger, bank-owned payment processors, and the little white card-swipes that plug into a smartphone are easier and more convenient than handheld credit card terminals. Square also — through a partnership with a tiny bank in Utah — makes loans to small companies and entrepreneurs banks would turn away.

As much as small merchants love Square, smaller banks distrust it, particularly now that the company, which is based in San Francisco, has applied to become an industrial loan company (ILC), a controversial type of banking license offered in Utah and a few other states.

And while Square insists it only wants to make small loans to the merchants it serves, banks see this as a backdoor way into their bread-and-butter business of taking deposits and making loans, both to businesses and consumers.

And Square, with its at least 2 million merchant customers, may look to today’s bankers a lot like Walmart did a decade ago. The company has been aggressively soliciting the merchants who use it as a payment processor, offering them small-dollar loans by email.

Take Courtney Foster, who runs a one-chair salon in the Murray Hill neighborhood of Manhattan and has used Square to accept payments for years. One day she got an email from Square Capital with an offer of a loan of $1,000 to $1,500, which would be paid back directly out of her payments processed through Square.

She has since borrowed about $3,000 in total from Square using the money (supplied by Celtic Bank) to start her own line of hair products.

The average loan approved by Square is about $6,000, and the company has either advanced or loaned almost $2 billion since 2014. The amount due back is typically 10% to 16% more than the amount loaned out — which is on the low end for similar types of small business finance  with payments coming out of a fixed percentage of the merchant’s receipts received through Square. The whole balance is due after 18 months, though Square customers can repay early.

Utah has 16 industrial banks, and most fall into the latter category, while some are retailers that issue their own loans, like BMW. Other companies that operate Utah industrial banks include American Express, USAA, UBS, and Sallie Mae.

Acting OCC Head Noreika Comments on FinTech Charter and Online Lending (PeerIQ), Rated: A

Also, in a major shift from prior OCC Head Tom Curry, Noreika affirmed that the proposed FinTech charter could be granted to commercial firms. Former Chair of the FDIC, William Isaac, was also constructive on the concept of enabling commercial firms to engage in banking to drive greater competition, customer choice, and expand access to credit to the 60% of Americans that cannot access a loan from a US bank. Historically, the separation of banking and commerce under the Bank Holding Company Act has prevented commercial firms (outside the ILC charter) from offering banking services. Our interpretation of the above is that, under the FinTech charter, commercial firms such as Walmart, Amazon, Google, and Facebook would have a path to offering banking services.

Cross River Bank CRO Adam Goller moderated a panel including PeerIQ (Ram Ahluwalia), Affirm (Alex Karram), Marlette Funding (Jeff Meiler), and former Massachusetts Commissioner of Banks, David Cotney. PeerIQ cited data and research from Columbia and Harvard Law concluding that the lack of regulatory clarity stemming from Madden-Midland has reduced the availability of credit in District 2.

On Timing for Issuing Charters:
“Interest also remains in the possibility of the OCC offering special purpose national bank charters to nondepository fintech companies engaged in the business of banking. … We have not, however, decided whether we will exercise that specific authority to issue special purpose national bank charters to nondepository fintech companies. We will keep you posted.”

PeerIQ Context: The Conference of State Bank Supervisors and NYS Dept of Financial Services have challenged the OCC’s authority to issue charters. Also, the OCC may be waiting for the nominee of Head of OCC Joseph Otting to be confirmed by the US Senate before introducing the FinTech Charter. Otting was approved by the Senate Banking Committee in early September.

Will They or Won’t They: The OCC’s Fintech Charter (Payments Journal), Rated: A

“The Fintech Charter Decision is an unlawful assertion of power that usurps New York consumer protection laws and would preempt plaintiff’s ability to regulate any number of the over 600 non- depository institutions she currently regulates,” wrote Matthew Levine, the executive deputy superintendent for enforcement at the department.”

“Acting U.S. Attorney Joon Kim, representing the defendants, argued that DFS lacks standing in the complaint because the OCC’s regulations addressing the special-purpose national bank charter have resulted in no injury-in-fact, because the office has not reached a final decision on whether it will offer the specific type of national bank charter that does not take deposits and conducts activities other than fiduciary activities. The U.S. Attorney’s Office also argues that the complaint should be dismissed for failure to state a claim.”

Scott Robinson of Plug and Play Fintech (Lend Academy), Rated: A

One of the leading accelerator programs today is Plug and Play, they claim to be the world’s largest startup accelerator. Lending Club and many other big names have gone through their program. In 2014 they started a dedicated fintech accelerator program, founded by Scott Robinson, who is our latest guest on the Lend Academy Podcast.

The Massive Hedge Fund Betting on AI (Bloomberg), Rated: A

Man Group, which has about $96 billion under management, typically takes its most promising ideas from testing to trading real money within weeks.

What spooked him was an experiment at his firm, Man Group Plc.Engineers at the company’s technology-centric AHL unit had been dabbling with artificial intelligence—a buzzy, albeit not widely used, technology at the time. The system they built evolved autonomously, finding moneymaking strategies humans had missed. The results were startlingly good, and now Ellis and fellow executives needed to figure out their next move.

The program stayed in quarantine until 2014, when a senior portfolio manager with a Ph.D. in mathematical logic named Nick Granger decided it was time to take it out of testing. He gave the AI system a small amount of money from a portfolio he was managing—then more, then more again. At each step, the program was profitable.

Source: Bloomberg

Matic Insurance Services and LendingQB Team Up to Eliminate Stress, Mortgage Delays Related to Homeowner’s Insurance (PR Newswire), Rated: B

Matic Insurance Services (Matic), a digital insurance agency that enables borrowers to purchase homeowner’s insurance during the home-buying transaction, today announced a new partnership with LendingQB, a provider of “lean lending” loan origination technology. Matic announced the news as part of a live demonstration at San Francisco’s Digital Mortgage conference.

Matic’s integration with LendingQB’s flagship loan origination software (LOS) makes it easy for borrowers to upload or secure a homeowner’s insurance policy during the mortgage application process. The result is a less stressful experience for borrowers and the elimination of costly insurance-related delays for LendingQB’s lender clients.

Is Yahoo a fintech company now? (Quartz), Rated: B

Fintech generally refers to companies like SoFi, TransferWise, and Revolut, whose ambition is to use technology to challenge traditional banks. What Yahoo Finance is doing is a little different—its app will add online brokers like Fidelity and E-Trade to its platform, but it won’t make any money from the brokerage charges. Instead, Yahoo Finance (now part of Oath, a Verizon-owned company), which has about 41 million mobile users, is trying to boost usage of its app.

The platform is targeted at devoted investors and provides more financial data for free than you can get outside of a Bloomberg terminal, according to Michael La Guardia, Yahoo Finance’s head of product.

Alipay almost accidentally started the world’s biggest money market fund (paywall) when it gave users a way to park their money from mobile payments. Amazon, meanwhile, offers credit to its merchants and has made more than $3 billion of loans, according to the World Economic Forum (WEF). Facebook has ambitions for its app to do just about everything, including financial activities. Tencent’s WeChat in many ways already does.

United Kingdom

Zopa searches for new borrowers through Saffron Building Society loan partnership (City A.M.), Rated: AAA

Zopa is partnering with a building society to offer its loans as it seeks to add more borrowers to the platform.

The online peer-to-peer lender will provide loans at 11 bricks-and-mortar branches of Saffron Building Society across Hertfordshire, Essex and Suffolk, as well as online.

Zopa Announces Credit Risk Model Update (Crowdfund Insider), Rated: AAA

On Friday, online lending platform Zopa announced the latest update of its credit risk model. This news comes just a few weeks after the lender announced updated on improving loan sale time progress, rebate period, and ISA transfer-in. Chief Product Officer at Zopa, Andrew Lawson, revealed he and his team are continuing to monitor leading macroeconomic indicators carefully alongside how Zopa’s loans are performing compared to expectation:

Marketplace lenders struggle to find borrowers (Financial Times), Rated: AAA

Zopa, the world’s first peer-to-peer lending company, hoped the partnership whereby drivers for the ride-hailing app were directed to its website for loans would mark its entry into a multibillion-pound market for secured loans in the UK.

But barely six months after the deal was struck it collapsed, with the partnership failing to attract as many drivers as expected.

Zopa’s experiment with Uber underlines the enormous difficulty faced by marketplace lenders attempting to find new borrowers. These borrowers are crucial for the platforms to grow at a time when there is strong interest from institutional investors to provide crowdfunded loans.

Source: Financial Times

According to Mr Zhang, institutional investors such as hedge funds, asset managers, pension funds and family offices now account for between 30 and 40 per cent of peer-to-peer consumer and business lending, compared with less than 5 per cent before 2014. BlackRock, the world’s largest asset manager, made its first significant retail investment in peer-to-peer loans last year when it bought a stake in Funding Circle’s investment trust.

So far, however, they have struggled to attract borrowers to match this demand. Competition is increasing from traditional banks — Goldman Sachs has its own online lending platform — especially for prime and super-prime debt that is less likely to default.

Source: Financial Times

Assetz Capital Lowers Commercial Mortgage Interest Rate From 7.9% to 6.9% (Crowdfund Insider), Rated: AAA

Assetz Capital, one of the UK’s fastest growing peer-to-peer finance platforms and the largest property backed peer-to-peer lender, announced on Friday it has lowered its entry interest rate for commercial mortgages from 7.9% to 6.9% in an unprecedented move to give access to even lower rates for lower-risk borrowers looking for commercial mortgages. This is one of the lowest rates available from any alternative finance providers.

Three million small businesses still don’t accept cards, despite move away from cash (The Telegraph), Rated: AAA

Around three million of Britain’s small businesses do not accept card payments, despite the UK rapidly becoming a nation of card-only shoppers.

One in six British shoppers now uses cards only to pay. A further 38pc would typically try to pay with a card first before they have to pay with cash, according to a study by Square, the payment company belonging to Twitter founder Jack Dorsey.

Small companies could be missing out on millions of pounds’ worth of business by not offering card payment facilities, Square warned.

Card payments overtook cash payments as the main method of purchases in the UK for the first time in July this year, according to the British Retail Consortium. The average Brit has just £32.54 in cash in their purse or wallet right now – not enough to cover more than one of the average transaction size of £18.42.

Wonga on course for profit this year after major changes (Express), Rated: A

The company, which has been overhauled under new management after being accused of targeting the vulnerable and being forced to compensate nearly 200,000 borrowers who overpaid owing to “system errors”, cut its annual pre-tax loss from £80.2million to £64.9million.

Revenue grew by 18 per cent to £76.7million as more products boosted customer numbers by 6 per cent.

Wonga confirms £64.9m loss in year it ended Newcastle United sponsorship (ChronicleLive), Rated: A

Britain’s biggest payday lender Wonga has revealed it remained deep in the red last year with losses of £64.9m, but confirmed plans to return to profit in 2017.

Nutmeg loss widens to £9.3m as it develops advice offer (Citywire), Rated: A

Nutmeg’s 2016 losses have widened £9.3 million as it continued to invest heavily, as it presses ahead with developing the ‘most approporate’ advice proposition for its customers.

The loss, revealed in its accounts published on Companies House, follows the £8.9 million loss it posted in 2015. Its operating expenses rose from £10.8 million to £11.9 million over the year.

At the end of the year Nutmeg managed around £600 million in assets under management on behalf of 25,000 clients.

Turnover rose by almost 50% from £1.72 million to £2.56 million.

Wealthtech is coming to the High Street (Banking Technology), Rated: A

One area of fintech that is of interest is wealthtech. This sub-sector is likely to become more visible over the next few months. Wealthtech has become defined as utilising technology to enhance wealth management and the retail investment process.

The most visible players in the UK are the robo-advisors with Nutmeg the best known (and RiskSave following behind!) but other concepts are also deserving of attention, such as Munnypot.

These developments will soon be more visible at branch level.

An offering of automated financial advice from the retail banks could go a long way towards alleviating this. Santander and HSBC have already launched product offerings in this space, RBS is trialling a service through its Coutts’ sub-brand and Lloyds (with a quarter of the UK market) are sitting on the sidelines awaiting the results of the regulator’s Financial Advice Market Review (FAMR).

Fintech start-up Curve adds cloud-based accounting software to its app to simplify expenses (CNBC), Rated: A

Fintech start-up Curve will now let users claim business expenses across multiple bank cards through its app.

The London-based firm’s app allows its users to link all of their bank cards to one contactless MasterCard. Curve said it hopes to automate the tedious process and remove any friction associated with business expenses. It is predominantly targeted at small business owners and the self-employed.

Curve said Monday it would add online accounting software developer Xero to the app, meaning users will now be able to claim business spending across all their accounts.

The hottest startups in London (Wired), Rated: A

As London’s startup community awaits the result of Brexit negotiations – and its impact on single-market access – one might think tech would have ground to a halt. But growth continues: the last 18 months have seen billion-dollar valuations for TransferWise, Funding Circle and Improbable, and a near-unicorn valuation for Deliveroo.

Monzo

Monzo wants to make banking smarter. Founded in 2015 by Tom Blomfield, Jonas Huckestein, Jason Bates, Paul Rippon and Gary Dolman, it offers pre-paid cards connected to an app that tracks spending and lets its customers analyse their financial activity.

Nested

One of a growing number of UK property – or proptech – startups, Nested guarantees that it will sell your house within 90 days, or buy it themselves.

Habito

Habito scours more than 15,000 mortgage products to suggest the best option, and takes a commission from the eventual lender. In January 2017, the startup raised £5.5 million in a Series A round led by Ribbit Capital.

Ravelin

Founded in 2014, Ravelin analyses online behaviour in real time to reduce payment-related fraud. According to its clients – including Deliveroo, Karhoo, and Easy Taxi, its technology reduces fraud incidence by more than 50 per cent. The company has raised £4.3 million to date from backers including Passion Capital and Errol Damelin.

P2P needs the FSCS stamp of approval (Citywire), Rated: B

Some commentators estimated nearly half a million new investors would try their hand at P2P lending when the Innovative Finance ISA brought eligible platforms into the ISA fold.

This is unsurprising given that, according to government statistics, British consumers have around £500 billion either saved or invested in ISAs.

However, the stampede has not arrived yet.

Plenty of people think the FSCS offers an insurance policy against poor investment performance. It does not. If a share portfolio tanks, for example, the scheme will not be there to save you. That is the risk you run by choosing to invest in the equity markets.

The FSCS is, however, on hand to compensate investors if a provider has been shown to mismanage its product, and has subsequently gone bust. Only then does it offer up to £50,000 (2017/18 tax year), not the larger amount doled out to savers.

Hull has fast become a profitable city for buy-to-let landlords (Mortgage Introducer), Rated: B

LendInvest’s buy-to-let index ranked the city as the fifth best buy-to-let postcode for landlords in the third quarter of 2017, up from 33rd in the second quarter.

“Cities such as Hull and Nottingham making significant gains in the Index (up #33 to #5 and #35 to #12 respectively) is encouraging, and points to competitive market conditions in those areas and higher than average levels of activity.

The top 10 areas for investors in order of ranking are Luton (#1), Colchester (#2), Manchester (#3), Rochester (#4), Hull (#5), Stevenage (#6), Romford (#7), Southend-on-Sea (#8), Ipswich (#9) and Ilford (#10).

China

Wealth-Management Industry at Turning Point (Caixin), Rated: AAA

China’s wealth-management industry is undergoing profound changes, shifting away from short-term, fixed-income products to longer-term, equity-based investment, said Tang Ning, chief executive of Beijing-based fintech conglomerate CreditEase.

Last year, the Forbes listed a record 400 billionaires from the Chinese mainland, compared to 335 a year ago. The listed members held a total of $947 billion assets, a 14% rise from the previous year. Meanwhile, China’s per-capita GDP exceeded $8,123 in 2016, up from $8,069 a year earlier, according to the World Bank.

Unlike investors in the U.S. and other developed market, Chinese investors have long favored most the fix-income products like bonds and bank bills, betting on governments’ implicit payment guarantee. But as China’s economy slows and its financial market liberalizes, the government has become increasingly hesitant to offer such sweeping guarantees.

A number of wealth management companies including CreditEase have launched private equity FOF over the past few years. In early September, the China Securities Regulatory Commission (CSRC) approved the first batch of six firms including China Asset Management, China Southern Fund Management and Manulife Teda Fund Management to set up publicly offered FOF products.

Tang estimated that there are 200 million active investors in China who do not have access to human advisers and asset managers because of their hefty fees.

Alibaba’s Jack Ma places bet on China’s online insurance market (Asian Review), Rated: A

When the heads of three of China’s most prominent companies join hands to launch a start-up, investors notice.

Jack Ma Yun of Alibaba Group HoldingTencent Holdings‘ Pony Ma Huateng, and Peter Ma Mingzhe of Ping An Insurance Group — collectively known as the “three Ma’s” — did just that. Looking to turn Ping An into a full-blown financial technology company within ten years, Peter also enabled the growth of Lufax, which started as a peer-to-peer lending platform in 2011 and became one of the most valuable e-finance company worldwide as of September.

Four years ago they founded China’s first online-only insurer. It was a company with an untested business model and making no money, but it sparked an investor frenzy.

Source: Asian Review

HSBC: Mobile banking in China begins with your face (Enterprise Innovation), Rated: A

Mobile banking continues to soar in China. According to China Internet Watch, total transactions of China mobile banking clients totaled 55.63 trillion yuan (US$44 trillion), up 5.1% quarter on quarter. China Construction Bank (26.1%) and Industrial and Commercial Bank of China (21%) have a combined market share of close to half of mobile banking in Q2 2017.

European Union

French Real Estate Crowdfunding Grows Steadily and Delivers (Crowdfund Insider), Rated: AAA

The French real estate crowdfunding market grew by 50% in 2016 and keeps growing at the same linear growth pace in 2017. While new platforms continue to join, first entrants strongly dominate the nascent market. With €160 million worth of real estate projects funded, the French platforms have a positive record of delivering expected returns.

It has since grown at a fast, but more linear pace of +53% to reach €68 million in 2016, and is expected to grow by 50% again in 2017.

French real estate crowdfunding attracts new platforms. In 2016, their number grew from 26 to 42, with 19 new entrants and 3 withdrawals. Indeed, more than 90% of real estate crowdfunds are raised by the top 10 platforms and 75% by the top 5. Between them, the two leaders, WiSeed and Anaxago, account for more than 50% of the market.

Top 10 French real estate crowdfunding platforms
Platform

Regulatory Status

Regulated Real estate since

Projects

Value

Repaid

Wiseed

PSI

2014

123

€53,197,600

33 %

Anaxago

CIP

2014

83

€38,908,333

18 %

Lendix

IFP

2014

14

€15,875,000

7 %

Clubfunding

CIP

2015

30

€10,075,500

27 %

Lymo.fr

CIP

2015

29

€8,196,500

45 %

Fundimmo

CIP

2015

23

€7,734,900

26 %

Homunity

CIP

2016

22

€6,732,200

18 %

Koregraf

CIP

2015

17

€4,935,500

47 %

Proximea

CIP

2015

5

€3,490,000

20 %

Immovesting

CIP

2016

7

€2,932,000

Source : , September 2017

 

Source: Crowdfund Insider

WINNERS ANNOUNCED FOR INVESTOR ALLSTARS EVENT (BusinessCloud), Rated: A

The winners of the 15th annual Investor Allstars awards were announced this week, with Funding Circle co-founder and CEO Samir Desai being crowned Entrepreneur of the Year and CoderDojo winning the Tech4Good award.

The Entrepreneur of the Year award went to Samir Desai of Funding Circle and online property lending and investment platform LendInvest was announced as Europe’s Allstar Company.

The full list of award winners is:

  • Exit of the Year: Skyscanner (Scottish Equity Partners)
  • Growth and Buyout Fund of the Year: Livingbridge
  • Entrepreneur of the Year: Samir Desai (Funding Circle)
  • VC Fund of the Year: Idinvest Partners
  • Europe’s Allstar Company: LendInvest
  • Corporate Development Team of the Year: Sage Group
  • Investor of the Year: Benoist Grossmann (Idinvest Partners)
  • VCT of the Year: Octopus Ventures Specialist
  • Debt Provider of the Year: Kreos Capital
  • Seed Fund of the Year: LocalGlobe
  • Service Provider of the Year: Orrick
  • Tech4Good Award: CoderDojo Foundation (part of Raspberry Pi Foundation)
  • Digital Innovation in Art: Articheck

That viral ‘mermaid dog’ video was too good to be true (The Daily Dot), Rated: B

It seemed too good to be real. A hairy creature, which some people guessed was an afghan hound, effortlessly floats underwater and moves its arms with the grace of a ballet dancer. It’s pure euphoria, captured in a video that lasts only a few seconds.

When Klarna, a tech bank with a focus on online shopping, posted the video to its Instagram account on Sept. 17 with the caption, “When you’re swimming into the weekend like… #noworries,” many people assumed it was a video of a real animal swimming in a pool. Or maybe they just wanted to believe.

It’s an animation that is part of an ad campaign for Klarna, which is trying sell people on the company’s “smooth” payment system.

International

Regtech Startups On Pace For Record Deals, Against Backdrop Of Shifting Regulatory Landscape (CCB Insights), Rated: AAA

Deals to regtech startups have increased steadily (if at times slowly) over the past few years, from 83 deals in 2013 to 147 last year. At the current run rate, deals in 2017 are on track to hit a new high, while funding is on pace to grow 14% to nearly match record funding levels set in 2015.

In 2017 YTD, regtech startups have seen 103 deals worth $894M in disclosed equity funding. At the current run rate, deals in 2017 are on track to reach a new high of 148 (up slightly from 147 in 2016). Funding is also on pace to grow, potentially bringing total disclosed equity investment over the last 5 years to more than $5B.

Source: CB Insights

Last quarter saw 34 deals, dipping 13% from Q1’17 to hit a 6-quarter low. Though deals were down, funding was up 14% from the previous quarter — and grew 64% year-over-year — to reach $326M.

H1’17 has seen 73 investments, up 3 deals from H1’16, while funding is up approximately 54% over the same period.

Source: CB Insights
Australia/New Zealand

Yield-hungry investors switch their cash to peer-to-peer lenders (The Sydney Morning Herald), Rated: AAA

Peer-to-peer lender, RateSetter, says 56 per cent of money invested with it is from savers withdrawing their money from their bank savings accounts.

Yield-hungry investors are understandably frustrated with earning next-to-nothing on their cash held at their banks, with interest rates at historic lows and likely to stay that way for the foreseeable future.

With the the advent of peer-to-peer (P2P) lenders, online platforms that match investors and borrowers, investors can get up to  three times the interest paid by term deposits.

NZ named Asia Pacific’s fintech champ (NZ Adviser), Rated: A

New Zealand has the highest per capita fintech lending volumes of any country in the Asia Pacific, and has embraced fintech faster than any other neighbouring Asia Pacific countries.

According to the research, peer-to-peer consumer lending forms the bulk of market activity in here. The second largest was donation-based crowdfunding, for which US$16.8 million was raised in 2016 – an increase of around 100% over the previous year. Equity-based crowdfunding was the third largest model in New Zealand with US$13.85 million across 2016 – up from US$11.86 million in 2015.

Appetise’s ASX listing; Study Loans & RateSetter close funding (Deal Street Asia), Rated: A

UK startup Appetise looks to list on the ASX, Study Loans has secured seed funding and P2P lender RateSetter Australia has closed additional funding from a private equity (PE) fund.

Melbourne-based fintech Study Loans, which offers a credit engine targeted at the student loans sector, has raised A$2 million ($1.56 million) in seed funding from investors that include the Simonds family and RMY Corp, as well as A$5 million ($3.9 million) in debt equity.

RateSetter Australia, a peer-to-peer (P2P) lending platform, has secured A$8.5 million ($6.65 million) from private equity fund Five V Capital. The deal values the company in excess of A$100 million. Existing equity investors in RateSetter are RateSetter UK, Carsales and Strattons.

India

Chqbook – Gurgaon Based Fintech Startup Raised Funds (Bizztor), Rated: B

Chqbook – a fintech startup that allows customers to explore, compare, book and get personal finance products like home loans, personal loans and credit cards, raises undisclosed funds from Youwecan backed Startup Buddy, Apurva Chamaria, global head of corporate marketing, HCL, Sachin Arora, ex-CTO Myntra, Bharat Gupta, Founder of Net Asset Consulting LLP, Amit Manocha, Private equity professional based out of Singapore, and others.

APAC

Indonesian P2P lending platforms recorded 496.5 per cent year-to-date growth of funding allocation (e27), Rated: AAA

Indonesian Financial Services Authority (OJK) revealed that peer-to-peer (P2P) lending platforms in Indonesia in total has channeled up to IDR1.4 trillion (US$106 million) in funding for small and medium enterprises (SMEs) in the country. The number is a 496.5 per cent year-to-date (YTD) growth from December 2016’s number of IDR242.48 billion (US$17.9 million).

Funding Societies Dubbed First Southeast Asian Company to Win Global SME Excellence Award from United Nations’ ITU Telecom (Crowdfund Insider), Rated: A

Singapore’s and Southeast Asia’s SME crowdfunding platform Funding Societies announced on Friday it was named the first southeast Asia company to win the Global SME Excellence Award from United Nations’ ITU Telecom, which was held this year in Busan, South Korea. 

PLDT unit disrupts businesses (Manila Standard), Rated: A

Vea, 67, now heads Voyager Innovations Inc., the digital arm of PLDT and the one behind digital platforms such as Smart Padala (mobile remittances), PayMaya Philippines Inc. (formerly Smart e-Money), Freenet (free sponsored data platform), VYGR (digital performance-based marketing), Tackthis! (electronic commerce platform), Hatch, (marketing technology and innovations platform), Lendr (digital consumer loan platform), FINTQ (financial technology unit) and Voyager DX (digital transformation).  Voyager, which has 600 employees, introduces solutions that allow customers to participate in the digital economy such as by using digital money.

Marzan presented data showing that 60 million or 58 percent of the Philippines’ 103 million people are Internet users.  Active social medial users are 60 million as well.

“In the Asia-Pacific region with 4.2 billion population, 46 percent are already Internet users and active social media users are 1.5 billion or 36 percent.  Mobile connection is 3.99 billion and active mobile social users are 1.44 billion. This is exponentially growing and we have to prepare for it,” Marzan said.

How FinTech uses technology to help the ‘unserved’ (Manila Bulletin), Rated: B

TrueMoney, a new financial technology player, seeks to have one TrueMoney center in each of the country’s more than 42,000 barangays to serve those who need a remittance network but have no bank accounts.

To meet that goal, TrueMoney teams up with cooperatives and groups in different regions. Its latest partnership is with Cebu People’s Multi-Purpose Cooperative (CPMPC), a community-based savings and credit cooperative with over 55,000 members to-date.

At this point, TrueMoney has over 5,000 centers in the Philippines.

MENA

Fintech Peer to Peer Lending Platform, Beehive, Raises $ 5m Investment (PR Newswire), Rated: AAA

Beehive, MENA’s leading peer to peer lending (P2P) platform, has secured $5m investment as part of a Series A round led by Riyad TAQNIA Fund and supported by the Mohammed Bin Rashid Fund (MBRF), the financial arm of Dubai SME, as well as several other regional investors. This latest fundraise brings the total raised by Beehive to $10.5m since its launch.

To date, Beehive has successfully facilitated finance over $35 million (AED 130 million) to more than 200 business funding requests and registered more than 5000 international investors.

South Africa

African Billionaire Patrice Motsepe Invests In Digital Bank (Forbes), Rated: AAA

South Africa’s first black billionaire Patrice Motsepe has reportedly invested in TymeDigital, an online lender that has recently been awarded an operating license by the South African Reserve Bank.

African Rainbow Capital (ARC), an investment firm founded by Patrice Motsepe, recently acquired a 10% stake in TymeDigital, which is a subsidiary of the Commonwealth Bank of Australia, one of the world’s largest banks.

Authors:

George Popescu
Allen Taylor

Thursday September 21 2017, Daily News Digest

RateSetter

News Comments Today’s main news: RateSetter surpasses $150M in loans. New York AG requests cybersecurity safeguards from Experian, TransUnion. Point72 Ventures leads AlphaFlow’s $4.1M seed round. Cross River appoints VP of Government Affairs to focus on regulatory framework. Clarity Money passes 500,000 user milestone. MarketInvoice’s losses doubled last year. Raisin expands into the UK with acquisition. Today’s main analysis: Millennial investors don’t […]

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United States

Real estate investment platform AlphaFlow picks up $ 4.1 mln seed (PE Hub Network), Rated: AAA

AlphaFlow, an automated alternative investment platform for real estate, announced today the closing of a $4.1 million seed round funding, led by Resolute Ventures and Point72 Ventures, the venture capital arm of Steve Cohen’s Point72 Asset Management. Other investment partners include Upside Partnership, Social Capital, Y Combinator, Clocktower Technology Ventures, an affiliate of Drobny Capital, Red Swan Ventures, and more.

AlphaFlow’s seed round comes two years after the company was established by CEO and former RealtyShares Co-Founder, Ray Sturm. AlphaFlow plans to use the funding to continue scaling successful partnerships with lenders and investors, both accredited individuals and investment managers.

AlphaFlow Optimized Portfolios are available for investment professionals such as endowments, pension funds, RIAs, and wealth managers, as well as by independent investors seeking uncorrelated returns through short‐term, higher‐yielding real estate loans backed by properties.

To date, AlphaFlow’s flagship product, AlphaFlow Optimized Portfolios, boasts broad diversification across hundreds of loans in 29 states, average LTV of 72%, and target net returns between 8 to 10%. With this seed round funding, AlphaFlow intends to continue to innovate in the application of sophisticated finance mechanisms to scale within the investment industry.

Another Study Confirms It – Millennial Investors Don’t Know What They Are Doing (ValueWalk), Rated: AAA

Millennial investors are woefully underprepared for the next financial crisis according to a survey conducted by online real estate crowdfunding service Fundrise.

The Fundrise survey suggests that 67.2% of millennial investors are not prepared for the next crisis, and 47.1% feel that there is nothing that they can do to prepare for it. With 83 million millennials in the US holding an average of $75,500 in assets, this means the largest generation is at risk of losing $3.1 trillion in the next financial crisis assuming a repeat of the 50% drawdown seen last time around.

According to an annual study by Charles Schwab, 56% of millennial investors say ETFs are their investment of choice, compared to only 23% of seniors.

77.8% of respondents said that they had no interest in investing outside of the stock market while 42% of millennials surveyed said that they did not know whether it was important to invest outside of the stock market.

Source: ValueWalk

Cross River Appoints VP of Government Affairs (PR Newswire), Rated: AAA

Cross River, the financial services organization that merges the established expertise of a bank with the innovation and product offering of a technology company, announced today the appointment of Phil Goldfeder as VP of Government Affairs. Goldfeder will lead a team at Cross River working with regulatory agencies and policy makers in Washington, D.C., as well as state governments across the U.S., to implement appropriate regulatory frameworks that will encourage innovation while ensuring consumer protection.

Clarity Money Passes 500,000 User Milestone (BusinessWire), Rated: AAA

Clarity Money, the personal finance app that acts as the “Champion of your Money,” today announced that it reached 500,000 users on September 4, 2017, less than seven months after launching on iOS.

This milestone builds upon Clarity Money’s tremendous momentum in 2017, which has included:

  • Two successful rounds of funding, from noted investors such as Citi Ventures and Soros Capital
  • A nomination for the 21st Annual Webby Awards in the financial and banking services categories for mobile apps
  • Being a featured personal finance app on the Apple App Store and debuting as Apple’s #1 app under “New Apps We Love” in the Apple Store days after launching

NY AG Wants To Know About TransUnion, Experian Cybersecurity (PYMNTS), Rated: AAA

TransUnion and Experian, two of The Big Three credit reporting companies, have received letters from New York Attorney General Eric Schneiderman inquring them about their cybersecurity safeguards in the wake of the massive data breach at rival Equifax.

According to a news report in The Associated Press, the attorney general wants the two companies to describe what security systems they have in place and what changes they are implementing since data on 143 million U.S. customers at Equifax was breached.

New York’s attorney general wants to know if the companies would waive fees for consumers that needed credit freezes because of the hack.

Equifax breach has banks tightening their defenses, counseling customers (Information Management), Rated: A

Asking bankers to comment on the Equifax data breach generally evokes a cone of silenceforged out of a combination of sympathy and fear — I’m not going to speak about it because it could happen to me.

A few, though, will acknowledge the toll the breach has taken on their customers and their security departments, which have scrambled to ensure they won’t share (or haven’t shared) Equifax’s fate.

Another banker, Jim Hanlon, the chief technology officer at Dedham Savings Bank in Boston, was astounded that Equifax did not catch its breach more quickly.

“We have 60,000 customers,” he said. “If somebody came into our network and was looking at 100 files, that would raise a flag with us. If somebody’s accessing millions of records, how is something not alerting them to that fact? That’s the concerning piece to me. The documentation said they take network security seriously. But there should have been a red flag somewhere.”

Equifax’s security team detected and blocked suspicious network traffic associated with its U.S. online dispute portal web application on July 29. But the company’s investigation found that hackers had access to certain files containing personal information from May 13 through July 30.

The Equifax Breach: What You Need to Do Now (Parade), Rated: A

While I don’t have all the answers, financial/debt attorney and author of Life & Debt Leslie H. Tayne of Tayne Law Group, P.C., has some great suggestions.

Q: What can consumers affected by the breach do now to protect their information?

A: For starters, sign up for credit monitoring so that future account fraud and identify theft attempts will be noted and immediately brought to your attention. Next, get in the habit of regularly monitoring your bank and credit cards on your end for any suspicious activity. While you’re online, update your account passwords using long, strong, unique passwords for every single account.

Q: Should you freeze your credit so that no one can use your information illegally?

A: There are pros and cons to freezing your credit. The biggest pro of freezing your credit is that no one can apply for credit in your name. But that no one includes yourself, meaning it could create delays and problems when credit is needed quickly in the case of applying for a loan, credit cards or jobs or if seeking insurance, looking to buy or rent a home or contracting with a utility company during the freeze period. Yes, you can unfreeze your credit at any time, but this is also time consuming and may involve having to pay a fee.

Q: It doesn’t sound like freezing your credit is the best option right now.

A: With these types of drawbacks, a better avenue to consider may be signing up for a fraud alert.

Q: What else do consumers need to know or be on the lookout for going forward?

A: A key concern emerging from the Equifax security breach that consumers need to watch out for are cons and phishing scams. They need be wary of anyone who may approach them impersonating financial or government institutions or general companies who may come across offering support in resolving their data breach.

To Survival: Listen, Learn, Repeat (PYMNTS), Rated: AAA

While it may not be the oldest credit union around, the Boeing Employees Credit Union (BECU) of Tukwila, Washington, has been in business since the days of the Great Depression. Founded in 1935, BECU began as a credit union for employees of the Boeing Company aircraft manufacturing firm. Today, at 82 years old, BECU is looking pretty fit for its age. It currently holds more than $17.2 billion in assets and services more than 1 million members, placing it in among the top five U.S. credit unions for cash assets — and that’s without a steady diet of kale and spinach smoothies.

But, a common element with which older financial institutions must contend is new players arriving on the scene and throwing older players’ relevance into question.

Should older institutions treat these younger upstarts as rivals or as potential partners?

Doug Marshall, BECU’s senior vice president of retail, recently told PYMNTS that BECU has chosen the latter approach.

BECU has approached approximately 60 organizations in the FinTech space to explore opportunities for collaboration, Marshall said. Among the companies approached is Even, a supply-side marketplace lending company. An official partnership has not yet been established, but BECU turned to the company to explore innovations for the credit union’s own lending habits and to help members “smooth their cash flow.”

A few years ago, BECU launched an updated mobile app in partnership with MX, a technology solutions provider for financial services companies. Marshall said BECU was excited to see how members would embrace the newly-launched app. When it went live, however, it became clear they weren’t thrilled.

“We did quite [a lot] of research before we deployed,” Marshall said. “But, in some ways, we didn’t ask one of the most fundamental questions.”

According to Marshall, one of the important lessons that younger FinTechs can teach older credit unions about staying relevant is to not be afraid to fail.

“Lesson three is pivot quickly,” Marshall said. “That’s the magic of a FinTech partnership. We were able to respond and [quickly] deploy a fix.”

Morningstar CEO Kunal Kapoor tells advisers to embrace technology (Investment News), Rated: A

Imagine financial technology that can create personal portfolio indexes for individual investors or a computer program that can assign forward-looking performance ratings for mutual funds and ETFs.

That’s the way Morningstar CEO Kunal Kapoor thinks when he imagines where technology is heading, and why he believes financial advisers need to run toward technological innovation to avoid being left in the digital dust.

He compared the initial fear of robo-advice platforms to fears from the threat of online brokerage trading in the 1990s.

“The online trading platforms were supposed to put everyone out of business, but they were just absorbed into the mainstream,” he said.

Impact Housing REIT, LLC Launches $ 35 Million Equity Crowdfunding Opportunity Focused Housing Crisis in America (BusinessWire), Rated: A

Impact Housing REIT, LLC (ImpactHousing.com), a new apartment real estate investment trust led by Edward (“Eddie”) P. Lorin, a 30-year multifamily real estate veteran, is pleased to announce that its $35 million direct public offering under Regulation A+ has been qualified by the Securities and Exchange Commission (SEC) and is now open for investment. All investors – accredited and unaccredited, domestic and international – can invest directly in Impact Housing REIT Series A equity round for as little as $1,000.

Poor housing conditions due to a rising economy, extreme weather conditions, and poverty is effecting our health, quality of life, and country, as a whole. Impact Housing is the first REIT in the country using the new equity crowdfunding laws to focus on America’s housing crisis, specifically on creating affordable, livable, distinctive multifamily communities for America’s working people and their families.

Employing a strategy that Mr. Lorin has refined over decades, Impact Housing plans to buy neglected, poorly managed apartment buildings throughout the U.S., and transform them into thriving, healthy, family-oriented communities. Upgrades typically include new amenities, refreshed and upgraded interiors, resort style pools, playgrounds, state-of-the-art fitness centers, BBQs, dog parks, community gardens and open space social areas.

The technology enabling this online investment offering is backed by CrowdStreet, a leading provider of real estate fundraising and investor management solutions.

HOW AI APPS FOR BANKS ARE CHANGING THE FACE OF THE FINANCIAL SECTOR (TechGenix), Rated: A

Long before chatbots popped up as interesting business-use cases, long before mobile banking applications offered military-grade secure transactions, and much before focused analytics tools for banking made themselves known, AI apps for banks augmented by machine learning and deep learning began creating an impact in the world of banking.

The following factors make the financial sector a highly targeted market for all kinds of AI apps for banks:

  • Massive amounts of structured data from the past.
  • Consistency in data recording and archiving practices across financial institutions.
  • Quantitative nature of finance and banking business practices and operations.
  • Accuracy in data records.

AI apps for banks: Smart portfolio management for end users

These applications help banks build an online accessible tool that considers user preferences, personal demographic information, earning power, and wealth sources, and then matches these with their financial goals. In parallel, these systems take real-time market data and factor in parameters like a customer’s credit history, risk aversion, and lifestyle practices, creating a very robust portfolio of investment and saving instruments across asset classes.

Mobile banking applications like Moven and Simple leverage the idea of using algorithms that grow smarter with time. More precisely, they grow smarter by handling more data and measuring more results.

These AI-based applications can integrate with a user’s online bank accounts, debit and credit cards, and e-wallets to track their expenses, present advice on better expense management practices, and help them choose more suitable financial products that sit well with their financial habits, liquidity requirements, and short-term saving goals.

Automated hedge fund management

These models collate inputs from several sources of real-time financial information from the major financial markets of the world. Also, these models incorporate quantified inputs regarding sentiments in the financial markets.

Self-learning security systems for fraud detection

AI-based fraud detections tools of today leverage the principles of deep learning and machine learning, and are already beginning to incorporate the benefits of neural learning, and hence have tremendous potential in cybersecurity, particularly for the banking sector.

PeerStreet Named One of the Top Ten Startups to Work For in Los Angeles (Crowdfund Insider), Rated: B

Real estate crowdfunding platform PeerStreet announced on Tuesday it was named one of the Top Ten Startups to Work For in Los Angeles. The list was created by Zippia, an online startup career platform.

LendUp Appoints Jotaka Eaddy As New VP of Policy, Strategic Engagement & Impact (Crowdfund Insider), Rated: B

LendUp, a socially responsible online lender on a mission to redefine financial services for the emerging middle class, announced on Wednesday it has appointed Jotaka Eaddy as its new Vice President of Policy, Strategic Engagement, and Impact. Eaddy previously served as LendUp’s Head of Government Affairs.

LendUp has now saved borrowers nearly $135 million in interest and fees. The lender expects to surpass $200 million by the end of the year.

Need Money Fast? 4 Options for Small Business Owners (Entrepreneur), Rated: B

There’s an extremely fine line you have to walk when scaling. If you expand too quickly, hire too many employees, and order excess inventory, you could deplete your financial resources and crash. But if you don’t take any chances or prepare your business for growth, you won’t be able to respond in an efficient manner when you finally get the big break you’ve been waiting for.

So, what, exactly, can you do when you are ready and need money to expand? Here are four options.

1. Online lenders

If you need a sizable loan, you’ll still need to go through a traditional bank or lender. However, if you need only a modest amount of cash, online lending msy be the way to go.

2. Personal installment loans

If you’re really in a bind and need some quick cash, a personal installment loan might be the way to go. A lender simply checks your credit score and processes your request.

3. Line-of-credit loans

With a line of credit, your business gets approved for a certain amount of money for a specified period of time — typically one year.

4. Receivable financing (factoring)

The factor advances a portion of the receivables — likely 75 to 90 percent of the value — and then holds on to the remaining portion. It’s a good solution for businesses that have orders coming in, but don’t have the money to fill those orders.

United Kingdom

MarketInvoice’s losses doubled in 2016 (P2P Finance News), Rated: AAA

MARKETINVOICE saw its losses double during 2016, as the peer-to-peer invoice finance platform continues to use funds to scale up.

Its latest accounts on Companies House for 2016 showed a loss before taxation of £6m, increasing from £3.1m in 2015.

This is despite turnover increasing from £4.1m to £4.4m and an increasing number of invoices getting funded, at £442m, compared with £328m a year before.

Deposit marketplace fintech enters UK via acquisition (AltFi), Rated: AAA

A leading European deposit marketplace has acquired Manchester-based fintech PBF Solutions as part of its entry into the UK market. Raisin will target UK savers with its marketplace of savings accounts, while also offering an end-to-end deposit raising solution for UK banks and other firms.

Founded in Berlin in 2013, Raisin is already partnered with 40 banks and financial institutions across Europe. In the past four years the firm has also attracted over €4.3bn in what it calls “marketplace deposits”.

PBF will become Raisin UK, and will significantly increase the size of its UK-based operations over the coming months. CEO Kevin Mountford will take charge of Raisin’s UK expansion.

Lendable: the next generation lending platform that can give borrowers a small loan within two hours (Independent), Rated: A

By taking advantage of the large amount of data available in the UK at a time when consumer lending was evolving fast, Kissinger and his team conceived of a new kind of online lending that they claim is faster and more efficient than larger peer-to-peer lenders Zopa and Ratesetter.

Since 2014, they have built the third largest unsecured consumer lending platform in the UK by 2016 volume, even though – at 4.6 per cent – their market share is still small. So far it has lent a comparatively small £80m to around 20,000 borrowers. Zopa, by comparison, has approved £2.62bn in loans since 2005.

But with a growth rate of 430 per cent in the last year, Lendable is expanding quickly. It aims to be the fastest lender to decide on applications and transfer cash in the market, getting funds of between £1,000 and £15,000 in the borrower’s account in as little as two hours.

Power to the people: Meet the P2P lender that uses a centuries-old way of lending (City A.M.), Rated: A

But for many rural businesses, Folk2Folk has been a saving grace. The peer-to-peer (P2P) lending platform has helped struggling companies in a time of need, and in some cases prevented an entire community from caving in on itself.

“We don’t exist as a platform that wants to talk solely about interest rates,” says Giles Cross, the company’s chief marketing officer. “Rather, our purpose is to sustain local and rural communities around the UK – where people want to club together to make a difference.”

A large proportion of the businesses that use Folk2Folk are startups that have been starved of funding, largely because they don’t have a long-standing track record.

The House Crowd Says Investor Confidence at Record High (Crowdfund Insider), Rated: B

The House Crowd, a UK property crowdfunding platform, is reporting “record levels of investor confidence”. According to the platform, the House Crowd is experiencing high demand for its property-backed peer-to-peer lending products, with over 1,270 people having invested in one. The House Crowd states that 66% of its investors now repeatedly reinvesting their capital through the business.

FCA’s Bailey calls for govt action on debt crisis (FT Adviser), Rated: B

Higher UK interest rates could spark a consumer debt crisis unless the government intervenes, according to Andrew Bailey, chief executive of the Financial Conduct Authority (FCA).

More than 8.3m adults in the UK are struggling under the burden of debt – a higher proportion of the population than in 2016, according to figures from the Money Advice Service.

Its data revealed 15.9 per cent of the UK population is living with a debt problem, up from 15.4 per cent in 2016.

China

Social Media Giant Tencent Gets Into Old-School Finance (Bloomberg), Rated: AAA

Tencent Holdings Ltd., China’s largest social media firm, is entering the traditional finance industry by investing in CICC International Capital Corp., a move that may help the investment bank’s expansion in wealth management.

Shares of CICC jumped by a record after it said Tencent is paying HK$2.9 billion ($372 million) for roughly 5 percent of China’s oldest investment bank. The companies will team up on marketing and data analysis, according to an exchange filing.

Source: Bloomberg Technology

Ping An Securities deploys Finastra technology to boost revenue and enter new markets (The Asset), Rated: A

Ping An Securities has implemented FusionCapital from Finastra throughout its operations in Greater China.

The business, part of China’s Ping An Group, is now using the flexible Finastra platform to help extend its securities brokerage capabilities on a global scale – meaning it can boost revenues as it enters new markets.

Ping An Bank launched intelligent investment services (01Caijing), Rated: A

China Ping An “simple life” conference held in Shanghai. Ping An Bank mobile banking business – “safe pocket bank” launched a smart investment service (referred to as “safe intellectual investment”), the first open to ordinary investors to use. The service uses the Black-Litterman model (BL model) and the quantitative asset allocation method, which are widely used by overseas investment bankers, and develop personalized investment plan according to the customer’s risk appetite.

International

Japan wants to roll back regulations for financial technology startups — here’s why it could be bad for the US (Business Insider), Rated: AAA

Japan’s push to attract innovative financial technology startups to the country could spell trouble for the US.

On Wednesday at the New York Stock Exchange, Japanese Prime Minister Shinzo Abe said the government was moving forward with a plan to roll back regulations on some fintech startups to help spur the development of emerging technology and drive growth in the country.

As such, Abe is pushing for a regulatory sandbox program that would allow fintechs, startups looking to automate or digitize aspects of financial services, to operate and scale without meeting existing regulations.

While such an environment is understood to exist in Silicon Valley more broadly, Berenguer said, those hoping to break through specifically in the financial industry in the US are often required to subscribe to the same regulations as their much larger peers.

That often means paying lawyers to ensure compliance, costs that can force entrepreneurs to put off investing in their product and team. This creates a sort of Catch-22 for some startups. Venture-capital backers are less likely to give entrepreneurs money without a product, but it’s more difficult to create a product with less money when also paying legal costs. Berenguer says this has made financial technology harder to break into relative to the overall tech industry.

Singapore, UK sandbox

Some companies, he said, are seeking greener pastures in Singapore and the UK, where a sandbox program has existed for some time.

Where the huge SoftBank-Saudi tech fund is investing (Money), Rated: AAA

The Softbank Vision Fund was unveiled less than a year ago, backed by Saudi Arabia and Japan’s SoftBank (SFTBF). By May it had raised $93 billion, out of a planned $100 billion, to spend on technology businesses of the future.

Saudi Arabia is the biggest Vision Fund investor, followed by SoftBank. Other investors include Apple (AAPLTech30), Qualcomm (QCOMTech30), Foxconn, Shar (SHCAY)p and Mubadala, the sovereign wealth fund of the United Arab Emirates.

It’s already invested in 10 firms, leading funding rounds worth at least $7.7 billion.

Here’s what it has backed so far this year:

  • Slack
  • OYO
  • Fanatics
  • WeWork
  • Roivant
  • Guardant Health
  • Nvidia
  • Flipkart
  • Brain Corp
  • Plenty
Australia

P2P lender surpasses $ 150m in loans (Broker News), Rated: AAA

Peer-to-peer lender RateSetter has now reached the $150m mark in loans facilitated thanks to a rapid influx of lenders into the platform.

Millennial investors have helped to drive this growth, especially in RateSetter’s one-month market where these younger demographics make up 72% of the lender’s investors since the firm launched in 2014. This is followed by the one-year market where Millennials make up 40% of all investors.

Investment in the platform has risen by 50% over the last five months alone after RateSetter hit the $100m loan milestone in March. There are now more than 7,700 investors registered with the platform, making RateSetter the largest P2P lender in Australia.

For the one-month market, the average amount invested has increased from $3,777 two years ago to $11,483 today.

Source: Broker News
India

In Game Of Loans, RBI Arms A New Player (Bloomberg), Rated: AAA

Amit Parker, 26, needed money for his father’s heart surgery. Banks refused to lend as he had delayed repayments on a motorcycle loan three years ago. The travel firm executive tried his luck at Lenden Club (Lenden is Hindi for give-and-take), an online portal that connects individual borrowers with lenders. He managed to get Rs 70,000.

Most of these are small-ticket transactions, and the market is small. A few hundred such loans are disbursed a month with only the young with poor credit record or the tech-savvy borrowing, Rajiv Raj, co-founder of credit-scoring platform CreditVidya, told BloombergQuint. Adoption could improve once the central bank comes out with guidelines.

The Reserve Bank of India on Wednesday provided that clarity, bringing P2P lending platforms on a par with non-bank finance companies. And the opportunity is huge. More than 30 such startups have come up in the last four years, including Faircent, i2ifunding, Lenden Club and Billionloans.

Yet, since it involves lending to people with poor credit scores, interest rates can go as high as 28 percent. That didn’t deter Parker from taking another Rs 1.5-lakh loan on Lenden Club. He wishes to continue borrowing on the platform.

Millennials are the most active lenders and borrowers, Rajat Gandhi, co-founder of Faircent, said over the phone. About 60 percent of its 18,000 members are below 35 years. For its Mumbai-based rival Lenden Club, more than two-thirds of its users are 30-40 years old.

They largely borrow to improve lifestyle.

Loan marketplace Rubique targetting 250 pct growth in disbursement, 300 pct in revenue (Financial Express), Rated: A

Does the launch of your mobile app mean that you are shifting your focus to individual borrowers from SMEs?

From day one, we have maintained that our take on the opportunity in the financial space is not focused on retail or SME. The Indian financial sector is largely influencer-driven. Whenever, someone wants a loan, they go through an influencer, whether a chartered accountant or a financial advisor.

How much have you disbursed through your platform so far in FY18?

Last year, we did Rs 1,000 crore in disbursements, of which 60% was in the SME category and 40% in the retail category. This year, as a company, in the first four months (April-July), we did Rs 500 crore worth of disbursements and we have been clocking very healthy revenue. This month, we are touching around Rs 3 crore in revenue. We had been going at a monthly average of about Rs 2 crore in revenues so far. This year, we are targeting almost 250% growth over last year (in disbursements) and a healthy revenue growth. Last year, the revenue was Rs 15.5 crore. This year, we are targeting an almost 300% jump and we expect to cross `45 crore.

Buying a car this festive season? Consider these factors when comparing car loans (India Times), Rated: A

Many people wait for the festival season to make big-ticket purchases like buying a car. That is because banks and non-banking finances companies (NBFCs) usually lower their lending rates on car loans and even have offers such as writing off processing fees.

Source: India Times

“The only benefit of availing a car loan through the dealer is the slight convenience. Dealers tend to push the customer towards their captive finance arms or towards banks where they get higher commissions. So, when a customer compares the offer from the dealer with more banks or at online marketplaces, they will typically find lower interest rates and better terms than those offered by the car dealer,” says Gaurav Gupta, CEO, MyLoanCare.in, an online loans marketplace.

Source: India Times

Remittance firms should consider fintech start-ups as partners rather than competitors (The National), Rated: A

A recent Statista report estimates that fintech will be worth around US$20 billion by 2017.

For instance, 2016 GCC-wide figures by Statista showed that a full 57 per cent of banks and financial services providers saw fintech startups in their operational space as potential partners, while only 22 per cent saw them as competition.

Fintech start-ups tend to be technologically led. They harness mobile tech, social networks and a well-designed user interface to bring services directly to customers. But this technology-first model is most useful in the first and last mile fulfilment, ie, when a customer requests a transaction, or is notified of its completion. When it comes to actual transaction processing, fintech startups often lack the size, scale and well-developed treasury functions needed to fulfil global requests.

But mutually beneficial fintech partnerships can be a game changer. We are heading for what might be called a hybrid model – where a transaction is initiated in-app but is then handled by conventional partners through systems that are already compliant with regulations and have a robust track record of transaction fulfilment.

Asia

Used-car dealer taps fintech for one-stop ease (SGSME.sg), Rated: A

A USED-CAR dealership has tapped fintech to offer a paperless and hassle-free one-stop service to buyers, who can make an electronic deposit for a preferred model and submit an online car loan application, complete with insurance cover.

Orchard Credit, best known for its four decades in the vehicle financing business, recently set up a dedicated used-car showroom to provide the full range of car services to its customers.

Orchard Credit also pioneered the car loan aggregator. It is the only dealer which offers online car loans from nine banks and financial institutions – DBS, Hitachi Capital, HL Bank, Maybank, OCBC, Standard Chartered, Sing Investments and Finance, Tokyo Century and UOB.

INDONESIAN peer-to-peer (P2P) lending startup KoinWorks launches a new programme under its KoinPintar category of loans in collaboration with Binus Online Learning.

Benedicto says that KoinWorks will cover a maximum of 80% of the fees based an applicant’s finances. Loans with a flat interest rate between 9% to 12.5% will be offered to cover the rest.

How technology is changing equity trading (The Asset), Rated: A

The widespread use of algorithmic trading has lessened the need for interaction between the buyside and sellside, and brought with it increased reliability, faster speeds and lower costs. However, it also brings technology-related risks and a lack of transparency.

The widespread use of algorithmic trading – basically the process of using computers programmed to follow a defined set of instructions for placing a trade – means that it is no longer necessary for the buyside traders to speak to their counterparts every time they make a trade.

Authors:

George Popescu
Allen Taylor

OnDeck Turns 10: Snapshot of its Journey Into an SME Lending Giant

OnDeck Loan Originations

OnDeck, with its vision to provide lending solutions to Small and Medium Enterprises (SME), has gone from strength to strength since its 2007 inception to emerge as the largest online lender to small businesses. It has been able to win in an increasingly competitive environment, is now a listed corporation, and has successfully completed a […]

OnDeck Loan Originations

OnDeck, with its vision to provide lending solutions to Small and Medium Enterprises (SME), has gone from strength to strength since its 2007 inception to emerge as the largest online lender to small businesses. It has been able to win in an increasingly competitive environment, is now a listed corporation, and has successfully completed a decade whereas its peers have faced many strong headwinds. Let´s put light on the journey of OnDeck into an SME lending giant.

OnDeck, an alternative lending platform, entered the P2P lending space in August 2007 with the intention to gain a foothold in SME lending. With its “customer first” philosophy, it has focused on providing speedy, efficient, and top quality lending solutions to SMEs. The company was founded by Mitch Jacob (founder), a serial fintech entrepreneur. So far, OnDeck has provided $7 billion in loans to over 70,000 customers in almost 700 different industries. The company has over 400 employees on its payroll and more than $150 million in annual revenue.

Key Milestones

2007-2010

After originating its first loan in 2007, the SME lending powerhouse leveraged its proprietary technology and data driven OnDeck Score to achieve company revenue of an estimated $15 million in 2010 as compared to $5 million in 2009. The financial crisis of 2008 came as a blessing in disguise for the online lending platform as banks simply vacated the small business lending vertical. This helped the young company to quickly reach the $50 million mark in loans disbursed to over 2,000 small businesses.

2011-2014

2011-2014 was considered as a golden era in the history of the company, as the company grew by 127% (CAGR) during that time. In 2013, it originated $458.9 million of loans in the top five states alone: California, Florida, New York, Texas, and New Jersey; this represented a year-on-year growth of 165% and was ranked 11th in the Forbes’100 Most Promising Companies in America. It was awarded an A+ rating from Better Business Bureau for providing remarkable product and service to its clients.

In May 2014, OnDeck entered into a partnership with BBVA Compass, a customer-centric global financial institution, ranked among the top 25 banks in the US. With the help of OnDeck’s innovative technology and business scoring system, the bank was able to offer customized loans to its small business clientele. In this alliance, BBVA referred their clients to OnDeck for loans, and OnDeck used the BBVA data to underwrite the loans. The partnership was a game changer as banks and fintech lenders had been seen as competitors till then. This model showcased a way where they could work on their individual strengths and be allies. OnDeck flourished in 2014 and originated loans worth $788.3 million during the year and witnessing a year-over-year growth of 171%. By the end of 2014, it crossed the coveted $1 billion mark in originations during the year.

IPO

In December 2014, the online lending platform started trading on New York Stock Exchange under the ticker “ONDK.” It managed to raise $200 million from its IPO, and the firm was valued at $1.32 billion after the end of first day of trading. It was a huge milestone for OnDeck as well as the entire alternate lending industry as OnDeck was only the second P2P company to be listed at that time. With a valuation over $1 billion, the company was catapulted into an elite list of “unicorns.”

2015

Since 2007, OnDeck has facilitated over $1.5 billion in loans across 700 industries in almost all 50 US states.

Another feather in its cap was the partnership with JP Morgan Chase, the country’s largest bank with $2.5 trillion in assets and over $100 billion in revenue. Through this partnership, JP Morgan has been offering small business loans to its 4 million small business accounts. The bank leverages OnDeck’s underwriting technology for quick approvals and funding of their loans. While it is a Chase branded loan and it appears on the bank`s balance sheet, OnDeck provides loan servicing and in return has been receiving originations as well as servicing fee per loan. OnDeck is providing a tailor-made platform keeping in mind JP Morgan’s needs and leveraging the bank’s own client base for customer acquisition.

An In Depth Look at the OnDeck/JPMorgan Chase Deal

Economic Impact

OnDeck commissioned an analysis report to show the positive economic impact its lending had on the economy and society. The report stated the company’s first $3 billion lent to the small businesses powered $11 billion in business activity and created 74,000 jobs nationwide.

Key Highlights

  • In order to remain ahead of its competitors, the online platform is continuing to grow its strategic partner channel. In April 2015, OnDeck collaborated with Angie´s list to give small businesses access to loans up to $250,000. Another strategic alliance was announced in the same month between Prosper Marketplace and OnDeck. The focus is to collectively address the financial needs of customers by offering better, innovative, and customised solutions.
  • OnDeck launched its offices in Australia and Canada. They represent unchartered territories, but the company has the capital and the experience to take advantage of new markets sharing a lot of similar characteristics as its home market.

2016

To maintain its strong value proposition and promote transparency, OnDeck created a group named “Innovative Lending Platform Association” (ILPA) with two other major online lending companies, Kabbage and CAN Capital. ILPA is a trade organization that was formed to ensure transparency and standards around pricing and fees. The association was formed with the motive to create the industry´s first model for pricing disclosure by empowering small businesses to better assess and compare finance options. The initiative resulted in the origination of SMART BoxTM which means ¨Straightford Metrics around Rate and Total Cost .¨

OnDeck also joined hands with Intuit Inc. (NASDAQ: INTU), a financial software company, in June 2016. The alliance launched a new “QuickBooks Financing Line of Credit” that provides small businesses easy access to loans at a low rate of interest. Intuit and OnDeck alliance also launched a $100 million small business lending fund to back the new product.

2017

OnDeck is extending its partnership with JP Morgan Chase by signing a new 4-year contract. The project named Chase Business Quick Capital® will allow OnDeck to increase digital functionality on the platform and target the megabank’s millions of small business clientele.

Measures to turn it into a profitable company

The company has endured a rough time as a listed company in the last few months and this has shown in its annual results. In Q4, 2016 its year-on-year (YOY) growth in loan origination fell to 13% as compared to 27% in Q3. To stop this downward slide, it introduced a “cost rationalization” plan which was focused on tightening credit management and job cuts. Along with this, the following lines of actions were also adopted by the company to reach profitability:

  • As per Q4, 2016 results, staff reduction was expected to be around 11%. But the management revised the staff reduction target to 27% to further continue the cost reduction.
  • The company is moving to a balance sheet lending model to reduce dependence on external lenders.

And not surprisingly, its recovery plan and cost optimization measures started paying off in Q1 2017. The net losses dropped substantially by 68% from $36.5million in Q4, 2016 to $11.6 million in Q1, 2017. And above that, provision for losses also reduced by nearly 17% from $55.7 million to $46.2 million in Q1, 2017.

Stock Price responding to the measures

The price chart clearly shows that the last year was not a good period for the company stock. The stock kept plummeting all through the year. But the measures initiated by the management in the last quarter of 2016 have somewhat stalled the downward spiral and the stock price has finally started to show some resistance.

Conclusion

OnDeck announced Q2, 2017 financial results in August. The lender has managed to narrow down the quarterly losses significantly along with kickstarting a $45 million cost rationalization program. More importantly, the company expects to finally hit GAAP-profitability by the year-end. The company has a strong fundamental base, and its ability to pivot for survival and growth will ensure that the company is here for the long run.

Author:

Written by Heena Dhir.

Friday August 18 2017, Daily News Digest

Europe private equity real estate

News Comments Today’s main news: iFunding insolvent, SEC issues subpoena. DreamFunded now offers Reg CF investment opportunities. MarketInvoice integrates with Veritas. Raisin passes 4B Euro mark. Today’s main analysis: China Rapid Finance reports unaudited Q2 results. European real estate investment up post-Brexit. Today’s thought-provoking articles: Community banks refuse to step down on ILC battle. How Swift makes renminbi payment frictionless. Small lenders […]

Europe private equity real estate

News Comments

United States

United Kingdom

China

European Union

Australia

  • Small lenders offer biggest savings on $1M property loans. AT: “There could be any number of reasons for this. One is that large lenders have massive overhead expenses and therefore are forced to charge higher interest rates and fees. Smaller lenders can use technology and agile business practices to cut costs.”

India

Asia

Africa

News Summary

United States

iFunding Insolvent, SEC Issues Subpoena as Investor Jazco Looks to Step In (Crowdfund Insider), Rated: AAA

iFunding, a real estate crowdfunding platform, is insolvent according to several sources.

In recent days, information has cropped up that investors have been left holding the remains of the company that included properties with an estimated value of $20 million. One individual estimated the number of impacted investors at 400 individuals. These Investors are now looking at options to salvage what they can from the crowdfunding platform.

Crowdfund Insider has been told the SEC did issue a subpoena at some point regarding the operational questions regarding iFunding. Specific details have not been made available but one individual suggested it had to do with the platform operating as a Broker Dealer without having the appropriate license.

DreamFunded Now Offers Real Estate Investments Using Reg CF (Crowdfund Insider), Rated: AAA

DreamFunded Real Estate has launched its first real estate investment opportunity under Reg CF. DreamFunded is a FINRA approved crowdfunding platform that may offer securities the newest crowdfunding exemption. This iteration of crowdfunding allows any investor access to these opportunities – not just wealthier, accredited types. DreamFunded is one of only two real estate crowdfunding platforms using Reg CF.

In ILC fight, community banks will not stand down (American Banker), Rated: AAA

Commentators who say we should do away with that historic separation should be aware that the community banking industry will once again fight tooth and nail against such a move. We fiercely and successfully opposed Walmart’s 2006 bid. More than a decade later, the core principle remains the same.

Allowing nonbank corporate conglomerates to own banks not only violates the U.S. policy of maintaining the separation of banking and commerce. It also jeopardizes the impartial allocation of credit, creates egregious conflicts of interest, and results in a dangerous concentration of commercial and economic power. It also extends the federal safety net to commercial interests, which is counter to the principles upon which the Federal Deposit Insurance Corp. was created.

The Independent Community Bankers of America’s main objection to the SoFi application for federal deposit insurance is that the ILC charter would allow the fintech company to avoid the legal prohibitions and restrictions under the Bank Holding Company Act (BHCA).

iPayment, Inc. Introduces New Business Unit: iPayment Capital (PR Newswire), Rated: A

iPayment, Inc., a trusted provider of payment and processing solutions for small and medium-sized businesses (SMBs), introduces iPayment Capital, a new business unit focused exclusively on merchant cash advance services.

iPayment Capital will formally launch this fall with a focus on iPayment’s more than 137,000 SMB customers. Adding merchant cash advance as a direct offering, the Company will significantly streamline the process for its customers, offering a simplified application, expedited reviews and approvals, and a seamless re-payment process.

The Company recently hired Mr. Tomo Matsuo as Senior Vice President to lead this important initiative. Mr. Matsuo spent over six years with Bizfi, a premier fintech company combining aggregation, funding and a participation marketplace on a single platform for small businesses, where he held several senior level positions including Chief Operating Officer.

Morgan Stanley Advisor Charged with Insider Dealing (Financial Advisor IQ), Rated: A

Morgan Stanley financial advisor Michael Siva is among seven people charged with making about $5 million trading on illegal leaks made by a former Bank of America employee, Bloomberg writes.

Daniel Rivas, a former employee at Bank of America’s capital-markets technology group, allegedly passed dozens of tips about unannounced deals to two friends, including his girlfriend’s father, James Moodhe, an assistant controller at a brokerage that prosecutors didn’t identify, according to the news service.

Moodhe allegedly passed the tips on to Morgan Stanley’s Siva, whose trades on the leaked deals allegedly made his clients more than $880,000 and $8,000 for himself, Bloomberg writes.

10 bold predictions about the financial advice industry’s future (Investment News), Rated: A

“In 10 years, we’ll be in the midst of the largest wealth transfer in history, as more than $30 trillion is passed to millennials.”

Lowell Putnam, co-founder and CEO, Quovo

“Clients are going to want more technology that they can touch. I think there’s going to be more of a collaborative piece to planning.”

Rose Price, financial planner, VLP Financial Advisors

“The emerging influence and affluence of women — specific to income, education, entrepreneurship and wealth — will further demand comprehensive planning and financial independence.”

Sameer Somal, chief financial officer, Blue Ocean Global Wealth

“As the Gen X and millennial generations become more empowered to take charge of their financial future, they will demand advice in an ‘instant’ … whether through an app, online digitally or virtually with an adviser.”

Julia Carlson, CEO and wealth adviser, Financial Freedom Wealth Management Group

“There will be commoditization of financial planning advice in the same way we’ve seen in investment management in the past, that’s going to offer the opportunity for further specialization.”

Nicholas Crow, president, Motley Fool Wealth Management

Here’s what an uptick in the US IPO market could mean for fintechs (Business Insider), Rated: A

Initial public offerings (IPOs) have been 

Crowdfunded real-estate investments: 3 ways to do it (MarketWatch), Rated: A

In fact, investment crowdfunding (excluding community fundraising tools like Kickstarter) could top $300 billion annually by 2025, according to CFX Markets.

A typical crowdfunded real-estate project raises anywhere from $50,000 to $3 million from individual investors; the total project size can range up to $30 million or higher. For a $10,000 investment, return expectations range from $700 to $1,200 for a one-year debt investment to $5,000 to $15,000 for a longer-term (over three to five years) equity investment.

Equity crowdfunding

Pros

• Lower barrier to entry: For as little as $5,000, individuals can invest in large, commercial real-estate projects and enjoy the benefits of real estate: strong returns, a low degree of correlation with public markets and historically lower volatility.

• High yield potential: As equity investors, individuals can share in uncapped gains.

Cons

• Risk remains: These investments do carry risk, and some investors may not know how to evaluate risk factors, such as local economy volatility, or potential for higher-than-expected construction costs.

• Lack of liquidity: Many of these investments entail a hold period of up to five years. No prominent secondary markets have emerged yet.

• It’s early: While many platforms tout positive aggregate return figures, it’s inevitable that some projects won’t go well.

Syndicated debt crowdfunding

Pros

• Less risky than an equity investment: Debt investors are entitled to repayment before equity investors earn a return, so these investments carry less risk.

• Extra diligence: The loans upon which these investments are based were originated by professional real-estate lenders, who often have a physical presence and expertise in the markets where they issue loans.

• Short hold period: Relatively short terms (typically under two years) allow investor to reinvest sooner, and reduces liquidity risk.

Cons

• Less upside than an equity stake: Though debt investments are generally more secure, they carry less upside, as the investor’s yield is limited to the interest rate of the loan.

• A middleman: The experienced real estate lender is an additional layer of diligence, but it’s also another party between the investor and the original loan. This typically means a net annual percentage return of 0.5% to 1% lower than platform-issued debt offerings (see below).

Platform-issued (‘pre-filled’) debt crowdfunding

Pros

• Less risky: Debt investors are the first to be repaid, and the investment is secured by the underlying property.

• Short hold period: The individual typically recoups their money in six months to two years.

• One less middleman: With the platform acting as the lender, one less party takes a fee.

Cons

• Less upside than equity, for the same reason that syndicated debt does.

• Less diligence: Unlike syndication, the only loan underwriting is done by the platform (acting as lender). Some platforms practice conservative underwriting, but the companies themselves may have limited operating histories and minimal experience in all the markets where they issue loans.

KeyBank Partners with Billtrust to Deliver Best-in-Class, Automated Accounts Receivable Solution (PR Newswire), Rated: A

KeyBank (NYSE: KEY) announced today its strategic partnership with and equity investment in Billtrust, a pioneer of payment cycle management solutions. This collaboration, along with the launch of KeyTotal AR™, marks the most recent in a series of partnerships with emerging fintech providers, affirming Key’s commitment to bringing innovative solutions to market. Terms of the investment were not disclosed.

The KeyTotal AR™ platform allows KeyBank’s corporate clients to improve operational efficiency during the invoice-to-cash process using electronic invoicing and payments in a flexible, cloud-based solution. Powered by Billtrust’s Quantum Payment Cycle Management solution, the platform accelerates cash flow by automating invoice delivery and payment and cash application. Merging this innovation with KeyBank’s broad range of accounts receivable (AR) capabilities has created one of the highest-level product suites available in the market today.

Top 5 Emerging Fintech Hubs in The U.S. (Bank Innovation), Rated: A

Atlanta

Atlanta has enjoyed a position as a hub for financial services, if not necessarily fintech, for quite a while. The city, which is presently playing host to a number of fintech startups, incumbents, and technology accelerators (including the Techstars Atlanta Program) is the place to be for payments companies, to the point where some have nicknamed areas of the hub things like “Transaction Alley.”

For the older guard of digital payments, companies NCR and WorldPay are both currently headquartered here, and of course, it’s the birthplace of the Atlanta Automated ClearingHouse, or ACH.

Startups like First Performance Global are innovating the authorization side of payments, using data analytics, social media, and automation to make sure its businesses stay competitive.

Austin

The city is home to older fintech residents like banking technology provider Kasasa, mobile trendsetter Malauzai, and digital banking solutions provider Q2 Holdings.

Now, Austin is headquarters to newer entrants like Draft, which is using the venture funding it received from Plug and Play and Envestnet Yodlee in order to build insights based on data analytics to help financial advisors avoid poor portfolio performances and to further build trust with clients. Companies like Self Lender are focusing attention on the under-banked, using digital savings plans to help users build up the credit they are missing from lack of access to more traditional financial products. Other startups like Able are focusing on the increasingly competitive small business lending market, aiming to fund SMBs at all stages with help from friends and family.

Miami

Take for example the startup Waleteros, a banking app geared specifically to serve the underbanked U.S. Hispanic customer.

Then there’s ClassWallet, an app geared specifically to help schools. This virtual wallet streamlines the process of payments and reimbursements for teachers and schools alike.

Catering to Miami’s entrepreneur demography is a startup like InvestReady, formerly known as Accredify. This company uses API integration to allow crowdfunding portals to verify investors, thus simplifying the tedious compliance and verification process. The company, which was founded in 2014, has to date raised $120K in funding.

Omaha-Lincoln, Neb.

D3 Technology in Omaha has become a stalwart in the mobile banking scene, helping institutions replace their aging, first-generation mobile apps with data-driven solutions and modern UX’s. Lincoln’s Hip Pocket is a financial wellness tool that allows users to save money with a swipe.

Washington D.C.

Some companies like Wealthminder are using digitized financial planning tools and investment recommendations fueled by data analytics to help its users to achieve longer term financial goals, such as funding college, buying a home, or retirement.

Startups like FS Card are busy re-designing credit, offering new options for small dollar loan customers to move towards more traditional (more affordable) credit products. Others, like StreetShares are enabling “social finance” for small businesses, allowing like-minded investors to fund small businesses through auctions (businesses pitch themselves through a simple mobile application, and investors compete to fund; the lowest bids are consolidated into one single loan with a low interest rate).

Recent FinTech Partnerships Bode Well for GH Capital (KFM BFM), Rated: A

Using aggregators also allow retailers to instantly offer multiple payment methods to the customers leading to a higher conversion rate. That’s why we see digital payment processing companies like Wirecard AG (WRCDF) expanding at a quick rate. The company registered a transaction volume growthof ~34% during the first quarter of 2017.

GH Capital Inc (GHHC), a gateway provider for online banking electronics payments, can also benefitfrom this trend. The company already entered in several partnerships with multiple payment processors. It recently partnered with Allied Wallet and has taken a 23% equity stake in VMoney.

GH Capital is involved in the provision of IPO services for small corporations.

BFS Capital Appoints Michael Marrache as CEO (BusinessWire), Rated: B

BFS Capital Inc., a small business financing company, announced that it has appointed Michael Marrache as Chief Executive Officer to succeed outgoing CEO and co-founder Marc Glazer. Named President in September 2016, Marrache previously served for more than three years as the company’s Chief Operating Officer. He also will join the company’s Board of Directors. Marc Glazer will continue to serve as Chairman of the BFS Capital Board.

Washington Capital Partners Rewrites the Rules of Flip-to-Rent Real Estate Investing (Press Release Rocket), Rated: B

Today, Washington Capital Partners (WCP), a hard money lender operating in the Washington D.C., Virginia, and Maryland areas, announced their new Flip-to-Rent Hybrid Loan product. This 3-year hard money loan allows fix and flip investors to immediately roll their property into a long-term rental loan.

United Kingdom

Fintech lender MarketInvoice to tap 400,000 strong customer base (AltFi), Rated: AAA

MarketInvoice continues on its mission to extend its services to a broader range of businesses. The invoice finance platform, which recently launched a new longer term funding line (MarketInvoice Pro), has forged a strategic alliance with credit management specialists Veritas Commercial Services.

Veritas is a leading credit management firm with a digital sales ledger platform called VeritasVirtual. Its customers use this platform to monitor the status of outstanding payments. The MarketInvoice platform has now been seamlessly integrated into VeritasVirtual, offering small business users access to MarketInvoice Pro – a funding line which is secured against their outstanding invoices.

China

China Rapid Finance Reports Unaudited Second Quarter 2017 Financial Results (PR Newswire), Rated: AAA

China Rapid Finance Limited (“China Rapid Finance” or the “Company”) (NYSE: XRF) today reported its unaudited financial results for the second quarter ended June 30, 2017. The Company will hold a conference call on August 17, 2017 at 8:00 am Eastern Time (8:00 pm Beijing Time) to discuss the financial results for the second quarter of 2017. Dial-in details are provided at the end of this release.

Second Quarter 2017 Financial Highlights

  • Total gross billings on transaction and service fees[1] grew by 59% year over year to $24.5 million, or 46% over the previous quarter.
  • Gross billings from consumption loans exceeded gross billings from lifestyle loans, marking an important milestone. Gross billings from consumption loans increased by 642% year over year to $13.2 million, or 97% over the previous quarter. Gross billings from consumption loans represented 54% of total gross billings as compared with 12% in the prior year period, and 40% in the previous quarter. Gross billings from lifestyle loans were $11.3 million as compared with $13.7 million in the prior year period, or $10 million in the previous quarter. Gross billings from lifestyle loans were 46% of total gross billings, as compared with 88% in the prior year period, and 60% in the previous quarter.
  • Net revenue increased by 9% year over year to $15.2 million (after netting off customer acquisition incentives of $8.1 million) from $13.9 million (after netting off customer acquisition incentives of $0.6 million) in the prior year period, and 45% over the previous quarter from $10.5 million (after netting off customer acquisition incentives of $5.3 million) in the previous quarter.

Second Quarter 2017 Operating Highlights

  • Number of new borrowers added in the second quarter of 2017 was 760 thousand, increasing 39% over the previous quarter. As of June 30, 2017, the Company had 2.7 million unique borrowers.
  • Total number of loans facilitated grew by 354% year over year to 5.1 million, or on average 55 thousand loans facilitated per day. Total number of loans facilitated since inception reached 20 million.
  • Total loan volume facilitated increased by 244% year over year to $720.7 million. Consumption loans facilitated increased by 431% year over year to $637.5 million, with lifestyle loans facilitated totaling $83.2 million, as compared with $89.7 million in the prior year period.
  • Average cumulative loan volume per borrower of the Q4 2015 cohort increased to approximately $1,550 in their 18th month on our marketplace from approximately $1,300 in the 15th month. Average cumulative loan volume per borrower of the Q1 2016 cohort increased to approximately $1,340 in their 15th month on our marketplace from approximately $1,099 in the 12th month.
  • Repeat borrowers on the Company’s marketplace accounted for 72% of the total borrowers as of June 30, 2017.

Sohu’s Fox Fintech Group Approved to Obtain First Internet Micro-credit License Issued by Ningbo City Government (PR Newswire), Rated: A

Recently, the Finance Office of Ningbo City Government approved a subsidiary of Fox Financial Technology Group Limited (“Fox Fintech Group” or “the Company”), an affiliate of Sohu.com Limited (NASDAQ: SOHU), to obtain the city’s first internet micro-credit license. This is a milestone that shows Ningbo City Government’s positive stance towards leading internet companies to set up fintech-related businesses in the city.

European Union

Savings Marketplace Raisin Passes the €4 Billion Mark Faster than Any Wealth Management Fintech (Crowdfund Insider), Rated: AAA

Headquartered in Germany, Pan-European savings marketplace Raisin reports that in less than 4 years its customers have invested more than €4 billion in the platform’s savings products. As a result, Raisin is the leading marketplace for investments in Europe and one of the fastest growing Fintechs in the world.

Founded in 2013 as the first marketplace for investments in Europe, Raisin is now about twice the size of its next largest competitor.

Source: Crowdfund Insider

European real estate investment up on Brexit (Pensions&Investments), Rated: AAA

The immediate impact of 2016’s Brexit vote on private equity real estate investing in the second half of the year carried over into 2017, with reciprocal effects in mainland Europe. The first half of 2017 saw 201 deals closed, down from 315 and 302 in the first six months of 2016 and 2015, respectively. Continental Europe saw about 500 deals close between January and June 2017, as compared to about 400 halfway through 2016 and about 300 at 2015’s midpoint.

Source: Pensions&Investments
International

How Swift makes renminbi payment frictionless (The Asset), Rated: AAA

Swifts’s gpi enables banks to make cross-border renminbi payments to Chinese companies. By collaborating with China’s Cross-border Interbank Payment System they aim to make renminbi payments as fast as possible, Michael Moon, head of payments markets for Asia-Pacific at Swift, tells The Asset.

A recent Swift report shows that the renminbi only ranked sixth as a share of total global payments by volume.

Malaysia and Germany are the two countries which have had the highest growth in renminbi utilization for the past three years. For the first six months of 2017, Malaysia and Germany have seen a 551% and 436% growth respectively, compared to the same period in 2014.

SONM Advisory Board Onboards Digital Economist Paolo Tasca (Finance Magnates), Rated: B

Supercomputer Organized by Network Mining (SONM) has made an announcement regarding digital economist Paolo Tasca having joined the company’s board of advisors.

Tasca is the founder of the Centre for Blockchain Technologies at the University College London (UCL) and currently holds the role of Executive Director there. Prior to this position, Tasca acted as Lead Economist for digital currencies and peer-to-peer lending at Deutsche Bundesbank, which is located in Frankfurt, Germany.

Australia

Small lenders offer biggest savings on $ 1m property loans (Financial Review), Rated: AAA

Small lenders are offering the lowest rates on $1 million mortgages, with some products potentially lowering repayments by $500 a month, or $200,000 over a 30-year term.

The loan sizes have crept up as the median price of a property in Sydney hit $1.15m and about $850,000 in Melbourne.

Loans.com.au, an online lender, and Mortgage House Advantage offer the lowest variable, principal and interest rate for an owner-occupier of 3.64 per cent, or monthly repayments of about $4569.  That compares to an average rate of 4.27 per cent, a difference of 53 basis points, $362 a month or $130,000 over a 30-year term.

Australian Unity has a top rate for interest-only, owner occupiers of 3.79 per cent, or $3158 in monthly repayments. There is a $600 application fee. The average basic variable rate in the category is 4.73 per cent, a difference of 94 basis points, $551 a month or more than $198,000 over a 30-year loan.

Loans.com.au offers owner occupier, interest-only loans at 3.89 per cent, or $4711 in monthly repayments. That compares to an average rate of 4.53 per cent, a difference of 64 basis points, or $374 a month, or more than $134,000 over 30 years.

India

Online lending startup KNAB Finance raises funds from InCred, others (VC Circle), Rated: A

KNAB Finance Advisors Pvt. Ltd, a fin-tech firm that provides unsecured working capital loans to small and medium-sized enterprises (SMEs), has raised a little over Rs 2.5 crore in two funding rounds, a top company executive told VCCircle.

Non-banking financial company (NBFC) InCred, and over a dozen individual investors including Mindtree executive chairman Krishnakumar Natarajan and Sharjah Islamic Bank’s senior vice president Ravi Bhardwaj invested in the company.

The startup extends loans with an average ticket size of Rs 6 lakh, and it has disbursed Rs 10 crore worth of loans so far. It also offers short-term loans, allowing customers to close them within a month.

Asia

The potential impact of AI on trade finance (The Asset), Rated: A

HSBC announced that it was working with IBM to create a cognitive intelligence solution aimed at extracting key data from trade documents before entering the bank’s formal system. The bank typically processes over US$500 billion worth of trade documentation for customers and must manually review an estimated 100 million pages of documents annually.

In Singapore, financial technology firm Silent Eight has alternatively proposed using AI solutions to support bank analysts and investigators with their fight against AML violations and terrorism financing.

Africa

8 Zambian startups graduate from BongoHive accelerator (Disrupt Africa), Rated: A

The eight startups taking part in the programme were gaming startups LudoHuband Gamers Entertainment Meet (GEM), food startup InspireMe Trading, development and design startup Orbitrix Programming Solutions, flowers company Unforgettable Moments, real estate crowdfunding startup LCB Moguls, agri-tech startup eMsika, and interior design company Kreate Interiors.

Authors:

George Popescu
Allen Taylor