Thursday January 24 2019, Weekly News Digest

millennials loan money

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

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

millennials loan money

News Comments

United States

United Kingdom

China

International

Other

News Summary

United States

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

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

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

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

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

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

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

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

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

Strong Bank Earnings (PeerIQ), Rated: AAA

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

Source: PeerIQ

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

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

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

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

Source: WalletHub

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source: Fundera

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

United Kingdom

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

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

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

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

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

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

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

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

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

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

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

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

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

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

China

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

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

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

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

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

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

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

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

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

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

European Union

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

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

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

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

International

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

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

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

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

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

India

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

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

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

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

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

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

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

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

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

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

Asia

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

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

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

Authors:

George Popescu
Allen Taylor

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

Tuesday November 27 2018, Daily News Digest

Reliable Consumers for JP morgan, Citigroup, wells fargo and Bank of America

News Comments Today’s main news: LendingClub hits $1B in CLUB certificate issuance. Zopa boosts Augmentum Fintech fund returns. Monzo breaks record on crowdfunding round. Yirendai’s critical stage to regain growth. Judo gets $350M in funding. Today’s main analysis: How late-cycle expansions turn into recessions. Today’s thought-provoking articles: LendingClub does more lending during holidays. Turning LendingClub into a financial health club. Why […]

Reliable Consumers for JP morgan, Citigroup, wells fargo and Bank of America

News Comments

United States

United Kingdom

India

Other

News Summary

United States

LendingClub Reaches $ 1bn in CLUB Certificate Issuance (Lend Academy) Rated: AAA

LendingClub has seen issuance of their new CLUB Certificate reach $1bn in less than a year after first announcing the pass-through security product last December at their investor day. The CLUB Certificate was created to make it easier for institutions to invest in LendingClub originated loans.

Loan for the holidays: Lending Club loans out more during holiday shopping months (Thinknum Media) Rated: AAA

This year was a record-breaking season for holiday shopping, as online spending surged 23.6% according to Adobe Analytics.

But where is all that money coming from? While some consumers saved up for the season, others might have turned to loans, such as ones offered at Lending Club ($NYSE:LC), to pay down huge gifts or refinance debt from credit card spending.

Outside of March 2016 — a month during an unusual stretch of time right before its chief executive Renaud Laplanche stepped down and a federal subpoena came in — Lending Club typically has the most loans issued by dollar amount in the months before the holiday season, according to data tracked since 2013.

Source: Thinknum

LendingClub CEO Working to Turn It Into a Financial Health Club (Web Pro News) Rated: AAA

The CEO of LendingClub, Scott Sanborn, says that they are really looking to make membership in the club mean something and are working to take Lending Club and turn it into a ‘financial health club’ that will help people successfully manage expenses. He says that LendingClub helps by shining a spotlight on credit card debt which is the first step to doing something about it.

A Looming Crisis in People’s Overall Financial Health

We are seeing really an epidemic happening which is incomes have been stagnant for more than 20 years. All of people’s major expenses, healthcare, college, housing, is going up and it’s creating a real looming crisis in people’s overall financial health and it’s something that people just aren’t talking about. Close to half of Americans have credit card debts and they are more than twice as likely to talk about spousal infidelity than they are about the fact that they have credit card debt that they need to manage. We believe that by shining a spotlight on the problem it’s the first step to helping people do something about it.

Top fintech VCs explain how PayPal missed a golden opportunity and why they wouldn’t invest in LendingClub today (Business Insider) Rated: AAA

PayPal is arguably one of the biggest success stories to come out of Silicon Valley in the last 20 years. It launched the careers of Peter Thiel, Elon Musk, and Max Levchin and paved the way for other members of the “PayPal mafia” to make seed investments in a next generation of startups.

“OnDeck and LendingClub have scaled, strong businesses now, but you’d never invest in those companies as startups today,” Harris said. “I don’t think you would look at unsecured personal lending or small-business lending, where you have to go out and acquire customers in the wild, with no special sauce. That’s 10-year-old thinking.”

The current model many VCs advocate is for companies to find ways to offer additional services, like loans, to existing customers. Acquiring new customers can be expensive, and there’s a competitive advantage when you underwrite or target new services to existing customers, because they know more about them.

PeerIQ’s Lender Earnings Webinar; Bank Exec Comments on the Credit Cycle (Peer IQ) Rated: AAA

One of the main themes that we explored in the LEI was how late we are in the credit cycle. Most C-level executives were extremely are sanguine on the economy but are nonetheless taking precautions. PeerIQ’s view is “The good news — and the bad news — is that conditions don’t get better than they are now.” We recommend reviewing Bloomberg Julie Verhage’s “US Banks See Good Times Ahead Even as Many Prep for Downturn” for more.

Source: Peer IQ

How Late-Cycle Expansions Turn into Recessions

The current US expansion that started in June 2009 is the longest on record at over 113 months. Late expansions are characterized by low unemployment, high consumer confidence, high asset values. We currently observe a near 50-year low unemployment rate, near record high consumer confidence, and the highest level of consumer credit outstanding (although well below peak per-capita debt levels).

Ironically, it is these solid economic indicators that are responsible for the party coming to an end. In a simplified model, credit availability expands to the marginal borrower (e.g., new entrants, cov-lite corporate loans, thin-file credits, etc.) just until the marginal consumer or corporate loans creates more losses than expected. Lenders feel the pinch on credit performance and on funding due to rising rates. Lenders individually tighten lending leading to a reduction in the supply of credit on an aggregate basis.

PeerIQ’s Q4 2018 Lending Earnings Insights Report (Lend Academy) Rated: A

PeerIQ released their Q4 2018 Lending Earnings Insights Report which points to a number of themes showing the economy is strong but CEOs are striking a cautious tone. Delinquencies and defaults continue to be low as consumers have seen their wages rise and taxes drop. Lenders are increasing reserves as they anticipate credit to renormalize in the near future, saying the economy right now was too good to be true.

Read the Full Report here.

Excerpts:

Regulators are increasingly focusing on the greater role of non-banks in consumer lending.Large money center banks continue to pull-back from riskier loans such as small business and consumer lending. Large banks instead have increased their credit facility volume 6x since 2010. FDIC Chair Jelena McWilliams cites the significant role of non-banks in origination as potential for systemic risk. The FDIC is contemplating granting ILC charters to non-banks – a major shift.

Delinquencies and charge-offs in FinTech asset classes are near all-time lows, although charge-offs on prime credit are increasing. Enova (Subprime) and OnDeck (Small Biz) are seeing near cycle-low charge-offs, while LendingClub (Prime) is seeing higher delinquencies on newer vintages. The change in LendingClub’s charge-off estimates across loan grades was mixed. Charge-offs on grades B and C are estimated to be higher by 28 bps and 16 bps respectively QoQ.

Small Businesses Are Poised for Growth, but Are Lenders Ready? (Business Wire) Rated: AAA

Source Business Wire

Betterment, Merrill Edge, Fidelity’s Go Lead the Pack in Digital Advice Branding, Claims Cerulli (Financial Advisor IQ) Rated: A

Robo-advice pioneer Betterment is the pack leader in digital platform awareness among investors, a new Cerulli Associates study reveals. But Merrill Lynch and Fidelity aren’t far behind, the study shows.

Among the more than 5,500 people polled, the Betterment brand was known by 15% of respondents, Merrill Lynch’s Merrill EDGE by 13%, and Fidelity’s Go by 12%. Trailing the three frontrunners was Charles Schwab’s Intelligent Portfolios and Vanguard’s Personal Advisor Services, which were each recognized by 10% of respondents, the study reveals.

For its digital platform marketing awareness study, Cerulli polled investors under the age of 45 earning more than $125,000 annually and with more than $250,000 in investable assets.

5 Business Loans You Can Get Without Being Profitable (NAV) Rated: A

With the Bureau of Labor Statistics reporting over 415,226 startup firms less than 1 year old in 2017, it’s apparent that this category of business will need funding like never before. However, business loans are tricky. On hand, they tend to offer a larger line of credit to companies than personal loans or lines of credit. On the other hand, qualifying can be difficult and often requires you to provide at least two years of documentation that you are profitable.

For the brand new business that hasn’t managed to turn a profit (yet), what is left? How can you get a cash infusion into your business in time to expand, add employees, support a product launch, or refinance existing debt? The following loans are a bit non-traditional, but just might be exactly what you are looking for in your quest for funding during your startup years.

TD Bank Launches New Digital Mortgage Experience Powered by Roostify (Business Wire) Rated: A

Roostify, a digital lending platform provider, announced that TD Bank, America’s Most Convenient Bank®, has leveraged Roostify’s technology to provide customers with a digital mortgage offering. This digital experience combines the latest in lending technology with a human-centric approach that gives TD Bank’s customers an accelerated, low-stress path to home ownership.

The deployment now provides prospective homebuyers with useful tools to assist them in finding a loan that fits their needs and budget. Leveraging Roostify’s proprietary DecisionBuilder lead tool, TD Bank’s Digital Mortgage allows consumers to explore which loan products they qualify for, right from a simple-to-use web page. Consumers can then move on to apply for their chosen loan in minutes, and follow a streamlined, all-digital process for moving their loan through closing. With easy access to TD Bank’s expert loan team, homebuyers can enjoy both the convenience of a digital solution and reassurance of expert guidance as they navigate one of the most significant transactions of their lives.

The Lending Alternatives Hopeful Investors Should Know Inside And Out (Forbes) Rated: A

People buy real estate for many reasons — generating cash flow, a tax write-off, appreciation value. Some of the greatest profits are made when buying real estate in a down market. Seasoned investors and fortunate newcomers who purchased coastal residential property from 2012-2017 are sitting on healthy equity appreciation as well as competitive interest rates in the 3.5-5% range.

The traditional path to buy a property is to obtain financing through banks, credit unions or a mortgage company. Following the 2008 housing crisis, traditional lenders implemented more strict guidelines: Stellar credit scores from 740 and above, stable employment, a low debt-to-income ratio, six months or more of liquid reserves.

For hopeful investors unable to meet these demands, alternatives are to pay all cash or to finance the purchase using hard money financing or a private lender. By utilizing one of these two methods, buyers also do not have to be concerned with the mounds of paperwork lenders requested. There are some advantages and disadvantages by using either type of alternative financing.

How Marcus by Goldman Sachs took to the streets of New York to market its high yield savings account (Tearsheet) Rated: A

Marcus, the online consumer bank by Goldman Sachs, has been running a man-on-the-street ad campaign about recent research the company conducted. According to the survey, 60 percent of Americans with savings accounts don’t know the interest rate on their savings account, and *more than half* of Americans with savings accounts (56 percent) opened theirs without exploring other options.

Dustin Cohn, head of brand and marketing communications at Marcus, joins the podcast to talk about the survey and why Marcus chose interest rates as a differentiator. We unpack the recent advertising campaign and explore the recent acquisition and integration of personal finance app, Clarity Money.

Ross: Easy money and the rise of ‘neo banking’ (My NorthWest) Rated: A

Banks are entering a whole new era. It’s called neo banking. Because it’s so “neo.”

You just sign over your paycheck, and suddenly you can buy things with a wave of the phone. As far as I can tell, you just look romantically at what you want to buy – and it’s yours!

You can even get loans. But it’s friendlier because neo banks don’t have loan officers who look at your income statement and say “Ha ha ha, you’re kidding!”

United Kingdom

Zopa helps boost Augmentum Fintech fund returns (Peer2Peer Finance) Rated: AAA

ZOPA’S latest funding round has boosted the value of Augmentum Fintech’s portfolio, helping the fintech investment fund report net asset value growth of 5.1 per cent in its maiden financial results.

UK-listed Augmentum Fintech unveiled its first financial results on Monday since launching in December 2017. It reported that a recent £60m private fundraise by Zopa had boosted the value of its stake in the lender by £3.5m to £22m.

Augmentum Fintech Sees Portfolio Rise In First Interims Since IPO (Morning Star) Rated: A

Augmentum Fintech PLC reported its first interim results Monday since listing on the London Main Market in March.

In the period from incorporation on December 19 last year to September 30, the fintech venture capital investor had a net asset value total return of 5.1%.

At September 30, Augmentum Fintech’s NAV per share was 104p. The company’s net assets at September 30 totalled GBP97.8 million.

The company’s portfolio fair value increased 62% since the company listed in March to GBP53.9 million on September 30 from GBP33.3 million on March 13.

Monzo confirms record-breaking UK fintech crowdfunding round (City AM) Rated: AAA

Digital bank Monzo has today announced it will be heading back to the crowd for the last chunk of its series E fundraising round, with a target of up to £20m.

The raise, first reported exclusively by City A.M. in August, will be the largest fintech crowdfunding round in the UK to date.

Going live on Exeter-based platform Crowdcube, existing Monzo investors will get early access to the round from 3 December. The round will then be opened up to other Monzo customers, who can invest up to £2,000.

Banking app Monzo explores expansion into high-cost loan products (The Telegraph) Rated: A

Monzo, the financial technology start-up,  is considering launching loans aimed at “the Wonga segment” of the market, its chief executive Tom Blomfield said.

Mr Blomfield said he hopes in future to offer loans to people with poor credit scores who may not be able to access more traditional loan products.

UK Competition and Markets Authority Questions PayPal Acquisition of iZettle (Crowdfund Insider) Rated: A

The UK Competition and Markets Authority (CMA) has issued a statement on the PayPal acquisition of iZettle – an event that was announced in early 2018 and closed in September. PayPal purchased Sweden based iZettle for $2.2 billion as the company seeks to gain access to iZettle’s point of purchase credit platform.

The CMA stated:

“… the CMA has found that PayPal could face insufficient competition in the UK after acquiring its market-leading rival. The finding raises concerns that the merger could result in customers, which include small and medium-sized businesses, paying higher prices or receiving a lower quality service.”

The CMA added that iZettle could have provided strong competition for PayPal if the company had not moved to take over the Fintech.

NatWest digital loan ceiling lifted to £700K (FinExtra) Rated: A

NatWest has today announced the launch of a new digital platform which will be available to all NatWest business and commercial customers allowing them to apply online for secured and unsecured loans of up to £750,000 – the largest digitally available loans in the industry.

The new platform, available to all business and commercial banking customers who use online banking, will allow applicants to complete the process in a matter of minutes, with a decision being communicated to customers usually within 24 hours, sometimes immediately. This fully digitised application process streamlines the customer experience and reinforces NatWest’s position as the UK’s leading commercial lender.

NatWest’s development underlines the bank’s commitment to further improving its digital offering and builds on the success of its ESME Loans platform, which provides loans of up to £150,000, Mettle – the standalone digital business current account, and LenderComm, the first production use of blockchain in the syndicated loan marketplace.

Arbuthnot Commercial Asset Based Lending supports acquisition of Euxton Tile Supplies Ltd (Bridging Loan Directory) Rated: B

Arbuthnot Commercial Asset Based Lending (ABL) has supported the acquisition of Euxton Tile Supplies Ltd (Euxton) by Earle Group with a £2m asset based lending facility, comprising a £1,250,000 confidential invoice discounting line and a £750,000 cash flow strip to provide the desired level of headroom in the transaction.

Wonga to automate compensation claims (TNT Magazine) Rated: A

Wonga, the payday lender that went into administration this August, plans to automate its compensation claims process – sparking fears that customers will lose out. Accounting firm Grant Thornton is in the process of winding up Wonga and is legally obliged to assess the claims of all customers who believe that they have been mis-sold loans.

The Guardian reports that in a bid to cut costs the administrators are creating an automated ‘adjudication tool’ that will decide which claims to pay out on, rather than processing each claim manually.

In its October letter to creditors, Wonga said that it had been receiving roughly 200 to 500 compensation claims every day after it went into administration on 30 August. Before that date the company had received 24,000 complaints from customers and a further 9,500 had been escalated to the Financial Ombudsman Service.

Proplend Milestone: Surpasses £50 Million in Online Lending (Crowdfund Insider) Rated: A

Less than six months after surpassing £40 million in online lending, UK based peer to peer lender in the property space, Proplend, announced on Monday it has now reached £50 million in online lending. According to the lender, all loans are commercial property backed, comprising a mix of bridging and mortgage lending risk-adjusted returns, which were funded by the lending platform’s growing band of Classic account, Pension account, and ISA “Lenders.” Proplend also revealed:

“By circumventing the traditional banking system, our Lenders have access to secured, inflation-beating fixed income returns whilst providing creditworthy commercial borrowers with an invaluable source of fast, flexible, interest only alternative funding. Having facilitated its first loan in 2014, Proplend has since accommodated over 50 commercial facilities, each loan typically funded within 24 hours by more than 100 participating Lenders. With a maximum loan term of 5 years, 20 loans have fully repaid to date with more than £15m capital returned and over £4m interest earned across the book – much of it tax-free.”

China

Yirendai Is At A Critical Stage To Regain Growth (Seeking Alpha) Rated: AAA

Yirendai Ltd (NYSE: YRD) released the third quarter 2018 earnings on November 12, with diluted Earnings per ADS of RMB2.43 (USD$0.35), decreased from USD 0.5 from second quarter. Considering the application of ASC 606, the adjusted earnings per ADS (if ASC were not adopted) is RMB 5.89 (USD 0.86), increased from RMB 4.91 in the same period from last year.

  1. The volume of newly originated loans has been decreasing, more than the loan volume decrease of the industry. We can compare YRD’s loan volume with the industry, as well as some competitors, as below.
    Source: Seeking Alpha

WeiyangX Fintech Review (Crowdfund Insider) Rated: A

Ping An Invests $47 million in Berlin-based Fintech Startup Finleap

The Ping An Insurance Group’s Global Voyager Investment Fund led a €41.5 million ($47 million) investment towards Berlin-based Fintech company Finleap.

Internet Finance Association of Jiangxi Province Issues P2P Exit Guidelines

On November 16, the Internet Finance Association of Jiangxi Province issued the “Guidelines for the Exit of Online Lending Intermediary Organizations in Jiangxi Province (Trial)”, stating that online lending institutions should put the rights of protecting lenders at the top of their exit work and minimize the loss of lenders. The guidelines specifically mention that when a P2P institution exit, it needs to take eight steps, namely:

(1) to file an application for withdrawal;

(2) to set up an exit work leading group;

(3) to issue an exit notice and close some platform functions;

(4) to prepare a business list of circumstances and formulate an exit plan;

(5) submit an exit plan and other related materials;

(6) publish relevant information such as the exit plan;

(7) implement the lender’s funds as planned, and steadily settle the stock items;

(8) completion of the exit.

European Union

Lendingblock Receives In-Principle Licence as DLT Provider in Gibraltar (Crowdfun Insider) Rated: AAA

Securities lending platform for digital assets Lendingblock has issued a statement indicating that the Gibraltar Financial Services Commission (GFSC) has made an in-principle decision to grant the firm authorization as a Distributed Ledger Technology (DLT) provider. Lendingblock adds that it continues to work closely with the GFSC as it seeks the full DLT licence.

Lendingblock says that following this decision, and the successful testing period, the Lendingblock platform is open for institutional onboarding in preparation for launch.

Market participants are now able to sign up for access and will be able to commence borrowing and lending  BTC, ETC, BCH, and LTC beginning early next year.

Digital lenders ‘must keep investing to grow’ (IBS Intelligence) Rated: A

Research from digital ID specialist Mitek has concluded that there is a huge opportunity for digital lenders to grow, if they continue to invest in digitisation.

The findings have been published as a whitepaper, authored by fintech research practice Autonomous NEXT. Titled European Digital Lenders, it looks into the state of the digital lending market in Europe.

He said the report found that venture capital investment is still flowing into the space and is set to hit $800m in Europe: “The UK alone has originations of over $6bn, and Europe-wide, the addressable market is $150bn – with current digital lender revenues estimated at $400m,” he added. “Moreover, the market shows impressive originations growth, with a 60% CAGR since 2013.”

Australia/New Zealand

Australian challenger bank Judo gets $ 350m funding boost (Fintech Futures) Rated: A

Melbourne-based challenger bank Judo Capital is edging towards a bank licence with a $350 million debt facility agreement with firm Credit Suisse.

The bank shared the news with Business Insider. David Hornery, co-founder and co-CEO of Judo, says the facility will provide further depth to Judo’s funding for Australian SMEs.

Short-term loan, long-term debt: Superloans under investigation after slew of complaints (Stuff) Rated: A

Short-term money lender Superloans has come under attack from people who say they target poor and vulnerable consumers, charge extremely high interest rates, and resort to illegal means for recouping their money.

The Commerce Commission has launched an investigation into Superloans after it received more than 20 complaints against the company since 2013 – several from financial advisors.

Copies of the complaints, obtained under the Official Information Act, reveal one complainant alleged Superloans threatened to take repayments out of a person’s pay cheque, illegally.

Another woman complained that a Superloans’ employee only looked at her bank statements before approving her loan application, and did not check her credit.

India

IvyCap Ventures makes first investment in P2P lending through Lendbox (The Ecomonic Times) Rated: AAA

Credit marketplace LendBox has secured the first investment by a large institutional investor in India’s peer-to-peer lending space, raising Rs 6 crore in a pre-series A financing round.

Major Trends Witnessed this year in Fintech (Entrepreneur) Rated: A

Online lending platforms have been quite phenomenal in filling in the credit void within our country. But how accomplished are they in doing so? MSME loans are considered as the trickiest element of lending given the sheer opacity that exists within the sector. This opacity has decreased the share of scheduled commercial banks in MSME credit from 95% to 90% between December 2015 and March 2018. The credit growth turned negative post-demonetization. During the same period, the share of loans by NBFCs (which are essentially used by online lending platforms) nearly doubled growing with an annual average of 35 per cent, largely because of cutting-edge technologies such as Artificial Intelligence and Big Data.

5 ways to reduce risk in P2P lending (The Economic Times) Rated: A

Lending money is a risky affair. However, there are ways to minimize the risk. Since peer-to-peer (P2P) lending is a relatively new concept and the RBI regulations for the P2P sector are barely about a year old, here are five effective ways in which you can reduce the risk to ensure getting your money back. Of course, with interest.

Understand the platform
You should try to understand how the online P2P model works before lending money on it. An investor should be aware how the money is lent on the platform and what are the risks involved in lending money on the platform.

Do not hesitate to ask the P2P player about the overall volume, defaults, recovery process and likely returns. You can do your own research or simply contact the P2P company through emails, chats or phone calls.

Do not go overboard
Sure, P2P platforms can offer your higher double-digit returns. But that doesn’t mean you should lend your entire in P2P lending. Choose the amount you wish to invest and then diversify,” says Raghavendra Pratap Singh, Co-Founder, i2ifunding.

Ex-Infosys CFO & Director V. Balakrishnan Joins Association of NBFC P2P Platforms as Patron Member (Indian Web) Rated: B

Within a month after the formation of NBFC-P2P industry bodyAssociation of NBFC P2P Platforms, the association today announced the joining of finance industry veteran & Former Infosys Chief Financial Officer V Balakrishnan as Patron Member.

P2P lending industry players have formed association to represent the Indian NBFC-P2P industry at various national as well as at international forums. The P2P operators participating in the operations are OML P2P, Monexo, PaisaDukan, Finzy, Cashkumar, Liquiloans, Micrograam, Lendsmartp2p, Peerlend and Indiamoneymart. The association aims to establish formal lines of communication between various government and regulatory authorities on matter of compliance and to create awareness about the industry and to work towards enhancement of public trust in this sector.

Asia

HonestFund Raises $ 12.2 million (USD) in our Series B round (Honestfund Email) Rated: AAA

HonestFund is one of the largest peer-to-peer lending players in South Korea. We were founded in 2015 and currently have about USD 300 million in cumulative originated loans. We have recently raised USD 12.2 million in our Series B round from the top VC firms, IT giants, and the largest financial institutions (i.e. Shinhan Bank and Hanwha Life Insurance) in South Korea.

Canada

Unlicensed online payday lenders are operating in New Brunswick (Global Newswire) Rated: A

Unlicensed online payday lenders are targeting New Brunswickers, warns the Financial and Consumer Services Commission.

FCNB has been receiving complaints from consumers about inappropriate collection practices by payday lending businesses not licensed to operate in the province.

“We are hearing that these businesses are contacting consumers who have fallen behind in their payments at their place of employment and in some cases, threatening to seek repayment from their employer. Sometimes they are contacting them up to 50 times a day,” said Alaina Nicholson, director of Consumer Affairs at FCNB. “It is against the law for a payday lender in the province to contact you at your place of work, or to contact your employers or coworkers to collect a payday loan that is late.”

Subscribe Technologies Upgrading Lendertech With Peer To Peer Lending Service And Integrating Platform Into Gingerly Marketplace (Stockhouse) Rated: A

Subscribe Technologies Inc. is pleased to announce it is upgrading the Company’s Lendertech financial technology platform with financial service auction and matchmaking features and has begun the initial phase of integrating the technology with the Company’s flagship Gingerly small business software application marketplace.

LenderTech facilitates greater and broader access to capital for those in need, including across a number of traditional and emerging areas such as mortgages, commercial lending, auto loans, student loans, and small business loans, among others.

As intended, our development team is now integrating this money lending service into the Gingerly software application marketplace and dashboard, with the addition of new Peer-to-Peer matchmaking features, designed for SMEs to have greater and faster access to lenders in one clean and simple to use interface.

IOU Financial Inc. Joins the FINSYNC Lending Network  (PR Newswire) Rated: B

 IOU FINANCIAL INC., a leading online lender to small businesses (IOUFinancial.com), is pleased to announce its strategic partnership with FINSYNC, Inc. (“FINSYNC”).

Small businesses of all types rely on FINSYNC to visualize, manage and project cash flow and analyze loan options.  IOU’s non-collateralized financing product has been assimilated by FINSYNC, enabling users who apply for financing through FINSYNC to quickly access IOU’s affordable, flexible financing for working capital and expansion.

Africa

Nigeria’s mixed signals on fintech (Euromoney) Rated: AAA

Earlier this year, the country’s central bank and the Nigeria Inter-Bank Settlement System opened a regulatory sandbox to enable budding fintech companies to develop new products freely and securely, becoming one of the first African countries to do so.

Even before that launch, Nigeria was frequently touted as the continent’s next big fintech hub, set to compete with South Africa and Kenya.

Bitcoin exchange NairaEx, online lender KiaKia and invoicing platform Payant are just three of the firms that have made a name for themselves in short order.

Authors:

George Popescu
Allen Taylor

TIME Magazine Calls These Two Online Lenders ‘Genius’

CommonBond

In early October, TIME Magazine released its inaugural list of the top 50 Genius Companies, and two online lending companies, CommonBond and Oportun were included. The magazine asked its global network of editors and correspondents to nominate companies that are inventing the future. They then evaluated the candidates by such factors as originality, influence, success, […]

CommonBond

In early October, TIME Magazine released its inaugural list of the top 50 Genius Companies, and two online lending companies, CommonBond and Oportun were included. The magazine asked its global network of editors and correspondents to nominate companies that are inventing the future. They then evaluated the candidates by such factors as originality, influence, success, and ambition.

What they were looking for

A video titled How We Chose the 50 Most Genius Companies of 2018 includes snippets of interviews from founders and CEOs whose companies made the list. Viewing these gives us more insight into what the magazine saw as worthy of “genius” thought. Bob Igor, CEO of Walt Disney, talks about having “constant curiosity, constant desire for more knowledge about what is new.” Luis von Ahn, CEO of Duolingo, whose company’s goal is to give “equal access to education to everybody,” reminds us that it’s “OK to fail.” Anne Wojcicki, co-founder and CEO of 23andMe, says that “it’s not that taking risks is essential, it’s that being open-minded to a different way of looking at a problem is essential.” She adds: “Risk…is essential to creating a new path and making change.”

These are all revelations that the 50 companies represented have made, whether they are time-tested and proven companies or promising start-ups.

Notables on the list

The list has a good mix of both types of companies, those which are proven winners and those that are trying to make their mark by helping to better the world. Long proven household names like Apple, Disney, and Lockheed Martin are joined by newer companies that now define so much of our world, like Amazon, Netflix, Spotify, and Pinterest, and those who look to shape the future more differently than the past, like SpaceX, Slack, and Lishtot.

And then there are the two online lending standouts–Oportun and CommonBond.

Oportun and CommonBond are moving to make money more easily accessible for sectors of the population that need it. Oportun is working to make loans available to higher risk borrowers than those that have access to more traditional means of lending while CommonBond is looking to transform access to student loans.

Oportun

Oportun is a Menlo Park California company that provides emergency loans for low-income consumers who can’t get a loan from a traditional bank and who don’t want to get into the vicious cycle of high fees and triple-digit interest rates of payday lenders.
Oportun began with a focus on serving the Latino community but has expanded to open borrowing to the estimated 45 million Americans who have little or no credit history. In lieu of credit scores, Oportun relies on other data to assess applicants, such as the length of time that a person has had the same job or address.

Vision

CEO Raul Vazquez says that Oportun is “committed to building a sustainable business that helps people shut out of the financial mainstream.”

Proven Track Record

To this point, the company has proven it can make a profit while providing $5.4 billion worth of loans to people who didn’t meet banks’ criteria. In so doing, the Oportun team has helped some 600,000 customers establish credit scores and open themselves to future borrowing by reporting successful payments to credit bureaus.

A CDFI (Community Development Financial Institution), Oportun issued its first securitization in June 2013, and it announced its twelfth securitization last week, issuing $275 million of three-year asset-backed bonds secured by a pool of its investment loans. Morgan Stanley and Co. LLC served as lead book-running manager, and Goldman Sachs and Co. LLC and Jefferies LLC were joint book-runners.

Availability

As of now, the company has loans available at retail locations in nine states: Arizona, California, Florida, Illinois, New Jersey, New Mexico, Nevada, Texas, and Utah. Online loans are also available in Idaho, Missouri, and Wisconsin.

Rates of Service

The company’s interest rates average about 35 percent, a reasonable rate for high-risk borrowers.

Good Reviews

The Economist, Consumer Reports, and The Wall Street Journal are among the publications that have reviewed the company favorably. Oportun was even named one of the three finalists in The Wall Street Journal’s 2018 Financial Inclusion Challenge.

The Team

The team heading up the company has many notables, including Vazquez, who is the former CEO of Walmart.com. Chief Credit Officer, Patrick Kirscht, previously served as Senior VP of Risk Management for HSBC Card Services Inc., and Johnathon Coblentz, who serves as CFO and CAO, is the former CFO and Treasurer of MRU Holdings Inc. and was Vice-President of Fortress Investment Group LLC.

CommonBond

With the rising price of college tuition and the more than $1.5 trillion in active student loans in the United States today—more than car loans and credit card debt—the market is ripe for new players in the scholastic financial space. CommonBond has been working to put a new face on student loan refinancing since 2011.

Vision

By staying small and using technology to keep costs down, CommonBond seeks to offer borrowers refinancing rates lower than those of the federal government and private banks. The firm estimates that it saves borrowers on average $24,000 over the life of their loans.

Offerings

CommonBond offers three types of loans (Undergrad, Graduate, and MBA) and repackages and refinances existing loans at lower rates.

The firm offers loan terms of five, 10, and 15 years, with amounts ranging from $5,000 to the cost of tuition. The loan cap for any borrower is $500,000. The company offers the customer a personalized rate before he or she applies. Loan origination fee is two percent, and the company charges no prepayment penalties. CommonBond’s late fees might be especially attractive to college-age students, who might not always get their payments in on time. The late fee is only the lesser of $10 or five percent of the monthly payment.

Source: Studen Loan Hero

Good Press

Being a father of school-age children, CommonBond is a company I could see myself using in five or six years, and I read the reviews of the company as a potential customer. The reviews aren’t all glowing, but they give me an overall feel that this is a firm I could do business with, if I so needed. Fast Company named CommonBond the Most Innovative Company in Education earlier this year, and thecollegeinvestor.com, despite thinking the rates could be more competitive, continuously puts the company on its Best Companies to Finance Your Student Loan list. CommonBond is also one of only three lenders the site recommends for finding the best student loans.

Double Bottom Line

Charitable work and philanthropy being so important in today’s world, it can’t hurt for a company to have a strong double bottom line. This is one area where CommonBond sets itself apart from others in the space. Every time a loan is funded, CommonBond covers the price of a child’s education through its “Social Promise.” The firm’s partnership with Pencils of Promise has provided schools, teachers, and technology to thousands of students in the developing world, and its commitment to social equality also distinguishes it as a true difference maker in the United States. Loans and restructuring are available to anyone with a degree from a not-for-profit American university regardless of citizenship, as long as the customer meets the other criteria.

Conclusion

Those of us in and around the online lending space can be heartened by the addition to these two companies to this list. We can also be heartened by the continued efforts of business founders to make funds available more easily and affordably for Americans just trying to navigate the business aspects of life. Both of these companies should be recommended to those who may benefit from their services.

Author:

Written by Paul Keenan.

Thursday October 18 2018, Daily News Digest

Major US Banks Active Mobile Banking Users

News Comments Today’s main news: Upgrade to debut ABS bond. KBRA assigns preliminary ratings to Upgrade Receivables Trust 2018-1. Funding Circle launches free iPad incentive. China’s P2P lending is in trouble. Today’s main analysis: State laws put installment loan borrowers at risk. (A MUST-READ) Today’s thought-provoking articles: SoFi’s data science head on machine learning and non-traditional lending. LendingClub’s Bill Walsh says […]

Major US Banks Active Mobile Banking Users

News Comments

United States

United Kingdom

International

Other

News Summary

United States

Online lender Upgrade prepares debut ABS bond  (International Financing Review) Rated: AAA

Upgrade, an online lending company started by former LendingClub founder Renaud Laplanche, is looking to sell a debut asset-backed bond deal, four people with knowledge of the deal told IFR on Wednesday.

KBRA Assigns Preliminary Ratings to Upgrade Receivables Trust 2018-1 (Business Wire) Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by Upgrade Receivables Trust 2018-1 (“UPGR 2018-1”). This is a $286.390 million consumer loan ABS transaction that is expected to close October 30, 2018.

This transaction represents the first ABS securitization collateralized by unsecured consumer loans originated through the online marketplace lending platform operated by Upgrade, Inc. (“Upgrade”) and the first from the Upgrade Receivables Trust (“UPGR”) shelf. Upgrade Receivables Trust 2018-1 (“UPGR 2018-1” or the “Issuer”) will issue four classes of notes totaling $286.390 million. The proceeds from the sale of the notes will be used to purchase the loans and related rights from Upgrade Receivables Depositor LLC (the “Depositor”), who purchased the loans from the unaffiliated transferors, to fund the reserve account and to pay transaction expenses. The Depositor will in turn sell the loans to the Issuer.

Preliminary Ratings Assigned: Upgrade Receivables Trust 2018-1

Class Preliminary Rating Expected Initial Class Principal
A A (sf) $187,308,000
B BBB (sf) $32,569,000
C BB (sf) $28,440,000
D B (sf) $38,073,000

SoFi’s data science head: Opening the funnel to non-traditional borrowers with machine learning (Thomson Reuters) Rated: AAA

ANSWERS: What are some of the issues in machine learning that you are working to solve for right now?

WU: I think where machine learning plays the biggest role is in datasets that have extremely high numbers of dimensions, very low signal ratios and very sparsely populated values. For example, people in lending use data from the bureau. There are millions and millions of rows, there are thousands and thousands of columns. Each specific field has very little to no signal and each person has very few things that are actually populated. Those are opportunities where machine learning, particularly deep learning, has an extremely high potential.

ANSWERS: How can machine learning assist with lending decisions, and how does one keep bias from creeping into that?

WU: When making a decision on creditworthiness, machine learning can help lenders look at metrics beyond FICO and income. Whether it’s adding more information to traditional metrics versus determining creditworthiness of applicants without a full credit history, machine learning can drive tighter risk management while assessing borrower’s creditworthiness where traditional models cannot.

LendingClub’s Bill Walsh: ‘At its core, marketing is a data problem’ (Tearsheet) Rated: AAA

Today’s marketer on the hot seat is Bill Walsh, LendingClub’s general manager and head of marketing for personal loans. Bill brings an engineer’s approach to marketing. The MIT grad began his tenure at Lending Club in an operations role, where rigorous problem solving was used to solve some of the biggest problems in the business. Now that he’s leading marketing on the consumer side, he brings a similar approach.

We talk about how LendingClub defines marketing and approaches channels. We pay particular attention to a recent TV campaign you might have seen over the summer of 2018. Measuring and responding to the signal is core to LendingClub’s approach and in the course of this four week broadcast campaign, Bill’s team iterated twice. This puts ad agencies on notice — this is the new data-driven fintech marketing world.

Mobile banking is reaching a saturation point in the US (Business Insider) Rated: AAA

JPMorgan Chase counted32.5 million active mobile banking customers in Q3 2018 — an 11% year-over-year (YoY) increase from 29.3 million in Q3 2017.

That’s up from the 31.7 million active mobile customers in Q2 2018, but is also a slight deceleration from the 12% YoY growth in Q3 2017— following several quarters of decelerating growth: Chase has been adding around 800,000 mobile users on a quarterly basis.

Wells Fargo counts 29 million total active digital customers — 22.5 million of which use mobile banking. This marks an 8% annual increase in mobile banking customers, but a 4% YoY increase in total digital customers, demonstrating that most of its new customers are coming from mobile channels.

Source: Business Insider

State Laws Put Installment Loan Borrowers at Risk (PEW) Rated: AAA

Pew’s analysis found that although these lenders’ prices are lower than those charged by payday lenders and the monthly payments are usually affordable, major weaknesses in state laws lead to practices that obscure the true cost of borrowing and put customers at financial risk. Among the key findings:

  • Monthly payments are usually affordable, with approximately 85 percent of loans having installments that consume 5 percent or less of borrowers’ monthly income.Previous research shows that monthly payments of this size that are amortized—that is, the amount owed is reduced—fit into typical borrowers’ budgets and create a pathway out of debt.
  • Prices are far lower than those for payday and auto title loans. For example, borrowing $500 for several months from a consumer finance company typically is three to four times less expensive than using credit from payday, auto title, or similar lenders.
  • Installment lending can enable both lenders and borrowers to benefit. If borrowers repay as scheduled, they can get out of debt within a manageable period and at a reasonable cost, and lenders can earn a profit. This differs dramatically from the payday and auto title loan markets, in which lender profitability hinges on unaffordable payments that drive frequent reborrowing. However, to realize this potential, states would need to address substantial weaknesses in laws that lead to problems in installment loan markets.
  • State laws allow two harmful practices in the installment lending market: the sale of ancillary products, particularly credit insurance but also some club memberships (see Key Terms below), and the charging of origination or acquisition fees. Some costs, such as nonrefundable origination fees, are paid every time consumers refinance loans, raising the cost of credit for customers who repay early or refinance.
    Source: PEW

Read the full report here.

Bank Of America’s Zelle Boosts P2P Transactions 138 Pct In Q3 (PYMNTS) Rated: A

Bank of America cut expenses and reduced its provision for credit losses as the financial institution also beat analysts’ revenue and earnings expectations. Bank of America, in reporting its latest financials on Monday, also said that Zelle P2P payment transactions increased 138 percent year over year.

Revenue increased about 4 percent year over year, hitting $22.8 billion, higher than analyst expectations of $22.67 billion. The financial institution reported earnings per share of 66 cents, which represents a 43 percent year-over-year increase and is above analyst expectationsof 62 cents. Net income grew 32 percent to $7.2 billion.

Bank of America said its provision for credit losses decreased $118 million during the third quarter of 2018, to $716 million. “The net reserve release was $216 million, driven by continued improvement in consumer real estate and energy portfolios,” the bank said in its Q3 financial report.

As digital banks proliferate, so do risks (American Banker) Rated: A

Facing intense deposit competition from online-only banks such as Ally Financial and Goldman Sachs’ Marcus, many traditional banks are looking to turbocharge their deposit gathering by launching — or considering launching — digital banks of their own.

PNC Financial Services Group is the latest big bank to join the fray, recently rolling out a digital-only bank in markets where it lacks a brick-and-mortar presence. Like JPMorgan Chase, Citizens Financial Group and a number of other regional and community banks, PNC is counting on its digital bank to attract low-cost deposits to fuel loan growth while also helping it reach new demographic groups.

Early results have been promising — PNC CEO William Demchak said Friday that he’s been “pleasantly surprised” by the response in the Kansas City, Mo., market — but with the space becoming so crowded, industry watchers are beginning to question if the U.S. marketplace can reasonably support so many new digital banks.

Source: American Banker

Outside Financial Launches to Help Consumers Save up to $ 3,000 on Auto Loan Packages (PR Newswire) Rated: A

Outside Financial, an independent auto loan marketplace, launched its consumer-first platform today to bring transparency to auto finance. The company is the first to offer full auto loan packages outside of the dealership, which can save customers $1,000 to $3,000, along with time and hassle. Outside Financial also arranges refinances for existing borrowers.

In 2017, Americans racked up $568.6 billion in auto loans1, yet 60 percent of buyers don’t know they can bring their own financing to the dealership. The company’s new Outside Financial (OF) Markup Index* reveals that, on average, new car buyers are charged $1,717 in hidden markups when arranging their loans through a dealer.

Individual Investors Can Now One-Click Invest in Commercial Real Estate with CrowdStreet’s “Blended Portfolio” Offering (Benzinga) Rated: A

CrowdStreet, which operates the largest and most diversified online marketplace for direct equity investment in U.S. commercial real estate, is now raising $25 million for the company’s first CrowdStreet Blended Portfolio investment offering. To provide individual investors and registered investment advisors another way to diversify their investments with commercial real estate, the company plans a series of diversified and specialty portfolio investment options that will collectively raise and invest up to $170 million.

The first CrowdStreet Blended Portfolio’s proceeds will be deployed across 30-50 pre-vetted projects on the CrowdStreet marketplace, representing a broad range of commercial and multifamily asset types, risk profiles and geographies.

Credible.com Unveils First Truly Consumer-Centric Mortgage Marketplace (Business Wire) Rated: A

Credible.com, the leading online loan marketplace, announces the launch of its first-of-its-kind mortgage marketplace. Credible.com is the only mortgage marketplace that provides actual rates from top lenders in 3 minutes (without affecting a borrower’s credit score), and a streamlined digital origination process. The platform is designed to save borrowers frustration, time and money.

The Credible.com mortgage marketplace builds on the success of the company’s marketplaces for student loans, student loan refinancing, and personal loans, which have facilitated more than $1.6 billion in loans to date. The first product offered through the mortgage marketplace is mortgage refinancing, which went live today in 20 states that collectively represent 65 percent of mortgage originations.

Talking Regulation at the Online Lending Policy Summit (Lend Academy) Rated: A

The big topic of the day was the OCC’s Special Purpose National Bank Charter also known as the Fintech Charter. The topic was laid out for the audience by the first keynote speaker, Grovetta Gardineer, the Senior Deputy Comptroller for Compliance and Community Affairs at the OCC. She talked about the history of the OCC going back to 1863, with the National Banking Act, when the dollar supplanted state currencies as the sole currency of the United States, a revolutionary idea back then. Ms. Gardineer reaffirmed the authority of the OCC to introduce a national fintech charter and talked about how companies should proceed if they are interested. While she would not comment on specifics she did say that the OCC is currently having preliminary conversations with fintech companies but no formal application has been received yet.

The new head of the CFPB’s Office of Innovation, Paul Watkins, talked about the importance of the regulatory sandbox concept. He was one of the architects of the Arizona fintech sandbox and he is bringing that knowledge with him to Washington. He talked about the two main tools to help facilitate innovation at the CFPB: their trial disclosure program and the no action letter.

How Dealstruck Arrived, “Disrupted,” and Died – A Cautionary Online Lending Tale (deBanked) Rated: A

A self-described member of the “lucky sperm club,” a not-even 30-years-old Senturia went on to successfully raise $30 million of investor capital to fund his business, enough to fuel his rise and price-shame his competitors for years. But it wouldn’t last, as he detailed in book, Unwound, about the behind-the-scenes chaos that ravaged Dealstruck until the company closed for good in late 2016.

AFR Wholesale announces partnership with Floify (Housingwire) Rated: B

AFR Wholesale and Floify shook hands on a partnership, and AFR will now use Floify’s point-of-sale technology.

AFR’s goal in partnering with Floify, a 2018 HW Tech100 winner, is to reduce origination time and increase broker productivity. According to the release, Floify’s POS platform can save up to 15 hours of processing time per loan.

This is only one of an ever-increasing number of companies partnering with software companies or developing their own tech solutions in hopes of increasing productivity and getting some breathing room in the margin department in this tough mortgage market.

iintoo Launches Principal-Protection Product for Retail Investors Supported by Insurance Provided by Everest (iintoo Email) Rated: B

Online Real Estate Investment Management Company iintoo Investments Ltd. (“iintoo”) launched Epiic (Equity Protection Investment Community), the first-of-its-kind real estate investment product that provides principal protection for private accredited investors. Supported by insurance provided by an affiliate of Everest Re Group, Ltd. (NYSE:RE), a leading international reinsurance and insurance organization with operations that span the globe, and a social community pool, Epiic offers two layers of protection for investors’ principal.

iintoo opens up access to real estate investments that were once exclusive to professional funders and high-net-worth individuals. Starting at $25,000, accredited investors can invest in ownership shares in projected high yield, premium real estate projects.  Each project undergoes a rigorous due-diligence and approval process provided by iintoo.  In order to assess the risk factors in real estate investing, iintoo also conducted a thorough analysis of the real estate market in the United States, taking into consideration all sectors in all 50 states over the past 30 years.

TRANSACT Tech San Francisco to Examine the Impact of Software Providers on the Payments Industry (PR Newswire) Rated: B

The Electronic Transactions Association (ETA) will bring together executives from leading banking, payments and FinTech companies on November 1, 2018 for TRANSACT Tech San Francisco at the Wells Fargo Connections Center. The event will explore how software services are changing the way key ecosystems players – processors, banks and hardware manufactures – serve merchants and channel partners.

The day-long conference will kick-off with a fireside chat with Secil Watson, Executive Vice President and Head of Digital Solutions for Business at Wells Fargo. “Customer expectations are changing rapidly, and pace of change in technology is accelerating.” said Watson. “Yet we still have cash and checks. What can we learn from today’s customer experiences to build a better payments ecosystem for tomorrow?

Finicity Partners with Freddie Mac to Provide Industry-Leading Automated Income and Asset Assessment Solution (Finicity Corp) Rated: B

Finicity, a leading provider of real-time financial data aggregation and insights, announced today it has been selected as a third-party service provider for the new Freddie MacLoan AdvisorSM automated income and asset assessment capabilities, which provide a faster, easier way for lenders to verify loan application data upfront. Finicity’s digital verification reports greatly improve efficiency and accuracy, while also providing a simpler, more pleasant borrower experience.

Freddie Mac announced its new income and asset assessment capabilities at the Mortgage Bankers Association Annual Convention & Expo earlier today. Finicity’s verification reports are integrated within Freddie Mac Loan Product Advisor®, the cornerstone of Loan Advisor Suite.  When the capability goes live later this quarter, asset verification will be generally available and income verification will be available as a limited release.

United Kingdom

Funding Circle launches ‘free iPad’ incentive (Peer2Peer Finance) Rated: AAA

LISTED peer-to-peer platform Funding Circle is enticing new investors by offering a free iPads. But there’s a catch – they have to add at least £30,000 to their Funding Circle accounts before 16 November.

The P2P platform is also offering a number of other cashback and ‘giftback’ incentives to lenders who invest lower amounts of money.

Investors who add £20,000 to their Funding Circle accounts will receive £200 in John Lewis vouchers, while those adding £15,000 will get an Amazon Echo.

LendInvest Update: Accelerates BTL Production Application Volume Thanks to Rate Reductions (Crowdfund Insider) Rated: A

UK-based online lender LendInvest announced last week it has reduced rates and product fees across its Buy-to-Let product range. According to LendInvest, the pay rate for its five year fixed rate product has dropped to 3.60%, with the ICR calculation at a pay rate of 3.60%. Meanwhile, product fees for all BTL mortgages on standard property and HMO cases have been reduced to 1%, with borrowers who prioritize leverage in mind.

The lending platform also reported that for a limited time, valuation fees have been reduced to £100 for all standard property cases. LendInvest will now cover the borrower’s legal fee scale costs for standard property, standard conveyance cases, where dual representation is selected.

You think it’s going to be easy challenging the big banks? Think again (The Times) Rated: A

here has never been a more opportune moment for the pack of digital upstarts looking to topple the institutions that dominate the financial industry. Rarely does a week go by when a big bank does not suffer an IT meltdown, spewing sensitive data into the ether or freezing customers out of their accounts.

A decade after the collapse of Lehman Brothers, public distaste for the high street banks remains at elevated levels. Two thirds of Britons do not trust big banks to act in the best interests of society, according to a recent YouGov poll. The advent of smartphones, meanwhile, has fundamentally altered consumers’ expectations of their relationship with service providers.

Amex brings SME financing to UK with ezbob (Banking Tech) Rated: A

American Express (Amex) has partnered with online financing platform ezbob to offer UK SMEs competitive access to finance.

Through this partnership, eligible Amex business clients will receive a referral to apply for up to £300,000 in finance from ezbob at a fixed annual interest rate from 3%.

Carlos Carriedo, senior vice-president of global commercial services at Amex, says: “We know agility is crucial for smaller businesses to help retain a competitive advantage but accessing the finance needed to react swiftly to changing customer demands, or seize an opportunity, can be a challenge.”

Amex customers taking out a loan with ezbob will also benefit from a 40,000 Membership Reward points offer, the company adds.

Connect for Intermediaries announces new panel (Mortage Strategy) Rated: A

Connect for Intermediaries has announced the launch of a new unsecured lending panel.

Comprising Funding Circle, iwoca, Whitoak and Fleximise, the panel will be open to all of Connect’s AR members, and Connect will be able to obtain terms on behalf of other brokers as referrals.

Loans from £5,000 to £250,000 for up to five years will be available from 1.5 per cent.

Connect sales director Kevin Thomson says: “We have seen an increased demand for unsecured loans for trading businesses, as increasingly, brokers are coming to us with business clients who are looking to ease cashflow or expand their businesses.

P2P Lending Investment Returns Outstrip Many Market Competitors (CL News) Rated: A

P2P lending arrived in the UK back in 2010 with the launch of Funding Circle. The idea was simple. In the wake of the financial crisis, banks were – and still are – paying abysmally low rates of interest to savers. P2P platforms allowed savers to collectively lend money to businesses and individuals, usually over relatively short periods of time. By cutting out the middleman (or to be more precise, banks and other traditional lenders), P2P lenders were able to offer competitive rates to borrowers and superior returns to investors.

The market has evolved over the years. AltFi – which provides specialist news for the alternative investment industry along with a range of analytics services – says the market is growing rapidly. For instance, in 2015, P2P lending platforms brokered around £1.1bn in loans. In the first half of 2018 alone, the figure was £3bn. Separate figures from the Peer to Peer Finance Association reveal that its members have, to date, originated loans to a value of £9bn.

11:FS Foundry’s launch brings digital to banks (Banking Tech) Rated: A

Consultancy firm 11:FS has launched 11:FS Foundry, an approach to delivering digital banking services through a modular core banking architecture. It kicks off with the partnership with DNB, Norway’s financial services group, which has also become an investment partner.

DNB has invested £3 million for a 5% stake in 11:FS Foundry. This investment represents the long-term commitment between 11:FS and DNB to change how banks deliver digital banking services, the two companies say.

Watchdog warns payday lenders over customer complaints (Financial Times) Rated: A

The UK’s Financial Conduct Authority encouraged payday lenders to proactively compensate past customers; the industry has come under a lot of heat in recent months after a surge of complaints; companies say a lot of these complaints are bogus and a pushed by professional claims management companies (CMCs)

Wonga was forced to shut down a few months ago after they saw a significant rise in complaints, complaints now cost companies more than $725 per complaint after the first 25 complaints; the rise in complaints has come after new rules were put in place in 2015 where high cost lenders we ordered to drop fees and adhere to stricter standards; a new survey by Kantar TNS showed that 60 percent of payday loan customers still pay more than anticipated.

Fintech offers fresh ways to finance an MBA (Financial Times) Rated: A

According to David Simpson, admissions director at London Business School, MBA students spend just as much time trying to find funding as they do trying to find the right program; while struggling to find his own financing Prodigy Finance CEO Cameron Stevens though there had to be a better way so he started Prodigy with two former classmates.

The company is now growing fast by offering a service few others do, while also collecting credit records from across the globe; “You have talented people who have proved their potential in receiving offers to business school,” says Mr Stevens to the FT. “The only barrier for them is funding, because the banks are still incredibly localised, as they were in the 1500s.”

Arbuthnot Banking Group PLC Third Quarter Trading Update (Arbuthnot Group) Rated: A

Customer Lending balances are 28% higher than at the same time in the prior year and originations of new loans are 18% higher. However, as previously stated, the Group remains committed to maintaining its discipline in both credit underwriting decisions and return on capital when extending credit.

The newly launched Asset Based Lending division continues to develop ahead of the original business plan and has a strong pipeline of new opportunities. The Specialist Finance division has now completed the hiring of its core team of six employees and is currently setting up its operations based in Manchester. It is expected that it will write its first deals toward the end of the fourth quarter or early 2019.

OakNorth appoints form PRA director to board (Finextra) Rated: B

OakNorth – the bank for entrepreneurs, by entrepreneurs – today announces the appointment of Martin Stewart, the former Director of Banks, Building Societies & Credit Unions at the Bank of England, as an Independent Adviser on its advisory board.

Stewart joined the Bank of England in April 2013 and spent five and a half years there. In addition to supervising UK banks, building societies, credit unions and new entrants into UK banking, he was a Member of the PRA’s Executive Team responsible for PRA regulatory policy. His regulatory experience also includes spending three years at the FSA between 2010-2013, where he was a member of the leadership team that defined and implemented the UK’s post financial crisis prudential regulatory regime that now underpins the work of the Prudential Regulation Authority. In addition to this, he has almost two decades’ board-level experience having been Managing Director of a group of European subsidiary companies of the IFG Group PLC for almost four years, and as Chairman of the International Credit Union Regulators’ Network for the last six years.
China

China’s P2P Lending Sector Is in Serious Trouble (Money Makers) Rated: AAA

P2P lending has been lucrative in China with little constraining regulation. The industry is worth as much as $120 billion and has been high-risk, but high return.

Chinese regulators have been clamping down on debt and financial risk, the number of loan defaults is rising, capital investments are running out of the sector, and Chinese citizens are losing money. And getting pretty angry about it.

In July 2018, 114 P2P lending platforms in China were shut down or had funds suspended, without warning, by China’s regulators over liquidity concerns. Since June 2018, 243 online P2P lending platforms have gone bust.

Several Chinese Peer-to-Peer Lending Companies Have Submitted Self-Inspection Reports (Capital Watch) Rated: A

With hundreds of peer-to-peer (P2P) lending platforms having collapsed at the beginning of this year, different district-level financial bureaus recently rolled out a tougher reform on all P2P platforms’ risk compliance to ease a growing panic among investors.

This industry reform involves three major steps. First, all platforms have to complete a P2P Compliance Self-Inspection Report and submit it to the bureau by the end of October. Then, companies will be inspected by its local Internet Finance Industry Association, a non-state association. This will be followed by verification of inspection results by district-level Municipal Bureau of Financial Work with field inspection and a possible final check by higher-level government organizations.

New York-listed Hexindai Inc. (Nasdaq: HX) and PPDAI Group Inc. (NYSE: PPDF) both announced that they have completed and submitted the report.

European Union

A risky investment (Euro Weekly News) Rated: AAA

MANY UK nationals living part of the year in Spain, or visiting often, might spend months here but still retain tax residency in their home country.

This means those looking for investment opportunities can still take advantage of UK tax efficient products such as Finance ISAs – ones which use peer-to-peer lending to offer high rates of return. They may be nothing new but one legal justice firm has upped the ante offering returns of up to 8 per cent a year.

International

Advantages of P2B platforms in lending to SMEs (Lendit Conference Blog) Rated: AAA

In the EU and Australia, SMEs comprise 99.8% of all the firms and employ about 67% of the workforce. To tell the truth, SMEs might be rightfully called the economy, not just the backbone of it. A few other facts that follow are paradoxical. 2 years ago, International Finance Corporation (under World Bank) presented statistics that the gap for underfinanced SMEs around the world stood at 2.6 trillion $. One might expect, the situation got better in recent years with the global economy picking up and showing better and better numbers. On the contrary, most recent statistics from the same institution shows that the gap has widened to 5.2 trillion $.

P2P platforms make lending process global

P2B platforms can connect a business on one side of the world with an investor from another side of the world, and with a third party providing a service from yet another part of the world. All applications for loans can be made online, processed, assessed and the decision made within a matter of a few hours. Compare it to a similar process with the banks and the difference, that of speed and efficiency becomes clear. As an asset (loan) is put on the platform, investors can start investing within a matter of seconds. In such a way, a local business, somewhere in Eastern Europe can get funds from someone (or institutional investors) in UK or Germany and be able to use the collected amount for business operations within a couple of days.

4 developments that will shape the future of fintech (Business Matters) Rated: A

Within the past decade, we’ve seen the landscape of fintech move from a few disruptive start-ups to an industry that’s changing the landscape of business altogether. Consumers are becoming more and more accepting of technology as part of their day-to-day finance, a factor that has stretched the services sector and levelled the playing field with traditional institutions.

For instance, there has been a monumental shift in the way that consumers are managing their money. PwC’s Global Fintech Survey 2017 found that 84% of incumbent financial services providers believed their customers were already making payments with fintech companies, 68% thought customers were conducting fund transfers, and 60% said their clients were using fintech for their personal finances.

Quona Capital leads $ 5 million round for Brazilian small business lender BizCapital (Impact Alpha) Rated: A

Brazilian fintech firm BizCapital launched operations in January to help Brazil’s small business owners secure capital necessary for the day-to-day and growth needs of their businesses. Quona Capital, a financial tech investment firm that spun out of Accion, has led the company’s R$20 million ($5 million) investment round. Two existing investors, Monashees and Chromo Invest, both based in Brazil, also participated.

Roughly 70% of Brazil’s micro and small business owners are shut out of mainstream bank lending and instead resort to taking personal loans, which can carry interest rates as high as 200%. BizCapital offers short-term loans for up to R$150,000 ($40,000) at annual rates in the mid-double digits. The company hasn’t disclosed the size of its loan book but says it’s received more than 100,000 credit requests and serves customers in all 26 Brazilian states.

Australia

Global corporate lending platform, Trade Ledger has warned the Federal Government of substantial weaknesses in its proposed Open Banking implementation plan, when compared to the global best-practice model.

These primarily include the lack of an independent implementation and governance organisation, and limited consumer and small to medium-sized enterprise representation in the development of industry standards.

According to Trade Ledger, these omissions “risk a scaremongering campaign around data security that could stall progress and reduce the scope of the changes, leaving the door open for overseas financial markets to take over our local markets in the new era of Open Banking”.

India

UIDAI Asks Non-Banking Fintech Companies To Stop Aadhaar-Based Services (Inc 42) Rated: AAA

After getting telecom companies to submit their exit plans from Aadhaar-based services, the Unique Identification Authority of India (UIDAI), the Aadhaar regulatory body, has now asked digital payment companies to stop offering any sort of Aadhaar-based service on their platforms.

In a letter, the UIDAI also directed digital payment companies to submit confirmation of closure of Aadhaar-related authentication and their alternative plans to exit from the Aadhaar-based ecosystem.

According to reports, the UIDAI has sent the letter only to non-banking companies such as PayPoint, Eko India Financial Services, and Oxigen Services, among others.

Citing unnamed sources, an ET report stated that banks and payment companies such as Paytm, which have obtained banking licences, have not received the notice.

Africa

Kenya built a reputation as a pioneer of financial inclusion through its early adoption of a mobile money system that enables people to transfer cash and make payments on cellphones without a bank account.

Now, a proliferation of lenders are using the same technology to extend credit to the banked and unbanked alike, saddling borrowers with high interest rates and leaving regulators scrambling to keep up.

This week, the finance ministry published a draft bill on financial regulation which covers digital lenders for the first time. A key aim is to ensure that providers treat retail customers fairly, it said.

Authors:

George Popescu
Allen Taylor

Thursday May 24 2018, Daily News Digest

Small Dollar SBA Loans

News Comments Today’s main news: PeerStreet funds $1B in loans. Elevate Credit celebrates 2M non-prime customers. Assetz Capital raises rates. Australian government lends $700K to HashChing. Plaid expands into Canada. Today’s main analysis: Fintech gave brick-and-mortar SBA lender an edge. Today’s thought-provoking articles: How much mortgage borrowers can save by shopping around. Competition is pushing banks to change strategies. Millennials dominate […]

Small Dollar SBA Loans

News Comments

United States

United Kingdom

European Union

International

Other

News Summary

United States

PeerStreet Funds One Billion in Loans (Business Wire) Rated: AAA

PeerStreet, an award-winning platform for investing in real estate backed loans, today announced that one billion in loans have been funded through its marketplace since launch. This announcement comes after the company announced the close of its $30 million Series B last month.

Elevate Credit Celebrates Its 2 Millionth Non-Prime Customer (Citizens Tribute) Rated: AAA

Elevate Credit, Inc. (NYSE: ELVT) (“Elevate” or the “Company”) today announced it has served more than two million non-prime customers in the US and UK, saving them more than $3 billion versus the cost of payday loans. Elevate’s three products, RISE, Elastic and Sunny, employ advanced data and analytics to provide safe access to small-dollar credit to the two-thirds of Americans who cannot get personal unsecured loans from their banks.

Mortgage Borrowers Could Save the Most Ever by Shopping Around (Lending Tree) Rated: AAA

We calculate the Mortgage Rate Competition Index weekly as the median spread between the lowest and highest APR offered by lenders in our marketplace.

Purchase loans

  • Across all purchase loan applications on LendingTree for the week ending May 13, 2018, the index was 0.66, up 0.03 from the previous week.
  • How big of a deal is it to get a mortgage rate that’s 0.66% lower than the competition? Over 30 years, that could translate to $30,617 in savings on a $300,000 loan —over 10% of the total loan amount (see Mortgage Savings Tracker graphic below).
Source: Lending Tree

Lenders are ramping up competition as spring season heats up (MPA Magazine) Rated: A

The spread between the lowest median APR offered by mortgage lenders and the highest rate increased last week.

That’s according to the LendingTree Mortgage Rate Competition Index which analyzes rates offered by lenders on its platform. The spread for purchase loans increased from 0.23 a year ago to 0.66 last week and was up 0.03 from a week earlier.

For refinances the spread was 0.71, up from 0.67 a week earlier.

Here’s why GreenSky is one of the year’s most-anticipated fintech IPOs (Proactive Investors) Rated: A

The financial technology company plans to issue more than 34 million shares priced between US$21 and US$23. It’s scheduled to price the shares after the market close Thursday. At the midpoint price, GreenSky may raise as much as US$748mln.

The fintech has received US$560mln in funding from big-name investment firms such as PIMCO, TPG, Iconiq Capital and Fifth Third Bank.

OCC gives banks green light to compete with payday lenders (American Banker) Rated: A

The Office of the Comptroller of the Currency is shaking up the world of short-term lending by encouraging banks to offer high-interest rate loans to subprime borrowers as an alternative to payday lenders.

In a major break from past regulators, Comptroller Joseph Otting said Wednesday that he wants banks to originate loans of $300 to $5,000 to borrowers with FICO scores of 680 or below, with few other parameters beyond “sound underwriting.” The new OCC guidelines could open a $90 billion market to financial institutions.

Pew Commends OCC for Encouraging Banks to Provide Installment Loans (PR Newswire) Rated: A

The Pew Charitable Trusts today praised the Office of the Comptroller of the Currency (OCC) for formally encouraging banks to offer their customers safe, affordable small-dollar installment loans.

Millions of American adults, many of whom are low income and have damaged credit, spend more than $30 billion a year to borrow small amounts of money from payday and other high-cost lenders that operate outside the banking system. Pew research indicates that, given the opportunity, 8 in 10 payday loan borrowers would prefer to get credit from their banks or credit unions.

Americans Are Prioritizing Phone Payments Over Car Loans (Bloomberg) Rated: A

U.S. consumers are more devoted to their mobile phones than their automobiles.

The sea change has taken place over the last few years as mobile devices become an integral tool not just for communication with loved ones or employers, but also everything from banking to dating to watching TV and listening to music. As cars grow relatively less important, borrowers struggling to pay back their loans on time are increasingly prioritizing payments on the latest iPhone instead of making sure they hold on to their pickup or coupe.

Small businesses becoming more satisfied with fintech lenders (American Banker) Rated: A

Small-business owners are becoming increasingly satisfied with online lenders largely because they will often make loans that most banks won’t.

That was a key takeaway from an annual survey of small-business credit trends released Tuesday by the 12 Federal Reserve banks.

While small-business borrowers are generally more satisfied with banks — their rates are substantially lower — the survey found that the gap is narrowing.

Radius Bank Debuts Rewards Program with Enhanced Benefits For Loyal Customers (Crowdfund Insider) Rated: A

Radius Bank, a virtual bank focused on providing clients with banking solutions to better financial health, announced on Tuesday the launch of its new rewards program that offers enhanced benefits, such as increased transaction limits and cash back opportunities, for loyal customers.

According to Radius Bank, the rewards program is tiered into three levels based on criteria such as personal deposit balance and the longevity of the relationship clients have had with the Bank.

Loeb Seeks to Raise $ 400 Million for New Blank-Check Company (Bloomberg) Rated: A

Activist investor Dan Loeb is seeking to raise as much as $400 million to acquire financial technology firms via a so-called blank-check company.

The firm, Far Point Acquisition Corp., will be led by Tom Farley, who stepped down Monday as president of the New York Stock Exchange. Credit Suisse Group AG and Bank of America Corp. are leading the share sale, according to a regulatory filing Tuesday.

Far Point intends to issue 40 million units at $10 apiece under the terms of the offering. Each unit consists of one Class A share and one-third of one redeemable warrant.

How fintech gave this SBA lender an edge (American Banker) Rated: AAA

Add Seacoast Banking in Stuart, Fla., to the list of community banks that now believe in working with fintechs.

Seacoast, which became a SmartBiz client late last year, booked $700,000 of gains from selling SBA loans in the first quarter, tripling what it reported a quarter earlier and surpassing its total for all of 2017 by 40%.

Kleffel, who said loans generated through SmartBiz hit 127% of targeted volume in the first quarter, predicted that the effort should allow Seacoast to become one of the SBA’s top 100 7(a) lenders for the fiscal year that ends on Sept. 30. To do so, Seacoast would likely have to increase year-over-year 7(a) originations by more than 60%, according to SBA data.

Source: American Banker

CREXi raises $ 11 million to bring commercial real estate out of the Dark Ages (Tech Crunch) Rated: A

CREXi — the CRE stands for “commercial real estate” — has been around since 2015, but recently announced an $11 million Series A as well as some interesting user numbers. Key investors include Jackson Square Ventures, Manifest Investment Partners, Lerer Hippeau, Freestyle Capital, TenOneTen Ventures and Founder Collective. The company has managed more than 100,000 “properties brought to market” on its platform and they have 200,000 users per month. They see more than 6,000 properties listed on the site each month.

 

American banks had their most profitable quarter ever (CNN) Rated: A

Bank profits soared by 28% during the first three months of 2018 to $56 billion, according to statistics published by the FDIC on Tuesday.

The stellar results were released hours before the House of Representatives is expected to pass legislation that would roll back some rules on community banks and regional lenders designed to prevent another financial crisis.

 

NEA Welcomes Jonathan Golden as Partner; Announces Several New Hires (Pilot Online) Rated: B

New Enterprise Associates, Inc. (NEA) today announced that Jonathan Golden has joined the firm as Partner. Golden, an experienced technology investor and the first product manager at Airbnb, will be based in the firm’s Menlo Park, Ca., and San Francisco offices. The firm also named Matthew McAviney, M.D., Tak Cheung, M.D., and Santhosh Palani, Ph.D., as Principals on the healthcare team.

As an active angel investor, Golden has backed numerous early-stage companies including Bowery Farming, Coinbase, Everlane, Funding Circle, and Tile, among others.

Trelix Now Provides End-to-End Mortgage Fulfillment with the Addition of its Closing Services Solution (Altisource) Rated: B

Trelix quality control and other due diligence products and services across the loan origination and securitization lifecycle, today announced the launch of its closing services solution that helps mortgage lenders efficiently and properly execute and settle their loans. With the addition of closing services, Trelix now provides a full suite of end-to-end fulfillment services for its customers.

United Kingdom

Assetz Capital Announces Its First Ever Rate Increase Across Access Accounts (Crowdfund Insider) Rated: AAA

UK-based peer-to-peer lending platform Assetz Capital announced last week its first ever rate rise across its access accounts. The online lender reported that the rate increase, which takes effect from 1st May 2018 until further notice, will take target interest rates for the Quick Access Account and 30-Day Access Account from 3.75% to 4.10% and from 4.25% to 5.10%. Assetz Capital also revealed both new and existing investors will benefit from the target interest rate boost, and it applies to both ISA-wrapped and non-ISA accounts.

New SME funding platform launches (Peer2Peer Finance) Rated: A

A NEW funding platform is aiming to make it easier for small- and medium-sized (SME) businesses to access loans, equity and grants.

The online platform has been created by Swoop, which is a rebrand of BizFly.

The firm says it holds a database of over 400 lenders.

P2P lenders accessible via the platform include Funding Circle, Zopa, Growth Street, RateSetter and MarketInvoice.

“Manchester Can Be A Global Leader In Fintech” Say Policymakers (Business Up North) Rated: B

Further evidence of the optimism and ambition of the event comes from the business deals and opportunities that are created among this group of people. For example, Dan Rajkumar, chief executive of White Label Crowdfunding and Rebuildingsociety, and co-founder of the event, has announced the win of a new customer, AGPeer, which is launching a new peer-to-peer lending platform targeted at the agriculture sector.

 

European Union

Millennials dominate European P2P lending (Peer2Peer Finance) Rated: AAA

MORE THAN half of all European peer-to-peer lenders are millennials, new research has found.

Data from European P2P loans platform Robo.cash has shown that the younger demographic is steadily taking over the leading position from the older generation of investors.

Over the past six months, Robo.cash has noticed that its share of investors aged between 22 and 37 has grown to 53.9 per cent.

A Swedish startup has raised 10 MSEK to help Nordic banks attract millennial house buyers (Business Insider) Rated: A

Headed by Klarna veteran Pär Isaksson, the startup offers established banks – not exactly known for their innovative zeal – a one-stop-shop for streamlining their mortgage lending online, from user interface to operations.

The service is planned for launch in Sweden this fall, to be followed by the rest of the Nordics during 2019. To execute on that, the company is now raising 10 million Swedish krona ($1,2 m) from a number of profiles in Swedish finance, including Swedbank’s former CFO Göran Bronner.

International

Fintech competition is pushing banks to change strategies (Business Insider) Rated: AAA

It has become apparent that the space is evolving in a way that will see new technologies have an outsized impact in the next few years, according to a reportfrom Temenos and The Economist Intelligence Unit. Additionally, the report examined the impact of open banking and how banks are shifting their business models, among other things.

Source: The Economist

Here are some of the key takeaways from the report:

  • Tech and digitization will have a bigger impact than regulation. Forty-eight percent of banking executives think new technologies, such as blockchain and AI, will have the biggest impact on retail banks through 2020, while only 43% are most worried about regulatory fines.
  • Though open banking initiatives are the center of many recent stories, only 13% of respondents think those initiatives will have the biggest impact on retail banks.
  • In terms of evolving their business models, 61% of banks want to develop niche propositions for their own customers, followed by 54% wanting to maintain their own products and become an aggregator of third party-products, and 53% opting to open their services to third-party developers.

Access the report here.

Exclusive Interview with Alex Mashinsky, Celsius CEO and VoIP Innovator (Crypto Globe) Rated: A

During the recent Milken Institute conference debate, Alex Mashinsky really stood out as a harsh critic of the traditional banking system, and a strong believer in the future of cryptocurrency. He recently had the ICO for his crypto lending platform Celsius Network, but his involvement in the tech world dates a few decades back. In the 1990s, when Alex invented VoIP (Voice over Internet Protocol), he strongly believed that internet calls through a decentralized protocol could disrupt the business model of phone companies. It is now used by over a billion peopleacross the globe.

Vlad: About that, just a few weeks ago I was thinking that cryptocurrency could replace all the functions of a bank except for that of lending money to other parties. I guess it’s so much easier to follow tradition and go to the bank to get a loan each time you need a large amount of money. But then I saw you debating at the Milken Institute Conference. I found out about Celsius and was amazed that someone found a solution around it. So can you tell me how these crypto loans work?

Alex Mashinsky: They work exactly the same way as in the case of banks. There’s no magic involved, we’ve implemented a cryptocurrency-driven system which follows the same principles you find in a bank, only that you can deposit or lend funds in ways that are more stimulating from a financial perspective. We are fairer, more transparent, and operate on the blockchain.

International Digital Asset Platform (IDAP Token): Crypto Derivatives? (Bitcoin Coin Exchange) Rated: B

The Idap.io, which is a shorter name for the International Digital Asset Platform, has been planning to transform the cryptocurrency market with its new projects and ideas.

What Is International Digital Asset Platform?

This platform is a derivatives instrument that lets you access assets of the market by clicking. It has many tools that you will help you to find the best investments that you can make in the market and discover why you should make them.

You will be able to access crypto pairs, swaps, ICO venture funds and even P2P lending via this new platform.

Australia

Australian Government Backs Fintech HashChing with $ 700,000 Loan from Jobs NSW (Crowdfund Insider) Rated: AAA

HashChing, a Sydney-based home loan marketplace, has just announced a $700,000 loan from Jobs NSW. Deputy Premier and Minister for Small Business John Barilaro said the NSW Government had backed the Fintech which is expected to create 46 jobs over the next five years.

India

How Zerodha is reinventing the rules of lending with an age-old product (Your Story) Rated: AAA

The country’s third-largest brokerage Zerodha has received a lending licence from the RBI, and is now gearing up to launch operations by June end.

Loan against a security, be it a movable or immovable asset, is an age-old practice. While banks have traditionally occupied the largest piece of the lending pie in this space, there are others like non-banking finance companies that are also establishing themselves.

Loans against shares have been a popular product in the retail category, but of late, these loans seen some degrowth. Clocking a growth rate of 21.5 percent in FY2015, the growth of loans against shares grew by 16.5 percent in FY2017, according to the RBI Bulletin.

Chinese lenders out for a taste of India (The Economic Times) Rated: AAA

Several digital lending startups have been receiving a unique set of visitors in recent months: Chinese lending companies looking to set shop in the country. At least half a dozen Chinese financial-technology companies have held multiple meetings with the founders of digital lending startups in India for investment as well as partnership opportunities, according to domestic entrepreneurs involved in those discussions.

Chinese lenders facing regulatory heat in China due to
1 Restriction in lending rates
2 No fresh licences being given out to lending startups
3 Credit bubble causing ballooning NPAs

Sectors the Chinese could be interested in
1 Consumer lending
2 Instant personal loans
3 Peer-to-peer lending

Late last year, Chinese regulators cracked down on the micro-lending space, tightening lending rates to 36% annualised and withholding new licences for online lending startups.

Asia

P2P lending feared to trigger black credit (News Vietnam Net) Rated: AAA

After registering to borrow money on Tima.vn, a reporter, who acted as a borrower, was told to send some necessary documents via Zalo or Facebook. He was informed that he would have to pay the interest rate of 18 percent per annum to the company, not including the consultancy fee.

The reporter, when contacting vaymuon.vn, was told that he would have to pay the interest rate of 1.5 percent per month, plus the fee of VND2,000 a day for every VND1 million worth of loan, and the interest rate and fee may change at different moments.

The borrower was also warned that if he cannot pay debts, the lenders will be able to take necessary measures to collect debts – making public about the debt, selling the debt to third parties or suing before the civil court.

 

Canada

Dead fintechs don’t wear Plaid (Fintech Futures) Rated: AAA

San Francisco-based fintech app provider Plaid is expanding to Canada as its first international market.

Authors:

George Popescu
Allen Taylor

Wednesday May 23 2018 Daily News Digest

Interest rates & new delinquencies on CC debt

News Comments Today’s main news: SoFi to get into crypto investing by 2019. How Goldman Sachs predicts economic slumps. How SoFi personalizes the mobile experience. A Monzo case study. Klarna acquires Shop.co. Today’s main analysis: More Americans are struggling to pay with credit cards. Today’s thought-provoking articles: 4 in 10 Americans can’t cover a $400 emergency expense, Fed survey […]

Interest rates & new delinquencies on CC debt

News Comments

United States

United Kingdom

European Union

International

India

Other

News Summary

United States

SoFi will get crypto investing by 2019, says CEO Anthony Noto (CNBC) Rated: AAA

SoFi CEO Anthony Noto says the “modern finance” company wants members to be able to invest in cryptocurrency as soon as 2019.

“We want to accelerate our investment in some new products, one of which is our wealth products, and we want to add cryptocurrency to that,” Noto said on CNBC’s “Power Lunch.”

Goldman Sachs has a novel method for predicting the next economic slump  (Business Insider) Rated: AAA

You might remember that Goldman Sachs is lending to subprime borrowers. Turns out, it’s all part of a plan to help predict the next credit cycle.

In February, Goldman Sachs surprised Wall Street when it said that more than 80% of borrowers for its Marcus consumer-lending product had a FICO score of more than 660 at year end. The implication was that nearly 20% had a score of less than 660, placing them in a group often referred to as subprime.

In September, the bank said it saw a $1 billion revenue opportunity in the Marcus loan-and-deposit platform based on a $13 billion lending opportunity over three years. Whether it reaches that goal will depend in part on how those subprime borrowers behave.

More Americans are struggling to pay their credit cards (Business Insider) Rated: AAA

Interest rates, which influence the cost of borrowing, are on the rise after the Federal Reserve kept them near zero for years. That period of super-low interest rates achieved one key outcome: encouraging Americans to borrow, spend, and help grow the economy after the Great Recession.

Last June, credit-card debt finally hit a new high. But the share of borrowers who make payments more than 30 days late is rising along with interest rates.

Source: Business Insider

The Fed is set next month to raise its benchmark rate for the seventh time since late 2015.

Source: Business Insider

How SoFi is personalizing its mobile experience (Tearsheet) Rated: AAA

SoFi is personalizing its digital customer experience by fusing event planning, career services and personal finance insights inside its mobile app.

SoFi is joining a group of financial institutions that are letting customers aggregate accounts to get a full financial picture — even if they’re not with the same institution, with recent examples including Citi and HSBC.

As it grows its digital offerings, the company is adding services to meet the needs of a fast-growing customer cohort. SoFi currently has 500,000 customers — up 200,000 from last year.

 

 

 

50. SoFi (CNBC) Rated: A

This has been quite a year for SoFi (short for Social Finance).

The company claims to have 500,000 members and has made $25 billion in loans to date. SoFi has raised $2.1 billion in funding, including $500 million in a round led by Silver Lake Partners. In early interviews after taking over the top spot, Noto spoke about eventually taking SoFi public, but did not outline a timetable.

For millennials, it’s about having a house, children and retiring early (CNBC) Rated: A

Julia Boorstin live with SoFi CEO Anthony Noto discusses running what he describes as a “modern day” financial services company.

Watch the interview here

SoFi Makes Graduation From Student Debt An Epic Experience (PR Newswire) Rated: A

In a video released today on YouTube, SoFi made that moment of relief from student debt a grand occasion for one Midwestern woman. The company surprised Candice, a SoFi member who had refinanced her student debt, with an epic surprise “debt graduation” ceremony with friends, family, and some unconventional surprises planned by the company, together with production and entertainment studio GenPop.

Guaranteed Rate Partners with DocMagic to Cut Closing Time (Florida Newswire) Rated: A

DocMagic, Inc., the premier provider of fully-compliant loan document preparation, regulatory compliance and comprehensive eMortgage services, announced that retail mortgage lender Guaranteed Rate can now cut closing time by electronically signing mortgage closing documents in advance.

Guaranteed Rate has branded the solution FlashClose, which allows customers to opt-in, review and complete most documents in advance of the notary arriving, saving an hour or more at the closing table – with some averaging a mere 10-minute appointment to provide inked signatures.

First wave of neobanks resets for new offensive (American Banker) Rated: A

BankSimple (now just called Simple) was bought by BBVA and went through a painful process of migrating accounts to the big bank’s systems; its founder recently announced he’s leaving. Moven became a seller of software to large banks including TD Bank and Westpac, while still maintaining its own mobile banking service. Varo Money has been trying for almost a year to get a banking license. Chime remained independent (in partnership with The Bancorp Bank) but is going through growing pains.

This year, all are taking up their swords again, renewing an anti-bank message of helping consumers lead financially healthy lives, with fewer fees and more helpful products and software than traditional banks. Following is a look at how the neobanks are fighting back.

Cadre seeks at least $ 100M from SoftBank (The Real Deal) Rated: A

Real estate crowdfunding platform Cadre is seeking at least $100 million from a fund started by the SoftBank Group.

Representatives for the SoftBank Vision Fund met with a top executive from Cadre recently, Bloomberg reported. The fund gets nearly half of its $100 billion from the Saudi Arabian government and at least $15 billion from the United Arab Emirates.

Lending Express garners $ 2.7 mln (PE Hub Network) Rated: A

Lending Express, the only AI-powered marketplace for business loans, today announced the securing of a $2.7 million investment round led by Entrée Capital, iAngels, and existing investors. The funds will be used to build out their innovative loan-matching technology and scale up operations in the United States and Australia.

How fintech gave this SBA lender an edge (American Banker) Rated: A

Add Seacoast Banking in Stuart, Fla., to the list of community banks that now believe in working with fintechs.

The $6 billion-asset company is gaining traction in Small Business Administration lending after partnering with SmartBiz Loans to speed its approval process. The move halved the interval from application to funding, to as little as 10 days, said Julie Kleffel, Seacoast’s community banking executive.

Four in 10 can’t cover an emergency expense of $ 400, Fed survey finds (Market Watch) Rated: AAA

The Fed’s new survey of household economics and decision-making found 41% could not cover a $400 emergency expense using cash in 2017. That’s actually a slight improvement, since 44% could not in 2016, 46% could not in 2015 and only 50% could in 2013.

Those that couldn’t afford the expense turn to credit cards or borrowing from family or friends, while only 5% would turn to a payday loan or similar product.

Source: Federal Reserve

Read the full report here.

Why real estate tech won’t kill the middleman (The Real Deal) Rated: A

Not too long ago, it seemed like the real estate business was about to enter a new era. To some observers, websites like Zillow and Trulia or their office equivalents 42Floors and LoopNet threatened to put brokers out of business (although officially these firms said no such thing). Crowdfunding startups dreamed of doing the same to pricey fund managers. Why pay a cut to an agent if you can just find your house or office online, for free? Why give your savings to a pension fund, which gives it to an asset manager, which gives it to a real estate lender, which gives it to a developer, if you can just lend the money to a developer yourself, online, and save a fortune in fees?

ENACOMM Adds FoneLogix as Ally to Bring Data-Driven AI and Phone Banking to Financial Institutions (Globe Newswire) Rated: B

ENACOMM—a fintech company that empowers banks, credit unions and credit card companies with solutions for improving the customer experience (CX), fighting financial fraud, and increasing operational efficiency—today announced a new reseller agreement with FoneLogix, an Atlanta-based provider of cloud-hosted VOIP Phone Systems, Solutions and Support.

Through the partnership, FoneLogix’s bank and credit union customers will be able to take advantage of ENACOMM’s VPA (Virtual Personal Assistant) Conversational Banking and the ENACOMM Financial Suite (EFS), which includes a hosted, dynamic interactive voice response (IVR) system for personalized customer interactions.

AI Challenging Bank Lending Practices (Forbes) Rated: A

CultureBanx notes 

The Best Business Loans and Financing Options for Freelancers (The Entrepreneur) Rated: A

Most banks view freelancers as high-risk, and as such, may be unwilling to enter a loan agreement. Because a freelancer is considered a sole proprietor, he or she alone is liable for all losses and debts his or her business may incur. If the freelancer gets hurt or sick and cannot work — or is just terrible at running a business — the bank is left holding the bag.

Online lenders offer an interesting alternative. Typically, these non-traditional lenders have more relaxed loan approval criteria and a swifter approval process. Importantly, your personal income, assets and credit score are assessed for loan approval, not the value of your business. You should expect to pay higher rates of interest, a natural trade-off for the perceived risk you present.

First Tech Federal Credit Union Personal Loans: 2018 Review (Nerdwallet) Rated: A

First Tech offers unsecured and secured personal loans as well as personal lines of credit. Annual percentage rates start at 9% on unsecured loans, or 3% on secured loans, which can be backed by a First Tech savings account, First Tech share certificates, or stock you own in the company you work for or one listed on the NYSE, Nasdaq or Amex.

You can apply for a loan of as little as $500, making First Tech a good option for borrowers looking for small loans. Payments for unsecured and secured loans are fixed over two to seven years, and you can choose between monthly or biweekly payments.

 

 

Trump signs resolution overturning CFPB auto lending rule (Consumer Affairs) Rated: B

President Trump has signed a resolution, passed by Congress, overturning the Consumer Financial Protection Bureau’s (CFPB) auto lending rule, designed to prevent racial discrimination by dealers who finance purchases.

United Kingdom

Monzo Case Study (AWS) Rated: AAA

Monzo has grown from an idea to a fully regulated bank on the AWS Cloud. A bank that “lives on your smartphone,” Monzo has already handled £1 billion worth of transactions for half a million customers in the UK. Monzo runs more than 400 core-banking microservices on AWS, using services including Amazon Elastic Compute Cloud (Amazon EC2), Amazon Elastic Block Store (Amazon EBS), and Amazon Simple Storage Service (Amazon S3).

Open banking regulations, which came in at the start of 2018, required the nine largest banks in the UK to provide an API for their users’ account information.

 

Meet the 35 most exciting young entrepreneurs, engineers, and advisors in UK fintech (Business Insider) Rated: AAA

Business Insider has covered UK fintech since our 2014 launch. The UK Fintech 35 under 35 highlights the most promising young entrepreneurs, engineers, marketers, and sector experts under the age of 35. It spans both startups and big banks operating in the sector.

35. Pierce Glennie, iwoca

The company has lent over £400 million since its founding in 2011. Glennie was one of iwoca’s first outside hires and just 21 when he joined the business.

27. Aneesh Varma, Aire

Varma, who started his career at JPMorgan, set up Aire in 2014. It is his second startup, having previously founded enterprise software business FabriQate in 2005.

24. Anil Stocker, MarketInvoice

MarketInvoice is an online platform that lets businesses borrow against unpaid invoices. The lender isn’t MarketInvoice itself but institutional investors and high net worth individuals looking for strong returns.

23. Karen Kerrigan, Seedrs

Seedrs is one of the UK’s first equity crowdfunding platforms, letting ordinary people invest in startup businesses. 600 businesses have raised over £320 million since the platform launched in 2009.

17. Simon Miller, Scalable Capital

Scalable Capital is one of a number of so-called “robo advisors” — online investment advisors and platforms — that have sprung up around the world in recent years. The company already has £600 million in assets under management and has attracted investment from asset management giant BlackRock.

13. Joe Cross, TransferWise

Cross was one of TransferWise’s first employees and has seen the international money transfer business grow from a small East London startup to business worth over $1 billion.

6. Megan Caywood, Starling Bank

She is now chief platform officer at startup, app-only bank Starling, which is trying to make a new kind of bank that functions more like an app store than a traditional lender.

5. Martin Ijaha, Neyber

Neyber works with employers to let staff borrow money then repay through salary deductions. Neyber was founded in 2012 and now works with 160 employers with a combined 1 million staff. Last year Goldman invested £100 million into the platform.

3. Tom Blomfield, Monzo

The fully licensed bank now has over 500,000 current account customers who have spent £1 billion on Monzo’s iconic hot coral cards. The company has raised over £71 million to date and is valued at £280 million.

2. Samir Desai, Funding Circle

Their platform has now lent over £4 billion to businesses across the UK, Germany, US, and the Netherlands. Desai was awarded a CBE for services to financial services in 2015 and his company is tipped to float on the stock exchange later this year with a price tag of at least £1 billion.

1. Nikolay Storonsky, Revolut

Revolut began life as a foreign exchange card linked to an app that offered rock-bottom FX prices. The company is less than three years old but the popularity of its product has already seen it hit 2 million customers and a valuation of $1.7 billion.

Proptech Startup When You Move Raises £3M in Funding (Finsmes) Rated: A

When You Move, a UK-based proptech startup, secured new funding which brings the total amount raised to £3m.

Backers included Fig, a proptech VC, and a hybrid network of friends and family, private HNW investors and incumbent shareholders.

The company intends to use the funds to build out it customer excellence teams, scale up the development team and solidify its position as the solution for professionals involved in property purchases.

The UK fintech economy will create different pockets of excellence all over the country (Computer Weekly) Rated: A

He said fintechs such as Leeds based White label Crowdfunding which build peer to peer lending software, business lender Rebuildingsociety.com also in Leeds, and Accespay in Manchester have been involved with the Fintech North events.

Mark Carney: Every household £900 worse off because of Brexit (The Telegraph) Rated: A

UK households are £900 worse off than they would have been because of Brexit, Bank of England Governor Mark Carney has claimed.

Mr Carney revealed in a Treasury Select Committee grilling that growth has been up to 2pc lower than the central bank had expected because of the UK’s decision.

Banks ‘charging more’ for overdrafts than payday lenders (BBC) Rated: A

Unarranged overdraft fees can cost borrowers up to seven times more than a payday loan, a consumer group warned.

Which? compared the cost of borrowing £100 for 30 days in an unarranged overdraft across 16 high street banks with borrowing the same amount through a payday loan.

Ireland Issues Tax Guidance On Peer-To-Peer Lending (Tax News) Rated: B

A company that pays interest on finance raised via peer-to-peer lending or crowdfunding is obligated to withhold income tax at the standard rate of tax on interest payments made on the finance raised. The underlying lenders are liable to pay income tax on any interest they earn on which withholding tax has not been suffered.

‘Lenders need to be more transparent about portfolios’ (Bridging & Commercial) Rated: A

Far from deserting the sector, lenders are now presenting landlords with a wider range of borrowing options than ever before. New figures from financial information site Moneyfacts suggests that there are currently more than 2,000 buy-to-let mortgage deals available, a new record high.

And while the various regulatory and tax changes have spelt trouble for the small-time landlords, the professionals seem to be in the ascendency. A recent study by Aldermore suggested that more than four out of 10 portfolio landlords are looking to expand their portfolios in the next 12 months.

China

Chinese fintech’s global future is arriving now (Financial Times) Rated: AAA

Ant Financial recently raised an oversubscribed $10bn round which values the firm higher than Goldman Sachs, American Express and BlackRock; the Alipay product has more than 500 million users and is incredibly simple to use; they have integrated into Alibaba’s retail operation and have the world’s largest money market fund with Yu’E Bao; they have begun expanding globally as well as they have built partnerships with firms in Africa and have tried to enter the U.S. market through an acquisition of MoneyGram which was blocked by regulators; regulators will need to figure out how handle a company that doesn’t look to fade from the financial scene anytime soon.

Legal concerns heat up for wanted Founders Group leader as partner testifies in China (Myrtle Beach Sun News) Rated: A

Liu’s partner in the Chinese company Yiqian Funding, a peer-to-peer lending business that seeks investors, testified May 3 in her fraud trial in Nanjing that Liu was in control of the company when it became unable to pay many investors what prosecutors estimate to be $1.17 billion — or 7.4 billion yuan.

 

European Union

Klarna acquires universal shopping cart Shop.co (Ecommerce News) Rated: AAA

Klarna has acquired Shop.co, a small German startup that wants to simplify online shopping by offering a universal shopping cart. There’s little known about the deal, but according to Klarna it’s mostly about the acquisition of intellectual property and taking over a mere Shop.co employees..

According to t3n, a purchase sum somewhere in the mid double-digit millions is also likely. But later on, Klarna told another media outlet, Tech.eu, that the purchase price is far lower than some media have been speculating. It also said that it’s most acquiring intellectual property and employees.

Keeping on Top of Emerging Payment Solutions – Q&A with Klarna (Retail Tech News) Rated: A

Luke Griffiths: Klarna’s approach to online commerce is very different from that of traditional providers. Our overarching philosophy is to give consumers the freedom and flexibility to decide how and when they want to pay. At Klarna, we offer three payment options that cover all consumer needs for seamless shopping: ‘Pay now’, ‘Pay later’, and ‘Slice it’.

Pay now enables straightforward and immediate online payment purchases. This option allows customers to pay for their purchases in full via Klarna’s speedy online checkout and payment service using a card. Many of our merchants choose the Klarna checkout as it is proven to reduce abandoned baskets and provide a better user experience for shoppers.

Our second payment option, Pay later, allows shoppers to ‘try before they buy’. Customers have either 14 or 30 days to pay for their goods (depending on the merchant) after their items have been delivered, with no interest or fees – or they can return the items if they’re not what they expected.

EMaC launches ‘Drive Now Pay Later’ service for dealers (Motor Trader) Rated: B

EMaC, the service plan specialist, is widening the services it offers dealers and end consumers with the launch of a pay later credit facility for vehicle repairs and accessories.

The company, which is has also launched a new identity, has teamed up with credit provider Klarna to offer the “Drive Now Pay Later” service.

EMaC said its new Drive Now, Pay Later product would give dealers access to a credit facility to assist their customers in financing repairs and other vehicle related accessories.

Banks seek tech talent for digital shift (Financial Times) Rated: A

European Banks have increased advertising for IT and engineering roles by more than 10 times in the last 3 years; a new report by the Economist Intelligence Unit and Temenos shows for the first time that bank executives believe technology like AI and blockchain will have a bigger impact than regulation; being about 10 years removed from the financial crisis has help shift the view of banks to focus more of their time on digitization instead of regulatory compliance.

 

 

International

Meet the Goldman Sachs-Backed Fintech Startup Aiming to Take Over North America (Fortune) Rated: AAA

Now Plaid, which raised $44 million in a funding round led by Goldman SachsInvestment Partners nearly two years ago, is looking to expand internationally. The company announced Tuesday that Plaid is available in Canada for the first time—and compatible with both U.S. and Canadian dollars—a move designed to both support current clients’ Canadian expansions as well as attract new Canadian fintech players.

Companies use Plaid’s APIs (or application programming interfaces) as a foundation for building their own fintech products, depending on that secure way to link customers’ bank accounts. Its extension into Canada is a sign that the nascent fintech industry is gaining traction in more parts of the world. TransferWise, a London-based cross-border payments startup that uses Plaid, recently expanded into Canada as part of a global push. And Toronto-based Drop, a loyalty rewards app, is one of Plaid’s first Canadian clients.

Is Fraud a Solved Problem? (Lend Academy) Rated: AAA

But one statement stood out to me. Jeff Stewart, the Chairman and Co-Founder of LenddoEFL said that “fraud is a solved problem”.

That is quite a bold statement. So, I reached out to Jeff yesterday to get some more color on what he really means here. He stood by what he said on the panel at LendIt. While we can’t get rid of 100% of fraud what we can do is catch fake identities, fraud rings, and large-scale theft of identity.

It is not surprising that the type and amount of fraud varies between countries. We learned from Thomas Wang of China Rapid Finance in this same session that a staggering 97% of loan applications in China are fraudulent. Think about that for a moment. Only 3% of the applications that a Chinese online lender receives is from a real person. The rest is fraudulent activity often from established fraud rings.

Small Business Banking Catching Up in Innovation Race (Bank Innovation) Rated: A

There are quite a few lending solutions these days for small businesses — Funding Circle, OnDeck, Kabbage, and Square Capital, to name a just a few — but innovation and digitization are lagging in other areas, such as digital account opening. Enter Gro Solutions, a sales and marketing platform for financial institutions.

Australia

Understanding the SME mindset (Australian Broker) Rated: A

More than one in five SMEs – a total of 22% – opted for non-bank alternatives to funding their growth. A further 24% looked to borrow from their main relationship bank, and this bank lending percentage has trended down from 38% in our initial 2014 Index.

The most popular funding choices for SMEs using alternative working capital options in 2017 were debtor finance, which was used by 77%; merchant cash advances, used by 23%; P2P lending, with a total share of 10%; and crowdfunding, utilised by 9%.

India

Payday loan firm EarlySalary acquires CashCare (Media Nama) Rated: AAA

Payday loan firm EarlySalary has acquired CashCare. CashCare sells loans to customers on websites like Infibeam and Shopclues, and accepts repayments in EMIs at annual interest rates ranging between fifteen and 25%, according to CashCare’s website. The service is offered to people who don’t have a credit card too.

While CashCare’s 15% annualized interest rate is not too different from what credit card companies charge, EarlySalary’s payday loans come at a steeper cost. Charging ₹9 for each dayper ₹10,000 borrowed, their interest rate comes out to over 30%, compared to the 1.5–3% annualized interest credit cards charge, as we’ve pointed out before.

Xiaomi to start lending operations in India; to target salaried professionals (The Economic Times) Rated: AAA

IPO-bound Chinese smartphone company Xiaomi has launched its first lending product in India on the lines of the microlending product Mi Credit that it offers in China.

The new credit product, launched in partnership with lending platform KrazyBee, has already gone live and will be officially announced in a few weeks, as per a person aware of the development.

Called CreditBee, the credit product is a payday loan starting from Rs 1,000 up to Rs 1 lakh for a period of 90 days, as per the person cited above. The credit will be offered at an interest rate of 3% per month and will be targeted at salaried professionals, the person said.

P2P lending startup Cashkumar secures angel investment (VC Circle) Rated: A

Cashkumar, a peer-to-peer (P2P) lending startup, has raised angel investment of Rs 5 crore (around $735,000) through deals platform LetsVenture.

The startup’s first external funding was led by Mohan Kumar, executive director at global investment firm Norwest Venture Partners, and telecom company Reliance Jio’s chief digital officer Vishal Sampat.

Capacity-building workshop by RBI (Tribune India) Rated: B

Rachna Dikshit, Regional Director, RBI, Chandigarh inaugurated the workshop. In the event, topics like RBI guidelines, credit guarantee architecture for MSME financing and recovery management, alternative tech driven approaches to financing MSMEs like big data, fintechs, P2P lending, TReDS, movable asset based financing, role of CERSAI, management of sick account, credit scoring and rating models for MSMEs, assessment of term loans and composite loans, effective communication were covered.

 

Asia

Fintech Firm Flywire Teams Up With SP Jain For New Student-Led Singapore-Based Startups Competition (Crowdfund Insider) Rated: A

Flywire, a fintech firm that provides global payment and receivable solutions for education, healthcare, and commercial enterprises, announced this week it has partnered with SP Jain School of Global Management to launch a startup competition, the Flywire Challenge, to power a new generation of transformative entrepreneurship in Singapore and the APAC region.

According to the duo, this competition, which is set to launch this month, solidifies Flywire’s dedication to partnering with powerful regional universities, government bodies and industry, and investing in education and the start-up space, as well as their long-term relationships with international educational and healthcare institutions as a leading payments solutions provider. Flywire will host, sponsor and evaluate a contest following an open call for teams to submit proposals for innovative start-up ideas. Any and all students and graduates, not limited to SP Jain students, will be invited to compete for three awards in the Health Technology, Education Technology and Travel Technology sectors.

Latin America

Mexican investors back microlending startup Vola (VC Circle) Rated: AAA

Bengaluru and US-based Vola, which offers an alternative lending platform for students, has raised $500,000 (Rs 3.4 crore) in a pre-Series A funding round from Mexican insurance and credit firm Credika and unnamed angel investors from the North American nation.

MENA

AI Business Loan Company Lending Express Raises $ 2.7 Million (CTech) Rated: AAA

Israeli business loan startup Lending Express announced on Tuesday it has raised $2.7 million in a seed investment round led by Entrée Capital and iAngels, among other investors.

The company said it would use the capital to further develop its loan-matching technology and scale up its operations in the U.S. and Australia.

Authors:

George Popescu
Allen Taylor

Wednesday May 23 2018 Daily News Digest

Interest rates & new delinquencies on CC debt

News Comments Today’s main news: SoFi to get into crypto investing by 2019. How Goldman Sachs predicts economic slumps. How SoFi personalizes the mobile experience. A Monzo case study. Klarna acquires Shop.co. Today’s main analysis: More Americans are struggling to pay with credit cards. Today’s thought-provoking articles: 4 in 10 Americans can’t cover a $400 emergency expense, Fed survey […]

Interest rates & new delinquencies on CC debt

News Comments

United States

United Kingdom

European Union

International

India

Other

News Summary

United States

SoFi will get crypto investing by 2019, says CEO Anthony Noto (CNBC) Rated: AAA

SoFi CEO Anthony Noto says the “modern finance” company wants members to be able to invest in cryptocurrency as soon as 2019.

“We want to accelerate our investment in some new products, one of which is our wealth products, and we want to add cryptocurrency to that,” Noto said on CNBC’s “Power Lunch.”

Goldman Sachs has a novel method for predicting the next economic slump  (Business Insider) Rated: AAA

You might remember that Goldman Sachs is lending to subprime borrowers. Turns out, it’s all part of a plan to help predict the next credit cycle.

In February, Goldman Sachs surprised Wall Street when it said that more than 80% of borrowers for its Marcus consumer-lending product had a FICO score of more than 660 at year end. The implication was that nearly 20% had a score of less than 660, placing them in a group often referred to as subprime.

In September, the bank said it saw a $1 billion revenue opportunity in the Marcus loan-and-deposit platform based on a $13 billion lending opportunity over three years. Whether it reaches that goal will depend in part on how those subprime borrowers behave.

More Americans are struggling to pay their credit cards (Business Insider) Rated: AAA

Interest rates, which influence the cost of borrowing, are on the rise after the Federal Reserve kept them near zero for years. That period of super-low interest rates achieved one key outcome: encouraging Americans to borrow, spend, and help grow the economy after the Great Recession.

Last June, credit-card debt finally hit a new high. But the share of borrowers who make payments more than 30 days late is rising along with interest rates.

Source: Business Insider

The Fed is set next month to raise its benchmark rate for the seventh time since late 2015.

Source: Business Insider

How SoFi is personalizing its mobile experience (Tearsheet) Rated: AAA

SoFi is personalizing its digital customer experience by fusing event planning, career services and personal finance insights inside its mobile app.

SoFi is joining a group of financial institutions that are letting customers aggregate accounts to get a full financial picture — even if they’re not with the same institution, with recent examples including Citi and HSBC.

As it grows its digital offerings, the company is adding services to meet the needs of a fast-growing customer cohort. SoFi currently has 500,000 customers — up 200,000 from last year.

 

 

 

50. SoFi (CNBC) Rated: A

This has been quite a year for SoFi (short for Social Finance).

The company claims to have 500,000 members and has made $25 billion in loans to date. SoFi has raised $2.1 billion in funding, including $500 million in a round led by Silver Lake Partners. In early interviews after taking over the top spot, Noto spoke about eventually taking SoFi public, but did not outline a timetable.

For millennials, it’s about having a house, children and retiring early (CNBC) Rated: A

Julia Boorstin live with SoFi CEO Anthony Noto discusses running what he describes as a “modern day” financial services company.

Watch the interview here

SoFi Makes Graduation From Student Debt An Epic Experience (PR Newswire) Rated: A

In a video released today on YouTube, SoFi made that moment of relief from student debt a grand occasion for one Midwestern woman. The company surprised Candice, a SoFi member who had refinanced her student debt, with an epic surprise “debt graduation” ceremony with friends, family, and some unconventional surprises planned by the company, together with production and entertainment studio GenPop.

Guaranteed Rate Partners with DocMagic to Cut Closing Time (Florida Newswire) Rated: A

DocMagic, Inc., the premier provider of fully-compliant loan document preparation, regulatory compliance and comprehensive eMortgage services, announced that retail mortgage lender Guaranteed Rate can now cut closing time by electronically signing mortgage closing documents in advance.

Guaranteed Rate has branded the solution FlashClose, which allows customers to opt-in, review and complete most documents in advance of the notary arriving, saving an hour or more at the closing table – with some averaging a mere 10-minute appointment to provide inked signatures.

First wave of neobanks resets for new offensive (American Banker) Rated: A

BankSimple (now just called Simple) was bought by BBVA and went through a painful process of migrating accounts to the big bank’s systems; its founder recently announced he’s leaving. Moven became a seller of software to large banks including TD Bank and Westpac, while still maintaining its own mobile banking service. Varo Money has been trying for almost a year to get a banking license. Chime remained independent (in partnership with The Bancorp Bank) but is going through growing pains.

This year, all are taking up their swords again, renewing an anti-bank message of helping consumers lead financially healthy lives, with fewer fees and more helpful products and software than traditional banks. Following is a look at how the neobanks are fighting back.

Cadre seeks at least $ 100M from SoftBank (The Real Deal) Rated: A

Real estate crowdfunding platform Cadre is seeking at least $100 million from a fund started by the SoftBank Group.

Representatives for the SoftBank Vision Fund met with a top executive from Cadre recently, Bloomberg reported. The fund gets nearly half of its $100 billion from the Saudi Arabian government and at least $15 billion from the United Arab Emirates.

Lending Express garners $ 2.7 mln (PE Hub Network) Rated: A

Lending Express, the only AI-powered marketplace for business loans, today announced the securing of a $2.7 million investment round led by Entrée Capital, iAngels, and existing investors. The funds will be used to build out their innovative loan-matching technology and scale up operations in the United States and Australia.

How fintech gave this SBA lender an edge (American Banker) Rated: A

Add Seacoast Banking in Stuart, Fla., to the list of community banks that now believe in working with fintechs.

The $6 billion-asset company is gaining traction in Small Business Administration lending after partnering with SmartBiz Loans to speed its approval process. The move halved the interval from application to funding, to as little as 10 days, said Julie Kleffel, Seacoast’s community banking executive.

Four in 10 can’t cover an emergency expense of $ 400, Fed survey finds (Market Watch) Rated: AAA

The Fed’s new survey of household economics and decision-making found 41% could not cover a $400 emergency expense using cash in 2017. That’s actually a slight improvement, since 44% could not in 2016, 46% could not in 2015 and only 50% could in 2013.

Those that couldn’t afford the expense turn to credit cards or borrowing from family or friends, while only 5% would turn to a payday loan or similar product.

Source: Federal Reserve

Read the full report here.

Why real estate tech won’t kill the middleman (The Real Deal) Rated: A

Not too long ago, it seemed like the real estate business was about to enter a new era. To some observers, websites like Zillow and Trulia or their office equivalents 42Floors and LoopNet threatened to put brokers out of business (although officially these firms said no such thing). Crowdfunding startups dreamed of doing the same to pricey fund managers. Why pay a cut to an agent if you can just find your house or office online, for free? Why give your savings to a pension fund, which gives it to an asset manager, which gives it to a real estate lender, which gives it to a developer, if you can just lend the money to a developer yourself, online, and save a fortune in fees?

ENACOMM Adds FoneLogix as Ally to Bring Data-Driven AI and Phone Banking to Financial Institutions (Globe Newswire) Rated: B

ENACOMM—a fintech company that empowers banks, credit unions and credit card companies with solutions for improving the customer experience (CX), fighting financial fraud, and increasing operational efficiency—today announced a new reseller agreement with FoneLogix, an Atlanta-based provider of cloud-hosted VOIP Phone Systems, Solutions and Support.

Through the partnership, FoneLogix’s bank and credit union customers will be able to take advantage of ENACOMM’s VPA (Virtual Personal Assistant) Conversational Banking and the ENACOMM Financial Suite (EFS), which includes a hosted, dynamic interactive voice response (IVR) system for personalized customer interactions.

AI Challenging Bank Lending Practices (Forbes) Rated: A

CultureBanx notes 

The Best Business Loans and Financing Options for Freelancers (The Entrepreneur) Rated: A

Most banks view freelancers as high-risk, and as such, may be unwilling to enter a loan agreement. Because a freelancer is considered a sole proprietor, he or she alone is liable for all losses and debts his or her business may incur. If the freelancer gets hurt or sick and cannot work — or is just terrible at running a business — the bank is left holding the bag.

Online lenders offer an interesting alternative. Typically, these non-traditional lenders have more relaxed loan approval criteria and a swifter approval process. Importantly, your personal income, assets and credit score are assessed for loan approval, not the value of your business. You should expect to pay higher rates of interest, a natural trade-off for the perceived risk you present.

First Tech Federal Credit Union Personal Loans: 2018 Review (Nerdwallet) Rated: A

First Tech offers unsecured and secured personal loans as well as personal lines of credit. Annual percentage rates start at 9% on unsecured loans, or 3% on secured loans, which can be backed by a First Tech savings account, First Tech share certificates, or stock you own in the company you work for or one listed on the NYSE, Nasdaq or Amex.

You can apply for a loan of as little as $500, making First Tech a good option for borrowers looking for small loans. Payments for unsecured and secured loans are fixed over two to seven years, and you can choose between monthly or biweekly payments.

 

 

Trump signs resolution overturning CFPB auto lending rule (Consumer Affairs) Rated: B

President Trump has signed a resolution, passed by Congress, overturning the Consumer Financial Protection Bureau’s (CFPB) auto lending rule, designed to prevent racial discrimination by dealers who finance purchases.

United Kingdom

Monzo Case Study (AWS) Rated: AAA

Monzo has grown from an idea to a fully regulated bank on the AWS Cloud. A bank that “lives on your smartphone,” Monzo has already handled £1 billion worth of transactions for half a million customers in the UK. Monzo runs more than 400 core-banking microservices on AWS, using services including Amazon Elastic Compute Cloud (Amazon EC2), Amazon Elastic Block Store (Amazon EBS), and Amazon Simple Storage Service (Amazon S3).

Open banking regulations, which came in at the start of 2018, required the nine largest banks in the UK to provide an API for their users’ account information.

 

Meet the 35 most exciting young entrepreneurs, engineers, and advisors in UK fintech (Business Insider) Rated: AAA

Business Insider has covered UK fintech since our 2014 launch. The UK Fintech 35 under 35 highlights the most promising young entrepreneurs, engineers, marketers, and sector experts under the age of 35. It spans both startups and big banks operating in the sector.

35. Pierce Glennie, iwoca

The company has lent over £400 million since its founding in 2011. Glennie was one of iwoca’s first outside hires and just 21 when he joined the business.

27. Aneesh Varma, Aire

Varma, who started his career at JPMorgan, set up Aire in 2014. It is his second startup, having previously founded enterprise software business FabriQate in 2005.

24. Anil Stocker, MarketInvoice

MarketInvoice is an online platform that lets businesses borrow against unpaid invoices. The lender isn’t MarketInvoice itself but institutional investors and high net worth individuals looking for strong returns.

23. Karen Kerrigan, Seedrs

Seedrs is one of the UK’s first equity crowdfunding platforms, letting ordinary people invest in startup businesses. 600 businesses have raised over £320 million since the platform launched in 2009.

17. Simon Miller, Scalable Capital

Scalable Capital is one of a number of so-called “robo advisors” — online investment advisors and platforms — that have sprung up around the world in recent years. The company already has £600 million in assets under management and has attracted investment from asset management giant BlackRock.

13. Joe Cross, TransferWise

Cross was one of TransferWise’s first employees and has seen the international money transfer business grow from a small East London startup to business worth over $1 billion.

6. Megan Caywood, Starling Bank

She is now chief platform officer at startup, app-only bank Starling, which is trying to make a new kind of bank that functions more like an app store than a traditional lender.

5. Martin Ijaha, Neyber

Neyber works with employers to let staff borrow money then repay through salary deductions. Neyber was founded in 2012 and now works with 160 employers with a combined 1 million staff. Last year Goldman invested £100 million into the platform.

3. Tom Blomfield, Monzo

The fully licensed bank now has over 500,000 current account customers who have spent £1 billion on Monzo’s iconic hot coral cards. The company has raised over £71 million to date and is valued at £280 million.

2. Samir Desai, Funding Circle

Their platform has now lent over £4 billion to businesses across the UK, Germany, US, and the Netherlands. Desai was awarded a CBE for services to financial services in 2015 and his company is tipped to float on the stock exchange later this year with a price tag of at least £1 billion.

1. Nikolay Storonsky, Revolut

Revolut began life as a foreign exchange card linked to an app that offered rock-bottom FX prices. The company is less than three years old but the popularity of its product has already seen it hit 2 million customers and a valuation of $1.7 billion.

Proptech Startup When You Move Raises £3M in Funding (Finsmes) Rated: A

When You Move, a UK-based proptech startup, secured new funding which brings the total amount raised to £3m.

Backers included Fig, a proptech VC, and a hybrid network of friends and family, private HNW investors and incumbent shareholders.

The company intends to use the funds to build out it customer excellence teams, scale up the development team and solidify its position as the solution for professionals involved in property purchases.

The UK fintech economy will create different pockets of excellence all over the country (Computer Weekly) Rated: A

He said fintechs such as Leeds based White label Crowdfunding which build peer to peer lending software, business lender Rebuildingsociety.com also in Leeds, and Accespay in Manchester have been involved with the Fintech North events.

Mark Carney: Every household £900 worse off because of Brexit (The Telegraph) Rated: A

UK households are £900 worse off than they would have been because of Brexit, Bank of England Governor Mark Carney has claimed.

Mr Carney revealed in a Treasury Select Committee grilling that growth has been up to 2pc lower than the central bank had expected because of the UK’s decision.

Banks ‘charging more’ for overdrafts than payday lenders (BBC) Rated: A

Unarranged overdraft fees can cost borrowers up to seven times more than a payday loan, a consumer group warned.

Which? compared the cost of borrowing £100 for 30 days in an unarranged overdraft across 16 high street banks with borrowing the same amount through a payday loan.

Ireland Issues Tax Guidance On Peer-To-Peer Lending (Tax News) Rated: B

A company that pays interest on finance raised via peer-to-peer lending or crowdfunding is obligated to withhold income tax at the standard rate of tax on interest payments made on the finance raised. The underlying lenders are liable to pay income tax on any interest they earn on which withholding tax has not been suffered.

‘Lenders need to be more transparent about portfolios’ (Bridging & Commercial) Rated: A

Far from deserting the sector, lenders are now presenting landlords with a wider range of borrowing options than ever before. New figures from financial information site Moneyfacts suggests that there are currently more than 2,000 buy-to-let mortgage deals available, a new record high.

And while the various regulatory and tax changes have spelt trouble for the small-time landlords, the professionals seem to be in the ascendency. A recent study by Aldermore suggested that more than four out of 10 portfolio landlords are looking to expand their portfolios in the next 12 months.

China

Chinese fintech’s global future is arriving now (Financial Times) Rated: AAA

Ant Financial recently raised an oversubscribed $10bn round which values the firm higher than Goldman Sachs, American Express and BlackRock; the Alipay product has more than 500 million users and is incredibly simple to use; they have integrated into Alibaba’s retail operation and have the world’s largest money market fund with Yu’E Bao; they have begun expanding globally as well as they have built partnerships with firms in Africa and have tried to enter the U.S. market through an acquisition of MoneyGram which was blocked by regulators; regulators will need to figure out how handle a company that doesn’t look to fade from the financial scene anytime soon.

Legal concerns heat up for wanted Founders Group leader as partner testifies in China (Myrtle Beach Sun News) Rated: A

Liu’s partner in the Chinese company Yiqian Funding, a peer-to-peer lending business that seeks investors, testified May 3 in her fraud trial in Nanjing that Liu was in control of the company when it became unable to pay many investors what prosecutors estimate to be $1.17 billion — or 7.4 billion yuan.

 

European Union

Klarna acquires universal shopping cart Shop.co (Ecommerce News) Rated: AAA

Klarna has acquired Shop.co, a small German startup that wants to simplify online shopping by offering a universal shopping cart. There’s little known about the deal, but according to Klarna it’s mostly about the acquisition of intellectual property and taking over a mere Shop.co employees..

According to t3n, a purchase sum somewhere in the mid double-digit millions is also likely. But later on, Klarna told another media outlet, Tech.eu, that the purchase price is far lower than some media have been speculating. It also said that it’s most acquiring intellectual property and employees.

Keeping on Top of Emerging Payment Solutions – Q&A with Klarna (Retail Tech News) Rated: A

Luke Griffiths: Klarna’s approach to online commerce is very different from that of traditional providers. Our overarching philosophy is to give consumers the freedom and flexibility to decide how and when they want to pay. At Klarna, we offer three payment options that cover all consumer needs for seamless shopping: ‘Pay now’, ‘Pay later’, and ‘Slice it’.

Pay now enables straightforward and immediate online payment purchases. This option allows customers to pay for their purchases in full via Klarna’s speedy online checkout and payment service using a card. Many of our merchants choose the Klarna checkout as it is proven to reduce abandoned baskets and provide a better user experience for shoppers.

Our second payment option, Pay later, allows shoppers to ‘try before they buy’. Customers have either 14 or 30 days to pay for their goods (depending on the merchant) after their items have been delivered, with no interest or fees – or they can return the items if they’re not what they expected.

EMaC launches ‘Drive Now Pay Later’ service for dealers (Motor Trader) Rated: B

EMaC, the service plan specialist, is widening the services it offers dealers and end consumers with the launch of a pay later credit facility for vehicle repairs and accessories.

The company, which is has also launched a new identity, has teamed up with credit provider Klarna to offer the “Drive Now Pay Later” service.

EMaC said its new Drive Now, Pay Later product would give dealers access to a credit facility to assist their customers in financing repairs and other vehicle related accessories.

Banks seek tech talent for digital shift (Financial Times) Rated: A

European Banks have increased advertising for IT and engineering roles by more than 10 times in the last 3 years; a new report by the Economist Intelligence Unit and Temenos shows for the first time that bank executives believe technology like AI and blockchain will have a bigger impact than regulation; being about 10 years removed from the financial crisis has help shift the view of banks to focus more of their time on digitization instead of regulatory compliance.

 

 

International

Meet the Goldman Sachs-Backed Fintech Startup Aiming to Take Over North America (Fortune) Rated: AAA

Now Plaid, which raised $44 million in a funding round led by Goldman SachsInvestment Partners nearly two years ago, is looking to expand internationally. The company announced Tuesday that Plaid is available in Canada for the first time—and compatible with both U.S. and Canadian dollars—a move designed to both support current clients’ Canadian expansions as well as attract new Canadian fintech players.

Companies use Plaid’s APIs (or application programming interfaces) as a foundation for building their own fintech products, depending on that secure way to link customers’ bank accounts. Its extension into Canada is a sign that the nascent fintech industry is gaining traction in more parts of the world. TransferWise, a London-based cross-border payments startup that uses Plaid, recently expanded into Canada as part of a global push. And Toronto-based Drop, a loyalty rewards app, is one of Plaid’s first Canadian clients.

Is Fraud a Solved Problem? (Lend Academy) Rated: AAA

But one statement stood out to me. Jeff Stewart, the Chairman and Co-Founder of LenddoEFL said that “fraud is a solved problem”.

That is quite a bold statement. So, I reached out to Jeff yesterday to get some more color on what he really means here. He stood by what he said on the panel at LendIt. While we can’t get rid of 100% of fraud what we can do is catch fake identities, fraud rings, and large-scale theft of identity.

It is not surprising that the type and amount of fraud varies between countries. We learned from Thomas Wang of China Rapid Finance in this same session that a staggering 97% of loan applications in China are fraudulent. Think about that for a moment. Only 3% of the applications that a Chinese online lender receives is from a real person. The rest is fraudulent activity often from established fraud rings.

Small Business Banking Catching Up in Innovation Race (Bank Innovation) Rated: A

There are quite a few lending solutions these days for small businesses — Funding Circle, OnDeck, Kabbage, and Square Capital, to name a just a few — but innovation and digitization are lagging in other areas, such as digital account opening. Enter Gro Solutions, a sales and marketing platform for financial institutions.

Australia

Understanding the SME mindset (Australian Broker) Rated: A

More than one in five SMEs – a total of 22% – opted for non-bank alternatives to funding their growth. A further 24% looked to borrow from their main relationship bank, and this bank lending percentage has trended down from 38% in our initial 2014 Index.

The most popular funding choices for SMEs using alternative working capital options in 2017 were debtor finance, which was used by 77%; merchant cash advances, used by 23%; P2P lending, with a total share of 10%; and crowdfunding, utilised by 9%.

India

Payday loan firm EarlySalary acquires CashCare (Media Nama) Rated: AAA

Payday loan firm EarlySalary has acquired CashCare. CashCare sells loans to customers on websites like Infibeam and Shopclues, and accepts repayments in EMIs at annual interest rates ranging between fifteen and 25%, according to CashCare’s website. The service is offered to people who don’t have a credit card too.

While CashCare’s 15% annualized interest rate is not too different from what credit card companies charge, EarlySalary’s payday loans come at a steeper cost. Charging ₹9 for each dayper ₹10,000 borrowed, their interest rate comes out to over 30%, compared to the 1.5–3% annualized interest credit cards charge, as we’ve pointed out before.

Xiaomi to start lending operations in India; to target salaried professionals (The Economic Times) Rated: AAA

IPO-bound Chinese smartphone company Xiaomi has launched its first lending product in India on the lines of the microlending product Mi Credit that it offers in China.

The new credit product, launched in partnership with lending platform KrazyBee, has already gone live and will be officially announced in a few weeks, as per a person aware of the development.

Called CreditBee, the credit product is a payday loan starting from Rs 1,000 up to Rs 1 lakh for a period of 90 days, as per the person cited above. The credit will be offered at an interest rate of 3% per month and will be targeted at salaried professionals, the person said.

P2P lending startup Cashkumar secures angel investment (VC Circle) Rated: A

Cashkumar, a peer-to-peer (P2P) lending startup, has raised angel investment of Rs 5 crore (around $735,000) through deals platform LetsVenture.

The startup’s first external funding was led by Mohan Kumar, executive director at global investment firm Norwest Venture Partners, and telecom company Reliance Jio’s chief digital officer Vishal Sampat.

Capacity-building workshop by RBI (Tribune India) Rated: B

Rachna Dikshit, Regional Director, RBI, Chandigarh inaugurated the workshop. In the event, topics like RBI guidelines, credit guarantee architecture for MSME financing and recovery management, alternative tech driven approaches to financing MSMEs like big data, fintechs, P2P lending, TReDS, movable asset based financing, role of CERSAI, management of sick account, credit scoring and rating models for MSMEs, assessment of term loans and composite loans, effective communication were covered.

 

Asia

Fintech Firm Flywire Teams Up With SP Jain For New Student-Led Singapore-Based Startups Competition (Crowdfund Insider) Rated: A

Flywire, a fintech firm that provides global payment and receivable solutions for education, healthcare, and commercial enterprises, announced this week it has partnered with SP Jain School of Global Management to launch a startup competition, the Flywire Challenge, to power a new generation of transformative entrepreneurship in Singapore and the APAC region.

According to the duo, this competition, which is set to launch this month, solidifies Flywire’s dedication to partnering with powerful regional universities, government bodies and industry, and investing in education and the start-up space, as well as their long-term relationships with international educational and healthcare institutions as a leading payments solutions provider. Flywire will host, sponsor and evaluate a contest following an open call for teams to submit proposals for innovative start-up ideas. Any and all students and graduates, not limited to SP Jain students, will be invited to compete for three awards in the Health Technology, Education Technology and Travel Technology sectors.

Latin America

Mexican investors back microlending startup Vola (VC Circle) Rated: AAA

Bengaluru and US-based Vola, which offers an alternative lending platform for students, has raised $500,000 (Rs 3.4 crore) in a pre-Series A funding round from Mexican insurance and credit firm Credika and unnamed angel investors from the North American nation.

MENA

AI Business Loan Company Lending Express Raises $ 2.7 Million (CTech) Rated: AAA

Israeli business loan startup Lending Express announced on Tuesday it has raised $2.7 million in a seed investment round led by Entrée Capital and iAngels, among other investors.

The company said it would use the capital to further develop its loan-matching technology and scale up its operations in the U.S. and Australia.

Authors:

George Popescu
Allen Taylor

Tuesday March 20, 2018, Daily News Digest

fintechs

News Comments Today’s main news: Affirm intros in-store capabilities. SoFi prices first student loan ABS with medical residency refis. Experian targets non-prime borrowers with new credit score. RateSetter CEO warns of collaboration risk. Today’s main analysis: Hui Ying Financial Holdings’ 2017 financial results. Today’s thought-provoking articles: What the Senate Banking Committee bill means. Key Chinese technology players. What Europe’s investors […]

fintechs

News Comments

United States

United Kingdom

China

European Union

International

Other

News Summary

United States

Affirm Introduces In-Store Capabilities (Business Wire), Rated: AAA

Affirm will partner with merchants to make Affirm financing available in-store. Now shoppers can use Affirm InStore in brick-and-mortar locations, securing credit in just seconds before they even get to the cash register, and can pay for their purchase over time in simple, fixed monthly installments. Additionally, the company announced that consumers will have the ability to instantly add a newly issued Affirm virtual card to Apple Pay, the easy, secure and private way to pay, via the Affirm mobile app.

Affirm InStore brings the same easy experience shoppers and retailers have come to expect online to the point-of-sale in brick-and-mortar locations. Affirm gives merchants two flexible options: they can integrate the Affirm InStore API (application programming interface) with their Point Of Sale (POS) system or use Affirm’s expanded virtual card experience.

According to a survey conducted by Affirm, this can impact a retailer’s brand even if the financing product is offered by a third party. Fifty-five percent of respondents said they would think less favorably of a brand that offers a financial product that can be harmful to consumers.

Affirm’s platform makes it possible for shoppers to pay for purchases over multiple-month terms with simple interest loans that don’t charge compounding interest or late fees. And, unlike most credit lenders that base loan decisions on a consumer’s credit score and income alone, Affirm takes a more sophisticated approach, using data science in credit-scoring algorithms that combine credit history and other relevant factors to assess creditworthiness.

Affirm, a startup founded by PayPal co-founder, just launched Apple Pay Credit Card without the plastic (Tech Startups), Rated: A

Affirm now has more than 1,000 merchants using its service.

The company is going after the millennials with a new type of credit card, without plastic and only available online. The company announced today the launch of Affirm virtual card to Apple Pay Credit Card without the plastic. With Affirm Virtual Card, consumers will have the ability to instantly add a newly issued Affirm virtual card to Apple Pay, via the Affirm mobile app. With the virtual card, Affirm is reinventing credit with alternative to traditional credit cards and making its micro-lending program available through Apple Pay and letting customers use their iPhones to pay in brick-and-mortar stores.

SoFi prices 1st student loan ABS with medical residency refis (American Banker), Rated: AAA

Social Finance’s second private student loan securitization of the year, which priced Friday, is also its first to include loans refinancing the debt of medical residents.

Loans refinancing the debt of medical residents and fellows account for approximately 5% of the collateral for the original collateral for the transaction, SoFi Professional Loan Program 2018-B Trust, according to rating agency presale reports. The collateral for the deal was upsized, to $900 million from $700 million originally, in response to strong demand, though investors demanded slightly higher spreads on the senior notes compared to SoFi’s previous student loan securitization, completed in January.

Experian Releases a New Credit Score Aimed at Non-Prime Borrowers (Lend Academy), Rated: AAA

The ranks of thin file consumers continues to grow in this country. According to Experian these consumers now number 25% of the total U.S. population. These are people with five or fewer items in their traditional credit history.

Since the acquisition they have worked with the Clarity Services team to build a new score specifically for the non-prime segment. They are calling it the Clear Early Risk Score. As the name implies this new score is designed to give lenders a clearer view of the risk of these thin file consumers, many of whom should not be categorized as subprime.

When I asked Alex how this new score will be used in conjunction with their traditional FICO score he said it will be used in two ways:
1. When the consumer has no traditional file and therefore no credit score it will be used as an independent score.
2. The consumer may be originally scored as subprime and this new score could provide new  information that may lead to a different conclusion regarding risk.

 

 

 

Here’s what the latest Senate bill means for US fintech (Business Insider), Rated: AAA

A bill that the Senate Banking Committee has been drafting for several years, designed to reduce the regulatory burden for small- and mid-sized US lenders, received bipartisan approval in the Senate on Wednesday with a 61-38 vote.

The bill’s proposals include raising the threshold for the Dodd-Frank definition of a “systemically important” lender from $50 billion in assets to $250 billion, thus absolving smaller banks from strictures like annual stress tests; absolving banks with under $10 billion in assets from the Volcker Rule; and allowing small banks and credit unions to report less of their mortgage loan data, among other things.

Source: Business Insider

U.S. Online Merchants Believe Instant Financing Will Drive Increased Sales (PR Newswire), Rated: A

Online merchants in the U.S. are increasingly recognizing the importance of offering instant financing to shoppers, according to a new online e-commerce survey. Nearly two-thirds of retailers polled (64 percent) believe providing online financing options through their store is important to driving new and increased sales. Forty-six percent indicate it would decrease cart abandonment – still one of the most critical challenges for online retailers today.

The merchant survey, which recognizes the importance of instant financing among online retailers, corresponds with consumer attitudes as revealed in a Klarna-sponsored survey last year that showed:

  • Three quarters of consumers (75 percent) indicate preference for online merchants offering instant financing
  • 39 percent said they would spend more money if given instant credit options when purchasing goods and services online
  • 28 percent would be very likely or completely likely to change merchants in order to use instant financing
  • Nearly half of respondents (47 percent) would like to be presented with an instant financing option while shopping online

THE QUANTS, THE ALGORITHMS, AND THE PERFORMANCE (All About Alpha), Rated: A

In the forthcoming paper he contends that with only “a tiny handful of exceptions” (read “Renaissance”) such trading doesn’t produce exceptional results. The problem goes far beyond what one addresses by saying that the field is new and still developing, that machine learning will get better, that Big Data will get even bigger, and so forth.

Heaton asks us to contemplate Citadel LLC. This huge hedge fund “returned only about 13 percent in 2017,” which was short of the S&P 500 gain. Yet the S&P gain would have been “available quite inexpensively to anyone with the money to open an account at Vanguard Group.”

Does Citadel compensate for underperformance in bull markets by preserving capital in bear markets? Heaton says that it does not, “Citadel fell nearly 60 percent in 2008, far more than the S&P 500 index.”

Composing Architecture for Growth (Lendit), Rated: A

The same technology that is influencing this change is also making it possible to deliver that experience at a fraction of the time and cost it would take with older technology.

This ‘right’ technology means embracing cloud-based services and an API-enabled composable architecture.  Today, building an architecture is quick and cost effective, particularly through the use of cloud technology.  Rather than having to buy, build, and maintain a collection of poorly-connected systems, an API-enabled composable architecture lets institutions leverage services built on a flexible yet secure infrastructure.

A composable API-driven architecture is necessary to tap into the full potential of cloud technology. The traditional approach is all or nothing, build an end-to-end solution which relies on a single vendor which would be responsible for the implementation.  But the composable approach embraces thinking that one company cannot focus on everything and be the best at it.  The architecture can be divided in small pieces and managed through life cycles separately and tested, removed or replaced without risk.

Everlasting Capital Grows from a Basement to Inc.’s 500 List (deBanked), Rated: A

“I was making $267 a week at the pawn shop and I was having to ask friends to help me pay my rent for a room,” Feinberg said. “So at that point, I realized that something needed to change.”

That question prompted Feinberg to present to his brother and Murphy the idea to start a finance company. Feinberg said he drew up a business plan in a day and a half and his brother and Murphy agreed to give him $3,000 to start the company. That was November of 2012.

And it did. After a year, Feinberg’s company, Everlasting Capital, made $110,000 in commissions and $3.5 million in volume. Within that first year, he also hired three people and moved from the basement of the pawn shop in Rochester, NH to a 600 square foot office in the same town.

This lightning fast trajectory is by no means common. That’s why Everlasting Capital made it onto 2017’s Inc. 500 list, the iconic list of America’s fastest growing private companies. By year two, Everlasting Capital earned $640,000 in commissions, generating $14 million in volume, and by year three it earned $1.6 million in commissions with $18 million in volume.

A Conversation with Lendup’s CEO Sasha Orloff and Vice President Jotaka Eaddy (The Financial Revolutionist), Rated: A

We were happy to connect with LendUp’s co-founder and CEO Sasha Orloff and Jotaka Eaddy, the company’s vice president of policy, strategic engagement and impact. Orloff, Eaddy and the rest of the LendUp team are clearly mission-driven professionals who want to put borrowers on the pathway to better financial health.

The Financial Revolutionist: Sasha and Jotaka, it’s great to see you again. Sasha, I know you started the company in 2011 with your step brother, Jake. When did you start making loans?

Sasha Orloff:    Thanks Gregg. We recently hit our six-year anniversary of our first loan. Although Jake and I “started” the company in 2011, LendUp was really born after coming out of Y Combinator’s Winter 2012 class.

FR:     Is access to credit a civil rights issue that needs more attention?

JE:    Absolutely. It’s just that some of the blatant racism that’s confronting our nation these days takes center stage on TV and social media. But historically, race has played a major role in accessing credit and how people are marginalized when trying to access it. Plus, when you look at the predatory products across this country, they are heavily marketed to poor communities. So yes, safe access to credit is an important issue for me — and should be for everyone — and LendUp is on the right side of it.

OCC once wanted payday lenders to ‘stay the hell away’ from banks. No longer (American Banker), Rated: A

More than a decade has passed since federal regulators cracked down on partnerships between payday lenders and banks that had been designed to circumvent state interest rate caps.

Now the Office of the Comptroller of the Currency, operating under newly installed leadership, has taken a notable step in the opposite direction.

The agency said Friday that it has terminated a 2002 consent order with Ace Cash Express.

South Dakota is an example of a state that could be impacted. Sixteen months ago, the state’s voters approved a 36% interest rate cap. Critics of payday lending worry that federal banking regulators may effectively overturn such laws, and that last week’s decision by the OCC is a step down that path.

Goldman Sachs Adds LPL Financial to Its Securities-Lending Business (US News), Rated: A

Goldman Sachs Group Inc has signed LPL Financial Holdings, the largest U.S. independent broker-dealer by revenue, to its securities-based lending platform, the bank said on Tuesday.

Called GS Select, the platform was launched last year as a way for the Wall Street bank to target borrowers who have less than $10 million in investable assets. GS Select issues loans worth $75,000 to $25 million that are collateralized by the borrowers’ investment portfolios.

Goldman’s typical wealth clients have at least $50 million in assets.

Questions raised as robo advisers hire humans (FT Advisor), Rated: A

Robo-advice firms offering automated financial advice have begun incorporating human advisers into their service, raising questions about how this will impact their business models.

Schroders-backed Nutmeg is currently looking at introducing human advisers into its service, while rival Scalable Capital, in which Blackrock has a large minority stake, has recently done just that.

Cerberus completes Cyanco acquisition (PE Hub Network), Rated: B

Cerberus Capital Management, L.P. today announced the completion of the previously announced acquisition of Cyanco Holding Corp. by a Cerberus affiliate from funds managed by Oaktree Capital Management, L.P. The transaction closed on March 16, 2018.

Cyanco will continue to be led by its current management team. As part of its investment, Cerberus will be putting in place a new board of directors for Cyanco. The new board will be chaired by Daniel Ajamian, an executive who has been Chairman of several other Cerberus portfolio companies.

Here Are 7 Atlanta Startups That Have Raised More Than $ 100 Million in Funding (Atlanta Inno), Rated: B

Kabbage, a FinTech company that connects small businesses with capital they need, is sitting pretty at $1.6 billion in total funding acquired since its debut on the Atlanta credit scene in 2009. Kabbage was recently in the news after the lending startup announced that, in the wake of the Parkland shooting, it would stop processing loans to assault-style weapons manufacturers.

Greensky, a consumer lending company which offers paperless solutions and financial services to businesses, secured a total of $350 million in funding in just two rounds.

 

United Kingdom

RateSetter CEO warns of ‘risk’ of collaboration over competition (Peer2Peer Finance), Rated: AAA

At the Innovate Finance Global Summit at London’s Guildhall, Lewis warned that if the two cohorts solely collaborate, there would be little visible change from the viewpoint of the consumer.

“The technological advances being made are unstoppable; the question is who is going to take them to market,” he said on Monday.

There have been an increasing number of partnerships between fintech firms and the very incumbents that they are trying to disrupt. US investment bank Goldman Sachs has acquired a number of innovative start-ups through its online lending platform Marcus.

report released last month from consulting firm Capgemini and corporate networking website LinkedIn found that more than 75 per cent of fintech firms cite collaborating with incumbent firms as their primary business objective.

 

The state-backed Royal Bank of Scotland (RBS) is working on secret plans to create a standalone digital bank to compete with emerging British fintech champions including Monzo and Revolut.

Sky News has learnt that RBS has assigned one of its top executives to the project, which is so confidential that few people inside the company are aware of its existence.

RBS has already struck agreements with a number of leading fintech companies such as Funding Circle, with which it works to direct customers to peer-to-peer and other providers of alternative finance.

 

LendInvest launches second retail bond offer (Bridging & Commercial), Rated: A

The online platform for property finance has issued a five-and-a-half year 5.375% fixed rate retail bond due October 2023.

Payments under the bond will be guaranteed by LendInvest and the bond will be secured by way of a floating charge over the whole of the undertaking and all property, assets and rights, both present and future, of the issuer.

LendInvest’s first retail bond – which trades on the London Stock Exchange – raised £50m from a broad base of retail and institutional investors.

As of 31st December 2017, the bond was 99.6% utilised, with an interest coverage ratio of 192% and a weighted average LTV ratio of 57%.

Letter: Build a brighter future (Watford Observer), Rated: A

My suggestion was Funding Circle, which enables businesses to access finance independent of their banks and allows them to receive funds within a couple of weeks, compared to up to three months with a traditional bank loan.

It’s been a tried and tested investment since August 2010 and there are currently 18 councils investing through the Funding Circle platform, and the amounts invested vary from £1,000 to £2 million.

The Funding Circle minimum a council could lend to a business is £20, so Funding Circle suggests lending £2,000 would allow a council to lend to at least 100 businesses, lend no more than 1 per cent of the portfolio to each business.

What recent IPOs reveal about the state of fintech (AltFiNews), Rated: A

Over the last week or so we’ve seen not one but two fintech focused venture capital style listed funds list on the London market: Augmentum Fintech raised £94m while TruFin hit the market with a £70m valuation. Both of these funds have their own unique characteristics although perhaps the most interesting information from the listings is what they reveal about the likely worth of the alternative finance space in the UK.

The fund’s 15 per cent stake in Zopa, by contrast, seems a little more tangential though it’s also the single most valuable asset in the fund.

City of London and Innovate Finance Launch Fintech Strategy Group (Crowdfund Insider), Rated: B

The City of London Corporation and Innovate Finance have jointly announced the launch of the Fintech Strategy Group (FSG) to help continue the success of the UK Fintech sector. According to Innovate Finance, the group will combine senior industry leaders across the sector including banks, regulators, and innovative Fintech startups.

The purpose of the FSG is to foster a collaborative dialogue on the future of UK Fintech – a vital issue as Brexit weighs on the financial services industry.

 

 

China

Chinese Tech Major Key Players – Tencent, Vipshop, Weibo, and Yirendai Market Analysis & Forecast 2017 to 2022 (Digital Journal), Rated: AAA

China’s government is intent on upgrading its manufacturing sector and leading the world in a range of advanced technologies. Implicit in its “Made in China 2025” 10-year plan is the notion that China will displace the US as the world’s dominant technological power.

The US is likely to remain a leader in all major advanced technologies over the next decade, with Baidu the only Chinese player equipped to challenge the US’s lead in next generation technologies such as AI. There are signs though, that China is closing the overall gap faster than we expected.

This report researches the state and thrust of Chinese technology over the next two to five years and what it implies for global technology investors.

Hui Ying Financial Holdings Corp. Reports Fiscal Year 2017 Financial Results (Markets Insider), Rated: AAA

Revenues increased by 88.4% to $46.5 million and loans facilitated through platform increased 59.9% to over $1.3 Billion

Source: Markets insider
  • Total loans facilitated through our platform increased by 59.9% to $1,308.7 million for the year ended 2017 from $818.5 million in 2016, as China’s online peer-to-peer lending platform industry continued to grow significantly during 2017, coupled with an increased marketing campaign, promotion activities on our platform as well as increased brand awareness of our online marketplace. This led to accumulated value of loans facilitated through our platform in the aggregate amount of $2.87 billion since the launch of our marketplace in December 2013 through the end of 2017.
  • We had 8,047 borrowers and 69,232 investors participated in an aggregate of 23,263 loans during 2017, compared to 1,067 borrowers, 39,999 investors and 8,739 loans during 2016. As of the end of 2017, we had 367, 893 registered investors and 24 cooperative partners who frequently serve as guarantors of loans on our platform.
  • Total revenues increased by 88.4% to $46.50 million for the year ended 2017 from $24.68 million in 2016, as a result of an increase in loans facilitated through our platform and the contribution from the newly launched entrusted loan business. Revenues from loan origination service fees, loan repayment management fees and financing income from entrusted loans were $26.70 million$18.21 million and $1.58 million, respectively, for the year ended 2017 compared to $17.49 million$7.19 million and nil, respectively, in 2016.
  • Net income increased by 344.1% to $15.27 million for the year ended 2017 from $3.44 million in 2016. Diluted earnings per share was $0.21 for the year ended 2017, compared to $0.05 for 2016.

Blockchain startups are overvalued: Q&A with Anju Patwardhan, Managing Director at CreditEase China (Technode), Rated: B

Blockchain technology is in full swing. Baidu, Alibaba, and Tencent are all vigorously investing in blockchain technology and Chinese VCs are fishing for blockchain tech companies. What’s more, the Chinese government is also poised to educate Chinese people about this booming technology. However, that doesn’t mean that all blockchain projects are viable.

With a $500 million fund and another RMB fund with the same amount, CreditEase Fintech Investment Fund is investing in fintech companies, mostly participating in B and C rounds.

European Union

Here’s what investors in France, Spain and Italy are up to (GooRuf), Rated: AAA

Lendix is one of the leading European players in the crowdlending sector for SMEs and although it is not yet active in the UK or outside of Europe, it sure is expanding fast.

So what are investors’ preferences?

– The French investor prefers grade A projects with a duration of 37 to 48 months.
– Spaniards are the most risk-averse and tend to invest more in projects with A and A + grades, but are not opposed to longer durations.
– Italian investors are the most risk-prone: they prefer B rated projects but with shorter durations (0-24 months).

This data shows that the Lendix community invests 11% more on A, A + and B + projects than on B or C ratings. Moreover, the duration seems to have a relative impact in terms of amounts invested, even if investors are more attentive to this parameter in the case of small projects (amounts up to 100,000 euros). In general, the community invests 32% more in long-term projects.

These 2 brothers just declared a mortgage price war – and Sweden is going nuts (Business Insider), Rated: A

Sweden’s mortgage industry is today worth around 3 trillion krona ($370 bn), according to Statistics Sweden, and most of the interest on these loans end up in the pockets of big banks.

A new fintech venture called enkla.com has today launched a potentially game-changing service. The Swedish online lender offers consumers a 0.95% fixed mortgage rate for three years, which is considerably less than the 1,6% average for similar loans among Sweden’s major banks, according to Di Digital.

Enkla’s self-stated goal is to borrow 100 billion SEK ($12,2 billion) worth of mortgages in the next 18 months by issuing mortgage bonds on the international markets, Di Digital writes. If the target is met, Enkla.com would be looking at a 3 percent share of the Swedish mortgage market.

The service enters a market where Sweden’s household debt has exploded from 66 percent to 87 percent of GDP in the past decade, driven by soaring housing prices. Consumers are evidently hungry for a cheaper deal than what banks can offer. Currently, Sweden’s four biggest banks – Swedbank, Nordea, Handelsbanken and SEB – have 75 percent of the country’s mortgage market, Breakit reports.

Enkla.com takes a 0,35% cut on the mortgages.

Beyond data sharing, open banking boosts omnichannel payments (PaymentsSource), Rated: A

In Europe the move to open banking has been driven by regulations such as the revised Payment Services Directive PSD2 and General Data Protection Regulation (GDPR), which compel banks to open their core systems to allow customers to control and release their data to third parties delivering added value services.

In other territories with no regulatory imperative, the drive towards open banking is led by the desire to provide the best customer experience, with added value services, new business models and connected marketplace products from third parties and vice versa. To do this, the application programming interfaces (APIs) of the bank will need to be open and connected to external providers. And cloud technologies will be fundamental in enabling this to become a reality.

International

Tech and Global Money Transfers: Why We Need Each Other (Canstar), Rated: AAA

Digital disruptors such as peer-to-peer lending services, mobile apps and blockchain have shifted the market, offering borderless accounts combined with speed and transparency.

Powering these disruptors are new technologies like artificial intelligence, big data and robotics, which are changing the customer experience; providing unprecedented insights into customer behaviour that help deliver a more seamless money transfer experience.

The World Bank predicts the value of global remittances will grow by 3.4% to USD$616 billion in 2018. In order for the industry to continue to thrive, businesses will be better served by coming together to redefine the future of money transfers.

A bitcoin trading firm just opened up a lending business — and it’s going gangbusters (Business Insider), Rated: A

Bitcoin might be in a bit of a slump, but one brand new bitcoin business is going gangbusters.

Genesis Capital, the recently launched subsidiary of market making firm Genesis Trading, has close to $100 million in loans outstanding, a person familiar with the company’s operations told Business Insider. That’s a striking milestone, considering the business was launched two weeks ago.

It gives out loans worth $100,000 or more in cryptocurrencies including bitcoin, ether, and bitcoin cash. BlockTower Capital, a cryptocurrency hedge fund, and DV Chain, a crypto trading firm, are some of Genesis’ clients, according to people familiar with the matter.

Autonomous NEXT estimates the number of crypto funds has increased to 226. That’s up from approximately 50 at the end of August 2017. In total, they manage approximately $3.5 to $5 billion, a tiny fraction of the $3.2 trillion managed by traditional hedge funds.

What are the technology trends to look out for in 2018? (Investment Week), Rated: A

One key trend at the forefront of the digital space is artificial intelligence (AI). Some estimates predict that the AI market could grow from $5bn to $120bn by 2025.

A report from digital consultancy Juniper Research, has found that annual cost savings derived from the adoption of ‘chatbots’ in healthcare will reach $3.6bn globally by 2022, up from an estimated $2.8m in 2017.

The UK is leading the way when it comes to peer-to-peer lending, and is one of Europe’s largest alternative finance markets at £4.9bn, according to the University of Cambridge’s Judge Business School.

 

Fintech: partner, build, or buy? (Banking Exchange), Rated: A

“Fintech” covers many things, but is often used to refer to nonbank firms that leverage cutting-edge technology to deliver financial services directly to consumers and businesses. In that sense, banks initially viewed fintechs as competition, as they compete for lending, personal finance, payments, and other consumer services.

1. What’s the problem to be solved?

Sounds like common sense, but a fintech partnership should necessitate an extensive evaluation of the underlying need, such as filling in product or service gaps, or, in this bank example, offering borrowers a digital channel for applying and getting to closing quicker on a commercial loan as their primary competitors offered. Clear objectives help the bank and fintech determine if the match is on solid ground from the start.

A fintech partnership should offer the bank an upside—quantitative and qualitative—that simply isn’t available at more favorable cost, risk, and performance measures under the build or buy options.

2. What’s the difference between buying vs. partnering with a fintech?

Is it a shared risk and shared reward? Does the reward justify the risk? Or is it just the innovation culture of the third party? The definition is critical as the process of evaluating a fintech’s performance, costs, and risks entails unique considerations from a typical vendor evaluation.

Many partnerships are really just vendor relationships. That’s okay. In many cases, banks with extremely low risk appetites prefer the typically lower risk of a vendor relationship. One fintech exec noted how impossible it is to run many banks’ risk gauntlets because they don’t understand what they are getting into.

Asia

Indonesia eyes banking boom (Asean Economist), Rating: A

Indonesian banks will enjoy “more than 12 per cent” loan growth this year due to a recovering global economy and rising commodity prices, according to Jakarta’s financial regulator.

Loan growth in Indonesia has fallen below 10 per cent since early 2016, compared with more than 20 per cent during the preceding commodity boom.

MENA

Interview with Ahmed Moor, CEO of Liwwa (P2P Banking), Rated: A

What is Liwwa about?

liwwa is a marketplace lending platform that provides funding to small and medium businesses in Jordan. Our mission is to support job and income growth in the region. To date we have underwritten about 10 million USD in loans. This has helped to create 475 jobs in Jordan, 1.77 million USD in income, and 13.05 million USD in economic output.

What are the three main advantages for investors?

The type of investors we target are financially-savvy professionals who already have a portfolio of investments. They are attracted to our service because it is a way for them to further diversify their existing portfolio. The other advantage is that there are no big barriers to testing out the platform – provided he meets certain basic criteria, anyone can register and there is no minimum amount required in order to start lending.

What are the three main advantages for borrowers?

There is a 240 billion USD capital access gap in the MENA region. For borrowers, we provide a much-needed alternative to bank financing.

Canada

BMO launches banking chatbot with Finn.ai (Fintech Futures), Rated: A

The chatbot – called BMO Bolt – is available via Facebook Messenger, which is Canada’s “top messaging platform”, according to Finn.ai.

84% of the country’s population uses a smartphone to access Facebook and 38% performs mobile banking tasks via mobile phones, the vendor adds.

Authors:

George Popescu
Allen Taylor

Will the Payday Lending Rule Die or Survive?

Will the Payday Lending Rule Die or Survive?

The payday lending industry has been a fixture in the common American’s financial life since the 90’s, but it enjoyed rapid growth and success after the 2008 financial meltdown. Today, as per industry analyst estimates, there are approximately 20,600 payday advance locations across the U.S., and the industry has lent around $38.5 billion in short-term […]

Will the Payday Lending Rule Die or Survive?

The payday lending industry has been a fixture in the common American’s financial life since the 90’s, but it enjoyed rapid growth and success after the 2008 financial meltdown. Today, as per industry analyst estimates, there are approximately 20,600 payday advance locations across the U.S., and the industry has lent around $38.5 billion in short-term loans to approximately 19 million American households. Not only that, the industry makes significant contributions to the U.S. and various state economies by providing employment to 50,000 Americans who earn $2 billion in wages and generate more than $2.6 billion in federal, state, and local taxes. But late last year, the industry was rocked when the Consumer Financial Protection Bureau (CFPB) released a regulation knows as the “payday lending rule”. The rule put the onus on the lender for determining whether a borrower can repay a loan and restricted the number of loans a lender can make to the borrower.

What is the Payday Lending Rule?

Lending Times had a chat with Quyen Truong (partner at Stroock & Stroock & Lavan LLP) to discuss the ramifications of the payday lending rule to the alternative lending market.

The payday lending rule was finalized because the CFPB believed that high interest and continuous refinancing of payday loans was leading to borrowers getting stuck in a never-ending debt trap. Borrowers who refinance or roll over an existing loan in turn pay additional fees and high interest, which flows into the lender’s bottom line.

Truong believes the new rules are too onerous for payday lenders because lenders are forced to conduct an analysis on a borrower’s ability to repay debt. Such analysis is unfeasible for small dollar loans. Additionally, there is a 30-day cooling off period, which means lenders can not provide follow-up/rollover loans during that period. The idea behind this cooling off period is to prevent borrowers from getting stuck in a vicious debt trap.

The Impact On the Payday Lending and Alternative Lending Industries

The regulation is expected to impact the payday lending industry adversely and may wipe out two-thirds of industry revenue, Truong said. But she believes that online lenders are more innovative when it comes to underwriting, and because they are agile and nimble, they are better equipped to adapt to the new rule. Having said that, the rule will still adversely impact the industry and many lenders could go out of business because of their inability to comply with the new regulation. On the other hand, it will be an opportunity for sophisticated lenders to devise an efficient process to conduct a repay analysis using technology. As for installment lenders that do not fall under the scope of this regulation, this rule is an opportunity to increase their market share, Truong said.

Will the Rule See the Light Day or Be Shut Down?

Given the backlash the regulation received from payday lending industry players, Truong believes the regulation will go through a major revamp and might even get completely eliminated under the Republican-controlled Congress.

Since it is threatening to wipe out the majority of payday lenders, there is a real possibility the CFPB will do a major overhaul to the repay analysis requirement, which will significantly improve the ability of payday lenders to conduct their businesses. In fact, CFPB Director Mick Mulvaney recently sent a memo to his staff stating the bureau’s focus will be on  focus on ‘quantifiable and unavoidable harm to the consumer’ and the bureau ‘won’t go looking for excuses to bring lawsuit’. And the bureau has recently dropped more than one lawsuit against payday lenders, even online lenders, it had targeted before Mulvaney’s appointment.

Truong also believes the 30-day period clause will at least undergo some modification where the cooling off period will either be reduced or a sequence of loans after which the cooling off period will be triggered might be increased to three short-term loans or more.

The Future of Short-Term High-Interest Lending

Truong believes the CFPB, under Republican leadership, will try to bring a semblance of normalcy to the business environment. But if states step up regulatory action or start adopting new laws, or state attorneys general start suing payday lenders for compensation, it can prove to be extremely problematic for lenders, especially online lenders.

The payday loan industry had been relying on the Congressional Review Act to address payday rule inequities, but the chances of success seemed limited given the congested congressional calendar. The fact that the CFPB is reconsidering the rule and is open to amending it is a major relief for the industry.

Truong also believes that, in order to overturn the rule, the industry needs to play a pivotal role. In that endeavor, payday lenders (including online lenders) need to provide additional evidence and analysis to the CFPB. Only hard data will force the bureau to change its stance on the payday lending rule.

Who is Quyen Truong?

Established in 1876, Stroock & Stroock & Lavan LLP is one of the oldest law firms in the U.S. Headquartered in New York City, the firm has nearly 300 lawyers.

Stroock & Stroock & Lavan LLP provides legal services to various financial institutions like investment banks, commercial banks, insurance and re-insurance companies, mutual funds, multinationals and foreign governments, industrial enterprises, and entrepreneurial ventures. Truong provides regulatory compliance counseling and defense for clients in highly regulated industries with a main focus on CFPB, FTC, and the DOJ. Prior to this, she served as additional director and deputy general counsel for CFPB and legal counsel at the Federal Deposit Insurance Corporation (FDIC).

The firm has represented online lenders and Truong has personally represented clients in the payday lending industry. She has also represented investors in the industry.

Conclusion

The fact that the CFPB has revisited the rule making process means half the battle has already been won. Considering the political and legal complexities, online lenders still have a long road ahead of them. There is still a big question mark on which way the pendulum will swing, but expert advice from experienced law firms like Stroock & Stroock & Lavan LLP is a prudent investment for online lenders looking for protection from a regulatory crackdown.

Author:

Written with Heena Dhir.

Allen Taylor

Wednesday January 24 2018, Daily News Digest

InsurTech

News Comments Today’s main news: SoFi hires Noto to be CEO. StreetShares secures $23M in equity to reach military, veteran market. Zopa fills positions for bank launch. Dianrong raises $70M. Yirendai signs onto Internet Finance Industry Credit Information Sharing Platform. Tera Funding sets Korean fundraising record. Today’s main analysis: FT Partners publishes 2017 InsurTech Almanac (a must-read). Today’s thought-provoking articles: […]

InsurTech

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Lending Times News

News Summary

United States

SoFi Names Anthony Noto Chief Executive Officer (SoFi), Rated: AAA

SoFi today announced that its Board of Directors has named Anthony Noto as chief executive officer and a director, effective March 1.

Twittter executive leaves to run SoFi (SF Gate), Rated: A

In Noto, SoFi has chosen a fast-rising executive in the tech industry. Noto, 49, was one of the most respected bankers at Goldman Sachs before becoming the chief financial officer of the National Football League and then Twitter.

Twitter dips after a key executive leaves for online lending startup SoFi (Business Insider), Rated: A

  • Shares of Twitter slid on Tuesday morning after the online lending startup SoFi announced that Anthony Noto, Twitter’s chief operating officer, will be joining the company as its new CEO, effective March 1. 
  • Twitter has suffered from several departures of key executives in the past two years as the company struggles to bring value to shareholders.
Source: Business Insider

SoFi’s Incoming CEO Brings IPO Experience to a Troubled FinTech (Bloomberg), Rated: AAA

Noto, who worked on technology, media and telecom deals at Goldman Sachs Group Inc. before joining Twitter in 2014, brings to the job a background in tech and finance. Beyond Twitter’s nascent revival, his turnaround abilities are largely untested. But given his history of taking companies public — including Twitter — a SoFi IPO is very much a possibility, according to people familiar with the situation. Furthermore, they say, it’ll be nice to have an adult in the room after all the recent turmoil.

SoFi Wealth, launched last year and harbored ambitions to quickly manage $100 million in assets, Bloomberg News reported in October. It grew slowly until last quarter, when it tripled its assets from September to $42.3 million as of Jan. 18, spokesman Jim Prosser said. The average account holds about $4,300. Other digital wealth startups have north of $10 billion under management.

FT Partners Research Publishes 2017 InsurTech Almanac (FT Partners), Rated: AAA

Highlights of the 2017 Almanac:

  • 2017 was a very active year for the InsurTech sector globally, with the most financings ever (over 200) and more than $2 billion in financing volume
  • While the total announced financing dollar volume for 2017 was lower than in the prior two years, when excluding rounds over $50 million, the volume reached a record high of approximately $1.3 billion
  • Of the four largest financings this year, two were in the Online Health Insurance space (Bright Health and Clover Health), one was in the Telematics space (Nauto) and one was in Online P&C Insurance (Lemonade)
  • 2017 also featured another wave of mid-range to larger financing rounds for InsurTech companies founded in the last several years, including Next Insurance’s $35 mm Series A, The Zebra’s $40 mm Series B, Health IQ’s $35 mm Series C, PolicyGenius’ $30 mm Series C and Trov’s $45 mm Series D
  • Europe had significant increases in financing activity, the largest out of any region this year — financing volume and deal count both grew by more than 2x; the region also recorded its largest InsurTech financing ever: BIMA’s $107 million raise led by Allianz X, which was the fifth largest financing globally in 2017
  • Among the cohort of InsurTech companies founded since 2010, this year marked two milestones:
    • First IPO: China-based ZhongAn (SEHK:6060) raised approximately $1.5 billion
    • Largest acquisition: Guidewire acquired Cyence for $275 million
Source: FT Partners

Download and read the full report here.

California Insurtech Hippo Secures $ 25 Million Through Series B Financing Round (Crowdfund Insider), Rated: A

Hippo, the California-based insurtech company that is transforming home insurance for savvy homeowners, announced on Monday it secured $25 million in Series B funding round, which was led by Comcast Ventures and Fifth Wall. The investment comes less than two weeks after Hippo announced it formed a strategic partnership with Spinnaker Insurance Company.

OnDeck Announces Date of Fourth Quarter and Full Year 2017 Earnings Conference Call (OnDeck), Rated: B

OnDeck (NYSE:ONDK), the leader in online lending for small business, will report its fourth quarter and full year 2017 financial results on Tuesday, February 13, at approximately 7:00 a.m. EST. The company will host a conference call to discuss the results at 8:00 a.m. EST that same day.

The conference call will be webcast live on the company’s Investor Relations website or listeners can access the call toll free by dialing (833) 227-5836 for calls within the U.S., or by dialing (647) 689-4063 for international calls. The Conference ID passcode is 5468078.

StreetShares Secures $ 23 Million Equity Funding to Scale for the Military and Veteran Market (StreetShares Email), Rated: AAA

StreetShares, Inc., the leading small business funding and government contract financing company serving the military and veteran market, announced today it has completed its Series B funding round, raising $23 million in fresh equity capital. The Series B round was led by a $20 million investment from Rotunda Capital Partners, LLC, and included an additional $3 million from existing investors, including veteran-focused venture firm, Stony Lonesome Group.

AutoGravity Milestone: Exceeds $ 2 Billion in Finance Amount Request in 2017 (Crowdfund Insider), Rated: A

AutoGravity, a California-based Fintech on a mission to transform car shopping and financing, announced last week it surpassed $2 billion in finance amount requested in 2017.

Central Pacific Bank adds Elevate Credit executive to board of directors (Pacific Business News), Rated: A

Honolulu-based Central Pacific Financial Corp. has appointed Christopher Lutes as director of the boards of CPF and Central Pacific Bank.

Lutes has been the chief financial officer of Elevate Credit Inc. and its predecessor company, which specializes in tech-enabled online credit solutions, since 2007.

LoanDepot to offer agent, contractor referrals to mortgage shoppers (The Orange County Register), Rated: A

Borrowers signing up for a mortgage through LoanDepot soon can get real estate agent referrals from the online lender as well.

And later this year, people getting home-improvement loans will be able to get the names of contractors, architects, roofers and other professionals.

loanDepot Expands mello Brand (PR Newswire), Rated: A

LD Holdings Group, LLC, parent company of loanDepot, the nation’s second largest non-bank consumer lender, today announced continued expansion beyond its profitable mortgage and personal loan businesses.  In Q1, a newly formed venture, mello Home, will connect pre-approved homebuyers with verified real estate agents in their local market, and help consumers find and hire home improvement and other pros.

Fintech startup wants to help advisers find and sell muni bonds (InvestmentNews), Rated: A

It’s like Zillow, but for bonds.

That’s the idea behind Bond Navigator, a cloud-based digital marketplace for advisers to find and evaluate municipal bonds, that launched Tuesday from startup 280 CapMarkets.

Amazon, PayPal to head to Vegas ABS bash (GlobalCapital), Rated: A

Amazon has already tapped the securitization markets as part of a plan to shift the risk of its business lending programme off its balance sheet.

Amazon has stated in previous quarterly reports that it intends to transfer more of the risk of its seller financing programme to third parties.

Similarly, PayPal has expressed interest in funding its credit portfolio through third parties, including bank lending, securitization, private equity and sovereign wealth funds, although the company told GlobalCapital in August that this would unlikely be a near term project.

Acorns wants to bring investing and education together (Tearsheet), Rated: A

Many financial services companies, both startups and incumbents, talk about the importance of customers’ financial education but how they integrate it into their own offerings often manifests as no more than a dedicated content marketing section or blog. Acorns itself has an online magazine called Grow that features news, financial how-tos and interviews with celebrities like Kevin Durant, Ian Kahn and Tony Robbins.

First Bank Goes Big into Peer To Peer Lending, Launches “Cent” (Business Insider), Rated: A

For personal banking customers of First Bank, the largest community bank headquartered in North Carolina, transferring money to family and friends is now as simple as hitting “Cent.”

On January 22, First Bank launched Cent, its new quick-money transfer tool, allowing personal banking users of the bank’s mobile banking application to send money to anyone, anytime, anywhere in the U.S., regardless of if the recipient banks with First Bank or not. And there are no fees.

Marketplace Lending In 2018: A DIY Mindset (mondaq), Rated: A

There is no doubt marketplace lending, by offering speed and flexibility not historically seen in traditional banking, has done its part to foster the “do it yourself” (DIY) era.

The industry’s rapid growth reflects in part the entry of more than 100 new players in the market in less than a decade.

6 Business Loan Scams and How to Spot Them (AllBusiness), Rated: A

1. The peer lending scam

Peer-to-peer lending has become one of the most important sources of online financing. Unfortunately, there are some shadowy operators out there, using Facebook Messenger and other less traditional avenues to hook in victims.

The scam works like this: You’ll be contacted out of the blue and offered peer-to-peer financing, then asked to pay an arrangement fee or fork out for background checks. You’ll never see the promised cash and you could lose quite a bit of money, as well as data that can be used for identity theft.

4. The credit repair scam

Most young businesses have an inadequate credit score. It’s a simple fact of life. However, there are plenty of predators out there who’ll be keen to convince you that they have the expertise and tools to transform your score—in return for a hefty fee, of course.

5. The loan broker scam

Loan brokers exist to identify the right products for your business, make introductions to lenders, and prepare the paperwork to ensure a smooth process. There are plenty of legitimate and professional brokers, who get paid a commission from lenders for arranging loans; unfortunately, there are also quite a few sharks, who charge upfront fees for the same service.

2018 Predictions and Pitfalls In Finance and Investing (AlleyWatch), Rated: A

Online and Alternative Investing Will Remain Strong: The amount of investors using online investing and alternative options will continue to remain strong, especially for both Baby Boomer and Millennial investors. Online investing exposes investors to a larger number of companies driving innovation, and, many online investors are starting to realize an ROI from their online investing activities. In spring 2017, the number of people who lived in a household that used an online investing/stock trading service within the last 12 months amounted to 15.79 million.

LendingTree Announces Top Customer-Rated Lenders by Loan Product for Q4 2017 (PR Newswire), Rated: B

LendingTree®, the nation’s leading online loan marketplace, today released its quarterly list of the top customer-rated lenders on its network based on actual customer reviews for the fourth quarter of 2017. The list features the top lenders in multiple loan product categories, including Mortgages, Personal Loans, Business Loans and Auto Loans, all of which are included in LendingTree’s online loan marketplace.

Mortgage Category

#1 Winner:  LenderFi, Inc.

Personal Loans Category

#1 Winner: Upgrade

Business Loans Category

#1 Winner: Seek Capital

Auto Loans Category

#1 Winner: RefiJet

Don’t Let Payday Lenders Off the Hook (Bloomberg), Rated: A

Payday lending can be a useful service. A two-week loan of $500 at 400 percent annualized interest can make sense if, say, you need to fix your truck to get to work. Unfortunately, the industry has long made much of its money by trapping customers in a series of consecutive loans that can end up costing many times the amount borrowed. A patchwork of state laws has done little to combat such practices.

CFPB Drops Investigation Into Payday Lender That Contributed To Mick Mulvaney’s Campaigns (International Business Times), Rated: A

Payday lender World Acceptance Corporation announced in a press releaseMonday that it received a letter from the CFPB stating that the financial watchdog had closed its nearly four-year investigation into the company’s marketing and lending practices. The company, which is headquartered in South Carolina, has given at least $4,500 in campaign donations to Mulvaney, who represented South Carolina in the House for six years before becoming President Donald Trump’s budget director last year.

Bye, bye, boomers — banks are looking toward millennials (Chicago Tribune), Rated: A

Sorry, boomers, but the world of banking and insurance isn’t so interested in you anymore. You’re getting too old to buy insurance and too conservative with your investments. And your time horizons are too short to be very profitable to the investment world. The financial services industry is aiming at millennials now.

–Six in 10 millennials are hesitant to discuss their situation with friends because they are embarrassed that they make less money or are ashamed of poor financial decision in their past.

–Only 12 percent of millennials feel very prepared for their financial future.

–Only one-third of millennials feel like they make enough to pay for bills and also save for the future.

Todd Ruppert Joins Money360 Board of Advisors (Business Insider), Rated: B

Money360, a technology-enabled direct lender specializing in commercial real estate loans, today announced that effective immediately, Todd Ruppert, former CEO and president of T. Rowe Price Global Investment Services, has joined the company’s Board of Advisors.

Ten Ways Young Can People Build A Strong Credit Record (Forbes), Rated: B

According to a report by WalletHub, young people struggle with low credit scores partially because they don’t have the time behind them to establish wealth and experience.

  1. Set Up Automatic Payments
  2. Get A Low-Limit Credit Card – Charging small items to a credit card and then paying it off in full every month builds credit in no time. You can find offers for these at creditcards.com and similar sites, with many offering cards with a $300 limit or so.
  3. Piggyback Off Of Others First – By becoming an authorized user on someone’s credit card, you can start building credit from their payments.
  4. Build A Credit History – It is not uncommon to get a 0% or 2% auto loan these days, and this way of building credit history is brilliant.
  5. Minimize Unsecured Debt
United Kingdom

Zopa expands executive team ahead of bank launch (Finextra), Rated: AAA

P2P lender Zopa has begun building the executive team for the launch of its new challenger bank later this year, appointing a CFO, chief risk officer and chief customer officer.

Chief financial officer Steve Hulme joins from Tandem Money where he was CFO for the last two years. Before Tandem, Hulme served as CFO for PayPal’s global credit business and as CFO for Capital One’s UK and Canadian business.

He will be joined by former TSB man Phillip Dransfield as chief risk officer. Dransfield has a 20-year track record in risk management taking in two of the counttry’s largest high street banks.

The left-field appointment of chief marketing officer goes to Clare Gambardella from health and fitness brand Virgin Active.

How UK fintech startups are preparing for open banking (ComputerWorldUK), Rated: AAA

Major banks are scrambling fast to not only comply with the regulation by opening up their APIs, but are also looking to leverage the new open landscape to separate themselves from their competitors and avoid being bitten by these fintech startups.

Take HSBC UK, which has proved itself to be an early mover when it comes to PSD2 by announcing a new beta app which will allow customers to see all of their accounts on one screen, even if they are with a rival bank.

However, UK challenger banks like Monzo and Starling, as well as some other fintech startups listed below, have been working towards the idea of open banking for some time now.

Monzo

According to a blog post by Simon Vans-Colina, an engineer at Monzo, the new API, which they are calling the AIS API, “will be made available to particular companies, that have been granted authorisation as AISPs.

Iwoca

As CEO Christoph Rieche explained to our sister site Techworld, real-time access to customers’ transactional data, which the banks have traditionally held onto for current accounts, is very valuable to his company.

Chip

“In a utopia consumers can start to grant affordability criteria to a lender, provide transaction data to a savings mechanism like Chip, or income data to a mortgage lender,” he said. “You can choose exactly which data you want which third parties to access, so it puts control into the customer’s hands.”

TrueLayer

Founder Francesco Simoneschi likes to compare TrueLayer to Twilio or Stripe, two companies that provide simple, secure and regulated access to core infrastructure (be it telco networks or payments infrastructure, respectively) through a core API.

So TrueLayer sits between the new breed of fintech companies looking to deliver value from newly opened customer financial data, and underlying banking infrastructure, charging a small fee for access to the API.

Emma

Cofounder Edoardo Moreni wrote in a blog post at the time: “Emma is currently building the banking app for millennials (iOS and Android), a mobile-only solution that helps consumers avoid overdrafts, find and cancel subscriptions, track debt and save money.

Debt tracker Emma integrates with Monzo (AltFi), Rated: A

After receiving its FCA approval last week as a Registered Account Information Services Provider (RAISP), subscriptions and debt tracking app Emma has now announced its first official integration with digital bank Monzo.

SME bosses aware of P2P lending but cautious about using it (P2P Finance News), Rated: A

Research among 200 SMEs by recruitment specialist Tindall Perry found while 74 per cent of finance directors describe their knowledge of alternative finance as average or above, only a quarter suggested that they were comfortable with accessing crowdfunding, with P2P lending also scoring less than 50 per cent.

In contrast, 85 per cent of companies said that they understood how best to access asset-based lending, while invoice finance, trade finance and venture capital all saw a positive response rate of between 55 and 75 per cent.

Top bankers warn of financial stability threats amid the calm (City A.M.), Rated: B

Speaking at the World Economic Forum, the annual gathering of the global elite in the Swiss ski resort, she said: “We have far fewer tools to deal with any event that happens.” Richards predicted an upset could occur “somewhere where none of us are looking”, and highlighted peer-to-peer lending as an example.

Current financial conditions have echoes of the pre-crisis era, according to Jes Staley, chief executive of Barclays, speaking at the same event. While he said he believes banks are much less of a threat to stability than a decade ago, he warned that current benign conditions may not last.

China

Dianrong Increases Series D Round Funding by US$ 70 Million (Business Insider), Rated: AAA

Dianrong today announced additional Series D round funding of US$70 million that was led by ORIX Asia Capital Limited, a wholly-owned investment vehicle of ORIX Corporation, and included CLSA, the overseas platform of CITIC Securities, China’s largest investment bank, which in turn is a part of CITIC Group, one of China’s largest conglomerates.

Japan’s Orix invests $ 60 mln in Chinese P2P lender Dianrong (Reuters), Rated: A

Orix Corp has invested $60 million in peer-to-peer lending platform Dianrong, in what is the Japanese financial firm’s first investment in a Chinese fintech venture as it looks to tap into the fast-expanding sector, sources said.

Yirendai Connects to NIFA’s Internet Finance Industry Credit Information Sharing Platform (PR Newswire), Rated: AAA

Yirendai Ltd. (NYSE: YRD) (“Yirendai” or the “Company”), a fintech company in China, announced today that it has connected to the Internet Finance Industry Credit Information Sharing Platform (“the Platform”) established by the National Internet Finance Association of China (“NIFA”). The Platform was established to serve as an industry wide credit data sharing database in aims of reducing credit risk, improving the credit environment and promoting the healthy development of the internet finance industry. Currently, all leading online lending platforms are required to upload their operating credit data to the Platform’s database and members can only make manual inquiries on the Platform through its webpage. Yirendai has been selected by NIFA to participate in a pilot project to enable automatic queries and the Company expects to launch an automated query function in its system shortly.

European Union

Banks and Fintechs Are Duelling In a ‘War For Talent’ (Bloomberg), Rated: AAA

Payments company GoCardless Ltd., which employs 170 people in London, will open a Paris office in February, said chief product and technology officer Carlos Gonzalez-Cadenas. Online lender LendInvest Ltd. said it will make a “concerted effort” to hire additional engineers in London this year, while Salesforce.com Inc.-backed software company Anaplan Inc. says hiring engineering talent is its current priority.

Faes said about 30 to 40 percent of its hires come from major financial institutions, adding that 100 percent of the team’s small risk and compliance team came from banks. For MarketInvoice Ltd., another British online lender, about three-quarters of its 85 employees — roughly a third of which are software engineers and data scientists — came from a large corporate in the financial services or accountancy space, said CEO and co-founder Anil Stocker.

Europe’s fintech industry, which includes challenger banks and online-only lenders, has rapidly expanded over the past 10 years. Traditional financial institutions have faced intense competition as a result, with former Barclays Plc CEO Antony Jenkins saying in July last year that banks could face obsolescence in five to 15 years.

How Adyen Became a $ 2.3bn Payments Company (Forbes), Rated: A

According to a report published in September last year by Innovate Finance and Magister Advisers, VCs poured around $8bn into fintech startups and early stage companies across the continent between 2010 and 2017 and over the course of that period, deal sizes rose significantly. In London – generally considered to be Europe’s Fintech Hub – figures published in January  by London and Partners found that the UK’s fintech sector attracted £1.24bn in 2017 alone.

Established in 2006,  the Amsterdam-based company is currently valued at around $2.3bn and has has built a portfolio of more than 4,000  clients, including Netflix, Facebook, Uber and Spotify, plus retailers such as River Island and Superdry.

International

Cross Border Funds Transfer (CBFT) using Hyperledger Fabric Blockchain (LinkedIn), Rated: AAA

Hyperledger Fabric is a permissioned blockchain platform contributed by IBM and provides plug-and-play modular blockchain components. You can see the commit history visualization of fabric project. Fabric runs chaincode which is comparable to Ethereum’s smart contracts. The consensus protocol is pluggable.

Transaction Flow Let’s see how nodes work together to execute a transaction. For now, let’s assume that the chaincode is already installed on the Peers.

  • Step 1: Transaction requests are proposed by a client. The client must be connected to the required number of peers according to the endorsement policy. A proposed Transaction is forwarded to Peers for Endorsement.
  • Step 2: Each endorsing peer simulates and validates the transaction. Peers reply with their Endorsement and certificate if they agree that the transaction is permitted.
  • Step 3: The client receives results from different Peers and can thus verify agreement among the Peers. Upon verification, the client forwards the transaction to the OS.
  • Step 4: Determining a well-ordered sequence of transactions is the task of the Ordering Service (OS). The OS generates transaction blocks containing validated transactions in the order they are deemed to have occurred, writes them to the ledger and then broadcasts them to all peers that a new set of blocks are now available on the ledger.
Source: Raj M Shimpi

The disappointing arrival of Open Banking … and the optimistic future (The Finanser), Rated: A

All well and good but, in a move that I am fairly sure was carefully orchestrated by the banking community, nearly all of the mainstream media greeted the launch of Open Banking with fear and scaremongering.

Nevertheless, the FinTech community are far more advocates of the new regime:

Note that to find the positive spin on Open Banking, I’ve had to seek out more business or niche news channels than the doomsayers of the mainstream consumer media.

Nasdaq-listed Longfin to open up Ziddu smart contracts to P2P lending (P2P Finance News), Rated: A

GLOBAL fintech group Longfin Corp is planning to make its Ziddu cryptocurrency smart contracts available for peer-to-peer lending.

Ziddu.com provides smart contracts which are available on cryptocurrency Ethereum’s blockchain and can be used as alternative finance solutions within trade finance and FX markets, without the need for a middleman or underwriter.

Building the World’s Most Inclusive Banking Service (Medium), Rated: A

Currently, there are over 2 billion people worldwide who find it difficult to access traditional banking services, often because they are new to the country or do not qualify for credit. I, too, was one of those people. When I arrived in the UK, I didn’t have a proof of address and credit history required to open a bank account, and just like many others in a similar position, I was left in a ridiculous catch-22 situation. I needed a bank account to get a job and a place to live but, in order to get a bank account, I was required to have a place to live and a job.

Monese is laying the foundation of how banks will work in the future by bringing the accessibility and convenience to levels that weren’t possible just a few short years ago. You can now bank locally in 20 different countries, in a matter of a few minutes — all you need is a mobile phone and your passport. You can literally open an account in your home country or an international IBAN in another country whilst standing in a supermarket queue.

Over 270,000 people have signed up to Monese and every day 1,000 more are joining us.

Source: Monese

$ 10 million ICO Success Karma Announces P2P Lending Access, aExchange Listing of KRM Token (The Merkle), Rated: A

Fresh from the success of a well-received ICO that raised $10 million, blockchain start up Karma has now announced open access to its peer-to-peer (P2P) lending platform via the use of its native KRM token, which also began trading on CoinLink exchange on January 11th, 2018.

India

NeoGrowth Credit secures funding of Rs300cr from LeapFrog Investments and others (Medianama), Rated: A

NeoGrowth Credit, a lending startup focused at SMEs has secured Rs 300 crore of equity funding from LeapFrog Investments, and existing investors like Aspada Investment Company and Quona Capital through Accion Frontier Inclusion Fund, reports The Economic Times. The report adds that as part of the investment, LeapFrog’s partner Michael Fernandes will join NeoGrowth’s board.

Asia

Tera Funding raised KRW 10 billion from Korean leading investors in Series A funding round (Business Insider), Rated: AAA

Tera Funding, a real estate P2P lending company in Korea, announced that it has secured KRW10bn (approx. US$9.3M) through its series A funding round from Woori Bank, Atinum Investment, SBI Investment and Premier Partners on 8 January 2018.

It is the largest single series A investment for Korean P2P lending start-ups, and this comes as a pleasant surprise for the industry as such decision to invest in Tera Funding was made after a thorough due diligence amid general public’s increasing worries about the industry with rising defaults and arrears mainly incurred by late-comers who take riskier approach.

Blockchain will force banks to change their feudal mindset (e27), Rated: A

Having said that, the advent of cutting-edge technologies is pushing banks to change the way they operate. While they have been able to survive many revolutions in the past, they cannot remain aloof to blockchain, one of 21st century’s biggest revolutions.

Lending Times News

Check out our new daily news digest and website Blockchain Times. Be sure to subscribe to our daily newsletter for the best in Blockchain news.

Authors:

George Popescu
Allen Taylor