Friday February 9 2018, Daily News Digest

personal loans

News Comments Today’s main news: SoFi brightens startup scene in Helena, Montana. LendingTree rates Upgrade #1 personal loan. UK P2PFA gets a new head. India considering digital payments tax rebate for P2P lenders. Today’s main analysis: Why point-of-sale lending is hot. Today’s thought-provoking articles: Industrial loan company (ILC) applications may soon be seen in a positive light. P2P lending […]

personal loans

News Comments

United States

United Kingdom

European Union

International

India

Canada

Africa

News Summary

United States

Startup Fever is Catching on Everywhere (Even in this Little Montana Town) (Inc.), Rated: AAA

There is a new millennial-friendly mixed-use development with a high-end steakhouse, movie theater, and hotel. And yes, even a town of 30,000 located more than 500 miles from the closest major metropolitan areas (Salt Lake and Seattle) has an entrepreneurial ecosystem. In fact, in some ways Helena has a startup scene larger cities would be jealous of. A few years ago, SoFi, the online student loan servicer that also provides personal loans and mortgages, contracted with two local programmers to help build their platform.

One of those programmers, David Thompson, is a graduate of the University of Montana-Western, Montana Tech, and the University of Montana. David had no interest in moving to the Bay Area, and successfully convinced SoFi to locate a substantial portion of its engineering team in Helena. Today SoFi is multi-billion-dollar startup, and David is the VP of Engineering, managing more than 100 programmers and engineers out of two locations in Helena.

For the last several decades–and especially over the last few years–we’ve heard a lot about the death of small towns and middle America. However, the success of SoFi and the emerging startup scene in Helena shows the potential for tech companies to be agents of economic revitalization in small towns and cities outside of the coasts.

LendingClub Schedules Fourth Quarter 2017 Earnings Release and Conference Call (PR Newswire), Rated: AAA

LendingClub (NYSE: LC), America’s largest online marketplace connecting borrowers and investors, announced that it will report earnings for the fourth quarter of 2017 on Tuesday, February 20, 2018, after market hours. LendingClub will host a conference call to discuss the fourth quarter financial results at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) on the same day.

A live webcast of the call will be available at  under the Events & Presentations menu. To access the call please dial +1 (888) 317-6003 or outside the U.S. +1 (412) 317-6061 with conference ID 8062913 ten minutes prior to 2:00 p.m. Pacific Time (or 5:00 p.m. Eastern Time).

Elevate Credit Fourth Quarter and Full Year 2017 Earnings Release Available on Its Investor Relations Website (BusinessWire), Rated: B

Elevate Credit, Inc. (“Elevate”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced financial results for the fourth quarter and full year 2017. Elevate has posted its fourth quarter and full year earnings release to its Investor Relations webpage at 

The Company will host a conference call to discuss its fourth quarter and full year financial results on Thursday, February 8th at 4:00 p.m. Central Time / 5:00 p.m. Eastern Time. Interested parties may access the conference call live over the phone by dialing 1-877-407-0792 (domestic) or 1-201-689-8263 (international) and requesting the Elevate Fourth Quarter and Full Year 2018 Earnings Conference Call. Participants are asked to dial in a few minutes prior to the call to register for the event. The conference call will also be webcast live through Elevate’s website at 

Upgrade, Inc. Rated #1 Personal Loan by LendingTree (PR Newswire), Rated: AAA

Upgrade, Inc. (), a consumer credit platform that combines personal loans with tools that help consumers understand and monitor their credit, announced that it has been named #1 in the personal loans category for the fourth quarter of 2017 by LendingTree.

Why point-of-sale lending is hot right now (American Banker), Rated: AAA

But research conducted by banks and fintechs has found that many younger Americans are uncomfortable carrying credit card balances, partly because they saw their parents struggle with debt during the financial crisis and prefer the more certain repayment terms of installment loans.

Personal loans issued by banks — these exclude credit cards and auto and home equity loans — hit a record $807 billion at Sept. 30, according to data from the Federal Deposit Insurance Corp., up 9% from two years earlier and nearly 30% since 2012. That’s not even including the many billions of dollars of loans made by upstart online lenders that don’t end up on banks’ balance sheets.

San Francisco-based Affirm originated more than $1 billion in point-of-sale loans last year — and, increasingly, regional banks that are funding the loans, either directly or behind the scenes.

Source: American Banker

Inside Overstock.com’s financial services strategy (Tearsheet), Rated: A

For the past few months, the 19-year-old e-commerce company has been quietly building out FinanceHub, a sort of marketplace for financial services that includes existing Overstock credit cards and insurance products; loans by LendingTree, Prosper and Sofi; a robo-adviser for automated investing, as of last week — and as of Tuesday morning, a discounted trading platform.

Fintech Firms Look to Enter Banking Via Century-Old Tactic (WSJ), Rated: AAA

Financial-technology firms eager to offer banking products are eyeing a century-old model that fell out of favor during the financial crisis but could see a revival under the Trump administration.

The industrial loan company charter, available in a handful of states and particularly popular in Utah, allows nonfinancial companies to enter the banking sector without being subject to many of its restrictions, including oversight by the Federal Reserve. Companies seeking the charters must still obtain deposit insurance from the Federal Deposit Insurance Corp., which last approved insurance for an industrial loan company in 2008.

That could soon change. President Donald Trump’s pick to head the FDIC, Jelena McWilliams, suggested during Senate testimony last month that she would look favorably on new applications.

Source: The Wall Street Journal

Who Is Chris Larsen? Founder Of Ripple Tops Forbes Cryptocurrency List (International Business Times), Rated: A

According to Forbes, Larsen’s net worth is between $7.5 billion and $8 billion in cryptocurrency, in large part thanks to his massive holding of Ripple—the cryptocurrency he co-founded in 2012.

Larsen, a Stanford M.B.A. and veteran Silicon Valley player, is no stranger to the world of digital finance. Prior to his involvement in cryptocurrency, he co-founded the online mortgage lender E-Loan. The company was valued at $1 billion in 2000. In 2006, he co-founded Prosper Marketplace—the first peer-to-peer lending marketplace in the United States.

Goldman Sachs is trying to build the ultimate financial destination for the masses (Business Insider), Rated: A

Individuals looking to saddle up with the prestigious bank needed to fork over a minimum investment of $10 million for wealth management services. The typical client had more than $50 million in investable assets.

Personal Capital Launches Socially Responsible Investing (Finovate), Rated: A

Wealth tech company Personal Capital is making it easier for investors to put their money in causes that are important to them with the launch of its Socially Responsible Personal Strategy today.

Autobooks Raises $ 10M in Series A1 Funding Round (Finsmes), Rated: A

Autobooks, a Detroit, MI-based fintech startup, raised $10M in Series A1 funding.

Toyota partners with AI firm Aire to spot finance delinquency (Motor Finance), Rated: A

Toyota Financial Services (TFS) has launched an evaluation of AI software from Aire to spot customers with higher risks of delinquency.

Aire’s machine learning technology will identify which lessees have entered customer delinquency by skipping a payment, and will give TFS an estimate on how likely they are to default on further instalments.

Aire’s software has already been used by lenders, including p2p lender Zopa, in the initial credit application phase.

Confluent Continues Momentum in 2017 with 4X Subscription Growth (Digital Journal), Rated: A

Confluent, provider of the streaming platform based on Apache Kafka, today announced 2017 results, which include 4X subscription growth year over year and 98 percent customer satisfaction.

In the 2017 Apache Kafka Report, many companies reported using the distributed streaming platform for more accurate and faster decision making, reduced operating costs, improved customer experiences and reduced risk. 1 in 4 respondents work for organizations with more than $1 billion in annual sales, illustrating how quickly this technology has gained traction across large enterprises. In addition, more than 15% of respondents are processing more than a billion messages a day.

Other 2017 highlights include:

  • Raised $30 million from Sequoia, Index Ventures and Benchmark to meet global demand for streaming platforms.
  • Expanded employee base by 120 percent, added numerous offices throughout the US and extended its footprint to six additional countries.
  • Added new customers around the globe, including Alight Solutions, Capital One, Funding Circle, HomeAway and Nordea Bank.
  • Announced the general availability of Confluent Cloud, an Apache Kafka as a Service offering that empowers enterprises and developers to move faster with streaming data.
  • Surpassed 200 partners, including some of the largest Systems Integrators and Platform partners in the industry.

Fintech partnerships can work (American Banker), Rated: A

That Radius Bank in Boston would strike another fintech partnership — it announced one Wednesday with the startup Mantl, which is trying to cut down online-account openings to four minutes — is less revealing than its part in Radius’ evolving MO.

When Nathaniel Harley, CEO of Mantl, first visited Radius, he was seeking feedback on a personal financial management technology the company was working on. But he was quickly talked into changing the direction of his company.

The two companies started building an account-opening system for all digital channels in March 2017. They worked to reduce manual entry and other hassles from the account-opening process. Mantl brought in one of its own fintech partners, Alloy, to handle much of the decisions, including anti-money-laundering checks, identity verification and fraud detection. Radius and Mantl used Alloy’s workflow management tool to configure the decision-making process.

Source: The American Banker

Mulvaney can’t just kill CFPB payday rule, but here’s what he can do (American Banker), Rated: A

Banking rules cannot be rewritten overnight, and so acting Consumer Financial Protection Bureau Director Mick Mulvaney has a tall order remaking the payday loan regulation crafted under his predecessor. But observers say Mulvaney has options for altering the rule to the industry’s favor.

One option would be to refocus the rule on disclosure requirements, which would be several steps short of a repeal but more amenable to lenders than the current CFPB regulation.

Democratic senators demand answers on CFPB’s stalled Equifax data breach investigation (Housingwire), Rated: A

Did the Consumer Financial Protection Bureau kill its investigation into Equifax’s data breach that exposed the personal information of 145.5 million U.S. consumers to hackers?

On Thursday, a group of 32 Democratic senators sent a letter to the CFPB, demanding answers on the state of the bureau’s investigation into the Equifax breach.

CFPB Seeks Comment on its Enforcement Processes (The National Law Review), Rated: A

The CFPB has issued a request for information that seeks comment on how the agency can best achieve meaningful burden reduction or other improvement in the processes it uses to enforce federal consumer financial law while continuing to meet the CFPB’s statutory objectives and ensuring a fair and transparent process.  Comments on the RFI must be received no later than 60 days after the date it is published in the Federal Register, which the CFPB expects to be February 12, 2018.

In the new RFI, the CFPB now seek comment on all aspects of its enforcement processes but lists the following seven topics:

  • Communication between the CFPB and subjects of investigations, including timing and frequency of such communications and information provided by the CFPB on the status of an investigation
  • Length of CFPB investigations
  • Notice and Opportunity to Respond and Advise (NORA) process, including whether the NORA process should be mandatory rather than discretionary and the information contained in letters the CFPB may send to potential subjects of investigations pursuant to the NORA process
  • Whether subjects of potential enforcement actions should have the right to make an in-person presentation to the CFPB before the CFPB decides whether to initiate legal proceedings
  • Calculation of civil money penalties, including whether the CFPB should adopt a civil penalty matrix
  • Standard provisions in CFPB consent orders
  • Manner and extent to which the CFPB can and should coordinate enforcement activity with other federal and/or state agencies with overlapping jurisdiction

Altegris To Merge With Artivest (PR Newswire), Rated: A

Altegris, an alternative investment research and management firm, and Artivest, an alternative investment technology firm, announced today that they plan to merge under the name Artivest, pending customary corporate and regulatory conditions to closing. The joint 100-person team will service over $3 billion in client capital—immediately becoming the largest independent alternative investment technology and solutions firm for wealth managers, fund managers, and independent advisors.

SharesPost Launches Unit Focused On Initial Coin Offerings; Hedge Fund Executive John Wu To Lead Group (BusinessWire), Rated: A

Taking a next step in its mission to provide liquidity to private growth companies,SharesPost today announced the launch of its Digital Securities Group.

The Digital Securities Group will bring security token issuers and investors into the SharesPost private marketplace. Token issuers and investors will use SharesPost’s existing Alternative Trading System to invest in ICO’s and trade in digital securities in compliance with U.S. securities laws.

Lenders to allow Airbnb income on mortgage forms (MarketWatch), Rated: A

Homeowners soon will be able to count income they earn from Airbnb Inc. rentals on applications for refinance loans.

A new program — expected to be announced on Thursday by Airbnb, mortgage giant Fannie Mae and three big lenders — will allow anyone who has rented out property on Airbnb for a year or longer to count some or all of that money as income.

SEC Exams to Focus on Disclosures, Robos, Cryptocurrencies (Financial Advisor IQ), Rated: B

In 2018 the SEC’s Office of Compliance Inspections and Examinations plans to pay closer attention to matters involving retail investors, particularly when it comes to disclosures, and zero in on cryptocurrencies, initial coin offerings and secondary market trading, the regulator says in a press release.

The regulator will also continue monitoring digital advice platforms, with a special focus on their compliance programs, including algorithm oversight, investor data protection and disclosures of conflicts of interest, according to the exam priorities. The SEC has made progress in the ratio of investment advisors it examines each year, from just 8% five years ago to 15% in fiscal year 2017, the regulator says. In 2018, the SEC plans to target those advisors it has never examined before, according to the regulator.

Former Keller Williams CEO Chris Heller joins loanDepot brand family as CEO of mello Home (loanDepot), Rated: B

LD Holdings Group, LLC, parent company of loanDepot, the nation’s fifth largest retail lender, today appointed top real estate executive Chris Heller to head its recently-launched mello Home business. Combining digital simplicity and smart local advice, mello Home seamlessly connects home buying, financing, and improvement services into a single consumer experience.

Fintech looks to the future of financial advice at T3 (InvestmentNews), Rated: B

If the theme of the 2017 T3 Conference was the fiduciary rule, 2018 was all about the future of financial advice.

Quovo launched Cue, a new alerts engine that leverages Quovo’s aggregation technology to notify financial advisers about account activity and client milestones.

MoneyGuidePro announced a new partnership with MX, a data aggregation provider, that lets advisers bring held-away assets into the financial planning software.

 

United Kingdom

UK P2P Finance Association Announces a New Leader (Lend Academy), Rated: AAA

It was through the work of the P2PFA, led by Christine Farnish, that these regulations were sensible and promoted the growth of the industry there. And while this initial regulatory framework is currently being reviewed by the FCA, today, the UK is one of the most competitive markets in the world in no small part because of these initial regulations.

Paul Smee brings more than 17 years experience in leading trade bodies in the UK. Previously, he was Director General of the Council of Mortgage Lenders for six years so he comes with experience leading finance trade bodies. He looks like a great choice to take over from Christine.

City Moves for 9 February 2018 – who’s switching jobs at Lendy, RegTek.Solutions and M&G? (City A.M.), Rated: B

Lendy, one of Europe’s leading P2P secured property platforms, is pleased to announce the appointment of Andrew Wawrzyniak as its new head of finance. Andrew was previously head of finance at Fund Partners, a leading fund manager, which specialises in the operation of collective investment schemes.

RegTek.Solutions, the market-leading control and compliance software provider for global trade and transaction reporting, has appointed Rob Bernstein as chief financial officer (CFO).

Rebuildingsociety partners with Leeds Council to support local businesses (P2P Finance News), Rated: A

PEER-TO-PEER business lender Rebuildingsociety has secured an agreement with Leeds City Council whereby the local authority funds loans through its platform.

The council will review business loan requests from companies with an LS postcode prefix, consider the industry and location of the company, and contribute to the loan amounts required by suitable applicants.

European Union

P2P Lending Is Becoming A Significant Income Source For Young Investors (Crowdfund Insider), Rated: AAA

According to Robo.cash, P2P lending is turning to a significant source of additional income for the growing number of the European investors.

The online lending platform also confirmed:

“The majority of investors are in the age groups: 25-34 years — 40%, 35-44 years — 31%, 45-60 years — 20%. The less number is the age of 18-24 years (6%) and 61 plus (3%). These figures are supported by the employment of investors: employees — 72%, entrepreneurs — 15%, students — 6%, retiree — 2%. At the same time, the most investors are just getting acquainted with P2P-services (52%) and the comparable number already has at least one-year practice: 1-3 years — 34% and over 4 years — 13%.”

Is Lithuania the most fintech-friendly destination in Europe? (Finextra), Rated: A

The country has been actively promoting itself as gateway destination to the European marketplace for non-EU firms and British startups fleeing Brexit. Registering a company takes merely three days, while getting a Payment Institution or Electronic Money Institution license takes only three months, two-to-three times faster than in other EU jurisdictions. Other perks include remote Know Your Customer (KYC) procedures, low profit tax, startup visa options and a sandbox regime for fintech startups in their first year.

The country also boasts a growing talent pool of up to 31,000 trained IT professionals with a further 8000 in the pipeline.

Lithuania Registered 35 New Fintech Companies in 2017 (Crowdfund Insider), Rated: B

This week, Invest Lithuania released the Lithuania Fintech Report 2017, which revealed that a total of 117 fintech companies were operating in the country in 2017, with 35 of them being registered last year.

International

IOU financial partners with goEBT to offer funding to network of 25,000 convenience store owners (Business Insider), Rated: AAA

IOU FINANCIAL INC. (“IOU” or “the Company”; TSX-V:IOU), an online lender to small businesses (IOUFinancial.com), is pleased to announce a strategic partnership with Marietta, GA-based c-store solutions provider goEBT (goEBT.com).  Through this strategic partnership, goEBT’s network of 25,000 convenience store owners nationwide will be able to access IOU’s fast, convenient, non-collateral funding solutions.

LENDDO AND EFL TEAM UP FOR FINANCIAL INCLUSION (#Include1Billion), Rated: A

Our companies come together united by the common vision of providing financial inclusion for more than one billion new and underserved individuals across the globe. We will together provide a suite of credit scoring and identity verification products to more than 20 emerging markets.

Our companies have individually facilitated over 5 million credit assessments since inception, allowing more than 50 financial institutions to disburse over $2 billion USD in credit to people with limited information.

The first joint product offering is already live in Asia and Latin America, with additional products and features scheduled for release in the coming months.

From #Include1Billion

Fuse Business Loans from Mynt began working with LenddoEFL to assess credit risk for its clients that were 80% unbanked.

Foxconn’s Gou said to invest in US crypto merchant bank venture (EJ Insight), Rated: A

Terry Gou, the billionaire chief of Taiwanese electronics giant Foxconn, is said to have invested in a cryptocurrency merchant bank being set up by Mike Novogratz, a former Wall Street macro hedge fund manager.

Citing a source familiar with the matter, Bloomberg reported that Novogratz has raised about US$250 million for his cryptocurrency merchant bank venture through a private placement.

India

Google search bias fine, Swiggy funding, Digital payments tax rebate & more (ET Tech), Rated: AAA

The government might consider giving tax rebates to merchants accepting payments digitally in order to promote the overall fintech sector, which is at its infancy at present but growing at a rapid pace, suggested the Reserve Bank of India.

Talking about the fintech sector the RBI has identified tech startups working in the space of peer-to-peer lending, blockchain, big data, smart contracts, robo advisors and online aggregators.

Read more.

HOW TO FUND YOUR HIGHER STUDIES (Money Today), Rated: AAA

Traditionally, one’s option was limited to getting an education loan from a public sector bank. Now that the demographics are favourable and the education loan market has the potential to grow, non-banking finance companies (NBFCs), fintech players and peer-to-peer (P2P) lenders are jockeying for a piece of the market.

Seek more funding: Education loans are part of the priority lending category, but unlike the US, there is no provision for student loan waiver in India. It means your loan will not go away until you pay it off. Try and find out if there is any other source of funding available, including financial aid, bursary and scholarship or upfront savings, which will bring down the loan amount.

What Banks Offer

Most of them offer education loans for studying medicine, engineering or management at graduate and post-graduate levels or for pursuing further studies in India and abroad. Some also provide categorised loans. For instance, State Bank of India (SBI) offers Scholar Loan for students who get admitted to premier institutions like IITs, IIMs, NITs and AIIMS, and a Global Ed-Vantage loan for studying in global counterparts. Bank of Baroda offers Baroda Scholar loan for studying abroad and Baroda Gyan loan for higher studies in India while separate schemes are available for courses conducted by the country’s top institutions.

Source: Money Today

Fintech/P2P Players

Landing an education loan may not be easy anymore, given the spurt in defaults. And that is where the new-age fintech firms and P2P lenders see a lucrative opportunity. “For those who fail to qualify for education loans from banks and NBFCs, P2P lending platforms can be an alternative way to borrow,” says Gaurav Aggarwal, Associate Director, Unsecured Loans, at Paisabazaar. In other words, aspiring students can raise personal loans from banks or fintech players like MoneyTap and LoanTap, or P2P lenders like Faircent and CreditMantri to cover their educational expenses.

What Lies Ahead For India’s Fintech Sector? (CXO Today), Rated: A

To understand what lies ahead for India’s fintech sector, it makes sense to understand the fintech growth is expected to boom in the Asia Pacific region. A Frost & Sullivan report predicts that the region is expected to grow at a CAGR of 72.5% from 2015 to 2020, reaching US$72 billion.

According to Quah Mei Lee, Industry Principal, ICT, Asia-Pacific, the mobile payments market in Singapore was estimated to be worth US$1.4 billion in 2017. The market is still small but is growing fast.

Indian digital payments industry is expected to reach $700 billion by 2022 in terms of value of transactions.

It is expected that more than 80% of the urban population in India will adopt digital payments as a part of their routine by 2022, and 70% of the retail chains will adopt the same.

Canada

A Canadian Way to Access US Small Business Lending (Stockhouse), Rated: AAA

Enter IOU Financial.  As “online lending” has become a 21st century reality, a financial niche has sprung up with online lending institutions that are prepared to cater to small businesses and provide badly needed capital, efficiently and affordably.

Compared to the above, IOU Financial provides easily manageable, working capital term loans for small business, and does so:

  • Quickly
  • Efficiently
  • Affordably

The speed of IOU’s loan application process is a big draw for small business owners.  IOU’s application generally takes roughly three to five minutes to complete.

Source: Stockhouse

 

Grounded Kitchen & Coffeehouse is OnDeck’s Small Business of the Month (PR Newswire), Rated: A

OnDeck (NYSE: ONDK), the online lender to small businesses, today announced that Grounded Kitchen & Coffeehouse, owned by Amir Rahim, has been selected as the OnDeck Small Business of the Month for February, 2018. The Ottawa-based restaurant is the first small business in Canada to earn the OnDeck spotlight award.

Africa

Glaring Ponzi Schemes In Ghana Now (Modern Ghana), Rated: A

So assuming I have $1000.00 I have no use for and would want to make a little interest on, All I have to do is go unto one of these platforms to match me with someone in need of $1000.00. These platforms because of the high risk they take (borrowers don’t provide tangible collaterals) usually charge higher interest and in return given higher interest to lenders than Treasury Bills will normally do. This idea is supposed to be easy and help people financially as there is gap between loans needed and financial institutions willing to give (“The two largest peer-to-peer (P2P) lending platforms, Prosper and LendingClub founded in 2005 and 2006 respectively, have originated over $6 Billion in loans to date. Although they have only begun to scratch the surface of the $3 trillion consumer debt market” Nav Athwal Cofounder and CEO of RealtyShares, a crowdfunding for real estate platform). Yet like most good things miscreants, hooligans and hoodlums find a way to make the system corrupt.

These swindlers promise up to a 100% interest rates within 5 working days. So they lure greedy but naïve people to roll in cash through mobile money. With a Minimal amount of GHC100.00 you get registered and paired with another person. You’re required to send the money to this person who they claim registered 5 days ago and the said day is the day of maturity.

Ways to spot financial scams and Ponzi schemes
1. If your interest is too good to be true, then its probably a lie. When you’re being offered an interest bigger than the T Bills in lending you should be wary and do due diligence.

2. They usually don’t tell the project in which your money will be invested.

3. Pressurised to respond quickly? 4. Are the contact details vague?

Authors:

George Popescu
Allen Taylor

Thursday February 8 2018, Daily News Digest

LendingTree personal loans

News Comments Today’s main news: RateSetter’s IFISA finally arrives. Renaud Laplanche to keynote at LendItFintech USA 2018. LendingClub makes changes to IRA product. Goldman could be buying Clarity. Today’s main analysis: LendingTree January 2018 Personal Loan Offers Report. LendingTree January 2018 Mortgage Offers Report. Today’s thought-provoking articles: Amsterdam gaining ground on London as Europe’s fintech capital. Senmiao Technologies sets terms […]

LendingTree personal loans

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

MENA

Canada

Bermuda

News Summary

United States

Renaud Laplanche Joins LendItFintech USA 2018 As Keynote Speaker (PR Newswire), Rated: AAA

LendItFintech, the world’s leading event in financial services innovation, today announced that Renaud Laplanche, founder and CEO of Upgrade, Inc., will join the keynote speaker roster for LendItFintech USA 2018. For three days, the world’s most prominent and emerging fintech CEO’s will gather at the Moscone Center to focus on the hot button topics and issues exploring the future of finance.

Laplanche’s keynote speech will focus on his vision for Online Lending 2.0 and in particular how new technology, blockchain, enhanced processes and the combined learnings of the past 10 years have helped make online lending better for consumers and investors alike.

Laplanche will also unveil Upgrade’s next major consumer credit product that industry observers are already touting “the biggest innovation in financial services since the credit card. Also, to illustrate how the Online Lending 2.0 principles help create more value for consumers and enable faster growth while achieving better risk management, compliance and credit performance, Laplanche for the first time, will release metrics about Upgrade exactly one year after its public launch.

Tax Efficient Investing and LendingClub IRA Changes (Lend Academy), Rated: AAA

Tax rates for 2018 start at 10% and go up to 37% for the highest wage earners. It’s important to understand how this ordinary income affects taxes compared to other asset classes like equities.

Let’s assume you decide to invest through a taxable LendingClub account. In a given tax year, you are only allowed to deduct $3,000 in losses against your ordinary income unless you have capital gains to offset the losses.

If you have a sizable investment in LendingClub and have no capital gains you’ll have to carry forward any losses beyond the $3,000 to future years.

LendingClub Offering a Bonus for IRA Investors

After understanding the benefits of investing through an IRA it’s worth mentioning that LendingClub offers bonuses for new accounts. The bonuses range from $25 all of the way up to $3,000 and are available on Traditional IRAs, Roth IRAs, SEP IRAs or SIMPLE IRAs. Below are the bonus amounts in place for 2018.

TaxSlayer Teams Up With Kabbage To Provide Small Businesses Easy Access To Working Capital (PR Newswire), Rated: A

TaxSlayer, a leading online and professional tax and financial technology company, today announced a strategic partnership with Kabbage, Inc., a global technology and data platform powering small business lending. The collaboration offers qualified small business customers hassle-free access to lines of credit up to $250,000 from Kabbage, and exclusive tax resources, including tips, promotions and discounts from TaxSlayer.

TaxSlayer customers will have access to:

  • Lines of credit from Kabbage up to $250,000 for qualified borrowers
  • Promotions from Kabbage, including a $100 gift card after qualification
  • Partner offers through the Kabbage Customer Perks network
  • Tips and insight on small business lending and finance

Kabbage customers will have access to:

  • Small business and personal tax tips from TaxSlayer
  • Market leading tax-filing support from TaxSlayer
  • Unique promotions and discounts from TaxSlayer, including 20 percent off services

LendingTree Personal Loan Offers Report (LendingTree), Rated: AAA

Excellent credit (760+ score): Offered APRs to consumers with a credit score of 760+ averaged 7.41% in January.

  • The average best APR offered to all borrowers with credit scores of 760 or above was 7.41%, a decrease of 13 basis points from the prior month, and 47 basis points from the same period one year ago.
  • At $24,218, the average loan amounts offered with the best APRs to all borrowers with a score of 760 and above, was down up 17 basis points ($41) from December, but up over 23% ($5,607) from the same period one year ago.
  • The top 10% of offers, presented to borrowers with the best profiles within this group, had APRs of 4.98% on average, and loan amounts of $34,892. A borrower with this APR and loan amount would save $2,896 by consolidating debt with a 10% APR over a three-year term.
Source: LendingTree

Good credit (680 – 719 score): Offered APRs to consumers with a credit score between 680 and 719 averaged 15.79% in January.

  • The average best APR for all borrowers with credit scores of 680 – 719 was 15.79%, down 12 basis points from last month, but up almost 200 basis points from a year earlier.
  • At $15,628, borrowers with scores of 680 – 719 saw the amounts offered with the best APRs increase by 1% ($160) in the last month, but drop by 1.72% ($268) from January 2017.
  • The top 10% of offers, presented to borrowers with the best profiles within the 680 – 719 credit score range, had an average best APR of 7.19%, offered with an average loan amount of $24,130. A borrower with this APR and loan amount would save $3,215 by consolidating debt from a 15% APR over a three-year term.
Source: LendingTree

LendingTree Mortgage Offers Report (LendingTree), Rated: AAA

  • January’s best offers for borrowers with the best profiles had an average APR of 3.93% for conforming 30-year fixed purchase loans, up from 3.80% in December. Refinance loan offers were up 5 bps to 3.75%.
  • For the average borrower, purchase APRs for conforming 30-yr fixed loans offered on LendingTree’s platform were up 13 bps to 4.55%. The loan note rate hit the highest since March 2016 at 4.45% and was also up 13 bps from December.
  • Consumers with the highest credit scores (760+) saw offered APRs of 4.41% in January, vs 4.70% for consumers with scores of 680-719. The APR spread of 29 bps between these score ranges was 1 bps narrower than in December but still near the widest since this data series began in April 2016. The spread represents nearly $15,000 in additional costs for borrowers with lower credit scores over 30-years for the average purchase loan amount of $238,518.
  • Refinance APRs for conforming 30-yr fixed loans were up 15 bps to 4.46%. The credit score bracket spread widened to 25 from 24 bps, amounting to $13,000 in extra costs over the life of the loan for lower credit score borrowers given an average refinance loan of $244,540.
  • Average proposed purchase down payments fell for the first time in 8 months to $63,411.
Source: LendingTree

Apple May use Marcus for Point of Sale Financing (Crowdfund Insider), Rated: A

Indicative of this systemic trend is a report this week in WSJ.com saying Apple may be cutting a deal with Marcus – Goldman Sachs’ vision of the future on online lending.

According to the WSJ report, Goldman may provide Apple with point of sale credit at interest rates far lower than the typical credit card.

“By offering a lower-cost loan, Goldman hopes to siphon off some of that business. Goldman charges 12% interest on its average Marcus loans. Credit cards can charge upward of 20% and carry late fees and other charges. Partnerships with big retailers like Apple are key. They can deliver millions of customers that Goldman would struggle to find on its own.”

Goldman is said close to buying personal-finance startup Clarity (American Banker), Rated: AAA

Goldman Sachs is in discussions to acquire the personal finance startup Clarity Money, with plans to fold it into its Marcus online lender, according to people familiar with the matter.

Robinhood users ramped up deposits during Monday’s market bloodbath (Business Insider), Rated: A

On Monday, the US stock market witnessed its largest point decline ever. The Dow Jones industrial average dropped as much as 1,600 points during Monday trade before closing down 1,175 points. Still, a spokesperson for Robinhood, the California-based brokerage, told Business Insider its users ramped up deposits on its zero-commission stock trading platform.

Venmo monetization may be on the horizon (Business Insider), Rated: A

Source: Business Insider

Venmo alone hit $10.4 billion, about 39% of the P2P total. As P2P surges across the board, it’s helping 

Identity fraud hits all time high with 16.7m US victims in 2017 (Payments Cards and Mobile), Rated: A

The 2018 Identity Fraud Study released by Javelin Strategy & Research, revealed that the number of identity fraud victims increased by 8% (rising to 16.7 million US consumers) in the last year, a record high since Javelin began tracking identity fraud in 2003.

The study found that despite industry efforts to prevent identity fraud, fraudsters successfully adapted to net 1.3 million more victims in 2017, with the amount stolen rising to $16.8 billion.

The 2018 Identity Fraud Study found four significant trends:

  • Record high incidence of identity fraud  In 2017, 6.64% of consumers became victims of identity fraud, an increase of almost 1 million victims from the previous year.
  • Account takeover grew significantly – Account takeover tripled over the past year, reaching a four-year high. Total ATO losses reached $5.1 billion, a 120% increase from 2016.
  • Online shopping presents the greatest fraud opportunity – Card Not Present Fraud is now 81% more likely than point of sale fraud, the greatest gap Javelin has observed.
  • Fraudsters are getting more sophisticated

Nearly half of small businesses plan to invest in cybersecurity in 2018 (AZ Big Media), Rated: A

Half of all U.S. small businesses were breached in 2016, according to 2016 State of SMB Cybersecurity Report. Disruption to normal operating expenses costs an average of $955K, which can be devastating to small business owners.

As part of Kabbage’s ongoing effort to help small businesses to be successful, Kabbage recently surveyed more than 800 customers and nearly half (47 percent) plan to invest in cybersecurity products and services in 2018.

Hackers find value in obtaining employee and customer data, bank account information and/or intellectual property, no matter the size of the business. Today, more than 70 percent of attacks are targeted toward small businesses, largely due to the their beliefs that they won’t be hacked (mostly due to their size).

Virginia consumers to receive $ 2.7 million in relief from settlement with internet lender (WINA), Rated: A

Attorney General Mark R. Herring announced today that more than $2.7 million in relief will be provided to Virginia consumers who took out loans with Internet lender MoneyLion of Virginia LLC-an affiliate of New York based Internet lender MoneyLion, Inc. Attorney General Herring’s settlement with MoneyLion will provide refunds and debt forgiveness to 3,800 consumers as a result of the company’s alleged violations of the Virginia Consumer Protection Act. Since creating a Predatory Lending Unit in his Consumer Protection Section, Attorney General Herring’s Office has recovered more than $25 million in restitution and debt forgiveness for Virginia consumers from online lenders.

The settlement includes the following key terms relating to loans made by MoneyLion during the period in question:

• MoneyLion agrees to provide $359,811.50 in refunds to 1,161 Virginia consumers who paid more than their loan principal plus 12% APR;
• MoneyLion agrees to give up the collection of $2,354,097.05 in illegal interest it charged on loans with 2,639 Virginia consumers;
• A payment to the Commonwealth of $10,000 as a civil penalty for MoneyLion’s alleged violations of the VCPA;
• A payment to the Commonwealth of $20,000 for its costs and fees in investigating MoneyLion’s alleged violations of the VCPA;
• Permanent injunctions preventing MoneyLion from misrepresenting its license status, allowable interest rates, and allowable fees.

Bankrupt Payday Lender Can’t Move CFPB Suit To Texas (Law360), Rated: A

A Montana federal judge refused to transfer a CFPB action alleging Think Finance duped borrowers and used sham tribal payday lenders to collect money it was not owed, finding Tuesday the case need not be moved to where the financial technology company’s Texas bankruptcy is.

U.S. District Judge Brian M. Morris said the state of Montana has a “substantial interest” in hearing the Consumer Financial Protection Bureau’s case since Think Finance LLC’s loans were voided under the state’s law.

Movement Mortgage Implements CompenSafe to Automate LO Compensation (Send2Press), Rated: B

LBA Ware, a leading provider of automated compensation software and systems integration solutions for mortgage lending and retail banking, announced that South Carolina-based Movement Mortgage has implemented CompenSafe to automatically calculate commissions for its loan originators (LOs) located in 700 branches across 49 states.

Cerberus Capital Management, L.P. today announced that an affiliate has entered into an agreement to acquire Cyanco Holding Corp. from funds managed by Oaktree Capital Management, L.P. (“Oaktree”).  Cyanco is the largest global producer of sodium cyanide, a critical input in the gold and silver mining industry. Terms of the transaction, which is subject to customary conditions to closing, were not disclosed.

OCC Chief Praises Mulvaney On Halting Payday Rule (PYMNTS), Rated: B

After a 45-minute meeting on Tuesday (Feb. 6), Comptroller of the Currency Joseph Otting had nothing but praise for acting Consumer Financial Protection Bureau (CFPB) Director Mick Mulvaney.

“Acting Director Mulvaney has helped reduce the burden on the banking system by delaying implementation of his agency’s Home Mortgage Disclosure Act rule, committing to reconsidering its payday lending rule, and deferring action on additional regulations until completing a more thorough review of those matters,” Otting said in the release. “I also applaud him for realigning his agency’s mission to the current needs of the nation, making its processes more transparent and fair.”

United Kingdom

RateSetter Innovative Finance ISA is Finally Here (Crowdfund Insider), Rated: AAA

Peer-to-peer lending platform RateSetter has shared that is Innovative Finance ISA (IFISA) will launch tomorrow (February 8th). RateSetter said the IFISA will initially be available to existing customers, then to new customers on 1 March and to inward transfers from other ISAs in April.

What a difference a tax year makes! P2P platforms pile in to the IFISA market (P2P Finance News), Rated: A

Just a handful of peer-to-peer platforms had full Financial Conduct Authority approval in time to launch an IFISA product in April 2016, with 2,000 accounts and £17m subscribed up to April 2017.

Many saw this as a damp squib, but as we enter ISA season for the 2017/18 tax year, platforms representing almost 80 per cent of the market could be set to lead the charge.

Both Zopa and Funding Circle have loan books worth more than £3bn each, while RateSetter boasts a portfolio worth £2.5bn.

ISA Innovation: What do investors think? (AltFi), Rated: A

Crowdstacker’s CEO Karteek Patel reveals why investors have opted for the Innovative Finance ISA over the past two years. 

When the first types of ISA launched in 1999 the country was still in the first flush of a much feted Blair Government, the economy was buoyant, and the outlook rosy.

It was the end of a decade that saw average base rates of around 8%. Inflation meanwhile may have started at 9.5% in 1990, but it rapidly fell to a more manageable 1.5% by 1999.

2016-17 average ISA subscriptions were £5,558. Average subscriptions for our Innovative Finance ISA were above £11,000 – probably indicating early adopters of the IFISA are more seasoned investors, who are investing larger sums. Of course, as we know from other innovations such as smartphones and social media, where early adopters lead, the masses will follow, as long as the proposition is attractive.

How UK challenger bank Monzo turned its customers into a loyal community (Tearsheet), Rated: A

Monzo asks customers for feedback on product launches and fees, allows them to invest in the company through equity crowdfunding rounds and holds community events across the U.K., either at Monzo offices or customer suggested venues. Its approach is based on the principle that customers will stay loyal and will refer others if they’ve got some kind of stake in it. Banks have traditionally relied on large-scale ad campaigns and promotions to get customers to change their providers. But U.K. customers still aren’t changing their banks in droves; according to U.K. nonprofit Bacs only 4.45 million successful switches have taken place since 2013. Plus, they’ll have less and less motivation to switch bank providers as more non-bank entities begin offering comparable services.

The company’s biggest growth driver is loyalty, with word-of-mouth referrals being the source of 80 percent of new customer growth, according to the company. The remaining 20 percent is based on a limited amount of sponsored ads on Facebook and Twitter. More than 30,000 customers participate in an online feedback forum for new products.

Separately, Monzo holds eight to 12 events per year around the U.K.

 

Esme Loans joins NatWest’s alternative finance panel (Finextra), Rated: A

Esme Loans, the digital lending platform that allows small and medium sized businesses to quickly obtain unsecured loans of up to £150,000, will join a select group of leading alternative finance firms on NatWest’s Capital Connections panel.

Princeton dispute pushes Ranger’s 2017 returns into negative territory (P2P Finance News), Rated: A

RANGER Direct Lending (RDL) saw its net asset value (NAV) slide 2.95 per cent over 2017 due to its ongoing Princeton legal arbitration.

The investment trust’s December update showed its NAV return was 4.53 per cent in 2017 but the ongoing legal dispute with its Princeton investment over bankrupt lender Argon pushed it into negative territory.

On a monthly basis, RDL’s NAV was actually at a six-month high to 0.48 per cent.

Lendy secures major repayment on west London flat (Bridging&Commercial), Rated: B

P2P lending platform Lendy has announced that it has received a major repayment in excess of £2.1m on a luxury flat in west London.

The property has a security value of £3.25m, a loan value of £2.12m and an LTV of 65%.

Personal lending increases four times faster than wages (BBC), Rated: A

In comparison, wage data from the Office for National Statistics (ONS) shows the typical full-time worker has seen pay increase by 6.5%, over the same period.

British households amassed £37bn in unpaid personals loans in 2017, an increase of £7bn from three years earlier.

In Northern Ireland personal loan debt is just over £1bn and has risen 4% since 2014.

FINTECH AND BANKING GROUP SET FOR IPO (BusinessCloud), Rated: B

TruFin has published a document announcing its intention to float on the AIM market of the London Stock Exchange in late February.

TruFin has offices in London and Birmingham and currently operates under three separate businesses: Distribution Finance Capital (DFC), Satago and Oxygen Finance.

The group also owns a 15 per cent stake in technology-led peer-to-peer lender Zopa. The platform was launched in 2005 and has since originated over £2.6bn of unsecured loans, connecting more than 320,000 customers to 70,000 investors.

China

China’s recent crackdowns indicate growing pains for its advanced fintech industry (Tearsheet), Rated: A

The central bank is now reining in “social credit” scoring models by companies like Tencent and Alibaba that use consumer data from purchases and social behavior, as of the past weekend. These programs are designed to make up for the lack of institutional records of individuals’ creditworthiness in China’s financial system — something the central bank itself has tried to address with its own solution. Now the government is worried e-commerce-turned-fintech giants could use social scoring as marketing to sell their financial products.

China is a mobile-first nation. Mobile e-commerce took off there because its retail landscape was weaker and less efficient 15 years ago compared to that of the U.S.

European Union

Amsterdam Makes The Most Of Its Fintech Credentials (Global Finance), Rated: AAA

Despite Brexit, London has managed to hang onto its status as Europe’s leading fintech hub, at least for now. According to the Nesta 2016 European Digital City Index, “London leads for both start-ups and scale-ups.” However, Stockholm and Amsterdam, which rank second and third respectively out of 60 cities, are leading the pack nipping at London’s heels, according to the index, which looks at how European cities support “digital entrepreneurship.”

Amsterdam has many claims to fame, but one of its lesser-known features is its concentration of 350 fintech companies, more notably in the payments (Adyen, Payvision, GlobalCollect), trading (BinckBank, Flow Traders) and alternative finance (Funding Circle, Spotcap) spaces.

European Investors Elect Favorite Projects as Prêtons Ensemble Launches New €200 Million Digital Lending Fund (Crowdfund Insider), Rated: A

The asset management firm Eiffel Investment Group which manages the €100 million marketplace lending fund “Prêtons Ensemble” (meaning “Let’s Lend Together”) for institutional investors Aviva France, AG2R LA MONDIALE, MAIF, MGEN and Klesia awarded European Digital Lending Awards at a gathering held in Paris on February 1st. The awards recognized SME projects presented on the lending platforms backed by the fund.

Nominated platforms included leaders such as Funding Circle and Lendix. The prizes however went to smaller marketplaces, a good opportunity to put the spotlight on these up-and-coming fintechs:

  • Green Economy award: Générale du Solaire, a project presented on Lendosphere, France.  
  • Job creation award: Metalliance on Wesharebonds, France.  
  • Innovation award: Selfstock on ClubFunding, France.  
  • Quality of Life award: All About Healthcare on Linked Finance, Ireland. Linked Finance is Ireland’s largest P2P lending platform with more than 16,000 registered lenders who have lent over €32 million to Irish businesses
  • Inclusive Economy: Mujeres y CIA on Finanzarel, Spain, and
    Nou verd and Nou set on Loanbook, Spain.  
  • Best pivot: Sky Hero on Look & Fin, Belgium.  
International

Senmiao Technologies Proposes Terms For $ 14 Million U.S. IPO (Seeking Alpha), Rated: AAA

Senmiao Technology (AIHS) intends to raise $14 million in a U.S. IPO by selling 3.25 million shares at between $4.00 to $4.50 per share.

According to a 2017 research report by the World Federation of Direct Selling Associations, the global direct selling volume increased by 1.9% in 2016, reaching $183 billion in sales between 107 million direct sellers.

In 2014, 45% of direct selling volume came from the Asia Pacific region and grew to 46% in 2015 – 2016, as the chart below shows:

Source: Seeking Alpha

According to management, ‘there are approximately 40 lending platforms in Sichuan province.’ Major competitive vendors that provide similar services include:

  • Sichuan Jinding Wealth Information Technology
  • Koudai Network Services
  • Chengdu Hongxue Jinxin Business Consulting
  • Chengdu Zhongke E-Commerce Co

Revenue ($)

  • Six months ended Sept 30, 2017: $182,960
  • FYE March 31, 2017: $73,237

Operating Loss ($)

  • Six months ended Sept 30, 2017: ($671,729)
  • FYE March 31, 2017: ($185,535)

Operating Margin (%)

  • Six months ended Sept 30, 2017: Negative
  • FYE March 31, 2017: Negative

Cash Flow from Operations ($)

  • Six months ended Sept 30, 2017: $302,568 cash flow used in operations
  • FYE March 31, 2017: $1,324,449 cash flow from operations

As of Sept 30, 2017, the company had $76,863 in cash and $736,246 in total liabilities.

(Source: Senmiao S-1/A)

 

Exclusive Interview with FintruX CEO Nelson Lin (Chipin), Rated: A

FintruX is an established online lending platform that is introducing blockchain into its financial network to better serve both kinds of customers.

Nelson. Thanks for joining us today. Can you tell us more about yourself and FintruX?

I am the founder and CEO of FintruX and also Robocoder. Robocoder provides the technology behind Fintrux.

FintruX is a global peer-to-peer (P2P) lending platform on the Ethereum blockchain network for providing unsecured loans. It connects small businesses who need money for cash flow issues, with lenders who want to earn a better return on their money.

In some ways, tokenized P2P lending platforms is a “killer app” for the blockchain technology. We are pretty sure you would agree, but can you elaborate and in the context of what you are trying to do.

All the current monetary transactions require too many intermediaries to facilitate a simple transaction from end-to-end and the process itself is also inefficient and time-consuming. Furthermore, most of the systems are fragmented, inconsistent and usually require extensive human intervention. Finally, such transactions require numerous touch-points to handle and manage the “trust” between all of the parties involved. Our mission is to make trustless financing a no-brainer for both borrower and lender.

What is the biggest problem within the industry or do you think there is a gap in the market for FintruX to fill?

The biggest problem is that small and startup businesses do not have sufficient credit history or access to capital for their short-term cash flow needs. Furthermore, the traditional systems are inadequate, fragmented, inconsistent, labor intensive and involve lots of intermediaries. There are many P2P lending platforms in existence but they do not talk to each other.

Australia

Global tech giants will threaten bank tax receipts (Financial Review), Rated: A

The $14 billion in taxes the federal government receives each year from the banking sector could be eroded by global technology companies including Apple capitalising on policies designed to boost competition in the sector, the chief executive of the Australian Bankers’ Association, Anna Bligh, will warn on Thursday.

In its half-year results presentation on Wednesday, Commonwealth Bank, the country’s second largest taxpayer, pointed to the $2 billion of taxes it pays to contribute to the economy. This contrasts to many of the global tech players, who book little profit in Australia despite huge sales, and therefore pay much less tax.

India

Credit is here to stay, new lenders beyond banks to play bigger role (money control), Rated: A

Emerging as an alternative to mainstream banking, NBFCs have also been playing an important role in bridging the credit gaps, i.e. in meeting the increasing financial needs of the underserved and unbanked areas in the corporate sector, unorganized sector and also for the local borrowers.

According to the Reserve Bank of India, in January 2017, a total of 28.8 million credit cards were in operation. Credit cards, also known as revolving credit, have been the preferred choice of masses as it enables repetitive use for daily purchases that can be paid back in instalments on a monthly basis.

According to PwC research, over 95% of financial services incumbents seek to explore FinTech partnerships.

MENA

A year when new innovations show up in Dubai realty (Gulf News), Rated: AAA

In the UAE, we are seeing some significant strides, where one technology-driven real estate crowdfunding platform, Smart Crowd, recently received approval from the Dubai Financial Services Authority to establish the region’s first regulated real estate crowdfunding platform. This will enable any individual to invest and own a piece of UAE property for as little as Dh5,000 and will most likely stimulate sales in the secondary market.

Canada

Business loans: Which one works for you? (Bankless Times), Rated: A

Source: Bankless Times
Bermuda

Trunomi Closes $ 3.5 Million Round from CloudScale Capital (Finovate), Rated: AAA

Consumer consent and data rights company Trunomi closed a $3.5 million round of funding today. This investment brings the Bermuda-based company’s total funding to $10.5 million.

Authors:

George Popescu
Allen Taylor

Friday February 2 2018, Daily News Digest

Groundfloor repayment timelines

News Comments Today’s main news: Alibaba acquires 33% stake in Ant Financial. MPL issuance grew by 100% year-over-year in Q4 2017. RateSetter prepares investors for IFISA launch. Bitbond launches alt investment fund with 1741 Fund Management. Today’s main analysis: An empirical analysis of Groundfloor’s loan vintages. International P2P lending volumes for January 2018. Today’s thought-provoking articles: The effect of […]

Groundfloor repayment timelines

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Africa

News Summary

United States

PeerIQ 4Q17 securitization tracker shows growth of marketplace lending industry (Bankless Times), Rated: AAA

Ten marketplace lending securitizations priced this quarter totaled $4.4 billion, a record for quarterly issuance, head of research Ashish Dole said. That is 100 per cent growth in issuance over the same quarter in 2016. Cumulative issuance is now $28.2 billion from 106 deals.

THE EFFECT OF ORIGINATION GROWTH ON QUALITY: AN EMPIRICAL ANALYSIS OF LOAN VINTAGES (Groundfloor), Rated: AAA

As we addressed those limitations by qualifying our offering with the SEC and raising our first round of venture capital funding in 2015, new critics emerged to say that while we might be able to lend in a local market at a small scale, we could never lend nationwide in very large numbers without compromising loan quality. In 2016, we set out to build a lending operations team (including risk management, underwriting, and asset management) with the professional expertise, policies, tools and processes to do just that. Our aim was to improve loan quality and volume simultaneously, well beyond our home market.

How have we done?

Vintages

Vintage A is composed of 88 relatively small, mostly local Atlanta-area loans originated during Groundfloor’s formative years, a period of 30 months (2.5 years).

Vintage B, by contrast, is composed of 222 loans that were originated following our addition and application of greater lending expertise. This vintage is more than 2.5X larger, and was originated over the course of 24 months (two years, a 20% shorter period of time).

Source: Groundfloor

Performance Measure #2: Timeliness of Repayment

For each vintage, we analyzed when loans repaid in relation to their maturity dates. Here is a comparison of the timeliness of repayment for Vintage A and Vintage B, with percentages provided to break down the share of repaid loans.

Source: Groundfloor

Here is a snapshot of the situation as of December 31, 2017:

Source: Groundfloor

Juniper Square raises $ 6M for its real estate investment platform (TechCrunch), Rated: A

Juniper Square, which today announced it has raised a $6 million Series A round led by Felicis Ventures, is tackling the real estate investment side by helping investment managers raise and manage outside capital for their projects.

Today’s funding round brings the company’s total funding to date to $8 million; the company plans to use the new influx of capital to accelerate its product development and grow its team to better service its user base.

Overstock Introduces Robo-Advising Investment Platform tZERO Advisors (Crowdfund Insider), Rated: A

Overstock.com, Inc. (NASDAQ:OSTK) has introduced a digitally-driven investment platform (aka robo-advising), presented by tZERO Advisors. The service is accessible to investors through the online retailer’s FinanceHub. For a monthly fee of $9.95, investors can either select from a group of pre-established Adaptive Dynamic Portfolios matched to their investment profiles, or create a customized blend of these portfolios.

States mull loosening of laws in response to CFPB payday rule (American Banker), Rated: A

The Consumer Financial Protection Bureau’s payday loan rule was supposed to reduce the number of Americans who get mired in debt they can’t afford.

But in an ironic twist, the 4-month-old rule is being used in state legislatures to justify the creation of a new category of loans that would be even costlier for many borrowers.

One such bill in Florida has zipped through three legislative committees in recent weeks. The Indiana House of Representatives voted to pass a similar measure Wednesday.

Bradley Strock, PayPal CIO, Joins Elevate’s Board of Directors (BusinessWire), Rated: A

Elevate Credit, Inc. (“Elevate”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced that Bradley Strock has joined its Board of Directors, effective immediately.

Mr. Strock joined PayPal in 2011 and since 2014 has been its Chief Information Officer.

Chase is using memes and GIFs to bring millennials to QuickPay (Tearsheet), Rated: A

JPMorgan is focusing its Zelle efforts on millennials, despite the platform outwardly claiming it’s not targeting that age group.

Chase will soon roll out an animated GIF campaign on social media as the second part of its Quick Pay with Zelle campaign.

With Chase QuickPay with Zelle, they can set recurring payments so you never wait for rent again. The best part? It’s already in your Chase Mobile app.  href="https://t.co/tQyDUm75Hf">pic.twitter.com/tQyDUm75Hf

In 2017 Chase saw a nearly 50 percent increase in p-to-p transactions — which includes all transactions before and after it joined the Zelle network — and a 15 percent increase in enrollments.

On Monday Zelle reported it transacted $75 billion across its member banks in 2017. Venmo processed $30 billion in the same period.

Subcommittee hearing looks at challenges, opportunities with fintech (Financial Regulation News), Rated: A

The House Subcommittee on Financial Institutions and Consumer Credit convened this week to discuss opportunities and challenges in the financial technology, or fintech, market.

“From online lending and payment companies to blockchain and cryptocurrencies, advances in financial technology are changing the way financial markets work and how consumers access credit,” Subcommittee Chairman Blaine Luetkemeyer (R-MO) said.

“Fintech lenders present an opportunity to expand credit access and quality. Although such lenders should be subject to appropriate regulation, the regulation must work with the fundamental economic reality of the market,” said Brian Knight, director of the program on financial regulation and senior research fellow at Mercatus Center, George Mason University. “Ensuring that regulations do not burden fintech lenders more heavily than their bank competitors are burdened and that the validity of their loans is not in doubt are important steps toward helping realize the promises of innovation.”

EquityBuild Launches New Website Showcasing Their New Revolutionary Hybrid Capital Fund (PR Web), Rated: A

EquityBuild announces the launch of their completely new website and newest investment product EquityBuild Fund.This site is dedicated to the company’s new revolutionary hybrid capital fund only available on their platform.

How to boost your monthly income: The easy way (Augusta Free Press), Rated: A

Safe investments are a real thing, and there cannot be a more secure way of investing in interest rates at a lending club. However, the alternative for which you must search is a peer-to-peer lending platform, where investors finance loans and then get interest rates as high as 10% on a yearly basis.  For instance, you could start with an initial deposit of $2,500, as the starting investment rate is 25%.

Cryptocurrency passive income is a thing – And you should try it

  • Decred – Decred is a self-funded crypto platform, where investors have a share of the platform’s currency even at the very beginning.
  • AKR – is a mining platform which offers each investor, even at the beginning of their journey a “delegated proof of work”. It works literally all around the clock and you virtually have to put NO EFFORTS.
  • NEO – another passive crypto income for those searching to round a bit their monthly income. The network works on “Gas” – this is the name of this small cryptocurrency.

Square shares climb after the payments company launches bitcoin trading for most users (CNBC), Rated: B

Nearly all users of Square‘s Cash payments app can now buy and sell bitcoin on the platform, CEO Jack Dorsey announced Wednesday.

The service will not be available for customers in New York state, Georgia, Wyoming and Hawaii, according to Square’s website.

LendingPoint Names Antonio Martino as New Chief Financial Officer (BusinessWire), Rated: B

LendingPoint, the online balance sheet lender and provider of the LoanHero point of sale financing platform, today announced that Antonio Martino has joined the company as its Chief Financial Officer (CFO).

Martino is a financial industry leader with more than 25 years of experience spanning 10 countries. Most recently he was Director, Citi Corporate Treasury, where he had global oversight roles within the asset liability management and balance sheet management processes for Citibank, N.A. Previously, Martino served as CFO of Citibank in Turkey and across Central Europe, with roles in Istanbul and Budapest, Hungary. In addition, Martino was Finance Director of Citibank Poland’s consumer banking division in Poland and Vice President of Finance within Citibank credit card business in Canada. Martino started his career in public accounting with Ernst & Young.

United Kingdom

RateSetter starts preparing investors for IFISA launch (P2P Finance News), Rated: AAA

RATESETTER has begun emailing existing investors to get them ready for the launch of its Innovative Finance ISA (IFISA) this month.

The peer-to-peer lender sent messages to its customers on Thursday revealing that the IFISA would be made available to investors in the order they opened accounts.

Innovative Isas finally take off (MoneyWeek), Rated: A

The new innovative finance individual savings accounts (IF Isas) raised just £17m in the 2016-2017 tax year, their first year of operation, but the figure for 2017-2018 looks set to be a lot higher, says HM Revenue & Customs. IF Isas enable savers to use their annual Isa allowance to invest through peer-to-peer (P2P) lending platforms, which match investors looking for income with borrowers who need a loan.

In all, more than 30 platforms now offer the product, and providers report high demand – so much so that the market’s potential size in 2017/2018 may be limited only by the platforms’ ability to source enough borrowers who want to take out loans from investors wanting to lend.

Folk2Folk launches local lending movement (Bridging&Commercial), Rated: A

The local lending movement has been created by the peer-to-peer lending platform to build and sustain socially and financially successful rural communities.

Folk2Folk intends to incorporate this ethos into its behaviour and activity.

The movement involves the participation and support of the platform’s lenders and borrowers, legal and accountancy partners, local authorities, MPs, chambers of commerce, local enterprise partnerships, surveyors, land agents, local cooperatives, leisure and tourism platforms, interest groups, community associations, charities, business groups and banks.

Novae GC joins payday lender Wonga after company takeover (The Lawyer), Rated: A

Payday loan company Wonga has hired a new general counsel following the departure of Bill Flynn after nearly three years.

Goji celebrates first year of investment bond (Bridging&Commercial), Rated: B

Goji has reported a strong first year for its diversified lending bond, which has yielded a net return of 6% to investors.

The Business Funding Show closes the funding knowledge gap (KCW Today), Rated: B

The only funding exhibition in the UK and EU is returning to London for its third year. The Business Funding Show will be held on 22nd February 2018 at East Wintergarden and will connect entrepreneurs to top funders and service providers through conference talks,  an exhibitor showcase, and one-to-one investment clinics.

BFS aims to bring awareness to entrepreneurs about alternative funding options, from crowdfunding and peer-to-peer lending to business angels and venture capital. The event saw a 33% increase in attendance in 2017, a figure the organisers aim to surpass this year.

China

Alibaba nabs 33% stake in Alipay operator A (IT Brief), Rated: AAA

With Alipay and Alipay Wallet under its umbrella, the company also runs 4 other major businesses: Yu’e Bao, Zhao Cai Bao, Ant Credit, and MYbank, a cloud based online lender the company was in the middle of establishing at the time of the name change.

Now, Alibaba Group Holdings has announced it will strengthen its strategic relationship with Ant Financial by acquiring a 33% equity stake in the company. The parties have agreed to certain amendments to their 2014 transaction agreements to facilitate the transaction.

Under the terms of the amended agreements, Alibaba will acquire newly-issued equity from Ant Financial in exchange for certain intellectual property rights owned by Alibaba exclusively related to Ant Financial.

Alibaba-backed online lender MYbank owes cost-savings to home-made tech (The Star), Rated: A

MYbank, a Chinese online lender that is an offshoot of Alibaba Group Holding Ltd, has built its business on doing things cheaply.

The bank says it can deliver loans to borrowers across China at lightning speeds for up to 1,000 times less than it would cost brick-and-mortar banks to do so.

MYbank employs about 300 people, half of whom are technicians.

As a result, the cost of approving a small business loan can be as little as 2 yuan (RM1.24), compared to at least 2,000 yuan (RM1,239) at a traditional bank, according to data provided by the bank. MYbank has built its technological infrastructure with Chinese-made technology, avoiding more expensive products from companies like IBM Corp, Oracle Corp and Dell EMC, which form the network backbone for much of China’s finance sector, Huang said.

MYbank is one of a handful of Chinese lenders – along with Tencent Holdings Ltd’s WeBank – that are founded completely with private investment. Since mid-2015, MYbank has served more than 7 million small business owners, Huang said. The bank is seeking to expand its network to include China’s 70 million to 100 million small businesses under-served by traditional financial institutions.

The bank’s net interest margin – around 3% to 5% – is higher than those for China’s major banks, which target large state companies, Huang said.

 

European Union

Bitbond Launches Alternative Investment Fund in Partnership with 1741 Fund Management (Finovate), Rated: AAA

Peer-to-peer small business financing platform Bitbond has entered into a partnership with 1741 Fund Management to launch an alternative investment fund.

European Alternative Finance Market Expanded by 41% in 2016, P2P Consumer Lending Leads (Crowdfund Insider), Rated: AAA

The European online alternative finance market grew by 41 per cent to 7.7 billion euros in 2016, according to the 3rd annual European Alternative Finance Industry Benchmarking Report by the Cambridge Centre for Alternative Finance. The report entitled “Expanding Horizons” indicates that online alternative finance showed growth in new areas across Europe.

For country-specific numbers, click here.

Among other findings of the report:

• Institutionalization grew considerably from 2015 to 2016, with 45 per cent of peer-to-peer consumer lending and 29 per cent of peer-to-peer business lending funded by institutions such as banks, pension funds and asset management firms.

• Online alternative finance for business continued to grow, providing 1.14 billion euros to more than 14,000 businesses throughout Europe. Debt models including peer-to-peer business lending accounted for 67 per cent of business finance, while equity models accounted for 27 per cent.

• Estonia ranked first for alternative finance volume per capita for the second year in a row, at 63 euros, followed by Monaco (51 euros) and Georgia (28 euros).

• Countries in which platforms believe that existing regulations are adequate are more likely to show higher levels of alternative finance per capita and a larger share of business funding.

• While overall perceptions of regulatory adequacy are divided, the greatest discontent concerns laws governing equity-based crowdfunding

• Two types of risk are of greatest concern to European alternative finance platforms: a potential collapse of a well-known platform due to malpractice, and fraud involving one or more high-profile transactions.

Bob Diamond to join board of Corrado Passera acquisition vehicle (Financial Times), Rated: A

Bob Diamond plans to join the board of a €600m acquisition vehicle chaired by Corrado Passera, which listed on Thursday, bringing together two of Europe’s best known ex-bankers to buy an Italian lender to small businesses.

After the cash shell’s initial public offering on Thursday, Mr Passera told reporters in Milan that it had shortlisted five small Italian lenders and would complete the acquisition of one of them for up to €60m — allowing it to become a bank.

The plan is to turn the small bank into an online lender to small businesses and a merchant bank, which will buy non-performing loans from other banks and parcel them up before selling them on to institutional investors.

 

Italy’s SPAXS shortlists five banks in acquisition hunt (Reuters), Rated: A

Saddled with one quarter of Europe’s nearly $1 trillion debt pile, which has rattled investor confidence in them, Italian banks have become more selective in their lending and compete to lend to low-risk firms, squeezing profit margins, while many small businesses find it hard to access funds.

Shares in SPAXS, which will use up to 10 percent of the amount raised in the IPO for the acquisition, were 4.04 percent higher at 1038 GMT on their market debut on the alternative investment segment of the Milan bourse.

Google and Facebook set off a second wave of fintech talent (Financial Times), Rated: A

One cloud on the horizon, however, is Brexit. The UK’s departure from the EU could make it harder for Irish fintechs to scale up quickly through expansion into the neighbouring British market, which many of them use as an early testing ground.

A good example of this is Plynk, a payment and messaging app aimed at young people, which was co-founded by Charles Dowd and Clive Foley in 2015, a year after Mr Dowd left Facebook. Based in the Camden Street area, Plynk last year raised €25m from investors led by Swiss Privée.

Another start-up that aims to build a global presence from its Irish base is TransferMate, which has handled more than $10bn of cross-border payments for businesses since it set up in 2010. Last year it raised €30m from Allied Irish Banks, with plans to offer the fintech’s software to all the bank’s clients.

By the end of this year, TransferMate expects to derive as much as half its revenue coming from clients in the US, where it has been approved by all 50 states. A third of its revenue is expected to come from European clients and a fifth from the rest of the world.

The most successful product of Ireland’s fintech scene is actually based in San Francisco. Stripe, which provides payment services to businesses, was founded by Irish brothers Patrick and John Collison, who have become paper billionaires thanks to its rapid growth.

Stripe has its European headquarters in Ireland, where it employs about 10 per cent of its 1,000 global staff. Iain McDougall, the company’s head of UK and Ireland, says the country’s fintech growth is being driven by “a second wave of talent in Ireland, spawned by the massive investment of Google, Apple, Facebook and Amazon in Silicon Docks”. A former Google employee himself, Mr McDougall says: “We’re starting to see some of that talent come through, not just college graduates with a couple of years experience . . . there’s now significant depth to it.”

International

International P2P Lending Volumes January 2018 (P2P-Banking), Rated: AAA

This month I added Linked Finance.

Zopa crossed the milestone of 3 billion GBP originated since launch.

Source: P2P-Banking

Moven To Buy US Bank, Create Joint Venture In Japan With SBI (PYMNTS), Rated: A

According to a report in the American Banker, SBI will receive one seat on Moven’s six-member board and the companies will create a joint venture in Japan.

Of the funding the company will receive from SBI Group, some will go toward the joint venture to sell customized Moven software for Asian banks.

Salesforce boosts nCino global expansion plans (American Banker), Rated: A

NCino, a vendor of cloud-based banking technology, announced a new round of funding led by Salesforce Ventures to help fund its global expansion strategy.

The funding round led by Salesforce Ventures, the corporate investment group of Salesforce, also featured participation from another existing nCino shareholder. The amount of investment was not disclosed.

Several countries investigating Japanese virtual coin heist (e27), Rated: B

Takao Asayama, who is a member of the Singapore-based NEM Foundation that is behind the cryptocurrency, told reporters in Tokyo that it is working with exchanges to block the hackers from cashing out the stolen cryptocurrency. He did not name the countries involved in investigations.

India

Jaitley extends avenue for SME financing, bad loans in the sector now on radar (Economic Times), Rated: AAA

As bank credit to micro, small and medium enterprises shrink, the government has decided to get innovative by getting Non-Bank Finance Companies (NBFCs) and the burgeoning fintech industry to play a larger role in financing. However, NPAs in the MSME sector would also now undergo greater scrutiny.

“Non-Bank Finance Companies (NBFCs) stepped up financing of MSMEs after demonetization. NBFCs can be a very powerful vehicle for delivering loans under MUDRA. Refinancing policy and eligibility criteria set by MUDRA will be reviewed for better refinancing of NBFCs,” said Finance Minister Arun Jaitley while presenting the Union Budget for 2018-19.

If we look at the NBFC segment first, it specialises in catering to sector specific financial needs covering retail; consumer and vehicle loans; micro, small and medium enterprises (MSMEs) and micro finance among others.

Source: Economic Times

Tech play
Jaitly also laid out a roadmap to use data generated by the Goods and Services Tax (GST) to enhance credit availability to the SME sector.

“It is proposed to onboard public sector banks and corporates on Trade Electronic Receivable Discounting System (TReDS) platform and link this with GSTN. Online loan sanctioning facility for MSMEs will be revamped for prompt decision making by the banks. Government will soon announce measures for effectively addressing non-performing assets and stressed accounts of MSMEs. This will enable larger financing of MSMEs and also considerably ease cash flow challenges faced by them,” said Jaitley.

Source: Economic Times

At end-March 2017, there were 11,522 NBFCs registered with the Reserve Bank, a number that is only bound to increase with fintech sectors like P2P being clubbed in the segment. The Economic Survey has revealed that the amount of credit or loans disbursed by banks amounted to Rs 26,041 billion as on November 2017, but 82.6% of this was cornered by large enterprises.

For millions of SMEs in the country, banks only lent out 17.4 % of the total credit.

Indian Budget 2018: A Push for Blockchin and Cyber Tech (Bank Info Security), Rated: A

In a move to push adoption and development of new technologies, such as machine learning, artificial intelligence and the internet of things, the finance minister announced allocation of Rs 3,073 crore for the Department of Science and Technology.

Meanwhile, the finance minister’ pledge to encourage use of blockchain, the distributed ledger technology that supports cryptocurrencies, in payment systems has earned him accolades from some security practitioners.

“Blockchain can be effectively used to process banking transactions. I see blockchain-enabled wallets and blockchain-enabled cards as next big thing in the payment systems,” Jyoti says. “Blockchain can provide an extra layer of cybersecurity to the payment systems, which could have led to this decision.”

Why Blockchain?

Blockchain has been popular among the banking industry in India. In fact, banks in India have formed a “bank chain,” an association of more than 20 banks where they discuss some typical use cases of blockchain.

Sapan Gupta, national practice head – banking and finance, at the law firm Shardul Amarchand Mangaldas, notes: “Capitalizing on the blockchain technology could open new ways of securing peer-to-peer lending transactions, boosting trade finance, fintech and information repository sectors. Segregating the use of blockchain from crypto-currencies reflects the government’s intention to use the technology in a gradual and safe manner.”

What do Ola, ShopClues, Practo, and Paytm feel about the budget? (Yourstory), Rated: A

Rajat Gandhi, Founder & CEO, Faircent.com 

“The finance minister’s budget speech reflects the government’s intent to increase the credit access for the MSME sector and women entrepreneurs under MUDRA scheme. P2P lending is using technology and new-age data, and diligently working towards taking organised credit to the non and under-banked segments of the Indian economy. This is an opportunity for the government to directly invest or co-fund through registered P2P Lending Platforms and ensure credit access for MSMEs, New-To-Credit as well as female entrepreneurs. P2P lending is an asset class ensuring flow of investments from those with surplus to those in need. Hence it’s important that the lenders are supported through tax incentives. We look forward to working with the government towards the common goal of financial inclusion.

 

Bipin Preet Singh, Co-founder, MobiKwik 

“A reformist budget for startups and digital India. The government’s impetus on digitising the rural hinterlands, focus on smart cities, and commitment to blockchain technology will encourage the promotion of digital payments across the country, thereby making India truly digital. Further, disallowing cash payments beyond Rs 10,000 by trusts and institutions will boost digital payments. I commend the government’s decision to reduce corporate tax to 25 percent and improve the ease of doing business by providing a unique ID for every company on lines of Aadhaar. These initiatives will benefit startups and MSMEs immensely and lay a strong foundation for a progressive India. However, the government should consider regulating cryptocurrencies than curbing their use entirely.”

Budget 2018: 10% Long Term Capital Gain tax to benefit P2P lending players (moneycontrol), Rated: B

Imposing 10% long-term capital gain tax on equity investments may create some level playing field for the P2P lending industry. So far, the favourable tax treatment on long-term gains on equity investments made them a preferred choice for the investors. Now, those who are ready to take higher risk for earning better returns may also think of investing in P2P lending projects which have a better risk profile as compared to equity-oriented investments.

Asia

Ulema council, OJK to issue fatwa on sharia-based fintech lenders (The Jakarta Post), Rated: AAA

The Indonesia Ulema Council’s (MUI) sharia division and the Financial Services Authority (OJK) are preparing a fatwa to serve as a legal basis for the operation of sharia-based financial technology (fintech) lending institutions.

“Many non-Muslims are also interested in sharia-based fintech financing. So it has a very large potential market,” Adiwarman said as reported by kontan.co.id.

Since a trial run in November 2017, Investree has disbursed Rp 2.7 billion (US$189,000) in sharia-based financing.

Africa

Five ways to finance your dream (Standard Digital), Rated: AAA

It found that in 2015, Kenya and South Africa raised $16.7 million (Sh1.7 billion) and $15 million (Sh1.5 billion), respectively, in financing from various online channels. However, unlike in South Africa, most of the money raised using these alternative financing platforms in Kenya came from foreigners.

Overall, a total of $62.2 million (Sh6.4 billion) was raised across Africa, with more than 75 per cent of this money going towards funding start-ups and SMEs.

  1. Equity-based crowdfunding
  2. Peer-to-peer business lending
  3. Debt-based securities
  4. Donation-based crowdfunding
  5. Reward-based crowdfunding

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

Monday January 22 2018, Daily News Digest

California triple-digit APR loans

News Comments Today’s main news: SoFi seeks to poach Twitter  COO for CEO slot. Zopa increases investor interest rates. SoftBank considers IPO in London. TransferWise launches borderless bank account. Spotcap partners with BAWAG Group for same-day financing. Today’s main analysis: Super high-interest loans in California have boomed. Today’s thought-provoking articles: How online branding can help businesses get a loan. Today’s […]

California triple-digit APR loans

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United States

SoFi Offers CEO Spot to Twitter Executive Anthony Noto (WSJ), Rated: AAA

Anthony Noto, a top Twitter Inc. executive, is in discussions to become the next chief executive of Social Finance Inc., according to people familiar with the matter, as the online lender grapples with accusations of improper workplace culture.

The San Francisco-based company has offered the job to Mr. Noto, currently Twitter’s operations chief and before that a top Silicon Valley banker atGoldman Sachs Group Inc.,people familiar with the matter said. Mr. Noto is likely to make a decision in the coming days, the people said.

Twitter’s Noto offered CEO spot at SoFi (SeekingAlpha), Rated: A

He may turn down the offer, as terms haven’t yet been completed, or Twitter might lobby hard to keep him, especially with CEO Jack Dorsey splitting his time between the social-media service and Square.

How Your Business’s Online Brand Can Help You Get A Loan (Forbes), Rated: AAA

An increasing number of the largest online lenders, such as Kabbage (a ValuePenguin affiliate) and Funding Circle (also a ValuePenguin affiliate), are relying on online data in addition to traditional data points to gain a fuller picture of a business’s health.

Kabbage, which recently received $200 million in funding from Credit Suisse, uses a fully automated underwriting process (involving no humans) to approve applicants and requires business owners to link online accounts, which run the gamut from bank accounts to vendor accounts, to complete an application.

Even traditional lenders are getting in on this trend. JPMorgan Chase (a ValuePenguin affiliate), which recently renewed its partnership with online lender OnDeck (also a ValuePenguin affiliate), the largest online lender to small businesses, uses the latter’s underwriting technology, which considers online data points, to help it offer online business loans.

How super high-interest loans have boomed in California (Los Angeles Times), Rated: AAA

Not long ago, personal loans of this size with sky-high interest rates were nearly unheard of in California. But over the last decade, they’ve exploded in popularity as struggling households — typically with poor credit scores — have found a new source of quick cash from an emerging class of online lenders.

These pricey loans are perfectly legal in California and a handful of other states with lax lending rules. While California has strict rules governing payday loans, and a complicated system of interest-rate caps for installment loans of less than $2,500, there’s no limit to the amount of interest on bigger loans.

In 2009, Californians took out $214 million in installment loans of between $2,500 and $5,000, now the most common size of loan without a rate cap, according to the state Department of Business Oversight. In 2016, the volume hit $1.6 billion. Loans with triple-digit rates accounted for more than half, or $879 million — a nearly 40-fold increase since 2009.

The number of loans between $5,000 and $10,000 with triple-digit rates also has seen a dramatic 5,500% increase, though they are less common. In 2016, loans of that size totaled $1.06 billion, with $224 million carrying rates of 100% or higher.

Many of the loans can be tied to just three lenders, who account for half of the triple-digit interest rate loans in the popular $2,500-to-$5,000 size range. LoanMe, Cincinnati firm Check ‘n Go and Fort Worth’s Elevate Credit each issued more than $100 million in such loans in 2016, as well as tens of millions of dollars of loans up to $10,000 with triple-digit APRs.

CFPB To Reconsider Payday Lending Rules (Forbes), Rated: A

Within this large document, there are four key actions being proposed:

  • Affordability test: This imposes two burdens on payday lenders. First, conducting an affordability analysis would increase the cost of underwriting a loan. Second, people generally turn to payday lenders when they are broke.
  • Limit payday rollovers
  • Exemptions made for alternatives to payday lenders, including credit unions and community banks: If a lender derives less than 10% of its revenue from payday loans, it is exempt from some of the most onerous rules. This particular restriction is odd. Why is the hated payday lending product acceptable, so long as the institution making the loan only generates 9.99% of its revenue from such activities? Are high rates and frequent rollovers acceptable when coming from a bank? Or is there a presumption that payday lenders are evil while bankers are not?
  • Limit on the number of times a checking account can be debited. This rule limits the lender to two unsuccessful debit attempts. Afterwards, the lender can only attempt to debit the account if it receives authorization from the borrower.

The outrageously high APRs paid on payday loans can make anyone’s stomach churn. But why are APRs so high? I believe there are three main drivers:

  • Risks are high: The people using payday loans are very high risk borrowers.
  • Price competition is absent: For a payday loan, people value speed and access.
  • Good behavior does not get rewarded: Payday lenders generally do not report to credit bureaus.

Consumer protection bureau drops payday lender lawsuit (KYMA), Rated: A

The Consumer Financial Protection Bureau on Thursday dropped a lawsuit against four payday lenders.

Since 2012, two of the firms — Golden Valley and Silver Cloud Financial — offered online loans between $300 and $1,200 with interest rates of up to 950%. The other two firms — Mountain Summit Financial and Majestic Lake Financial — also offered similar terms on loans, according to the bureau.

Bank of America’s digital investments pay off (Business Insider), Rated: A

  • BofA added about 2 million users to its digital channels, predominantly to mobile. The bank’s active digital users jumped from 32.9 million to 34.9 million annually, an increase largely driven by mobile banking users, which increased by 2.6 million users year-over-year (YoY).
  • Engagement is rising too. Mobile channel usage rose 34% YoY to reach 1.3 billion interactions in the quarter.

BofA consistently updated its digital and mobile offerings throughout 2017, adding contactless ATM functionality, for example, and integrating tools like the popular peer-to-peer (P2P) offering Zelle. These innovations have likely contributed to rising interactions.

The Biggest Myths About the Underbanked (MicroBilt), Rated: A

Just under 30 percent of U.S. households are underbanked or unbanked, according to the FDIC. What these terms mean has been up for debate and subject to misconceptions. Let’s look at some of the most pernicious myths regarding underbanked Americans and debunk them:

Bank Earnings, GS Enters Home Improvement loan market, PeerIQ Hires (PeerIQ), Rated: A

in 6 years as its trading revenue was impacted by losses in commodities trading. GS, continuing on its strategic objective to generate $13 Bn in loans in 3 years, also announced that 

Zelle’s anti-fraud efforts trip up key group: Its users (American Banker), Rated: A

The person-to-person payments service Zelle differentiates itself from rivals by promising users that transactions sent over its network will clear in near-real time. Yet in recent months, the service has faced a number of complaints from consumers who say they are having problems sending or receiving money or setting up accounts in the first place.

Zelle has acknowledged the problems, but says the occasional delay is the price some users will have to pay as the big banks’ rival to PayPal and Venmo aims to create one of the industry’s strictest fraud-prevention programs.

Loanable is Working to Disrupt Student Loan Industry (The Student Loan Report), Rated: A

One of the biggest (and most unique) new companies working in the online lending space is Loanable – a platform that brings together crowdfunding and peer-to-peer lending, but with a twist.

According to Bernard Worth, who created Loanable along with co-founder Justin Straight, there is a whopping $1.3 trillion in American student loan debt.

This system, which just launched in October of this year, is designed specifically for loans from friends and families. Loanable is an innovative way to get a low-interest loan from multiple friends and family members, without of lot of the awkwardness and tension that’s typically involved with borrowing from people you know.

The friends and family loan set-up process is pretty straightforward. You simply need to enter some information:

  • The full amount of the loan
  • Each lender’s name, address and email
  • The borrower’s name, address and email
  • The interest rate – which is usually between 2% and 10% for friends and family loans
  • The loan term (normally 36 months)
  • A designated late fee
  • The start and end dates of the lending schedule

SoFi Parent Loan vs. Parent PLUS Loan: Which Is the Better Option? (Student Loan Hero), Rated: A

SoFi Parent Loans Parent PLUS Loans
Eligibility requirements Your child is enrolled full time in college; you’re a U.S. citizen or permanent resident Your child is enrolled at least half time in college; you’re a U.S. citizen or eligible non-citizen
Application process Apply for an instant rate quote with a pre-approval application (soft credit pull); submit full application when you choose a loan (hard credit pull) Submit the FAFSA; work with your college financial aid office to request a Parent PLUS Loan
Credit requirements SoFi considers your credit score, debt-to-income ratio, income, career, education, and other factors. Another parent or guardian can cosign You can’t have an adverse credit history. If you do, you can apply with an endorser who has strong credit
Borrowing limits $5,000 minimum, up to the total cost of attendance Up to the total cost of attendance, minus any other financial aid received
Rates Fixed APRs from 3.25% – 7.25%; variable APRs from 2.58% – 7.07% Fixed interest rate of 7.00% for the 2017-2018 school year
Origination fees None 4.264 percent for the 2017-2018 school year
When repayment begins Immediate repayment Immediate repayment, unless you request a deferment while your child is in school and for up to six months after they graduate
Repayment options Five- or 10-year terms Standard Repayment Plan (10 years); Graduated Repayment Plan (10 years); Extended Repayment Plan (25 years); Income-Contingent Repayment, if you consolidate first (25 years)

Tax Preparation Firms Use Zero Interest Loans As Lead Generator (Lend Academy), Rated: A

With tax season around the corner you might have noticed a deluge of Jon Hamm commercials for interest free tax refund advance loans. This is a newer product used by tax preparation firms to build their customer base around tax season.

H&R BlockJackson HewittLiberty Tax Service and more recently Credit Karma all market interest free advances on your tax refund. The process is simple and the loans are paid back to the tax preparer when your refund comes back from the government.

CSBG Applauds Senate Introduction of the Small Business Credit Availability Act (Coalition for Small Business Growth Email), Rated: B

The “The introduction of the Heller-Manchin Small Business Credit Availability Act is welcome news for America’s small and mid-sized businesses. The legislation recognizes that business development companies (BDCs) have become an important source of capital for Main Street businesses and modernizes the way BDCs are regulated. If passed, this bill could quickly result in billions of dollars of credit availability for companies often overlooked by traditional lenders,” said Joe Glatt, co-founding member of CSBG.

Learn more about the Small Business Credit Availability Act (H.R. 3868) here.

State of New York Poised to Empower New York Department of Financial Services to Study Online Lending (Crowfund Insider), Rated: B

There is legislation moving through the state of New York that shifts some responsibility regarding online lending to the New York Department of Financial Services (NYDFS).

This is according to a brief write up in Lexology and the change in approach may have an important impact regarding online lenders operating in the state of New York.

NYDFS does not necessarily have a reputation for being Fintech nor innovation friendly.

Read the New York Senate Act here.

United Kingdom

Peer to Peer Lender Zopa Increases Interest Rates Paid to Investors (Crowdfund Insider), Rated: AAA

Zopa, one of the largest peer to peer lenders in the UK, has announced an increase in interest rates paid to investors. Zopa currently offers two diversified investment tiers: Zopa Core and Zopa Plus. Returns have increased from 3.7% for Core and 4.5% for Plus respectively. The higher rate reflected by Plus is indicative of an increase in risk profile. Zopa said this is the first time target returns have increased since 2015.

Bankers in fight to lure Softbank float to City (The Times), Rated: AAA

Softbank Group, the Japanese technology conglomerate, is considering the sale of 30 per cent of the shares in Softbank Corp, a subsidiary that is Japan’s third-biggest mobile phone operator, in an initial public offering.

The mega-deal could raise up to two trillion yen (£13 billion) and may take place this year in Tokyo and London, with the proceeds channelled into investments in new technology businesses, the newspaper Nikkei reported last week.

8 in 10 SMEs still prefer traditional bank loans over alternative finance (growth business), Rated: A

Research from an independent senior recruitment specialist firm, Tindall Perry, reveals that 74 per cent of finance directors describe their knowledge of alternative finance as average or above. However, only a quarter said they were comfortable with accessing crowdfunding or peer-to-peer lending.

In contrast, 85 per cent of companies said that they understood how best to access asset-based lending (ABL), while invoice finance, trade finance and venture capital all saw a positive response rate of between 55 and 75 per cent.

Despite this, traditional bank lending remained the funding of choice for financial directors, with 83 per cent suggesting that they would approach their bank for finance in the first instance.

UK Open Banking crew call on Contego to verify you (Fintech Futures), Rated: A

Contego, a regtech and compliance firm, has been chosen by the Open Banking Implementation Entity (OBIE) to verify its users and support open banking development in the UK.

Envestnet | Yodlee unveils API solution for PSD2 compliance (Fintech Futures), Rated: A

Envestnet | Yodlee has launched a single API solution to make it easier to comply with the UK’s PSD2 and open banking API specifications for account information services, reports David Penn at Finovate (FinTech Futures’ sister company).

Tech drives financial sector consultancy in the post-crisis era (Financial Times), Rated: A

“We’ve recruited more than 1,000 specialised consultants across BCG working on topics which didn’t exist just five years ago,” says Mr Morel. They are technologists, data scientists and process specialists who help banks decide what to prioritise and how to design and implement solutions. Most of those newcomers work in financial services, including 100 who work with UK institutions.

LendInvest seals £17m deal for first phase of 5,750 home site (Specialist Lending Solutions), Rated: B

LendInvest has been named the exclusive development finance lender on the first phase of a long-term development scheme that aims to build up to 5,750 new homes outside Dover in Kent.

The lender is funding the first 216 units on the first section of the site to be developed by Halsbury Homes – the largest number of units it has funded so far.

Astute investments for under $ 1,000 (Bankless Times), Rated: B

In fact, with real estate crowdfunding services like Fundrise Reviews you can invest with as little as £500 in commercial real estate. Something that means you could be looking at a return of over 10 per cent, not bad for such a small investment.
China

Shake-up in China’s online P2P lending sector (China.org.cn), Rated: A

The past New Year’s Day holiday might not have been a time of celebration for some Peer-to-Peer (P2P) investors in China.

Several Chinese online lending platforms announced a repayment delay or liquidation amid tightening government regulations.

On Dec. 26, 2017, a Beijing-based online lending platform ishoutou.com made an online announcement that it was going into liquidation due to compliance risks. It promised to pay back all loans by 30 percent, 30 percent and 40 percent respectively in the three months from February to April.

However, the company owner, Yang Yinghua, went missing the next day.

European Union

Orange Bank: is a phone company the future of fintech? (Financial Times), Rated: A

And yet it is Orange that has launched one of the most audacious attempts to break into mainstream banking and challenge tarnished incumbents. A couple of months ago Orange Bank was launched with a mission to attract 2m clients and shake up the staid world of French finance.

The shift to smartphone banking should put telecom operators, handset makers and the big technology groups in a strong position to go head to head with the traditional banks.

 

Springhouse Receives MOR RV2 Residential Vendor Ranking from Morningstar Credit Ratings, LLC for Asset Valuation (Yahoo! Finance), Rated: A

Springhouse today announced that it has received Morningstar Credit Ratings, LLC’s MOR RV2 residential-vendor ranking as an asset valuation provider. Morningstar’s forecast for the ranking is Positive.

As a member of the Altisource Portfolio Solutions S.A. family of businesses (“Altisource”), Springhouse leverages Altisource’s shared services.

EUROPEAN DIGITAL LENDING AWARDS (Eiffel Investment Group), Rated: A

Eiffel Investment Group actively supports the development of digital lending throughout Europe.

We are excited to sponsor the first EUROPEAN DIGITAL LENDING AWARDS.

The event will take place on February 1st, 2018, in Paris (25 Rue du Petit Musc, 75004 Paris) at 7 pm. If you would like to attend, please send us an email at contact@eiffel-ig.com (advanced registration is mandatory).

See voting categories here.

International

Transferwise Launches Borderless Bank Account (CLNews), Rated: AAA

Launched in January, the company’s ‘borderless’ account – coupled with a debit card –  allows users to hold up to twenty-eight currencies. Once signed up, account holders can carry out transactions in a currency of their choice as they travel around the world.

But there are other new players in the market. For instance, Revolut – which styles itself as a digital banking alternative, offers a prepaid debit card that allows users to hold up to sixteen currencies. Again, transactions can be carried out in the currency of choice.

Meanwhile, WorldFirst – a foreign exchange broker serving companies and relatively wealthy individuals –  last year announced that it was launching a World Account, Aimed at SMEs, the new account offers the ability to open local bank accounts overseas and hold dollars, sterling and euros.

To Illustrate the potential demand for its service, Worldfirst cited research suggesting that small and medium-sized companies were carrying out foreign-exchange trades to a value of £76bn every month.

Today’s Banks Need a Millennial Banking Technology Framework (Finextra), Rated: AAA

According to Bank of America’s Year-end Millennial Snapshot, 49% of Millennials believed that the Great Recession drastically altered their attitudes about banks, specifically with regard to their saving, investment and expenditure.

According to PwC’s Global FinTech Report 2017, FinTech startup funding is over $40 billion in cumulative investment, growing at a compound annual growth rate (CAGR) of 41% over the last four years.  

Embrace the Millennial Banking Revolution

59% of Millennials interviewed by BNY Mellon says they’ve never come across a financial product specifically meant for them. A report by The Millennial Disruption Index cited that all the four leading banks in the US are among the least-loved brands by millennials.

Spotcap partners up with major bank to offer same-day financing (Spotcap), Rated: AAA

Spotcap has entered into a market-leading strategic partnership with BAWAG Group to give Austrian small and medium-sized enterprises (SMEs) access to same-day financing.

More than 99 percent of Austrian businesses are small or medium-sizedand access to finance is a key challenge for SMEs in Austria, as it is for SMEs globally.

We will now provide Lending as a Service to major institutions in addition to our direct SME loan offering in the United Kingdomthe NetherlandsSpainAustralia & New Zealand.

AlfaToken ICO to Make Smart Contracts Accessible Even for Those with Zero Coding Skills (BTC Manager), Rated: A

AlfaToken, a service enabling startups and innovative entrepreneurs to create their own ICO tokens and smart contracts without coding skills, is gearing about to conduct its Initial Token Offering with the help of ICOBox, the world’s leading provider of ICO solutions. AlfaToken plans to offer services in 14 smart contract areas, from initial coin offerings and real estate rentals, lending and insurance, to business process management, smart homes and property transfers.

Founded in 2017, AlfaToken identified a gap in the ICO market where initial coin offerings are forecast to rise from 43 in 2016 to 537 in 2017, according to coinmarketcap.com. In particular, the company perceived an opportunity for its Ethereum smart contracts in the real estate rentals market, worth $2.8 billion (Airbnb forecasts), in the peer-to-peer lending market (including mortgages), worth up to $180 billion according to Business Insider, and also the insurance market valued at $4.5 trillion according to a 2016 report by the Institute of International Finance.

Australia

 

Eight big things coming to finance in 2018 (finder), Rated: A

1. Blockchain

Every digital financial transaction you’ve ever made in your life has had to go through a bank or large financial institution at some point. They authorise, facilitate and record the transaction, often taking a cut along the way. Blockchain essentially replaces the middleman in this process. It’s international, unregulated, instant and unhackable.

94% of economists surveyed by finder.com.au in November 2017 expect blockchain will have widespread use in the financial sector and economy.

2. Biometric payments

Although biometric payments are increasing, finder.com.au research shows 60% of Aussies – over 11 million people – either feel uncomfortable using biometric identification when logging on to their mobile banking apps, or aren’t really sure about it.

3. The end of our low-interest world

Australia’s cash rate sat stagnant throughout 2017 at a record low of 1.5%, producing low savings rates, cheap mortgages and escalating property prices.

4. The declining human face of banking

A sharp rise in mobile and online banking has meant Australians are less likely than ever to need to visit their local branch. We expect the number of branches to fall further in rural, regional and remote areas.

5. The rise of one-to-one lending

For example, the average three-year term deposit in December 2017 paid 2.55% interest. However, peer-to-peer lender RateSetter are currently offering 7.4% for the same period.

6. The disappearance of ATMs and cheques

The number of ATM withdrawals per month has fallen from a high of 73 million in 2010 to just 47 million in 2017.

7. Savings innovations for children

Finder’s 2017 Banking Innovation award went to Spriggy – an app which allows parents to pay pocket money onto debit cards.

8. And finally… instant banking and the New Payments Platform (NPP)

By far the biggest change to the financial industry in Australia will be the New Payments Platform (NPP), which will be switched on in phases from February 2018.

India

More millenials borrowing to travel; take micro loans (The New Indian Express), Rated: AAA

It has been noted that youngsters are averting eyes towards quick personal loans with lesser interest rates rather than the credit cards, says Aditya Kumar, founder of Qbera, a Bengaluru based fintech company. They recently compiled a stats on spending on travel loan trends in 2017. “Millennials, covering more than 50 percent of the Indian population are constantly looking for online digital platforms to plan their finances for holidays; unlike their predecessors who’ve always relied on savings. It has been a regular practice to narrow down their search to fintech lenders for financing their travel needs,” he adds.

According to his company’sstatistical report, out of 1700 applicants of travel loans till last year November, the age of 728 applicants is below 28 years and 105 female applicants within the age span of 20-28 years (both single and married), he adds.

Pre-budget 2018 Reaction Mr. Rajat Gandhi Founder & CEO, Faircent.com (Technuter), Rated: A

In 2015-16 more than 10,000 businesses across UK benefitted and an estimated 30,000 new jobs were created due to UK government’s favorable policies for the P2P lending sector.

Asia

OJK Set to Issue Regulation on Crowdfunding (Netral News), Rated: AAA

The Financial Services Authority (OJK) is planning to issue a policy in financial services institutions, including guiding principles for Digital Financial Services Providers that include registration and licensing mechanisms as well as the application of regulatory sandbox and policy on crowdfunding.

 

Building wealth management strategies for this year (The Star), Rated: A

Not only has the US Federal Reserve started to raise interest rates – a move mirrored by China’s central bank and the Hong Kong Monetary Authority with more developed countries expected to follow suit – but a market correction may be in the works following a strong run in both the US and Malaysian stock markets.

Yet despite its prices taking a plunge recently, its demand is still going strong. Similarly, ethereum, ripple, litecoin and Zcash continue to enjoy the mania status garnered by anything related to cryptocurrency. Equally enticing opportunities are abound with the rapid growth of equity crowdfunding (ECF) and peer to peer (P2P) lending platforms.

  • Review your holistic financial plan
  • Review your cashflow statement
  • Review your strategic asset allocation statement

Axiata invested US$ 200m in digital ventures (New Straits Times), Rated: B

Axiata Group Bhd is in the process of building one of the largest fintech companies in Asia to include five micro services – payments, remittance, lending, savings, and insurance.

President and group chief executive Officer Tan Sri Jamaludin Ibrahim said since 2013, Axiata had invested some US$200 million for its digital and internet ventures.

Out of the US$200 million, RM50 million worth of investment went into Axiata’s fintech business.

Russia

Russia’s Sberbank plans crowdinvesting platform for small firms, say sources (Gulf Times), Rated: AAA

Russia’s biggest lender Sberbank plans to help small firms raise funds from private investors with a peer-to-business platform, three sources familiar with the plans said, competing with two other ventures that support the cash-starved companies.

The state bank’s foray into p2b lending suggests it sees a revival in fortunes for small businesses as consumer spending picks up.

It also reflects the commitment of chief executive German Gref to enhance the bank’s use of new technology.

Authors:

George Popescu
Allen Taylor

Wednesday January 17 2018, Daily News Digest

European alt SME lending

News Comments Today’s main news: Wells Fargo is closing branches left and right. Repeal  of payday lending rule under consideration. Moody’s assigns provisional ratings to SoFi Professional Loan Program 2018-A-LLC. RateSetter leads in personal loans. Curve launches. Victory Park Capital looks overseas. Today’s main analysis: How Lendix blazes a trail in SME lending. Today’s thought-provoking articles: Why regulation is crucial. Wells […]

European alt SME lending

News Comments

United States

United Kingdom

China

European Union

International

Asia

Africa

Canada

News Summary

United States

Wells Fargo is getting more aggressive with branch closures (Tearsheet), Rated: AAA

Wells Fargo is charging toward its goal to cut over 800 branches by the end of 2020, it said in a presentation of its fourth quarter earnings on Friday.

 

Wells, which has been struggling to cut costs while it continues getting hit with legal fees following its various scandals, expects to save $4 billion as a result of the plan.
Source: Tearsheet

Consumer Financial Protection Bureau considering repeal of payday lending rule (NBC News), Rated: AAA

The bureau, which came under control of the Trump administration late last year, said in a statement Tuesday that it plans to take a second look at the payday lending rules. While the bureau did not submit a proposal to repeal the rules outright, the statement opens the door for the bureau to start the process of revising or even repealing the regulations. The bureau also said it would grant waivers to companies as the first sets of regulations going into effect later this year.

Moody’s assigns provisional ratings to SoFi Professional Loan Program 2018-A LLC (Moody’s), Rated: AAA

Moody’s Investors Service has assigned provisional ratings of (P)Aaa (sf) to Class A-1 Notes, the Class A-2A Notes and the Class A-2B Notes to be issued by SoFi Professional Loan Program 2018-A LLC (SoFi 2018-A). The collateral underlying the transaction consists of SoFi’s private student loans, which are loans the government does not guarantee. Our cumulative net loss expectation for SoFi 2018-A’s loan pool is approximately 2.0%.

Issuer: SoFi Professional Loan Program 2018-A LLC

  • $55,000,000 Floating Rate Post-Graduate Loan Asset-Backed Class A-1 Notes, Assigned (P)Aaa (sf)
  • $358,500,000 Fixed Rate Post-Graduate Loan Asset-Backed Class A-2A Notes, Assigned (P)Aaa (sf)
  • $236,800,000 Fixed Rate Post-Graduate Loan Asset-Backed Class A-2B Notes, Assigned (P)Aaa (sf)

Magilla Loans Platform Surpasses $ 4.5B Loan Origination Milestone (PR Newswire), Rated: A

Magilla Loans, a search engine for loans that connects borrowers to banks without requesting personal information, announced it has surpassed $4.5 billion in aggregated loans from top banks across the U.S. The Magilla platform provides business owners with access to multiple financing options, including access to business, home and real estate loans.

UpLift Closes Financings of $ 90M (FINSMES), Rated: A

UpLift, a Sunnyvale, CA-based travel financing company, closed financings of $90m.

The company received:
– a $75m credit facility in partnership with funds managed by affiliates of Fortress Investment Group, and
– a $15m equity round which includes participation from previous investors including PAR Capital with Draper Nexus, Highgate Ventures, and former Expedia CEO Erik Blachford.

NextCapital does $ 30-million VC round with a staggering objective that’s taking shape first with John Hancock (RIABiz), Rated: A

The shoot-the-moon robo strategy of NextCapital Advisers Inc. is looking up now that John Hancock Financial Services Inc. has come out of pilot and State Street Global Advisors became a partner in going after RIAs.

The Chicago-based digital advisor, founded in 2013, announced it more than doubled its backing with $30 million of venture round led this time led by Oak HC/FT of Greenwich, Conn. See: NextCapital raises $16 million as its founder goes where Financial Engines’ 401(k) robo strategy didn’t.

All told, the firm has raised $54 million: Six million dollars in August 2014, $18 million in 2015 and, just recently, this $30-million round.

Borrowers in the Lone Star State Can Now Get a Better Mortgage (Digital Journal), Rated: A

Better Mortgage, a digital mortgage company focused on improving access to home financing for a new generation of homeowners, is now available to Texas homebuyers. Better will now be able to serve more than half of Americans who are looking to own or currently own a home. In 2017, Better expanded its footprint in major real estate markets around the country, with Texas being the latest licensed states.

Texas is Better’s 14th market. In 2018, they expect to continue their expansion, focusing on geographies that help first-time homebuyers invest in their communities by putting down roots.

Gary Lieberman of Laurel Road (Lend Academy), Rated: A

In this podcast you will learn:

  • The history of Darien Rowayton Bank.
  • Why Gary decided to buy this small community bank in 2010.
  • How the bank has grown since Gary took it over.
  • How student loan refinancing first got on his radar decades ago.
  • When DRB originated their first student loan.
  • The advantages of being a bank and a fintech platform.
  • Some of the affiliate partnerships DRB has.
  • Other verticals where DRB has offerings today.
  • Why DRB rebranded to Laurel Road in 2017.
  • The scale they are at today with student loan refinancing.
  • Their approach to securitization.
  • How their loans have been performing to date.
  • The profile of their typical borrower.
  • How they market their offerings.
  • What the future holds for Laurel Road.

Refinancing Student Loans Gets Mixed Report (247WallSt), Rated: A

More than 45 million Americans have borrowed $1.45 trillion in student loans to help pay for their post-secondary educations. Repaying those loans can be tough, especially if the loan amount is high and pay for the first job after graduation is low.

Student loan marketplace and refinancing website LendEDU has just released its second annual report on the state of the student loan refinancing market. Here are several highlights from the report:

  • Average credit score of an approved refinance applicant is 764.
  • Just over 58% of 2017 applications are denied.
  • The average interest rate on a refinanced loan is 5.56%. The average rate rose 74 basis points year over year from 4.82% in 2016.
  • The average size of a refinance loan was $66,453. The 2017 average was more than 23% higher year over year.
  • Less than half of approved applicants actually end up refinancing their loans. In 2016, just over 33% of all applicants completed the loan process.

Reliamax’s Michael VanErdewyk: ‘We’re seeing a move towards more private student loans’ (Tearsheet), Rated: A

With all the excitement around online lending, there are still some spaces that have a long growth runway. One of the most persuasive growth opportunities is private student lending. Macroeconomic and policy changes are contributing to the growth thesis but so too are the number of local lending institutions that want to move into this asset class.

Rising costs of higher education
The cost of education continues to increase and the number of kids in school isn’t declining. So, it’s a big opportunity. Really, we have to talk about the cost of education. The cost of higher education in the U.S. today costs over $400 billion a year. About 25 percent of that is free money (grants and scholarships). Another 25 percent is federal student loans. The remainder — about $200 billion a year — is really family contributions.

The focus on private student loans
If you look at the total outstanding student debt, there’s about $1.4 trillion in federal student loans and $100 billion in private student loans, comprising only about 7 percent of total outstanding student debt.

CreditVest starts crowdfunding advisory firm (BizJournals.com), Rated: B

Jon Mauro founded Realty Mentors with Andrea Humphrey, who is president and owner of CreditVest, to focus on individual investors who want to participate in commercial real estate crowdfunding.

Zelle is now running TV ads (Tearsheet), Rated: A

Zelle is spending “tens of millions” of dollars on a television ad campaign featuring spoken word artist Daveed Diggs.

Early Warning, the bank-owned consortium behind the peer-to-peer payments platform, aired the first ad Saturday during the National Football League’s divisional round of playoff games and will continue to run them alongside unifying cultural events like the Grammy Awards, the NBA All-Star Game and the Super Bowl pre-game show. They’ll also run during popular shows on Bravo, Comedy Central, The Discovery Channel, ESPN and MTV.

Zelle is trying to build some brand recognition for itself among its target audience, mobile users, in an effort to compete with Venmo.

An investing platform founded by a 25-year-old went free — and now it’s facing a backlash from its rivals (Business Insider), Rated: A

M1, which was founded by CEO Brian Barnes when he was 25, originally charged users 25 to 40 basis points to use its platform, which allows users to buy fractional stocks and invest in pre-built portfolios. In December, it decided to go free, and make money strictly on the backend, by selling flow to trading firms and lending out non-invested funds sitting in users’ accounts to banks. The company also plans to offer margin trading to its users.

Since going free in December, M1 has seen daily inflows hit as high as $1 million, and a 10-fold increase in the number of new accounts each day.

Still,  M1’s robo rivals aren’t convinced the strategy will work for the small company.

Tipalti Launches Payables Automation Partner Program (BusinessWire), Rated: A

Tipalti, the leading global payables automation platform, today announced the launch of its Partner Program, which will offer accounting firms, financial institutions, system integrators, ERP resellers/VARs, consultants, and partners who work with the office of the CFO, the ability for their clients to leverage Tipalti’s software to eliminate the friction, risk, and time spent on manual accounts payable operations.

Key Features of Tipalti’s Partner Program:

  • Training and support for partners as they assist their clients
  • Option to pass exclusive savings on to their clients
  • Option to receive income stream through revenue-sharing
  • Low-impact engagement with minimal investment by partner

STOCKHOLDER INSPECTION RIGHTS SURVIVE CHALLENGE IN DELAWARE (AllAboutAlpha), Rated: A

On December 29, 2017, the last business day of the expiring year, the Delaware Chancery Court, in a memorandum of opinion by Vice Chancellor Slights, upheld stockholders’ statutory books-and-records inspection rights against a defendant corporation that sought to invoke and considerably to widen the scope of the Delaware Supreme Court’s Corwin decision of 2015.

The significance of this is that Delaware, some impressions to the contrary, is not a corporate-management-always-wins state. It was not so before the Corwin decision, nor did that decision make it so.  That ought to be good news for activist investors and their counsel. There may be alpha, or at least leverage toward alpha, lurking in the right to inspect books and records.

United Kingdom

RateSetter leading the way for personal loans (RateCity), Rated: AAA

Interest rates for personal loans listed on RateCity range from as low as 3.57 per cent to as high as 48.00 per cent.

The average personal loan interest rate was 11.89 per cent at the end of December, according to an analysis of the dozens of lenders listed on RateCity.

RateSetter, a peer-to-peer lender, has a one-year unsecured personal loan with an advertised rate of 3.57 per cent and a comparison rate of 3.92 per cent.

Curve, the fintech that connects all your cards to a single card and app, gets full consumer launch (TechCrunch), Rated: AAA

Curve, the London fintech startup that offers a platform that lets you consolidate all your bank cards into a single Curve card and app to make it easier to manage your spending, is finally launching to U.K. consumers. Up until now, the service remained in beta and was only officially available to business users.

In a call with Curve founder and CEO Shachar Bialick, he described the consumer launch as a major milestone for the company, noting that 50,000 people have signed up to its waitlist, in addition to the 100,000 or so users who joined Curve in its beta phase. It’s free to join, although a premium version of the Curve card is also available for £50 that offers additional perks.

How P2P could be a financial lifeline for UK landowners (Bridging&Commercial), Rated: A

A recent study of 172 farms by the Prince’s Farm Resilience Programme found that just 16% made a profit from their farming activities over the period assessed. The analysis found that instead many farms are now reliant on alternative income streams to turn a profit, such as tourism, renewable energy and selling their products directly to consumers.

But moving into alternative areas of business requires capital. And – with the average farm in the study making a loss of more than £20,000 from its farming activities – it may be capital that landowners require to invest in their business to prevent a loss.

Folk2Folk champions local lending because we believe in creating financially and socially sustainable communities by matching local businesses with local lenders.

Robo advice platform citing AI and machine learning raises £562k on Crowdcube (AltFi), Rated: A

Marketsflow, a new digital wealth management platform closed its fully funded investment round via equity crowdfunding.

Initially looking to raise £210k, the fundraise has seen more than £562k of commitments from nearly 800 investors giving Marketsflow a pre-money valuation of £2.4m.

What we learned about fintech from some of the biggest brains at Clifford Chance (Legal Cheek), Rated: A

What kind of financial technology has come across your desk at Clifford Chance, then? (Here comes the educational bit.) Chapman identified four technologies driving change:

Marketplace lending: crowdfunding or peer to peer lending, with the potential for “disintermediation” of the financial institution that used act as middleman for loans.
Big data and AI: you might just have seen it in the newspapers. But it’s closer than you think: if you’ve applied for a credit card, according to Chapman, chances are that a machine took part of the decision on whether or not to approve you.
Mobile payments: forget branches, even internet banking on a web browser is old hat. Some banks, indeed, exist only as apps (I instantly thought of my Revolut app, which started out offering as a slick currency exchange platform, but is now offering credit).
Blockchain and distributed ledger: different things, but often used in combination. These are “the pieces of technology that underpin the Bitcoin phenomenon”. It’s not just media hype, either: Clifford Chance is “seeing a lot of work in this space”.

5 Top Alternative Investments in the UK (What Investment), Rated: B

1. Crowdfunding

Rather than rely on venture capital trusts and angel investors, many new businesses are using crowdfunding to get off the ground. In fact, UK platforms such as CrowdCube and Angels Den have raised over £72 million from investors this year.

5. Peer-to-peer lending

Peer-to-peer lending allows you to loan money to people through online platforms, without a bank. These agreements are arranged through peer-to-peer lending platforms such as Zopa, Prosper and Lending Works. These peer-to-peer companies are typically FCA regulated and they organise credit and ID checks as well as set interest rates, collect payments and pay your returns.

After PSD2 and GDPR, what Wayfinding Signs will guide visitors through an Open Bank? (LinkedIn), Rated: A

When branch banking was the mainstream method of service distribution in financial services, both a bank’s customers and potential business partners could follow clear signs that directed them where to go and who to contact. The first sign that a bank sent its customers and potential business partners was the geographic location of a bank branch.

One in four very-low income households are struggling to pay bills or debt, with 10 per cent spending more than a quarter of their salary on credit card repayments, a report has found.

Data from the Institute for Fiscal Studies (IFS) showed one-sixth of the poorest households in Britain were in arrears on repayments and bills.

A further 10 per cent were spending at least a quarter of their monthly income on unsecured debts, such as credit cards and payday loans.

China

‘Freedom at a Price’: Why Regulation Is Crucial to Fintech’s Future (Wharton), Rated: AAA

In recent years, financial technology, or fintech, has dramatically expanded financial inclusion in China and elsewhere in Asia. Small and midsized businesses that have been underserved by banks now have access to capital, as fintech enterprises use the internet and mobile technology to reach those borrowers; leverage data analytics to build credible and innovative risk profiles to gauge creditworthiness, and are able to scale their reach exponentially with 24/7 customer windows and without the baggage of fixed-cost overheads that typically shackle traditional banks. Not surprisingly, the unmet needs of the underserved have provided huge market potential for fintechs.

Credit China FinTech, which is listed on the Hong Kong Stock Exchange as Chong Sing Holdings FinTech Group Ltd., or CSF, provides third party payments, online investment, technology-enabled lending, and traditional loans and financing services. Today, it has more than 51 million users who generated transactions worth RMB 868 billion ($130 billion) in the first half of 2017.

At the same time, both have proved massively popular in China which accounts for roughly half of the world’s digital payments and three-quarters of global, online P2P lending volume, according to Pricewaterhouse Coopers.

For one, default rates are higher than anticipated on peer-to-peer lending platforms. Also, instead of being disrupted by the fintechs, traditional banks have entered the peer-to-peer lending space to become the dominant players, he added.

China regulator says fintech must serve real economy (Finextra), Rated: A

Jiang Yang, vice chairman of China’s Securities Regulatory Commission (CSRC) was speaking at the Asian Financial Forum to an audience of fintech entrepreneurs. The development of fintechs should benefit the real economy and not “a small group of people”, he said in comments reported by the Nikkei Financial Review.

European Union

Lendix Raises €200 Million Institutional Financing to Trailblaze European Alternative SME Finance (Crowdfund Insider), Rated: AAA

The European Investment Bank Group (EIB), CNP Assurances, Eiffel IM, Groupama, Zencap AM, Matmut and Decaux Frères Investissements are among the first investors joining to finance Lendix’s latest investment vehicle to fund unsecured loans to SMEs in France, Spain and Italy. New institutional investors from banks and asset management firms in Spain and Italy are joining. As of now, €120 million of the planned €200 million are already committed and the first loans from this fund will start rolling out as soon as February.

Source: Crowdfund Insider

As of December 2017, Lendix originated a cumulated worth of €143 million of SME loans, a 90% increase from 2016.

Online Lender Robo.Cash Shares Insight into Investor Activity (Crowdfund Insider), Rated: A

Peer to peer lender Robo.cash has shared a “financial portrait of a Robo.cash investor.”

According to their results, investors from a younger age group, 18-24 years old, usually deposit circa €200 at a time and rarely withdrew  any funds. The maximum funding size is characteristic of the older age groups: the average deposit of investors of 35-44 years old is equal to €879 and for those who are older than 45 years old is €838.

Millennials of 25-34 years of age invest about €679 on average making frequent deposits in comparison to the younger age group.

Approaching energy crowdfunding with eyes wide open (YourIS.com), Rated: A

youris.com met Sissy Windisch, from the German company Green Crowding, who published a guide for new small investors, to allow them to make the best decisions. The document was released under the EU project CrowdFundRES.

This is a different kind of crowdfunding, unlike what platforms such as Kickstarter do?
With Kickstarter you donate money, so a comic book for example can be published, or you just want an artist to keep on creating art. Instead, the type of crowdfunding we are interested in is debt-based, which means that you get your money back plus interest. If you finance a solar roof on a school for five years, you get 3% every year and at the end of five years you get your money back.

Could you tell us more about debt-based crowdfunding?
Debt-based funding is already one of the largest types of crowdfunding. I would say one of the biggest areas in terms of funding volume at the moment is real estate. I think for 2016 alone the funding was estimated at around 3.5 billion dollars.

Why can’t the traditional financial institutions, such as banks or investment firms, offer these services?
What we’ve often seen, particularly for renewables, is that banks and other traditional financial institutions often look for large projects to invest in. They prefer investing in one 50-million wind park than in 500 small photovoltaic installations.

Swaper Offers One-Click Portfolio Investing (Benzinga), Rated: B

What does your company do? What unique problem does it solve?

Swaper CEO Peteris Kisis: Swaper is a loan marketplace offering an easy investing in pre-funded consumer loans originated by its parent company Wandoo Finance Group in Poland, Georgia, Spain, Denmark and Russia. All investments offered on our marketplace start from 12 percent annual interest and are BuyBack guaranteed, meaning Swaper will compensate investors both for the invested principal and accrued interest in case the borrower is late with payments.

International

Top backer of US subprime lenders eyes overseas opportunities (Financial Times), Rated: AAA

Victory Park Capital, a Chicago-based investment firm, has been a vital source of debt capital for a string of online lenders, including Avant, Elevate and LendUp, all of which focus on borrowers in the subprime segment. Total commitments and investments come to about $6.5bn from more than 90 deals, mostly in the US.

The firm, which was founded 10 years ago, is seeking to add to a portfolio including zip Money in Australia, Kreditech in Germany and Oakam in the UK.

(The Merkle), Rated: A

Vitalik Buterin, the creator of the Ethereum Network, recently proposed a new method for decentralized fundraising called the “DAICO”. Incorporating elements of Decentralized Autonomous Organizations, or DAOs, the new model is designed to minimize the complexity and risk associated with ICOs.

Buterin outlined the new model in a post on the Ethereum Research Forum entitled “Explanation of DAICOs”. In the exposition, the Russian-Canadian programmer outlines a new model that integrates characteristics of DAOs into ICOs to create a new model he refers to as the “DAICO”.

Source: The Merkle
Asia

New Crypto Exchange and 1000 Percent Revenue Growth Could Make KPAY The Crypto Stock To Own In 2018 (Baystreet), Rated: AAA

The little-known Indonesian digital payments company KinerjaPay (KPAY) reported another blowout quarter in December with sales that topped the previous 3 month period by a whopping 1,100%!

Revenue and User-Base Growing Parabolically? +1100% in Q3

KinerjaPay is a digital payments platform in Indonesia and South Asia, and the company ha been growing at an astronomical rate in the last year. In the third fiscal quarter of 2017 ended September 30, 2017, the company posted quarterly transactional revenue of $1.76 million, an 1,183% increase over $149K in the second quarter.

User growth is accelerating as the company brings on more partners for digital payments and bill pay capabilities in a region of the world where a fraction of people have a bank account or credit/debit card. The rate at which KinerjaPay is adding customers grew 58% in the 3rd quarter; the company reported 10,962 new users compared to 6,904 new users in the same quarter of last year, demonstrating just how fast they’re adding users for a small emerging company.

Asian stocks bounce back, with Hang Seng closing at a record (MarketWatch), Rated: A

Asian equity markets on Tuesday found their footing after some initial softness, leaving Hong Kong’s benchmark at a record closing high.

The Hang Seng rose 1.8% to 31,904.75, topping the previous high set on Oct. 30, 2007.

Japanese stocks rebounded from Monday’s selloff, with a weaker yen helping the country’s exporters. The dollar gained 0.2% to ¥110.7200, pushing the Nikkei to finish up 1% at a fresh 26-year high.

Africa

Fintech startups took nearly a third of all African venture funding in 2017 (Quartz), Rated: AAA

Almost a third of funding raised by African startups in 2017 was in the fintech sector as investors bet on consumers turning to more formal financial services in a region where just 17% of the population have banking accounts. Venture funding for African startups jumped by 51% to $195 million in 2017, according to a report from Disrupt Africa.

The success of mobile money technology like M-Pesa in Kenya and across East Africa has long shown the potential for other underserved markets. M-Pesa’s success is likely also behind for the increasing presence of mobile networks in the African financial sector and the convergence of the two sectors (pdf page 11).

Nigeria, South Africa and Kenya remained the countries with highest funding raised, consistent with their record from previous years.

Canada

Still a market for short-term loans (Edmonton Journal), Rated: A

Payday loan licences in Alberta have fallen by more than one-quarter, to 165 from 230, and industry officials predict even more payday loan stores will be shuttering their doors this year.

Before then, rules around payday loans in Alberta allowed for the second-highest interest rates in Canada, with lenders being allowed to charge up to $23 for every $100 borrowed, up to a maximum of $1,500. Now, the rate is $15 per $100 — touted to be the lowest in Canada — and borrowers are allowed to repay the the loans in instalments over two months. Lenders are also no longer allowed to penalize customers for paying back loans early and must restrict the number of times a lender can make preauthorized withdrawals.

Authors:

George Popescu
Allen Taylor

Tuesday January 2 2018, Daily News Digest

Yirendai

News Comments Today’s main news: Rumor: Former SoFi CEO Mike Cagney is planning a comeback with new HELOC startup. Funding Circle preparing 1B GPB float. Morgan Stanley to offer robo-advice. New bill could make IRS use API. Spice Mobility to invest $1.95M in P2P lending startup. Today’s main analysis: Yirendai still growing, and at a good price. Today’s thought-provoking […]

Yirendai

News Comments

United States

United Kingdom

China

International

Australia

India

APAC

News Summary

United States

The SoFi CEO who was ousted amid sexual harassment allegations is already back with a new startup (recode), Rated: AAA

Cagney has been approaching investors in recent weeks about a new fintech startup with a plan to raise about $25 million, according to multiple people familiar with his outreach. He has pitched investors such as Peter Thiel along with several others who were backers of SoFi, a company that Cagney pushed to become worth almost $5 billion.

Cagney is starting the new company alongside his wife, June Ou, who previously served as SoFi’s chief technology officer, the people said. The company does not yet have a name and has yet to be publicly announced — Ou’s LinkedIn page says she will serve as the COO of a “#newCo.”

The company is said to focus on HELOC, or home equity lines of credit, though the people said the idea was in the early stages and still required more sharpening. Ou this month shared a job posting on GlassDoor for engineers at a company soon to launch.

Morgan Stanley enters robo-advice investment market (Financial Times), Rated: AAA

Morgan Stanley has made a late push for dominance in the fast-growing market for “robo-advice” in America, launching an automated service aimed at the offspring of its well-heeled customers.

Funds managed by software will grow to $385bn by 2021, according to Cerulli Associates, more than quadrupling from today’s levels.

Morgan Stanley is the latest to pitch in, offering a choice of ETFs, mutual funds and seven themed portfolios, among them sustainability, gender diversity and next-wave technology. The new online tool, known as Access Investing, is designed to appeal to a younger generation, many of them members of wealthy families.

How a simple tech upgrade at the IRS could transform the economy (TechCrunch), Rated: AAA

Our credit system runs on the power of data. A simple IT upgrade at the IRS would put more of this power in your hands.

The IRS Data Verification Modernization Act of 2017, recently introduced in Congress by Rep. Patrick McHenry (R-NC) and Sen. Cory Booker (D-NJ), would set up an application programming interface (API) at the IRS.

This API would turn a cumbersome, manual process into an automated one. An API would allow the agency to provide your transcripts the instant you give your authorization. Credit providers would then have more information to make better decisions about your approval and rate. This could cut financial fraud and improve credit prices, speed and access for everyone.

Consumers Want Biometrics – How Will Payments Respond? (PYMNTS), Rated: A

recent study by Visa showed that, unsurprisingly, consumers are ready to say goodbye and good riddance to passwords, both because of the friction they create when trying to remember them – and the inevitable stutter step that the “forgot password” prompt creates – and because in the aftermath of the Equifax breach, the public has never been more conscious of how far passwords fall short in preventing fraud and keeping their data secure.

It was one of the big drivers, Nelsen said, behind the development of Visa ID Intelligence. Nelsen said that ID Intelligence is an ecosystem of authentication solutions to which issuers connect via a single API.

Over the last four years, Nelsen said there’s been an enormous increase in credit applications – a healthy portion of which are from fraudsters who’ve stolen legitimate credentials and have attempted to use them to open new accounts. Banks now recognize that the best way to combat new account fraud is to put knowledge-based authentication in their rearview mirror, in favor of using tools like identity documents and device data to help determine whether an identity is legitimate, stolen or synthetic.

Ebullient Equity And Credit Markets (PeerIQ), Rated: A

2017 has been a great year for equity and credit markets. The S&P500 ended the year up 20%, while CDX IG and CDX HY spreads tightened 46bps. ABS markets enjoy record issuance and all-tight time spreads.

Best of PeerIQ: 

Five ways financial laws could change in 2018 (The Hill), Rated: A

Republicans have made limited progress on President Trump‘s pledge to “dismantle” the Dodd-Frank Act, which the GOP had hoped to gut by the end of 2017. But the GOP and independent regulators could still make critical changes to key parts of the law’s legacy.

Senate Majority Leader Mitch McConnell told reporters last week that he’d like to hold a vote on a bipartisan Senate Banking Committee bill to exempt small and mid-size banks from aspects of Dodd-Frank.

House members from both parties have lined up behind a Congressional Review Act resolution to repeal the CFPB’s October rule Cyber breaches of financial companies reach across several committees of jurisdiction, and senators on the Banking Committee have expressed interest in a bill meant to protect credit-reporting information.

During the Banking panel’s markup of bipartisan Dodd-Frank rollback bill, Sen. Brian Schatz (D-Hawaii) sought to add language meant to boost accountability and transparency when credit reporting agencies are breached.

CFPB’s Payday Loan, Auto Lending Rules in Jeopardy (Manatt), Rated: A

As we have previously reported, the Bureau’s final rule on payday, vehicle title and other so-called high-cost installment loans created new consumer protections for a wide variety of short-term loans and provided official staff interpretations of the rules. Nearly 1,700 pages in length, the rule was issued on Oct. 4.

One of the more controversial provisions of the rule declares it an “unfair and abusive practice” for any lender to make covered short-term or longer-term balloon-payment loans, including payday and vehicle title loans, before reasonably determining that consumers have the ability to repay the loans according to their terms. Pursuant to the rule, it would also be an unfair and abusive practice to make attempts to withdraw payment from consumers’ accounts after two consecutive payment attempts have failed, unless the consumer provides a new and specific authorization to do so.

Now the rule—which is currently set to take effect Jan. 16, 2018—may see the same fate as the arbitration rule. H.J. Res. 122, introduced by Rep. Dennis Ross (R-Fla.), states “That Congress disapproves the rule submitted by the Bureau of Consumer Financial Protection relating to ‘Payday, Vehicle Title, and Certain High-Cost Installment Loans’ and such rule shall have no force or effect.” Significantly, H.J. Res. 122 includes Democratic co-sponsors.

Auto Finance—Another Bureau rule may soon be on the road to CRA repeal after the Government Accountability Office (GAO) wrote to Sen. Pat Toomey (R-Pa.) in response to a query about CFPB Bulletin 2013-02.

Umpqua’s next transformation (Banking Exchange), Rated: A

The long-term vision of the company has not changed: to provide banking products and services to people when they want it. We call it personalized banking for all—anytime, anywhere.

But how do you create a human relationship when more and more business is being done electronically?

So we’ve decided as a long-term strategy to combine the human element with digital components. We call it “human-digital banking.”

What does that mean? We have a new retail application in pilot called BFF—Best Financial Friend—created by Pivotus Ventures [Umpqua’s Palo Alto, Calif.-based fintech/research unit], that customers download on their phones. The first phase of the pilot was a centralized hub. Now we’re rolling it out in stores in the Portland [Ore.] market, training associates to serve as a BFF digitally in addition to working with customers in person. Our intent, as a more robust application becomes available early in 2018, is to introduce it into other metropolitan markets.

Using the app, customers pick a banker in the bank who will be kind of their personal concierge—almost like a personal shopper. They will help the customer do anything with Umpqua except get cash.

 

Always Search for the Best Option (Scotsman Guide), Rated: A

More than 53,000 single-family homes and condos were flipped nationwide in the second quarter of 2017 alone for a home-flipping rate of 5.6 percent of second-quarter home sales, according to Attom Data Solutions. The estimated total dollar volume of financing for homes flipped in second-quarter 2017 was $4.4 billion, the highest level since third-quarter 2007, nearly a 10-year high.

More than 35 percent of homes flipped in second-quarter 2017 were purchased with financing, according to Attom. That’s the highest level since third-quarter 2008, or a nearly nine-year high.

A joint study by the University of Cambridge and the University of Chicago suggests that the alternative lending sector, which includes crowdfunding, “hit a stride” in 2016 and has plenty of room for growth. Total market volume in 2016 for alternative financing in the U.S., Canada, Latin America the Caribbean was $35.2 billion, up 23 percent versus 2015. Real estate crowdfunding accounted for just 2.3 percent of the alternative lending market in 2015, but its volume rose by 70 percent in 2016.

OnDeck Line of Credit: What You Need to Know (Fundera), Rated: A

And finally, short-term lines of credit are more expensive than products that you’d get at a bank. The exact interest rate you’d get on an OnDeck line of credit, for instance, depends on the exact qualifications of your business, but in general, you can expect them to range from 10% to 80%.

3 Other Investments You Should Consider Making in 2018 (LearnBonds), Rated: B

There are several ways you can invest in small businesses. Peer-to-Peer (P2P) lending is a popular way that you definitely need to look into. This lending system eliminates middlemen completely and lets you connect with small businesses across the country with ease.

United Kingdom

Funding Circle, the UK’s biggest peer-to-peer lending platform, is preparing to hire advisers to oversee a £1bn-plus London flotation.

Sky News has learnt that the company has told investment banks that it will hold a beauty parade towards the end of the first quarter of 2018, with a listing possible as soon as the late autumn.

A Brave New World – Will Open Banking Boost The UK Fintech Sector? (Forbes), Rated: AAA

Open banking is coming to the UK. To be more precise, from January 13, 2018, Britain’s nine largest banks and one building society will be required to make customer account data available to approved rivals. If all goes according to plan, the new regime will herald a bold era of competition by allowing up-and-coming challenger banks and fintech (financial technology) businesses to compete on a more-or-less level playing field with  the giants of the financial services industry.

In the business loans market, peer-to-peer platforms have become increasingly accepted as a source of debt finance. For instance, in the three months to September, pioneering peer-to-peer platform, Funding Circle rang up £114m in new net lending to small businesses. This compared with £95m in new net lending by the big four banks.

According to a survey conducted by Decision Technology, 43% of bank retail customers would consider  sourcing a personal loan from a fintech provider. Although consumers were less amenable to opening savings accounts (only 26% would do so).

Mitty Group Secures Nearly £2 Million in Funding From Assetz Capital (Crowdfund Insider), Rated: A

Earlier this month, Liverpool-based property developer Mitty Group secured £1,982,000 worth of funding from UK-based peer-to-peer lender Assetz Capital to develop two new residential and leisure sites in Merseyside.

According to Assetz Capital, Mitty Group has secured a £942,000 loan from the online lender to fund its Regency Court Development in the Old Swan area of Liverpool.

Assetz Capital also reported that Mitty Group secured a £1,040,000 loan to fund its Burscough Street Development in Ormskirk town center.

Becoming a property investor – the crowdfunding option (LinkedIn), Rated: A

Real estate crowdfunding is becoming increasingly popular and it was valued at $3.5 billion in 2016. It is also projected to have the value of $5.5 billion by the end of 2017. It is a great time to think of investing in property UK using the crowdfunding option. However, it is important that you proceed with caution. Here are a few tips to help you make savvy decisions about real estate crowdfunding.

  1. Understand the rules.
  2. Real estate crowdfunding can be risky too.
  3. Take baby steps.
  4. Know your investment company.
  5. Always remember that real estate crowdfunding is generally the same as other investments.The higher the returns, the higher the risks. Try to limit your investment to 5% of your earnings, or 10% for higher net worth individuals.

Players who swapped the bit parts for starring roles (The Times), Rated: A

Satoshi Nakamoto is the anonymous coder, or group of coders, who created bitcoin as a stateless digital currency nine years ago. It’s a pseudonym. Her/his/their true identity remains a mystery, but, as cryptocurrencies continue to rise in influence and as investors lose faith in traditional institutions, that influence is more than likely to grow.

Imagine, for a moment, what it means to be Satoshi Nakamoto. You are, at least digitally, one of the 50 richest people alive and one of the most important people in the financial world.

Robo advisers recognise the need for human touch (Financial Times), Rated: A

Robo advisers promised to shake up the UK investment market by using algorithms to deliver low-cost automated services to the masses. However, British investors have found a bug in the system — when it comes to managing their money, they want to speak to human beings too.

The new breed of “robos” are morphing their business models to provide over-the-phone and face-to-face advisory services, recognising that more of a personal touch is needed to win over customers.

Scalable Capital, the European online robo-advice company backed by BlackRock, is launching over-the-phone and face-to-face consultations for a one-off fee of £200 from January after finding a number of clients wanted to talk to human advisers rather than answering its online questionnaire alone.

57 Insights from leading brands and experts on what it takes to deliver a Wow customer experience (Customer Think), Rated: B

Andrew Lawson, Chief Product Officer of Zopa.com, a UK online personal finance peer-to-peer lending company, believes that Wow service/experience starts with the customer and solving a problem they face. Too often customer service is a team that is set up to solve the problems that are inherent within the products/services that have been created.

China

Yirendai Limited: Still Growing, Still At A Good Price (Seeking Alpha), Rated: AAA

  • Emerging fintech player Yirendai Ltd. is well positioned in the expanding Chinese P2P lending industry.
  • P2P lending has a potentially huge market in China that could actually be enhanced by the government’s development of its Social Credit System.
  • Yirendai has strong revenue growth, a good return on equity, an attractive valuation, a nice cash flow, is free of debt, and plans on continuing to pay a dividend.
  • An uptrend is on the company’s price chart, reinforced by 50-DMA, 200-DMA, and Relative Strength technical indicators.
Source: Seeking Alpha

China looks for right balance between financial innovation, risk (Xinhuanet), Rated: A

But it has also made things easier for scammers. QR codes are so accessible that a simple scanning of an unidentified barcode can lead to a loss of huge money or massive personal information leakage.

For instance, while offering credit support for small and micro-sized enterprises who may not have enough collateral or sound balance sheets is still a headache for the banking sector, banks now can make better loan decisions by evaluating their conditions more precisely with technologies like big data and blockchain.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

Last month, a number of private banks (except WeBank, MYbank and XWBank) received notification from CBRC that they should stop offering online lending services, which caused quite a stir within the industry.

On December 23rd, a charity-crowdfunding campaign from Fenbeichou received profound attention and donations on China’s leading social platform WeChat. People were encouraged to donate and help underprivileged children who have same birthday as themselves. Applause for the campaign’s creativity didn’t last long when journalists found that there were some beneficiaries on the platform who were labelled with different names (but for the same picture) or even non-existent date of birth (e.g. 2017.2.29). People suspected this “Same-Birthday Crowdfunding” campaign was a fraud.

On December 28th, the Nanjing Municipal Public Security Bureau posted on its official Weibo that the head of online finance platform Qbao.com had surrendered himself to the local police.

On December 27th, a new range of rules were released to ramp up the security in the mobile payment sectors.

Mobile payment scale rises in 3rd quarter (Xinhuanet), Rated: A

The scale of mobile payment in China exceeded 29 trillion yuan (4.5 trillion U.S. dollars) in the third quarter of 2017, a report indicated.

According to the report released by internet research agency Analysys, the amount is a quarter-on-quarter increase of 28.02 percent.

International

The Biggest Fintech Stories of 2017 (Crowdfund Insider), Rated: AAA

Online lending, including marketplace lending or peer to peer lending, is entering a new era. Goldman Sachs and their Marcus platform is schooling early entrants with good tech and access to low cost of capital that is hard to beat. Big tech is moving in too, as companies like Square, PayPal and Amazon are now providing loans. In the US, early online lenders are rushing to launch new verticals and update models to remain competitive and relevant. Elsewhere, such as the UK and China, models are becoming more established as the focus has been different and the regulatory environment more welcoming.

Equity-based crowdfunding is now accounting for 17% of all seed and venture stage equity investment in the UK. Peer-to-peer business lending provides 15% of all new loans lent to small businesses by UK banks.

Today, the Fintech Charter has not moved an inch forward and is arguably in retreat. And why is that? Because the States do not want to lose relevance and Congress is unable to do anything about it. Who loses out? Consumers and small business, of course.

In early 2017, the Governor of the Bank of England Mark Carney delivered a pointed speech where he said Fintech could “signal the end of universal banking as we know it.” Why is this important? Because it is the Bank of England: the second oldest central bank in the world.

Australia gets a huge shoutout for being consistently vocal in their advocacy of Fintech from both the private and public sector. FinTech Australia has accomplished quite a bit in a short time as the advocacy group promoting the virtues of financial innovation.

The UK’s impending divorce from the European Union is still meandering down the negotiation path.

The shocking downfall of Mike Cagney, founder of unicorn darling SoFi – a company that once envisioned itself as the future of banking, rocked the Fintech world.

The dramatic rise of cryptocurrency and initial coin offerings (ICO) is nothing short of spectacular.

Australia

Lowest loan rate since 1956 sparks regulatory fears and raises pressure on debt (Financial Review), Rated: AAA

Borrowing rates have fallen to their lowest level for 62 years, triggering debate that Australia’s increasing household debt will force regulators to raise further speed limits to contain new lending, despite an already slowing investor market.

Other lenders, including online lender ING and Newcastle Permanent, the nation’s largest building society, are also targeting the owner-occupied fixed-rate sector with cuts pushing the headline rate to below 3.8 per cent.

Mortgages are a key profit generator for lenders, accounting for about 55 per cent of bank loans and 30 per cent of cash earnings.

India

Spice Mobility to invest $ 1.95 mn in P2P lending startup (VC Circle), Rated: AAA

BK Modi group company Spice Mobility Ltd is set to pick up a 30% stake in Luharia Technologies Pvt. Ltd, which runs peer-to-peer lending platform anytimeloan.in, for Rs 12.5 crore ($1.95 million) in an all-cash deal.

 

Spice Mobility to buy 30% stake in P2P lending startup for ₹12.5 crore (TechStory), Rated: A

Spice Mobility Ltd is buying 30% stake in Luharia Technologies Pvt. Ltd which operates P2P lending platform anytimeloan.in, in all cash deal of ₹12.5 crore ($1.95 million), the company said in a stock exchange filings.

Start-ups all geared, it may well be time for India to make ‘Digital leap’ (Financial Express), Rated: AAA

THE YEAR 2017 has been somewhat of a twilight zone for digital in India.

India is the world’s second largest online market with 460 million internet users and more than 1 billion mobile subscribers. But internet penetration is still south of 20% of our overall population.

I read recently that over 2.4 billion brand-related conversations happen online every day. In one significant trend, consumers are undergoing digital saturation amidst the social media and marketing barrage. As many as 83% of consumer respondents in a recent survey felt that brands didn’t handle their emotions well across different touchpoints.

Good or bad in 2017, there is lot of hope for Indian startups in 2018 (Tech Observer), Rated: AAA

For some startups, especially for Fintech firms like Paytm, 2017 has been an incredible year as they were most ready to reap the benefits of disastrous demonetisation policy announced by Prime Minister  which forced the people to rely on  wallet firms for making payment for even their tea. Further, implementation of GST has push an environment wherein individuals and SMEs are looking to go digital.

Lohia says that 2018 will see scaling up of players in the lending space especially in small business lending.

On the other hand, for peer to peer (p2p) lending platform – OMLP2P – that brings investors and borrowers together for a seamless and transparent loan disbursal experience, the year 2017 was a mile stone year because on October 4, 2017, RBI came out with the guidelines for the P2P industry, which paved the way for the P2P players to get themselves registered as “ NBFC- P2P” with RBI.

For starups like CreditMantri, 2017 has been a good year as they were able to reach out to 3.8 million Indians with their CreditMantri platform.

For Pune based startup Loantap, which focuses on providing lending platform to Salaried Professionals, 2017 has been a good year. He bets that 2018 is going to be great year for LoanTap and his firm will cross 100 crore Loan Book within first few months.

Year 2017-FINTECH Collaboration Kick-start Year (the Banking Finance Post), Rated: AAA

In 2017, Banks have targeted below areas to practice Innovation –

  • Architecture to innovate: Challenges around quick interfacing between systems through API Banking.
  • Operations Overheads: Improvement areas in Operations and Cost optimisation through Robotic Process Automation
  • Skillset Availability: Creation of skillset around new technologies was always main Agenda in 2017
  • Traditional Banking: Banking Services on limited channels for Customers, It’s very important to provide Banking services through many other non-Banking Channels
  • Fintech Experimentations: Challenges around quick partnering with external partners. Availability of API Management interfacing for third-party partnering
  • Agility in Solution: Availability of quick solutions for payments & other Banking Services
  • Remove Barriers of digital transformation like lack of skills, lack of technology, lack of adoption
  • Innovative Culture building for of business Team to drive innovation or digital transformation
  • Digital banking Enhance of channels to drive digital services e.g. Customer Onboarding, customer serving, customer engagement, custom education

So far Bank has conducted 5 Hackathons which is something Unique in the banking industry.

Main achievements through Innovation Carnival

  • 1st Bank in INDIA: DCB BANK – First Bank to conduct National Hackathon in 6 Cities
  • Digital Culture Building at DCB bank – This program touches on all entities in the organisation
  • Corporate Partnering & Training – Model to train participants e.g. by IBM, Redhat, NPCI etc Corporate conducted Sessions
  • Established Mentorship Collaboration with 60+ Fintech Mentors in various areas added value to boost true evaluation
  • 18 Innovation Themes: It keeps motivated internal team thru idea generation for 18 Themes
  • Both Virtual & 6 Physical hackathons: It keeps touch with external parties thru Hackathon, Summit
  • Meeting Bank’s Strategy Goals: It’s helping to execute the strategy for our Bank and to grow bank
  • Unique India Collaboration: Building Innovation Community among Government, Accelerators, Institutes, Corporate, Banks

Indian Startup Funding Of The Week [25-30 Dec] (Inc42), Rated: A

Lendingkart Finance: The Ahmedabad-based SME lending startup raised $3.8 Mn (INR 25 Cr) in debt from the State Bank of India. The latest influx of funds will be utilised to bolster Lendingkart’s loan book. The fresh capital will also enable the startup to expand its geographical reach to over 950 cities.

Foyr: Virtual reality-based prop-tech startup Foyr raised $3.8 Mn in Series A funding led by property consultancy JLL and other individual and non-institutional investors.

Anytimeloan.in: Spice Mobility is gearing up to buy 30% stake in Luharia Technologies, which owns and operates P2P lending platform Anytimeloan.in.

Top fintech trends that India can expect in 2018 (Economic Times), Rated: A

Fintech lending
The fast-paced digitization has unlocked fresher avenues for fintech players, especially the ones associated with SME-based lending.

Virtual agents
With everything going digital, loan officers can’t be too far behind.

Machine Learning and user experience
2018 will also be the year for adoption of new regression models driven by Machine Learning.

Automated Personalization

All of this is being done through automated algorithms that scrape everything from historic transactions, preferences, and supply chain partnerships, down to critical metadata embedded into user information.

IndiaChain
Our nation has taken a giant stride in the realm of technology by developing its own blockchain network.

Open Banking
UPI (Unified Payment Interface) and AEPS (Aadhaar-enabled Payment System) have paved the way for an open banking channel in 2018.

Physical and Digital Merger
In India, despite a commendable effort to bank the unbanked, a majority of the Indian population is still deprived of access to banking services till date. Businesses, on the other hand, have enough data to prove their creditworthiness but fail to acquire credit because of conventional scoring mechanisms that banks use. Lately, fintech startups have begun collaborating with banks and helped them in making good use of their data and increasing ..

The 7 Key FinTech Trends To Watch Out For In 2018 (Inc42), Rated: A

EY’s Fintech Adoption Index (2017), a survey of more than 22,000 digitally active consumers, ranks India second (52%) behind China (69%) in terms of percentage of the digitally active population.

Digital payments reached 1,162 crore transactions between April and November and are expected to exceed 1,800 crore in the current fiscal.

Wallet Usage To Rise

2017 has been the year which saw e-wallets and digital payments come to the fore, placating the masses post demonetization. Come 2018, this trend will likely mature as more and more Indians turn to the digital side of things.

More Emphasis On Data Analytics And AI

Beyond payments, interest in fintech startups in areas like blockchainartificial intelligence andlending are just some of the focus areas that will garner attention.

Banks And Fintech Companies Collaborating

A Secure Digital India

The rise in digital payments and online lending also makes the sector exposed to hackers who are always on the prowl to feed on vulnerable security.

P2P Moneylending

Motivated by the intention of democratising financial services while aiming for exponential growth, these FinTech startups will come up with newer models for lending, especially in the P2P Lending space.

Instant Payments

Open banking – With initiatives such as Unified Payments Interface (UPI) and Aadhaar Enabled Payment System (AEPS), banking will become more ‘open’ in 2018.

Proliferation Of Chatbots

In 2018, we can expect more chatbots to be deployed with improved quality of interactions, the speed of responses and accuracy in decision-making.

P2P lending NBFCs to see a promising year ahead (MoneyControl), Rated: A

India will be more than USD 4-trillion economy by 2022. Out of this, USD 1-trillion would be digital economy—and it’s the most conservative estimate the government is working with. As Indians become digitally more aware, India’s emerging Peer-To-Peer (P2P) lending industry will flourish in 2018.

Here’re the top 5 trends to watch out for:

  1. P2P lending platforms to become an important contributor to India’s growth story… Micro, Small and Medium Enterprises (MSMEs) contribute about a third of India’s manufacturing output and provide employment to over 10 crore people. Despite this, the share of institutional lending in the total borrowings of MSMEs is less than 10%.
  2. Faster and cheaper loans to SMEs and self-employed borrowers
  3. Fund raising activities of the P2P lending platforms may gather pace… RBI has given 3 months to the existing players and 12 months to the new players for registration. The regulator has made it mandatory for an aspirant P2P lender to have a minimum net worth of Rs 2 crore.
  4. Personal loans to grow at a healthy pace
  5. Awareness about the P2P lending sector to grow among investors

What to Expect in 2018 in the Payments Industry (BW Disrupt), Rated: B

  • The infrastructure to enable digital payments has been strengthened through issuance of debit cards, roll-out of Point of Sale machines, launch of phone-based acceptance through the BHIM app and the Bharat 4.0 app that allows seamless acceptance of QR code and UPI based payment.
  • At the same time, incentives have been provided to merchants to accept digital payments through the new Merchant Discount Rate rules
  • The RBI is helping make digital payment instruments like Wallets more viable
  • Along with these initiatives, the Government has concomitantly undertaken a massive consumer education and information campaign.
APAC

PLDT fintech unit reaching out to unbanked Filipinos (Inquirer), Rated: AAA

FINTQ, the PLDT group’s financial technology (fintech) arm, seeks to bring insurance, investment and savings solutions to 30 million unbanked Filipinos by 2020 through a grassroots-based financial inclusion program KasamaKA.

Launched to veer Filipinos away from usurious informal lenders, KasamaKA enables members to earn by referring applicants to any of the digital financial services offered by Lendr, FINTQ’s digital loan platform.

Indian-led global fintech InstaReM looks at 600 percent growth (ANI), Rated: B

Singapore headquartered fintech start-up, InstaReM, which offers convenient and cost-effective international money transfers to individuals and businesses aims to grow 600 percent in financial year 2018-19.

Authors:

George Popescu
Allen Taylor

Tuesday December 26 2017, Daily News Digest

cumulative loss

News Comments Today’s main news: 3 Reg CF portals no longer FINRA-approved. Zopa launching a bank. LexinFintech completes $108M IPO. European banks prep for PSD2. Australia releases second MPL survey. Today’s main analysis: PeerIQ’s MPL Loan Performance Monitor. Today’s thought-provoking articles: 2017 was a wild ride for alternative lending. Is Congress expanding credit for the poor or enabling high-interest rates? Megatrends […]

cumulative loss

News Comments

United States

United Kingdom

China

European Union

Australia

India

Asia

News Summary

United States

The Wild Ride In Alternative Financing In 2017 (PYMNTS), Rated: AAA

But as 2017 pulled into the station, it became clear that a decade-long era in financial services was officially drawing to a close, other than this transitional year between what was and what’s next.

It became clear that Act I of digital era financial services was drawing to a close – and that Act II is getting warmed up backstage.

The CFPB

The CFPB has spent a year generating surprising questions – with even more surprising answers.

Moreover, there was some thought that the federal courts might render much of the discussion moot, by ruling the CFPB’s independent structure rendered it unconstitutional in the CFPB v. PHH case.

That ruling was thrown out by a three-judge panel of the D.C. Circuit court of appeals, and a final ruling is still awaited.

The Congressional Review Act (And The Fate Of The Old Rules)

The 20-year-old law, which had only been used once before 2017, has been used 15 times since January of last year to undo Obama-era rules.

The law was effectively used to bounce the CFPB’s arbitration rule from going into effect. That rule would have made it illegal for financial services companies to insert mandatory arbitration clauses into consumer contracts, thus forcing consumers to surrender their right to form class-action lawsuits.

A similar maneuver was attempted to block controversial rules the CFPB passed regarding the regulation of prepaid cards. The House approved the CRA resolution, but the bill was unable to garner majority support in the Senate. That means going forward, prepaid cards that offer overdraft protection will be regulated as though they are credit cards, as opposed to debit cards.

The Future Of Innovation Instead Of Regulation

Affirm, founded by PayPal’s Max Levchin, built a POS financing product dedicated to offering consumers an honest, transparent way to pay for items on installment.

Affirm’s mission to expand consumer access to honest financing will rev into high gear next year, on the heels of a $200 million capital raise on an estimated $1.6 billion valuation, and now with the ability for any consumer to take advantage of its credit option at any merchant.

LendUp wants to calibrate financial services to what it calls “the new average consumer” or the “emerging middle class.”

EVEN’s new partnership with Walmart is a new tool to help smooth the income volatility for its workers by allowing them to be paid in real time for the hours they have already worked, instead of having to wait for the traditional payday.

“This isn’t that people just don’t have the money to pay their bills in general, but that they are forced to make bad decisions because the money they have already earned by working is not available to them at the right time,” EVEN CEO Jon Schlossberg told Karen Webster. “That adds up to a $100 billion industry a year in payday loans and late fees. That’s crazy; we can fix that and we should fix that.”

So EVEN – now with Walmart as a partner – is fixing it, both by giving customers access to their funds early, but also by providing access to financial management software so they can better control their money.

What’s Next

Perhaps in 2018, they will even find ways to write studies that use terms properly and do not directly contradict the research of other regulators.

Millennials, she noted, tend to enter the credit system with a bang once they start having families.

MPL Loan Performance Monitor (PeerIQ), Rated: AAA

This week, we introduce our redesigned MPL Loan Performance Monitor where we track the delinquency rates, cumulative losses, and transition matrices on public marketplace lending data that is comprised of loans originated by LendingClub and Prosper.

Source: PeerIQ
Source: PeerIQ

Is Congress expanding credit for the poor or enabling payday lenders? (Salon), Rated: AAA

Ken Rees has made a fortune selling loans with triple-digit interest rates to borrowers with poor credit history or no credit history.

But in 2008, federal regulators ordered First Delaware to stop working with payday lenders — including ThinkCash — so Rees changed his company’s name to Think Finance and started striking deals with Native American tribes, which, as sovereign entities, are also exempt from state usury laws. Think Finance filed a still-pending lawsuit claiming Think Finance used the tribes as a front to make deceptive loans. Think Finance denies the charges and Rees started a new company, Elevate Credit, which operates from the same building in Fort Worth, Texas. Elevate deals in online installment loans, a cousin to payday loans, and partners with a Kentucky-based bank to offer lines of credit with effective annual interest rates much higher than would otherwise be allowed in some states.

Sponsors say the Protecting Consumers Access to Credit Act facilitates bank partnerships by ensuring third parties like debt buyers and rapidly growing financial technology firms can buy, and collect on, loans originated by federally regulated banks regardless of state laws governing interest rates. These partnerships can help make credit available to those left out of the traditional banking system, primarily low-income individuals, backers say.

“The bill covers every flavor of online lending,” said Adam Levitin, a consumer law professor at Georgetown University. “Some members of Congress have gotten snookered that they are fostering innovation, but a loan is just a loan whether you do it online or not.”

But now more payday-style lenders are moving online and donning the friendly face of a tech startup. Some, like LendUp, a lender charging more than 200 percent on some loans and counting Google Ventures among its investors, have attracted mainstream support. Like many high-interest online lenders, LendUp says it is “a better alternative to payday loans” because they use alternative data sources to determine interest rates but consumer advocates say the product, a high-interest loan that can quickly lead to a cycle of debt, is essentially the same thing.

Elevate said in an email it is committed to lowering rates further, and said its loan terms are more transparent and it doesn’t charge expensive fees associated with payday lenders.

Elevate’s installment loan called RISE is licensed in 17 states that don’t impose interest-rate caps and charges annual interest rates as high as 299 percent. Elevate says repeat borrowers can eventually qualify for interest rates as low as 36 percent on subsequent loans.

Fifteen states and the District of Columbia impose interest-rate caps, most around 36 percent, to protect consumers from high-interest loans.

This article originally appeared on publicintegrity.org.

Three Reg CF Crowdfunding Portals are No Longer FINRA Approved (Crowdfund Insider), Rated: AAA

Ufunding was the first to depart FINRAs list of approved platforms. In hindsight it is a wonder the platform was ever approved. The action by FINRA took place a little over a year ago as “potential for fraud” was evident on Ufunding as was “an almost complete failure to follow disclosure and filing requirements.”

DreamFunded Marketplace has hit the exit. We are not certain exactly why DreamFunded left but, if one speculates, it is most likely due to the fact real estate investing is better suited for Reg A+ and Reg D crowdfunding rules which allow issuers to raise more money.

The other former CF platform is Crowdboarders out of Texas. Crowdboarders appears to have pivoted to more of a promotional platform.

After the tech wake-up call… (Banking Exchange), Rated: A

Not long ago, Indiana’s Peoples Bank SB had a business prospect come in who had a loan with Kabbage, the online lender, at 20%. “We reviewed their credit, and we got them into the bank at close to 5%,” says Benjamin Bochnowski, president and CEO at the $914.2 million-assets bank.

With credit that was worthy of a rate like that, the bank asked the customer why it had gone to Kabbage in the first place—and been willing to pay nearly 15 percentage points more for credit. Simple, the new customer responded. Kabbage was easy to use and delivered the proceeds of the loan quickly.

Camilo Concha of LendingUSA (Lend Academy), Rated: A

In this podcast you will learn:

  • The founding story of LendingUSA.
  • The different verticals they operate in today.
  • How their point of sale lending process works.
  • The typical terms on these loans.
  • A profile of the typical borrower who uses LendingUSA.
  • How they do marketing outreach to the merchants offering their loans.
  • The different revenue streams they have.
  • The scale that LendingUSA is at today.
  • How their loan performance has been to date.
  • Why LendingUSA is not competing as much on price as other consumer lenders.
  • Their overall approval rate for loan applications.
  • How they approach fraud prevention.
  • Who is providing the capital for these loans.
  • Where they are on the path to profitability.
  • Why the marketplace lending challenges of 2016 did not impact LendingUSA that much.
  • Why their cost of customer acquisition is going down.
  • Their biggest challenge in getting their business to where it is today.
  • Camilo’s long term vision for LendingUSA.

P2Binvestor CEO Krista Morgan on Marketplace Lending: What to Expect in 2018 (Crowdfund Insider), Rated: A

P2Binvestor CEO Krista Morgan founded P2Binvestor in 2012 with a mission to help growing businesses succeed. Morgan is not only CEO of a fast growing Fintech, she is also the cohost of the podcast “Women Who Startup Radio”, an ardent mentor to other women entrepreneurs who speaks regularly on business finance, fundraising, and scaling a startup.

I recently connected with Morgan via email to learn her 2018 predictions for the Marketplace Lending sector and more specifically, her predictions for P2Binvestor. Her observations follow:

  • More focus will be placed on business models and profitability
  • Platform mergers and shut downs will occur as equity investors remain on the sidelines
  • Capital will start to look for shorter duration assets
  • The conversation about diversity will continue

When asked what PB2i has in store for 2018, Morgan targeted the platform’s growth in four areas:

  • More bank partnerships
  • Tech focused on portfolio monitoring
  • Tighter credit standards

Modo Creates A Payments Data Highway Between The World’s Largest Financial Institutions (Benzinga), Rated: A

Bruce Parker, Modo CEO: Modo creates interoperability in the payments industry by conducting the exchange of data between systems via our translation utility service. Modo allows clients to bring together capabilities from around the payments and commerce industry by directly solving for interoperability between different payment systems.

We’re doing this for some of the biggest names in the payments game: Bank of America Corp BACVeriFone Systems Inc PAY, FIS, Klarna, and Alliance Data Systems CorporationADS, and are proud to say that list is growing.

Who are your customers?

Banks, networks, payments providers and their partners.

PayPal CEO Dan Schulman talks Fintech on Capitol Hill with Georgetown’s Chris Brummer (MENAFN), Rated: A

Other topics touched on during the interview with Mr. Brummer included how fintech can and should improve financial inclusion—and the continued need to eradicate banking deserts—as well as the necessity to better coordinate and launch public-private partnerships. Despite PayPal’s notable profile and 210 million users, it operates in a $100 trillion industry with approximately 1% market share—and there are still nearly 2 billion people around the world who live outside financial mainstream.

Getting Smart About Thin File Student Grads and Their Credit Card Worth (PaymentsJournal), Rated: A

The CARD Act of 2009 disrupted student credit card marketing with a means test and parental approval for certain types of accounts.  The market, which used capture about 12% of total card consumer spend now only contributes a fraction.

The American Banker covered an interesting story about how BankMobile, a digitial only bank with 800 university partners, is attempting to build a model based on academic history and how they maintained their student bank accounts.

3 Real Estate Investing Trends That Gained Steam in 2017 (Realty Biz), Rated: A

In 2016, the real estate crowdfunding industry produced 3.5 billion dollars in a market that has largely gone unnoticed. It’s anticipated by 2025 that the industry is going to be valued at more than 300 billion. Three trends emerged in 2017 that can help the informed investor understand the best approach to this dynamic and explosive industry.

  1. Investors Move Toward Institutional Capital
  2. Non-Accredited Investors Gain Steam
  3. Consolidation allows for the emergence of new players

Can real estate crowdfunding help the homelessness crisis? (Curbed), Rated: A

In addition to commercial space and two market-rate residential lofts, the two-story Jolene’s complex will also contain an 11-room SRO, or single-room occupancy, a dorm-like living arrangement where each resident gets their own 100-square-foot bedroom and access to shared common space. Six of the room will be given to working homeless Portlanders, as part of a partnership with the Street Roots non-profit, while the other five will be rented out to the general population for $425 a month.

After seeing that 90 percent of the participants in Fair-Haired Dumbbell were from Portland, they experimented with a slightly different form of crowdfunding that allowed anybody in Oregon making $70,000 a year or more to invest $3,000 or more in the project (technically, it’s taking advantage of Rule 504 of Regulation D, qualified by the SEC and the Oregon Secretary of State).

EquityStat Brings Portfolio Management To The Cloud (Benzinga), Rated: A

What does your company do? What unique problem does it solve?

Karl Swierenga, founder: EquityStat is an online investment portfolio manager. It allows investors to track and manage their stocks, mutual funds and ETFs, online in the cloud. Many investors own a combination of stocks, bonds, mutual funds and ETFs.

Who are your customers?

Our customers are individual investors who own mutual funds, stocks, bonds and ETFs.

FindBob Closes $ 1.26M USD Seed Round (Business Insider), Rated: A

FindBob () announced today that its seed round is closed at over $1.25 million USD. Grinnell Mutual led the investment.

The capital will allow FindBob to grow its sales and marketing teams, expand into additional U.S. markets and execute on its multi-generational product roadmap.

FindBob champions better transition behavior among financial professionals and their firms in order to perpetuate and protect their most precious asset: their book of business. By allowing company principals to take control of their futures on a secure digital channel, FindBob helps them safely discover opportunities to buy, sell, merge, partner or address succession and to be confident in their plan for the business they worked so hard for.

Fintechs that flamed out or faded in 2017 (American Banker), Rated: A

Source: American Banker
Source: American Banker

Fintech Outlook For 2018: US Banks Look To AI (The National Law Review), Rated: B

With 2017 at a close, US banks have set out their 2018 FinTech new year resolutions. According to American Banker, US banks are likely to focus their FinTech investment in 4 major areas in 2018:

  • Artificial intelligence and machine learning
  • Open banking
  • Cybersecurity and biometrics
  • Commercial banking innovation

Anyone invest in p2p lending? (blind), Rated: B

Just found out that I can earn annual returns of 6-12% by investing in p2p lending platforms like lendingclub and prosper. Way more than the measly 1.3% I get from my savings account.

Lendio Announces New Franchise in Rochester, New York (Crowdfund Insider), Rated: B

Lendio, an online lending marketplace for small business loans, announced on Thursday the opening of a new Lendio franchise in the Rochester area.

LendingTree,Inc. (NASDAQ:TREE) Files An 8-K Departure of Directors or Certain Officers (Market Exclusive), Rated: B

On December 19, 2017, our Board of Directors and Nikul Patel mutually agreed to change Mr. Patel’s position to Chief Strategy Officer, effective January 1, 2018. He currently serves as Chief Product and Strategy Officer, a position he held since November 2016.

United Kingdom

Zopa to launch a bank (Monzo), Rated: AAA

It’s why we’re applying to launch our own next-generation bank. We’ve listened, and we’re confident that we can deliver the bank that will be the best place for your money.  

Leading comparison websites have removed potentially misleading information from their sites after a Moneywise investigation found peer-to-peer (P2P) investment products included in the same best buy tables as high street savings products.

Moneywise looked at the UK’s leading product comparison websites and found issues with the four sites which offer P2P comparisons – Go Compare, Love Money, Money.co.uk and MoneySuperMarket.

A helping hand for small businesses (Money Week), Rated: A

A decade after the credit crunch, too many small and medium-sized enterprises (SMEs) in the UK still feel their potential is being hampered by a lack of access to appropriate financing. The government’s Industrial Strategy report, published at the end of November, identified financing issues as a clear problem for SMEs that are looking to grow; surveys of sentiment continue to reveal frustration.

Research from Hitachi Capital Business Finance shows that two-thirds of SMEs with growth plans for the year ahead fear that their expansion plans could be derailed if they cannot secure appropriate finance. A third of SMEs applying for finance aren’t securing enough funding to underpin their investment plans, according to similar research from Close Brothers Group; a quarter of SMEs think funding is still too dear.

New rules clarify P2P business borrowers are not deposit takers (P2P Finance News), Rated: A

In an announcement titled ‘protecting the future of P2P lending’, the Treasury said that no P2P business borrower needs to be regulated as a ‘deposit taker’ – often referred to as a ‘banking licence’ – unless that is their core business.

This clarification will be added to the Financial Services and Markets Act 2000 (Carrying on Regulated Activities by Way of Business) Order 2001.

10 business trends to look out for in the coming year (inside.co.uk), Rated: B

“I think we will see a strong increase in the number of Scottish businesses sourcing peer to peer lending, which matches borrowers directly with lenders, in 2018,” Hardie said. “Companies such as the Lending Crowd are currently the business world’s best kept secret, but their ability to deliver speedy transactions with attractive terms are firmly establishing them as strong alternatives to the banks.”

“A European directive being implemented in January 2018 will ban businesses from charging customers extra for making payments using a debit or credit card in the EU,” said Lynne Walker, head of business advisory at Johnston Carmichael.

China

China’s LexinFintech Completes $ 108M Listing As Sixth Chinese Fintech IPO In US (China Money Network), Rated: AAA

LexinFintech Holdings Ltd. (NASDAQ:LX), a Chinese online lender previously known as Fenqile backed by investors including Matrix Partners and JD.com Inc., has completed a listing on the NASDAQ to raise US$108 million.

Chinese online lender LexinFintech surges in US market debut (China Economic Review), Rated: A

Chinese online lender LexinFintech Holdings Ltd’s shares surged in their US market debut on Thursday, as investors brushed aside worries about Beijing’s recent crackdown on China’s booming microlending industry.

LexinFintech’s shares jumped 53% from its IPO price, which valued the Shenzhen-based company at $4.5 billion, to reach a high of $14.88.

China IPOs In New York Rebound To 16 In 2017, Online Lender Lexin Aces Nasdaq (Forbes), Rated: A

The 16 Chinese companies in 2017 raised $3.7 billion or about 8 percent of the total $35.6 billion raised by 160 IPOs.

Chinese tech titans Tencent and Alibaba are behind some of this pick-up, as they backed recent new listers including Chinese search engine Sogou, e-book company China Literature, microlender Qudian and logistics company Best.

Squeezing in its IPO before the year, Chinese online lender LexinFintech Holdings listed on Nasdaq on Dec. 21, raising $120 million and trading upward on its opening day by 19.4 percent.

Fintech Pioneer Sees Money in the Masses (Caixin), Rated: A

China’s booming fintech sector will see growth come from small business loans, wealth management tools for the “affluent masses,” and technology that helps you sift through thousands of insurance products in minutes, according to Tang Ning, founder and CEO of financial conglomerate CreditEase.

As of September, the company’s wealth management business oversaw assets worth $20 billion for nearly 50,000 high net-worth customers in China. It also manages $1 billion through a venture fund, which is among the ten most active venture capital investors in global fintech companies, according to data provider CB Insights.

Caixin: What are the most promising fintech trends over the next decade?

Tang Ning: We see small business lending being a key area of growth. In the past 10 years, creative lending models have done a good job at serving individuals, but there is much more to be done for small businesses.

We also see the emergence of insurance tech.

How are Chinese investors’ needs changing?

We are seeing the Chinese wealth management industry go through profound changes. It is moving from fixed-income investments to equity investment, from short-term speculation to long-term investment, from China-focused investment to global opportunities, from investing into single products, single opportunity to comprehensive risk management and comprehensive asset allocation, from managing this generation’s wealth to thinking about succession planning and inheritance.

Chinese peer-to-peer lender Golden Bull sets terms for $ 9 million US IPO (NASDAQ), Rated: A

The Shanghai, China-based company plans to raise $9 million by offering 2 million shares at a price range of $4.00 to $4.50. At the midpoint of the proposed range, Golden Bull would command a market value of $64 million.

European Union

Europe’s banks brace for a huge overhaul that throws open the doors to their data (CNBC), Rated: AAA

On January 8, banks operating in the European Union will be forced to open up their customer data to third party firms — that is, when customers give consent.

Banks will be required to build application programming interfaces (APIs) — sets of code that give third parties secure access to their back-end data.

Spain’s BBVA, Denmark’s Saxo Bank, Nordic lender Nordea and Ireland’s Ulster Bank have already published open developer portals ahead of the EU legislation.

HSBC has also made early moves toward meeting the incoming rules. In October, the bank launched a beta version of an app that lets customers see all of their bank accounts — including those from competitors — on one screen.

Several small lenders set up with the aim of competing with larger institutions are hoping to take advantage of the move toward a more open data infrastructure. U.K. firms Starling and Monzo, for instance, are want to make banking more like a “marketplace,” by connecting consumers with a number of products and services — including those from other providers — within their apps.

How PSD2 will make personal lending more competitive (IT ProPortal), Rated: A

Today, banks sell few unsecured personal loans to new customers – of seven of the UKs tier one banks only two offer personal loans to new customers – instead focusing on the needs and data of their own clients. The establishing credit risk and difficulties of pricing accurately has simply made it too complex to be competitive.

Also, although many peer-to-peer lending sites now have better protection for consumers as the industry became regulated by the FCA in April 2014, it can be argued this protection is greater for savers and lenders than it is for those borrowing and that the industry is still high-risk when compared with traditional routes.

This could all be about to change with the introduction of the intertwined The Second Payment Services Directive (PSD2) and open banking regulation.

First, XS2A will significantly improve the customer experience for loan applicants.

Hive Project buzzing after ICO (Bankless Times), Rated: A

After securing $8.95 million (BTC 2,087) from 2,234 participants through an ICO in August, Hive Project has released a demo version of their platform and completed an eight-market deal.

Hive Project uses distributed ledger technology to grant every issued invoice a unique fingerprint.

“In the Russian market alone there are  5.67 million SMEs with a combined turnover of €700 billion,” Mr. Soklic said.

Australia

ASIC releases second marketplace lending survey (Lexology), Rated: AAA

ASIC has released its second survey on the marketplace lending industry, which indicates steady growth in both borrowing and lending activity in the market since the last report.

Key findings from the report are outlined below:

  • there are three new marketplace lending platforms in the industry;
  • with $300 million in loans written to consumers and SMEs, there was a doubling of activity in relation to the number of borrowers and total amount borrowed since 2015-16;
  • the average reported default rate across the respondents was 2.2%;
  • there are an additional 4,187 retail investors since 2016, representing $12 million of extra investment in the industry; and
  • loan origination fees remained the primary source of revenue for marketplace lending providers.

The True Threat to Aussie Banks (Money Morning), Rated: A

The updated code of practice brings a number of changes. Most are simple consumer protections. Making it easier to cancel credit cards online, for example, and preventing banks from soliciting customers for credit limit increases.

India

Digital payments, P2P lending among key mega-trends of the year gone by (The Hindu Business Line), Rated: AAA

It was a great year for digitalisation and digital payments in the country.

Besides reducing the merchant discount rate for debit card transactions, the Centre announced a subsidy on transactions up to ₹2,000 via debit cards to expand the digital payment ecosystem.

P2P lending boost

Also, 2017 was a milestone year for the peer-to-peer (P2P) lending industry, as the RBI issued some guidelines in October.

Other defining changes

In April 2017, five associate banks of State Bank of India and Bharatiya Mahila Bank were merged into SBI, catapulting the latter into the league of top 50 global banks.

In May, the much talked about NPA ordinance giving greater power to the RBI to handle the bad loan crisis came about.

The other key decision of the RBI this year to improve transparency in the system was the move to make it mandatory for the banks to disclose in their balance sheets the extent of divergences between the gross NPAs in their book and those determined in RBI inspection. Private sector lenders such as Axis Bank, YES Bank and ICICI Bank were found to have under-reported their bad loan assets in recent years, prompting the central bank to take this decision.

How retail lending is set to scale up in 2018 (Financial Express), Rated: A

Major factors like steady decline in lending rates, strong focus and performance on growth and credit metrics in retail lending, investor interest in the segment, P2P regulation formalising the new category, increased focus on digitisation and path-breaking initiatives towards affordable housing are helping set a strong base for retail lending. Some of the big trends I see in the New Year are:

Consumer lending

Contrary to the slowdown in credit offtake by the corporate sector, retail credit segment has registered a strong growth of around 20% this calendar year.

Mobile: India today has more than 300 million smartphone users, removing geographical constraints of access to financial products. New venture investments will drive experiments in alternate lending.

Growth in MSME lending

With around 55 million MSME units employing over 80 million people, this sector contributes about 8% to the national GDP. Around 90% of these units are classified as micro businesses.

Growth in affordable housing segment

With home loan to GDP ratio of just 9%, the Indian housing finance sector remains relatively under-penetrated when compared to its Asian peers like China (20%), Thailand (17%), and Malaysia (34%).

The P2P Lending Segment will Drive the Next Phase of Growth of the Indian Fintech industry (BW Disrupt), Rated: A

With the much-awaited legitimacy, the sector is only at growth radar and trust in the segment is developing at a much faster pace. With more and more people moving towards online payments and transactions, the P2P lending space will witness a remarkable rise in the number of borrowers as well as investors. The growth will not only arrive from the urban India but also from Tier II and Tier III cities, leading the country towards the national goal of financial inclusion.

As predicted by NASSCOM, the Indian fintech space is expected to reach $2.4 billion by 2020, 2018 will act as a major contributor towards this direction.

How can P2P lending disrupt MSME sector in India? (MENAFN), Rated: A

There are more than 5 crore MSMEs in India and their contribution to the Indian economy is quite significant. The Micro, Small and Medium Enterprises are creating massive employability i.e. up to 12 crore people which is close to 33% of Indias manufacturing output. But still MSMEs suffer from an incredible capital shortage that amounts to Rs. 32 trillion as per the International Finance Corporation.

Fintech start-ups tap small-town users (Business Standard), Rated: A

Paynear, a start-up, has more users in small towns than in the metros. The Hyderabad-based firm, which provides a platform to traders for accepting digital payments, has seen a surge in growth from small towns. Of its 50,000 merchants, two-thirds are in small towns.

Funding Galore: Indian Startup Funding Of The Week [18-23 Dec] (Inc42), Rated: B

This week 19 Indian startups raised about $41 Mn in funding altogether in the Indian startup ecosystem.

Peel-Works: The consumer focussed SaaS and big data analytics startup raised an undisclosed amount in Series B funding led by Mumbai-based Unilever Ventures and Amazon Internet Services.

Faircent: Gurugram-based P2P lending startup Faircent raised $3.9 Mn (INR 25 Cr) in a Series B round of funding.

Asia

Financial inclusion is in your hands (National Multimedia), Rated: AAA

Aside from offering new innovative financial services to their existing customers, the use of Fintech also allows banks to serve potential |customers – those considered “underbanked” and “unbanked” – who in the past did not have access to financial services due to costs, lack of credit or access. The ability for the banks to serve everyone is known as “financial inclusion.” According to the World Bank, around 2 billion people don’t use |formal financial services and over 50 per cent of adults in the poorest households are unbanked.

A report from Thailand’s Ministry of Finance in 2016 shows that 56 per cent of Thais received micro finance from special financial institutions and less than 9 per cent from commercial banks. Clearly, most Thais often turn to non-bank providers for small sums of money.

The K Plus Shop is an example of fintech for financial inclusion from KBank. It is a mobile application designed to be a one-stop solution for micro businesses such as small shops and street vendors. The app is a point of sale, sales tracking, sales reports and PR tool combined into one app that anyone can download and use free of charge on any smartphone – iOS or Android. With K Plus Shop, the vendor can receive QR payment from any customer using K Plus, other mobile banking or e-Wallet applications via the standard QR for PromptPay, as well as from WeChat Pay and Alipay.

FintruX partners with blockchain data exchange DataWallet (Cryptoninjas), Rated: A

Authors:

George Popescu
Allen Taylor

Monday November 20 2017, Daily News Digest

weather unsecured consumer loans Orchard

News Comments Today’s main news: PayPal to sell $6B in consumer loans. Cleveland Fed retracts study on P2P lending. China Citic, Baidu launch direct bank. Flender to expand into eastern Europe, Spain. Douugh partners with Choice Financial. Today’s main analysis: Orchard Platform says how hurricanes affect unsecured consumer loans. Is LendingClub shifting to higher quality borrowers permanently? Today’s thought-provoking articles: […]

weather unsecured consumer loans Orchard

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

News Summary

United States

PayPal to sell $ 6 billion in consumer loans to Synchrony Financial (TechCrunch), Rated: AAA

PayPal announced today it has agreed to sell $5.8 billion in consumer credit receivables to Synchrony Financial, in an expanded relationship between the companies. The deal also includes Synchrony’s acquisition of $1 billion in participation interests in PayPal receivables held by certain investors and a chartered financial institution, the company said.

As a result of today’s deal, the two companies will expand their partnership by making Synchrony Bank the exclusive issuer of the PayPal Credit online consumer financing program available to PayPal customers in the U.S. for the next 10 years, replacing Comenity.

Orchard Platform Initiates Analysis: Severe Weather’s Effect on U.S. Unsecured Consumer Lending Industry (Crowdfund Insider), Rated: AAA

In a recent blog, Orchard Platform posted initial research how much Hurricanes Harvey and Irma affected the U.S. unsecured consumer lending industry. According to Orchard Platform, approximately 91% outstanding loans in Florida were in designated FEMA disaster areas including metropolitan areas Tampa, Orlando, Miami and Jacksonville.

“The population of loans in the areas affected by Harvey experienced a 3x increase from July 2017 to September 2017,” according to Orchard Platform Credit Analytics Manager Nicholas Del Zingaro. “All consumer unsecured loans in Texas experienced a 170 bps increase in Current to 30 Roll Rate over the same period. Irma made landfall on September 10th, but the Florida and Irma designated areas within Florida and Southern Georgia already show signs of distress, with the Current to 30 Rate increasing from 1.5% to 2.5%. The total population had an uptick of 30 bps from August to September.”

Source: Crowdfund Insider

Why Cleveland Fed should retract its online lending study (American Banker), Rated: AAA

The Marketplace Lending Association is calling upon the Federal Reserve Bank of Cleveland to temporarily retract and revise its report on online lending due to what we see as serious flaws in the authors’ reliance on certain underlying data.

In our view, this paper — “The Taste of Peer-to-Peer Loans” — and its accompanying materials show that a lack of precision and understanding of subject matter can result in significant inaccuracies. The report’s authors presented findings that seemed to reflect issues with the P-to-P industry, but they actually relied on data from a much broader category of loans. The result was a misleading and brutally critical report about the P-to-P industry that was actually based in part on data from more traditional loans.

Cleveland Federal Reserve Pulls Document Critical of Peer to Peer Lending as Critics Question Research Methodology (Crowdfund Insider), Rated: AAA

Earlier this month Crowdfund Insider posted a research report published by the Cleveland Federal Reserve that was highly critical of the peer to peer lending industry (marketplace lending) in the US. The report, authored by Yuliya Demyanyk at the Cleveland Federal Reserve, Elena Loutskina at the University of Virginia, and Daniel Kolliner at the University of Maryland, has since disappeared from the Federal Reserve site.

GS Marcus Deep-Dive (PeerIQ), Rated: AAA

Marcus, was launched in October 2016 amidst mixed perceptions from market participants. One-year later, however, Marcus has achieved its $2 Bn origination objective – making it the fastest growing lending platform that PeerIQ tracks.

GS Marcus expects to originate $13 Bn over three years – the exact amount that Wells Fargo consumer balances have shrunk over the last twelve months as detailed in the PeerIQ Lending Earnings Insights reportGS expects to grow revenue from the Marcus platform to over $1Bn by capturing roughly 6% of the $250Bn unsecured consumer loan market:

Source: PeerIQ

GS CFO Marty Chavez notes that Marcus has an aggressive ~3.5% ROA objective. By comparison, Discover’s ROA is currently ~2.4% and has only achieved a quarterly 3.5% ROA once in the last ten years.

Source: PeerIQ

Although the statistics look similar, each lender is measuring loss-rates somewhat differently:

  • Lending Club and Prosper cumulative loss rates on 36-month prime term loans are ~12% – as estimated by ratings agencies during a base case (not thru cycle) scenario.
  • GS projects thru-the-cycle annual credit losses of 4.0%. Therefore, GS is betting that it will outperform on losses thru-the-cycle.
  • Discover’s 3.2% loss-rate is a realized statistic from the most recent 10-Q.
    • Discover management notes that loss rates are re-normalizing to higher levels. Indeed, Discover’s loss rate was 2.1% two year ago in 3Q 2015 and management expects losses will continue to re-normalizing going forward.
    • We believe a comparable thru the cycle loss-rate for Discover would meet or exceed 4%. By way of comparison, the Discover loan portfolio experienced a peak charge-off rate during the financial crisis of ~7%. (and continued to deliver a positive ROA).
* GS estimate of 4%, Lending Club and Prosper based on 3-year ratings agencies cum. Loss estimate of 12%. Discover based on 3Q-10Q realized
Source: PeerIQ, GS Investor Presentation, Public Filings, Bloomberg.

Is LendingClub Making a Permanent Shift to Higher Quality Borrowers? (Lend Academy), Rated: AAA

recent post on the Lend Academy Forum spurred a discussion about the potential future of LendingClub, particularly as it relates to the types of borrowers they serve. While we don’t have insight into what LendingClub’s plans are, there are several things that have happened over the last two years that help us hypothesize that LendingClub’s strategy may be shifting.

LendingClub recently sent an email titled “How LendingClub Notes May Help You Generate Long-Term Wealth”. In it, they tout returns in the 4-6% range, a far cry from the returns some investors saw in LendingClub’s early days. The 4-6% range they present is footnoted, clarifying that this includes only grades A-C.

After I began writing this article LendingClub coincidentally announced in their recent earnings call that loan grades F and G would no longer be available to investors  These loans have an average interest rate of 24.16% on LendingClub’s platform. Moving forward, the loans will be brought in house as part of a test portfolio for LendingClub.

You can clearly see the expansion of C grade loans, which has increased to 36.09% of total originations in 2017, the most ever.

Source: Lend Academy

C grade loans currently make up just shy of 50% of 60 month loans.

Source: Lend Academy

Are Banks and Credit Unions Prepared for a New Mobile Era? (The Financial Brand), Rated: AAA

After years of strong mobile growth being driven by younger demographic segments, the majority of recent, more modest growth can be attributed to the 55 and older generation. In fact, consumers in the 55+age group have a three-year compound annual growth rate (CAGR) of nearly 8% compared to only 2% for the 18 to 34 segment, according to a study from Deloitte.

As in 2016, close to 90% of consumers viewed their phone within an hour of waking up, with roughly 80% doing the same within an hour of going to sleep.

Interestingly, the Deloitte research found that over 70% of younger demographic groups believe they are using their phones too much and are looking for ways to limit dependence. Alternatively, only 13% of consumers over 55 had the same concerns.

Source: The Financial Brand

When consumers were asked about the way they communicated on mobile phones, all options increased in 2017, including text messaging (91%), voice calls (86%), email (81%), social messaging (72%) and video calls (30%). The increase in voice calls reversed a four-year decline.

The survey found a significant growth in use of mPayments in 2017, albeit against a rather low base number. According to Deloitte, consumers who said they made an in-store mobile payment with a smartphone or other device in 2017 reached 29%, which is a 50% increase over 2016. Those who used mPayments weekly also increased by 50% in 2017, (from 8% to 12%).

This $ 700 Billion Industry Has Been Untouched By Tech, Until PeerStreet Changed Everything (Forbes), Rated: A

The PeerStreet platform lets accredited private investors access the huge market of real estate loans, backed by big data and advanced underwriting to identify loans that can give consistent returns.

Brett Crosby, Co-Founder and COO of PeerStreet, has extensive experience in analytics from his time working at Googleas Director of Product Marketing.

What did you do before this?

I was the co-founder of a company called Urchin, which was early in the web analytics space. We were acquired by Google in 2005, and turned Urchin into Google Analytics. I stayed at Google for 10 years, building and launching Google Analytics, launching mobile ads, local ads, the go-to market on social initiatives at Google, and Google Drive. After that, I was running global growth on Chrome, Gmail Docs and Drive.

Mulvaney as CFPB head? Five things to know (American Banker), Rated: A

If President Trump taps Office of Management and Budget Director Mick Mulvaney as interim head of the Consumer Financial Protection Bureau, as is widely expected, he will be a sea change from outgoing head Richard Cordray.

Mulvaney, a former congressman from South Carolina, was a fierce critic of the bureau when in Congress and he sat on the Financial Services Committee.

CFPB final payday/auto title/high-rate installment loan rule published in Federal Register (The National Law Review), Rated: A

The CFPB’s final payday loan rule was published in today’s Federal Register.  Lenders covered by the rule include nonbank entities as well as banks and credit unions.  In addition to payday loans, the rule covers auto title loans, deposit advance products, and certain high-rate installment and open-end loans.  For a summary of the rule, see our legal alert.

The controversy around Mark Warner’s payday lending bill, explained (The Week), Rated: A

At issue is the different ways that states try to handle payday lenders. Some states try to crack down on them with caps on interest rates. But other states are more lenient. And the situation is further complicated by big national banks, which operate under federal law and only have to comply with interest rate caps in the state they’re chartered in.

That loophole enables national banks to engage in “rent-a-charter” schemes. Since these banks aren’t subject to an interest rate cap (or are subject to a more lenient one), they can issue a predatory loan, then immediately sell that loan to a smaller payday lender barred by state law from issuing it on its own.

Pavaso Inc. has announced that it has selected eOriginal to support lenders in the digital mortgage process. Specifically, Pavaso will utilize eOriginal’s electronic promissory note (eNote) and electronic vaulting (eVault) services.

Elevate Credit (ELVT) and Its Peers Head to Head Comparison (Dispatch Tribunal), Rated: A

Net Margins Return on Equity Return on Assets
Elevate Credit 0.13% 1.40% 0.14%
Elevate Credit Competitors -27.28% -16.64% -8.05%

51.8% of Elevate Credit shares are held by institutional investors. Comparatively, 40.9% of shares of all “Professional Information Services – NEC” companies are held by institutional investors.

Gross Revenue NetIncome Price/Earnings Ratio
Elevate Credit $580.44 million -$22.37 million 357.00
Elevate Credit Competitors $242.33 million -$13.85 million 84.22

How Blockchain Technology Can Serve the Have-nots (Wharton), Rated: A

Some 2.7 billion people worldwide today have zero access to capital. Despite lacking any credit history or verifiable economic identity, these so-called unbanked or under-banked individuals can now access global capital markets with a $10 Android phone, thanks to blockchain-based economic identity platforms like BanQu or Humaniq that create a unique hash of verifiable authenticity — similar to a social security number — from a simple retina scan or selfie. The total market opportunity this group represents is a staggering $380 billion, according to a recent report.

Coinbase is going after big hedge fund money with its new cryptocurrency security platform (Business Insider), Rated: A

On Thursday, Coinbase, the San Francisco-based cryptocurrency exchange, announced a new platform that might quell the anxieties of big money investors looking to invest in crypto. The platform, called Coinbase Custody, was built specifically to meet the needs of such investors, including hedge funds and family offices, according to a Medium post by Coinbase CEO Brian Armstrong.

Just last week, an unidentified user accidentally deleted the code library required to use recently created digital wallets within Parity, a popular digital-wallet provider, and cryptocurrencies have long been associated with the chasms of the deep, dark web.

The service will charge users a $100,000 startup fee. Armstrong said there will also be a monthly fee based on assets.

Because index funds pose little competitive threat, expense ratios for the leading alternative funds are far higher than elsewhere in the industry. These days, the vast majority of conventional fund sales go into funds that have expense ratios of less than 0.60%–usually much less. With alternatives, on the other hand, a 1% expense ratio is considered low-cost. Most of the larger funds have expense ratios approaching 1.5%, which would doom them were they not alternatives.

Given all these differences, it’s not surprising that, for alternatives, industry leadership is upside down. The giants are absent. Among them, Vanguard, BlackRock, Fidelity, Capital Research, and T. Rowe Price run a grand total of $7 billion in alternative mutual funds. In contrast, the management firm AQR controls $29 billion.

Source: Morningstar Direct

RealEstateInvestingProfits.com Explain Why Bitcoin and Real Estate Investing are Joining Forces (PRUnderground), Rated: A

RealEstateInvestingProfits.com, a strategic consulting and real estate investing educational platform that is responsible for a combined 1,000 closings and nearly a 100m in total sales volume focused on wholesale/flips with their partners and affiliates, are making a compelling argument, suggesting that real estate and Bitcoin should be natural partners and doing their best to open eyes to possibilities in this area.

With the Real Estate Market Size growing from $7.1 trillion in 2015 to $7.4 trillion in 2016, currency movements effectively reduced the size of the global real estate investing market by approximately 2.3% in the dollar (USD) terms according to MSCI Research, the question many are asking – Can Bitcoin be a positive disruptor to save on third-party fees and high transactions exchanges from lending?

How does Affirm make money? (Vator.tv), Rated: B

Affirm makes it easy to repay the loan, send out email and SMS text messages to remind the customer of upcoming payments. Users can pay theur Affirm bills online, by debit card or ACH transfer, and sign up for autopayment.

The company makes money the same way that a credit card does: by charging interest of between 10 percent and 30 percent.

United Kingdom

In lending its all about the recovery (AltFi), Rated: A

There’s a problem with shadow banking and alternative finance. It’s called what to do when bad stuff happens.

Whereas most consumer lenders will struggle to provide 5%, platforms such as Funding Circle, Assetz and ThinCats can easily provide a net yield in excess of 5%, even after allowing for losses.

This deeper understanding of the lending process and defaults is all for the good but I think it raises a much more critical issue, especially relevant for SME lending – how do lenders cope with problem borrowers?

But Funding Circle also has a sweet spot in lending tens and hundreds of thousands of pounds which means they tend to avoid lending large sums in the £500k to £50m bracket (in fact nothing towards to the top end).

Financial advisers found publishing false credentials online (Which?), Rated: A

Which? Money analysed 43 advice firms which are listed on on Unbiased.co.uk – a comparison service that allows you to find a financial adviser – which stated they employed certified financial planners. These are advisers who hold a specific certification from the Chartered Institute of Securities and Investment (CISI).

Some 63% of them (27 firms), however, did not actually employ any such advisers.

Seven out of 24 firms (29%) were also falsely claiming to be accredited by the Society of Later Life Advisers (SOLLA), and 14 out of 72 firms (19%) claimed to have advisers with chartered financial planner status, despite not employing anyone who was, in fact, chartered.

UK FinTech to Launch a Bitcoin Visa Debit Card with Support for Altcoins (Cryptocoins News), Rated: A

A London-based fintech startup is planning on launching a prepaid Visa debit card, giving users the option to spend a range of cryptocurrencies across the U.K.

On Tuesday, the London Block Exchange (LBX) launched, headed by an 18-year Credit Suisse veteran.

The cryptocurrencies include bitcoin, ethereum, ripple, litecoin and monero.

Fintech startup Glint de-cloaks to offer a multi-currency account and card that supports spending gold (TechCrunch), Rated: B

London-based Glint has been pretty stealthy about what it planned to offer, despite several funding rounds and a vague description that it wanted to a create new “global currency” based on gold. Well, today the fintech startup is finally de-cloaking with a staggered launch of its multi-currency account, app and card that does indeed let you store your money in gold and convert it back to fiat currency at the point of payment.

Komodo (KMD) bringing first dICO to Market with Monaize (Oracle Times), Rated: B

Komodo (KMD) has a much smaller market cap at $233 million. Komodo promises to be a block chain interoperable network to allow transactions across coins to help financial institutions bring banking to freelancers, small business owners, and other underserved customers accept and send payments.

Monaize is now teaming up with Komodo for the first dICO to facilitate financial transactions using cryptocurrency.

China

China Citic, Baidu launch direct bank in fintech push (Reuters), Rated: AAA

China Citic Bank Corp (601998.SS) and search engine giant Baidu Inc (BIDU.O) launched on Saturday a direct banking joint venture, dubbed AiBank, to capitalize on China’s rapidly growing fintech sector.

Young, Carefree and Unsecured (Bloomberg), Rated: AAA

Consumer lending is booming in China, thanks to a less thrifty younger generation who have cast off the save-at-all-costs mentality of their parents.

China’s unsecured consumer loans amounted to just 9 percent of gross domestic product in the first nine months of this year, compared with 15 percent in the U.S., according to consultants Oliver Wyman. The educated 18- to 36-year-old borrowers LexinFintech targets tend to be ignored by banks, even though their job prospects mean that they’re unlikely to default.

Auto financing, meanwhile, has exploded to account for more than a third of car purchases last year from 8 percent in 2011, according to CLSA Ltd. data.

Peer-to-peer lender PPDAI Group Inc., which listed in New York last week, also said that its rates exceeded 36 percent once fees are included. The company’s shares are trading below their offer price.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

People’s Bank of China, China’s central bank, has made plans to launch a united platform by the end of 2017 for collecting personal credit information and assessing people’s credit ratings.

The new platform is expected to cover data from non-traditional market participants, especially Fintech industry (e.g. peer to peer lending), which will complement the existing credit data mechanism, increase supervision over non-traditional financial sectors and effectively reduce systematic risks.

Third-party credit service agencies may also become shareholders in the new platform with a ratio of 8% respectively.

On November 16th, Jianpu Technology Inc. announced it would be listed on the NYSE. Goldman Sachs, Morgan Stanley and JP Morgan are the bookrunners for the deal.

On November 16th, Xiamen Financial Affairs Office released the first P2P lending firms fillings in China. However, what drew the media’s attention more in the fillings is a firm called Jing Dong Xu Hang Online Lending Information & Intermediary Service Ltd. This company is a wholly owned secondary subsidiary of JD Finance. 

European Union

Flender looking at expansion into eastern Europe and Spain (The Business Post), Rated: AAA

Flender, a peer-to-peer lending start-up backed by Ding founder and Esat Digifone co-founder Mark Roden, is eyeing up an expansion to eastern Europe and Spain after it launches in Britain next year.

Charles Egly of Younited Credit (Lend Academy), Rated: A

Younited Credit is the largest online consumer lender in Continental Europe having crossed €500 million in total loans issued earlier this year.

In this podcast you will learn:

  • What the banking environment is like in France.
  • The long road they took to get a banking license.
  • The typical borrowers coming to Younited Credit today.
  • The terms of the loans they are offering today in France.
  • The kinds of investors on their platform today.
  • How they structure their investor offerings.
  • The three different ways they make money.
  • How their insurance product works.
  • The yield to investors of their different offerings.
  • Who Charles sees as their competitors.
  • How they are expanding their business to Italy and Spain.
  • Some of the large investors they are working with today.
  • Their approach to technology and underwriting.
  • Some of the alternative data they are using to feed into their algorithms.
  • How Brexit has impacted their business.
  • How they are using the €40 million they raised recently.
  • Where they are at with regards to profitability.

And more.

Allied Irish Banks invests €30m in payments fintech firm Transfermate (City A.M.), Rated: A

Allied Irish Banks (AIB) has invested €30m in (£27m) in business-to-business international payments start-up Transfermate, it will announce today.

The investment could value Transfermate at between €250m to €300m, sources said.

International

Fintech funding round-up (Banking Technology), Rated: A

As reported in May, peer-to-peer lending start-up Flender was seeking to get €1 million in funding and is targeting a UK launch after getting full authorisation from the Financial Conduct Authority.

Over in Israel, Tipigo Ventures, which offers an artificial intelligence (AI) powered wealth management platform, has raised $1 million in seed funding. The firm says this puts its valuation at $10 million.

Kuants, an algorithmic trading platform, will “co work” and “co live” at IA’s start-up academy during a three-month long acceleration programme.

Staying in India, Sumeru Enterprise Tiger Business Solutions, a Bengaluru-based banking software start-up, has raised $900,000 from unnamed investors in India and the US.

Australia

Fintech start-up Douugh scores partnership with US mutual bank Choice (Financial Review), Rated: AAA

Sydney-based fintech start-up Douugh has scored a partnership with US mutual bank Choice Financial, as it readies to launch its smart banking personal assistant, Sophie.

As part of the open banking partnership, Douugh will launch an integrated bank account and debit card with the bank, giving it the ability to accept deposits. Choice Financial has also invested in Douugh, as part of a $2.5 million seed round.

India

Fintech startups simplify digital money lending (Sunday Guardian Live), Rated: AAA

Amongst those startups who have been simplifying digital lending are Rubique, InCred, ZestMoney, Qbera, Loan Singh etc.

Working as a medium for a customer and financial institutions, data analytics performed on hundreds of data points on Rubique’s platform assess the creditworthiness of the customers (loan origination qualification), bringing predictability by giving them eligible offers to choose from.

Using real-time processing is also part and parcel for Zest Money, based in Bangalore since 2015, whose USP is its simple digital process, fast approval time and flexible products, with the benefit of multiple options to pay EMIs.

Using cutting-edge technology and proprietary credit underwriting algorithms, based on alternative data sources, Loan Singh enables frictionless lending to creditworthy and underserved borrower segments. It mainly provides personal loans (for salaried individuals), Professional Certification Loans (for students pursuing skill development and certification programmes), and Small Ticket Unsecured Personal and Consumer Loans (through third-party associations).

Others like InCred, founded in January 2017 and based out of Mumbai, focus on giving credit to those customers who have traditionally been underserved by large banks and NBFCs.

How fintech startups are assisting MSMEs, the biggest contributors to the Indian economy (YourStory), Rated: A

While contributing eight percent to the nation’s total GDP, micro, small and medium enterprises (MSMEs) also provide for 40 percent of the total export. Producing over 10,000 different types of products, these small-scale ventures are also responsible for 45 percent of the entire manufacturing output.

To begin with, last year’s demonetisation drive has propelled the digital onboarding of a number of MSMEs.

However, given a favourable environment and a slew of radical changes, there is still a huge credit deficit that is still unmet for the sector. This is exactly where the number of mushrooming fintech startups step in. To disrupt the status quo and level the playing field, a number of fintech lenders are supporting these small-scale ventures. The fact was made evident by McKinsey, claiming that nearly 75 percent of the emerging fintech lenders are helping MSMEs with lending, payment systems, retail banking, wealth management and more.

In digital drive, Aegon Life looking for fintech partnerships (Zeebiz), Rated: B

Aegon Life Insurance is exploring partnerships with fintech firms to expand customer base through a digital push of selling policies online, a top company official said.

Five fintech platforms which will make all your honeymoon dreams come true (Business-Standard), Rated: B

Here is a list of five fintech platforms, which will make all your honeymoon dreams come true:

  1. Loantap.in
  2. Faircent.com
  3. Rubique
  4. CreditMantri
  5. BankBazaar
Asia

P2P lender Crowd Genie targets raising up to $ 31.6m via ICO (Deal Street Asia), Rated: A

Singapore-based P2P lending solutions provider Crowd Genie plans to conduct an initial coin offering (ICO) of its CGCOIN currency, aiming to raise up to ETHB100,000 ($31.69 million).

Are crowdfunding and P2P lending good options for business financing? (e27), Rated: A

For the better part of a decade, banks have relaxed their lending conditions, too, so small businesses are finding more success with being approved for a loan.

But banks are not the only ones providing funding to small businesses, as they are actually reluctant to lend money to such enterprises in some jurisdictions. In China, for example, state-owned banks are not too fond of lending to individuals and small businesses. However, here P2P lending is a booming market, with around 2,200 p2p lenders and a market valued at US$100 billion.

Not all small businesses have the capability to launch their own ICOs, nor build their own blockchains over Ethereum, however. For this purpose, a startup called Starbase will empower any business or individual to crowdfund using cryptocurrencies and tokens without building their own network.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

It is based on this point of view that MAS and the Hong Kong Monetary Authority decided to collaborate on a Blockchain-based cross-border trade finance platform. The platform, which is called Global Trade Connectivity Network (GTCN), is an open-sourced Blockchain platform and will be launched at the start of 2019.

OJK Will Fix The Rules Regarding Fintech (Gatra News), Rated: B

The authority noted that as of September this year, 24 P2P lending companies consisting of 16 local companies and 8 foreign companies have been registered and licensed in OJK. Meanwhile 31 P2P lending companies are in the process of registration.

Authors:

George Popescu
Allen Taylor

Friday October 20 2017, Daily News Digest

Chinese IPOs

News Comments Today’s main news: Betterment achieves private unicorn status. Venmo available at 2 million retailers. PayPal sees profits rise after targeting mobile payments growth. Finova secures $102.5M in equity, credit facility. Lendy investors see 100M GBP in returns. PayKey raises $10M for Asian expansion. Lendex.io plans ICO. Today’s main analysis: Qudian’s IPO underlines China’s fintech appetite. Mind the GAP in the […]

Chinese IPOs

News Comments

United States

United Kingdom

China

European Union

Australia/New Zealand

India

Asia

MENA

Canada

News Summary

United States

Betterment is now valued at $ 1 billion in private market trading (Business Insider), Rated: AAA

Betterment, a roboadviser with $11 billion under management, is considered a unicorn in the private markets.

Preferred shares of Betterment are being offered at a price of $11 on EquityZen, an online marketsite for shares of private companies, according to a list of investment opportunities seen by Business Insider. That gives Betterment an implied valuation of over $1 billion.

EquityZen, a four-year-old New York-based company, provides a platform on which private company investors can sell their shares to accredited investors. It serves 20,000 investors and has secured $6.5 million in funding.

Venmo users can now pay at over 2 million retailers (Business Insider), Rated: AAA

PayPal is giving over 2 million retailers in the US the ability to accept Venmo payments, marking the firm’s most aggressive move yet to 

PayPal tops profit estimates, lifts target on mobile payments growth (Reuters), Rated: AAA

Sharp growth in mobile payments led PayPal Holdings Inc (PYPL.O) to report a better-than-expected third-quarter profit on Thursday and lift its guidance for earnings through the rest of the year.

The San Jose, California-based payments company has been working hard in recent years to expand its reach to new customers through partnerships and acquisitions, particularly in mobile payments. Those deals are clearly starting to bear fruit, analysts said.

PayPal shares were up 3.9 percent at $69.89 in after-hours trading following the results.

The company’s adjusted profit rose 32 percent during the third quarter to $560 million, or 46 cents per share, beating the average analyst estimate of 43 cents, according to Thomson Reuters I/B/E/S.

Revenue rose 21.4 percent to $3.24 billion.

Its mobile payments volume jumped 54 percent during the third quarter compared with the year-ago period, to about $40 billion. Total payments volume rose 31 percent to $114 billion.

Florida Fintech Finova Financial Secures $ 102.5 Million In Equity & Credit Facility Funding (Crowfund Insider), Rated: AAA

Florida fintech firm Finova Financial announced on Tuesday it has secured $102.5 million in equity and credit facility funding. The financing was led by CoVenture with participation from existing investors.

Finova’s current digital products include its Car Equity Line of Credit (CLOC) and Automobile-Secured Prepaid Card. Its services are available in Florida, California, Tennessee, New Mexico, South Carolina, Oregon and Arizona.

Fundrise Growth eREIT Files to Raise $ 45.7 Million (Crowdfund Insider), Rated: A

The Fundrise Equity REIT, or Growth eREIT, has filed with the SEC to raise up to $45,730,440 under Reg A+.  The amount includes $11.8 million from a previous offering circular.

The Growth eREIT most recently paid an 8% dividend.

The first Growth eREIT sold out at the maximum amount under Reg A+ of $50 million.

Investors may purchase shares in the eREIT with at a minimum $1000. Under Reg A+, both accredited and non-accredited investors may participate.

LILY Partners with Affirm to Offer Drone Buyers Pay Over Time Options  (PR Newswire), Rated: A

Mota Group’s LILY® division today announced a new flexible time-payment option, partnering with Affirm to offer shoppers in the United States the flexibility of buying now and making simple monthly payments for their purchases.

This new option is in addition to LILY’s existing payment methods of credit and debit cards, Bitcoin, and PayPal, making LILY the only consumer drone company to offer all five methods of payment.

LILY customers may select Affirm at checkout and view their monthly payments up front before making their purchase. More information and purchasing options are available at www.lily.camera/affirm.

Clearbanc, Michele Romanow work with Facebook for easy small business financing (Financial Post), Rated: A

“The number one thing that prevents entrepreneurs from growing big businesses is access to capital,” says tech entrepreneur and CBC Dragon Michele Romanow. She’s looking to change that for e-commerce businesses.

Today, Romanow’s Clearbanc, which provides revenue-based financing to online businesses, announced a new program with Facebook that will give the social media giant’s five million online merchants across Canada and the U.S. access to up to $500,000 in financing without having to give up any equity or fill out any paperwork or even undergo a credit check.

Facebook advertisers that have been operating for more than six months and are looking for money to grow, and have positive economics on ad spends — meaning when they buy an ad they are making a positive margin on selling that product — can apply online through Clearbanc’s Chrged program, which provides tools to help businesses scale, and connecting their Facebook Ad Account and payment processor.

Perspectives from Around the Industry on CFPB’s Small Dollar Rule (Lend Academy), Rated: A

Sasha Orloff, CEO and Co-Founder of LendUp:

As a socially-responsible lender on a mission to improve credit access for underserved consumers, LendUp shares the CFPB’s goal of reforming the troubled payday lending market. Since our founding, we’ve been a strong advocate for eliminating the predatory practices that have defined the short-term lending market and are pleased that many of these reforms are included in the rule.

At a time when more than half of Americans are unable to access traditional banking products, it is critical that we offer consumers as many safe credit options as possible.

Ken Rees, CEO of Elevate Credit:

We believe the CFPB got it exactly right with the rule.

The rule will dramatically change the landscape of non-bank, non-prime lending in this country. In addition to reducing the number of payday lenders and title lenders, the requirements for advanced underwriting and reporting will push most of the mom-and-pop, primarily brick-and-mortar lenders out of existence.  We believe that the growing need for non-prime consumer credit will be filled by more sophisticated technology-enabled online lenders.

Lisa McGreevy, President & CEO, Online Lenders Alliance (full response here):

The biggest problem with the rule is the very prescriptive nature for a product that is $500 or less. There is no room for any new products or innovation in this space.

APR is an irrelevant measure for very short term loans like this. The CFPB quotes that more than 80% of these loans are rolled over for another loan within the month. That is unacceptable.

CFPB Consumer Advisory Board to meet Nov. 2 (National Law Review), Rated: B

The CFPB has published a notice in the Federal Register announcing that a meeting of its Consumer Advisory Board will be held in Tampa, Florida on November 2, 2017.

Presumably, the loan discussion will focus on the CFPB’s final payday loan rule.

Climb Credit Enters Into $ 130 Million Loan Purchase Agreements (PR Newswire), Rated: A

Climb Credit, a student lending company that expands access to quality education for the new economy, today announced that it has entered into agreements with investors to purchase $130 million of student loans originated by Climb Credit.

The transaction will enable Climb Credit to continue expanding its student loan programs beyond its current network of software development, UI/UX design, robotics, welding, nursing, and other skills-based programs in additional high-earning fields. Climb Credit’s focus is to transform the higher education paradigm by providing better access and affordable funding to students to attend schools that consistently demonstrate a strong return on investment (ROI) for their students.

Roostify Unveils New Decision Builder to Improve Pre-Application Consumer Experience and Drive Leads (PR Newswire), Rated: A

Roostify, a provider of automated mortgage transaction technology, today announced the upcoming release of Decision Builder, a new tool that will enable lenders to easily provide their prospective applicants with a clear, easily-digestible view of their loan options, based on the lender’s actual product and pricing system. The company will be offering live demonstrations of Decision Builder for the first time at the upcoming MBA Annual Convention.

The Decision Builder tool can be placed on a lender’s existing website, and features a handful of dropdown questions, such as the desired loan amount, the expected down payment, and the ZIP code of the house to be purchased. With that information, Decision Builder will generate a series of loan options based on the lender’s product and pricing system, showing the consumer what products and rates they would qualify for. Each option is presented in a visual, easy-to-understand interface with clear explanation of the benefit of the loan product – for example, a lower monthly payment or low total interest. From there, the consumer can more easily evaluate which loan product is right for them.

With accurate, realistic loan information from the lender’s website, the consumer can carefully consider their options on their own time, without the pressure of having to decide within the limited window of an appointment with a loan officer. When they’ve made a decision, the interface includes a convenient option to move forward on their chosen loan with the click of a button.

How consumer banking leaders are embracing AI (American Banker), Rated: A

Artificial intelligence is becoming a competitive advantage that will force institutions to incorporate it, according to participants at the BankAI conference this week.

“People will have to adopt artificial intelligence,” said Brian Pearce, senior vice president of artificial intelligence at Wells Fargo. “It will have to become part of everyone’s set of tools.”

What banks are doing

Wells Fargo is piloting several chatbot technologies, though it has yet to suggest a launch date for any of them.

The bank has a team dedicated to bereavement — they take these phone calls and help executors manage the estates of the newly deceased.

Bank of America

Michelle Moore, head of digital banking at Bank of America, shared an update on the virtual assistant it announced a year ago, erica. It’s now in use by 300 employees. Sixty percent of the time, employees choose to interact with erica by voice, though they could also use chat, Moore said.

Ally Bank

Ally Bank was one of the first to launch an AI-based virtual assistant two years ago: Ally Assist, which is based on technology from Personetics.

Most people who commonly interact with Ally Assist are heavier transaction customers, Morais said.

The bank is also using AI in the back office. For instance, the bank used robotic process automation to streamline an exception process that had required back-office staff to navigate multiple screens and type hundreds of keystrokes. It now takes three clicks.

BBVA

Robert Sears, executive vice president and global head of product for new digital businesses at BBVA, said the bank is applying AI in credit decisions and focusing on explainability.

The Top 10 Most Affordable MBA Programs In The United States (BusinessBecause), Rated: A

For those studying abroad, organizations like Prodigy Finance—a borderless, peer-to-peer lending platform—provide international, post-graduate loans.

Student Loan Hero looked at 116 of the top American business schools to identify which programs are most financially affordable, taking into account the average debt of graduates, average starting salaries, and annual tuition fees.

Rank Business School Average Indebtedness Percentage of graduates with debt Annual tuition and fees Average starting compensation
1 Lehigh University $0 0 $19,350 $86,667
2 Oklahoma City University $11,331 9 $16,230 $101,090
3 University of Texas —​ Dallas $7,132 25 $19,048 $83,000
4 Missouri University of Science and Technology $11,386 19 $15,402 $66,667
5 Oklahoma State University (Spears) $18,728 22 $12,121 $70,700
6 University of Missouri (Trulaske) $20,495 20 $14,599 $64,252
7 Florida State University $14,379 31 $18,693 $67,308
8 West Virginia University $18,608 33 $9,450 $58,488
9 Louisiana State University—​Baton Rouge (Ourso) $17,900 27 $17,800 $62,429
10 West Texas A&M $18,500 54 $9,600 $93,625

Jay DesMarteau, head of commercial bank specialty segments at TD Bank, said early-stage businesses will often use their funds for operational necessities such as buying inventory and building products.

Isaac Rodriguez, CEO of Provident Loan Society, notes that as a not-for-profit collateral lender, most of his organization’s loans are made for short-term expenses such as meeting payroll.

David Reiling, CEO of Minnesota-based Sunrise Banks, confirmed this trend, noting that many of the bank’s small business customers now use their borrowed capital for technology purchases.

For example, according to a recent survey from TD Bank, 69 percent of small business owners either believe they do not have a business credit score or believe that business credit scores do not exist.

Of course, an alternative lender may be a better option if you want an even smaller loan or if you don’t qualify for a traditional bank loan.

Has Dating Become a Financial Audition? (24/7 Wall St.), Rated: A

Student loan marketplace and refinancing website LendEDU polled 1,000 Americans to discover their personal finance preferences when it comes to dating.

The big question, though, was this one: “Would you consider [annual income, student loan debt, or credit card debt] to be a critical factor when deciding to date someone?”

Just over 30% of respondents said that credit card debt was a critical factor in deciding whom to date, compared with just less than 19% who saw annual income as a critical factor and 12% who saw student loan debt as critical.

OCC’s Noreika: National Bank Charters Should Be an Option for Fintech Firms (ABA Banking Journal), Rated: B

Acting Comptroller of the Currency Keith Noreika today reiterated his view that companies providing financial products and services should be subject to the same regulations and examinations as traditional banks, while emphasizing that a path should exist for these companies to apply for a national bank charter.

Zoinks! 6 Ways Home Buyers Scare Off Sellers (Realtor.com), Rated: B

So, in case you want to make sure you aren’t doing anything that might send up red flags, here are some things buyers do that scare off sellers.

For instance, a new, fly-by-night online lender might give some sellers the heebie-jeebies. So make sure to ask your agent (and also the seller’s agent) whether there’s a certain lender they trust.

Online Lender OppLoans Appoints Data Everywhere Founder Andy Pruitt as New CTO (Crowdfund Insider), Rated: B

Online lender OppLoans announced on Thursday it has appointed Andy Pruitt to the role of CTO. Pruitt is a hands-on technologist who has helped start and grow three Chicago-area software companies. He isfounder of Data Anywhere, a data management company.

State rolls out refund program, checks on the way (KFOR), Rated: B

CashCall refunds are still on the way.

By the time Wanda took action she had already paid online lender, CashCall, $1800 dollars on an $800 dollar loan and she didn’t even get her loan through CashCall.

The agreement gives the state one million dollars to distribute to customers.

United Kingdom

Lendy has repaid £100m to investors this year (P2P Finance News), Rated: AAA

LENDY has announced that it has returned £100m to investors over the last year alone, as it celebrates its fifth birthday this week.

The peer-to-peer property platform said on Thursday that this was a 120 per cent year-on-year increase and that it has now repaid £183m to investors since launch.

Lendy recently announced the repayment of a £7.92m loan, one of the largest seen in the UK’s P2P sector to date. The facility had been repaid ahead of schedule and delivered annual returns of 12 per cent to investors.

First Associates Receives FCA Authorization to Service Loans in the United Kingdom (First Associates), Rated: A

First Associates Loan Servicing announced that they have received Financial Conduct Authority authorization to undertake debt administration and debt collection in the United Kingdom.

In addition to having a stellar reputation for their loan servicing support and being the only loan servicer in their class to earn Morningstar Credit Ratings’ highest operational assessment ranking1, First Associates also offers lending support solutions to their roster of industry-lending clients including:

  • Capital Markets Support
  • Pre-Funding Support
  • Post-Funding Support

IFISA investments ‘to take off’ in 2018 (P2P Finance News), Rated: A

2018 MAY be the year in which the Innovative Finance ISA (IFISA) finally takes off, an industry expert has suggested.

Neil Faulkner, chief executive and founder of peer-to-peer analysis firm 4th Way, noted that the small platforms that have already launched IFISAs have seen massive boosts to their lending volumes, and suggested that the amount of money in IFISAs “will go up many-fold” when the major platforms have their own accounts on offer.

Take-up of IFISAs has been relatively slow so far, with HMRC figures suggesting that just £17m was invested across 2,000 accounts in the 2016-17 tax year, though these have been queried by P2P firms.

Othera ​announces ​new ​contract ​with ​U.K.’s ​Lendhaus (LendIt), Rated: A

Announced ​at ​Lendit ​in ​London, ​Othera, ​a ​blockchain ​software ​provider ​for ​the ​financial ​services industry ​has ​just ​signed ​to ​their ​proprietary ​blockchain ​platform, ​Lendhaus, ​a ​London- ​based ​loan originator ​providing ​syndicated ​lending ​for ​the ​commercial ​real ​estate ​sector.

HSBC launches integrated financial offering through Bud and first direct (IBS Intelligence), Rated: A

HSBC UK has announced a partnership with Bud through first direct to offer an integrated offering  of financial services products and tools across the market.

This first direct trial kicks off in December and it includes proprietary algorithms – Market+ – to suggest the most suitable financial and non-financial products and services based on individual needs.

Britain’s fintech BOOMS: Record levels of global investment ploughed into sector (Express), Rated: A

More than £825million has been pumped into the UK fintech since January – double the amount raised in the same period in 2016 – proving the vote to leave the European Union (EU) has not turned investors off Britain.

In fact, since the EU referendum vote, UK fintech companies have raised more than £1billion, according to research by London & Partners.

The capital has been the major winner from investment, receiving around 90 per cent of all venture capital investment.

London-based firms Funding Circle, Revolut and Receipt Bank each raised tens of millions of pounds of investment this year.

3 Ways You Can Use Social Media to Get a Business Loan (NetNewsLedger), Rated: B

There are several online lenders available to offer you loans; they use your social media data to take a decision. Kabbage is the most popular loan landers working online. Kabbage offers the loan to the small businesses and keeps the cash flow in the different businesses. Before giving you the loan, they will ask you to get the access to your social media accounts.

Mark Arnold – a branding expert advises the credit unions and banks check a business credibility and see how effectively they are grabbing the market through social media. These businesses primarily look at different business especially at LinkedIn pages to determine the loan eligibility.

Use some crowdfunding websites to raise money for your business-like GoFundMe, Kickstarter, and Indiegogo.Share links to your crowdfunding webpages on your social networks on Twitter and Facebook and motivate people to share on their social networks.

China

Qudian’s New York IPO underlines appetite for China’s fintech (Financial Times), Rated: AAA

Qudian, one of China’s largest online lenders, had a debut to remember on the New York Stock Exchange this week. Its shares closed up 22 per cent, making a multi-millionaire of founder and chief executive Min Luo.

The company, which raised $900m in the share sale, is the latest to underline investors’ appetite for the collision of lending and technology that has given rise to the Chinese fintech sector. Two days before Qudian’s debut on Wednesday, Chinese peer-to-peer lender Ppdai announced plans to raise $350m in New York, and at least a dozen similar issuers are preparing flotations.

About 40 per cent of consumers in China make payments online, and 14 per cent have gone on the web to borrow money, according to DBS.

Qudian’s IPO — the fourth-biggest in the US this year — comes on the heels of Chinese online insurer ZhongAn’s hotly received $1.5bn IPO last month in Hong Kong. ZhongAn’s stock is up 34 per cent from its debut.

Source: Financial Times

Wary of online lending, regulators have strictly limited online financial products such as high interest “payday loans” and microloans by capping interest rates at 36 per cent. Last May, new restrictions wiped out scores of P2P lending networks in China, after worries that it was fuelling real estate speculation and subprime lending.

Source: Financial Times

A rash of bankruptcies hits Chinese lenders backed by state firms (The Economist), Rated: AAA

In the past two months at least seven online lenders backed by SOEs have collapsed. It was a business none should have been in, far removed from the industries they were supposed to focus on. The money potentially lost is trivial—roughly 1bn yuan ($150m), compared with government assets worth more than 100trn yuan. Still, these cases highlight how hard it is for the party to stamp its authority on the vast state sector.

The troubled SOEs include distant subsidiaries of the national nuclear company, an aviation company and a big energy company in Shanxi, a northern province. They had acquired stakes, from as little as 20% up to 100%, in online peer-to-peer (P2P) lending platforms.

They were “marriages of convenience”, says Joe Zhang, chairman of China Smartpay, a financial-services company.

Source: The Economist

Supply chain finance tipped to become US$ 2.27tn market for Chinese internet firms by 2020 (SCMP), Rated: A

China’s supply chain finance sector is now being tipped to be worth a whopping 15 trillion yuan (US$2.27 trillion) by 2020, and the mainland’s booming internet-based businesses are lining up to grab their own share of it.

And despite the reverberations from the recent peer-to-peer (P2P) lending crisis, a marriage between information technology and financial services is continuing to play a vital role in transforming Chinese business.

That 15 trillion yuan figure was calculated by Forward Business, a Shenzhen-based consultancy focusing on studies of IT and other emerging industries, which also suggests mainland banks granted a combined 12.65 trillion yuan in new loans to the budding sector.

But the grim reality remains, that the larger commercial lenders remain belligerently reluctant to grant small loans to businesses and individuals, who present anything like a risk.

Established in 2013, Tiandihui is an online platform where cargo and trucks are matched.

It s network stretches across 50 mainland cities and it handled some 64 billion yuan worth of transactions last year. The company, which charges fees for its matchmaking, has yet to break even.

European Union

Israeli fintech startup PayKey raises $ 10 million to expand in Asia (Tech.eu), Rated: AAA

Israeli fintech startup PayKey has raised $10 million in its Series B round led by MizMaa with participation from SBI Group, Digital Ventures, SixThirty, Fintech71, and The FinLab.

The new funds will be invested in global expansion, namely in the Asian market. Several of the investors in this round are Asian based while the startup graduated from the Singaporean FinLab accelerator.

Mind the GAP in the Lending GAP (AltFi), Rated: AAA

The Lending Gap has been one of the most quoted negative consequences of the financial crisis. Many political efforts have been conducted to stimulate the economy. New business models (e.g., private debt, direct lending, alternative finance, peer to peer) were born with the explicit aim and mission to “fill the gap”.

Where are we today, 10 years after the crisis?  Are borrowers still suffering? What investment opportunities are out there, if any?

  • FACT #1. The lending gap has been reduced, and the drivers have changed.
  • FACT #2. New alternative lending opportunities have opened up.
  • FACT #3. Banks are in better shape today, but exposed to the digital revolution and various structural challenges.
Source: AltFi
  • FACT #4. Credit expansion has resumed since YE 2014.

P2P auto-lending is risking investor ethics and returns (P2P Finance News), Rated: A

THE MOVE towards auto-lending among some peer-to-peer platforms may limit interest rates and be a stumbling block for investors worried about the type of businesses they lend to, a European automated P2P firm has said.

Despite being automated itself, Latvia-based Robo.cash has claimed lenders may be missing out on higher interest rates with a passive investment strategy.

As an example, Funding Circle recently moved from manual to auto-lending,now offering a conservation option at 4.8 per cent or a balanced approach at 7.5 per cent.

Australia/New Zealand

Australian marketplace MyDeal.com.au launches fintech loan offering for retailers (Australian Anthill), Rated: AAA

Online retail marketplace MyDeal.com.au has launched business loan offering MyDeal Marketplace Loans to accelerate the growth of their listed retailers.

Retailers who list their products through the MyDeal Marketplace can now apply for a business loan of up to $250,000 directly through their supplier management system and in many cases receive the funding in under 24 hours.

This offering is in partnership with fintech business Prospa, Australia’s leading online lender for small business.

Robo-Advice Decision Will Improve Kiwis’ Financial Fortunes (Scoop), Rated: A

“We’ve long seen the potential for technology to deliver better personalised financial advice to Kiwis,” said Ramesh Naran, Senior Manager, Digital and Innovation at Kiwi Wealth. “With this decision by the FMA, we can go through the application process and turn Future You into the powerful, personalised tool we’ve always wanted it to be. It’s already on its way to becoming the platform that’ll set the industry standard.”

Mr Naran said the FMA’s approach recognises the ability of technology to improve financial understanding and outcomes for New Zealanders.

India

What do RBI regulations mean for peer-to-peer industry (Financial Express), Rated: A

In a much-awaited move, RBI issued guidelines to govern peer-to-peer lending or P2P. This is a landmark decision that will go the distance in achieving the objective of financial inclusion.

For the time being, RBI has advised NBFC P2Ps not to offer or arrange any credit enhancement or credit guarantee. Against this backdrop, the principal protection fund, which has been an exclusive offering of i2iFunding so far, may need some tweaking. At present, we are neither guaranteeing any compensation from the third-party nor are we making a claim of apportioning our capital for the purpose. Therefore, we will approach the regulator to get more clarity on this and would do our best in the interest of members of the platform. Existing investors need not hit the panic button.

Why State Bank of India is afraid of small but nimble fintech companies (ET Markets), Rated: B

More than 24,000 branches and 42 crore customers make the State Bank of IndiaBSE 0.00 % the goliath of all banks by sheer size and physical presence but its new chairman Rajnish Kumar is worried about the competition from nimble fintech companies.

“Today, the risk is the disruption that is caused by the technology ,“ Rajnish Kumar, chairman, State Bank of India told ET in an interview. “We have to be very alert to this challenge. Protecting the turf and meeting the challenges from all the new fintech companies is the priority .“

Wallets and other payment mechanisms have become the preferred mode of payments as people walking into branches have dwindled.

Asia

Kazakhstan’s Lendex.io plans ICO in early 2018 (Blockchain News), Rated: AAA

Founded and developed in Kazakhstan, the biggest economy of Central Asia, FinTech startup Lendex has announced plans for ICO crowdsale to finance the launch of a cross-border P2P (peer-to-peer) lending platform for underbanked consumers in Central and South East Asia.

MENA

Transitioning to a digital future in the Middle East (TXF News), Rated: AAA

Global fintech investment has risen phenomenally in recent years – from $3 billion in 2013 to $24.7 billion in 2016.

Although less than 0.1% of fintech investment originates in the Middle East, growing influence from a soaring millennial population, and increasing expectations for digital solutions, are giving rise to a burgeoning number of fintech initiatives throughout the region. In fact, the number of fintech companies in the Middle East and North Africa (MENA) region is expected to surge – from 105 at the start of 2016 to 250 by 2020. And fintech investment is predicted to grow by 270% in the Middle East this year, indicating the huge potential for digital change –and a strengthening drive to deliver it.

Payments

The majority of fintech innovation so far has been in the payments sector. Although fintech has already made a mark in the retail payments space – with new companies such as the UAE’s Beehive, an online marketplace for peer to peer lending, and Telr, an online payment gateway for emerging markets – effecting change in the corporate sector is more challenging. This is primarily due to the often more complex, cross-border nature of corporate payments and the accompanying regulations and security requirements.

SWIFT gpi already has the backing of over 110 banks across the globe – including BNY Mellon – which represents over 75% of SWIFT’s global payments traffic. The UAE’s Mashreq Bank was the first Middle Eastern bank to join SWIFT gpi earlier this year.

Trade finance and fintech development

AI, for instance, offers solutions to improve documentation flow and cut the need for time consuming processes. Two types of AI that could benefit trade finance are optimal character recognition (OCR) and intelligent character recognition (ICR). OCR converts images of paper documents into machine-encoded text, enabling documents used in trade transactions to be verified automatically; while ICR is able to learn and identify patterns of behaviour embedded in trade documentation. These capabilities would both help to improve efficiency and reduce costs in the supply chain.

Canada

They launched their Toronto-based venture, MagneTree Books, in the spring of 2015 with the help of a Kickstarter campaign for presales of their inaugural book.

Neither Josie, who was at the end of a maternity leave, nor Ronny, who worked for a humanitarian aid organization, had much savings to fund their startup or the first run of books, which together rang in at more than $65,000. A bank loan wasn’t an option; neither entrepreneur was in a position to cover the debt if something went awry.

Online sales have been slow – just 15 per cent of their books are sold on the web. But corporate gifting and wholesaling has proven fertile. Still, the company has yet to break even. Profit on a run of books rings up at about $7,000.

But they have a big problem: no cash to fund the second book’s production and marketing. Neither sibling is able to personally lend the company money, and they have begun crowdfunding once more.

Expert advice

Mr. Zakharia notes that the amount of money the siblings need to fund their second book is relatively small at between $7,000 and $10,000. Still, their inability to make a personal loan or secure a bank loan will make them unattractive to traditional lenders. “Banks are going to be very conservative,” Mr. Zakharia said.

One option the pair might consider is Lending Loop, a peer-to-peer lending marketplace that might be their fastest route to raising cash. “Because it’s such a small amount, I think it would be pretty easy to raise,” he said.

Authors:

George Popescu
Allen Taylor