Wednesday January 10 2018, Daily News Digest

personal loans LendingTree

News Comments Today’s main news: Citi launches mortgage platform. Credit card debt hits all-time high. The House Crowd receives FCA authorization. Apples for Oranges, an Isa comparison site, launches. Ant Financial dupes users into joining credit system, then apologizes. Ant Financial halts consumer loan sales. P2P lending association launches in India. TD Bank acquires AI company Layer 6. Today’s main analysis: LendingTree’s […]

personal loans LendingTree

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United States

LendingClub (NYSE: LC) today announced that on January 2, 2018, its Board of Directors (the ‘Board’) received another letter from IEG Holdings Corporation (‘IEG’), which had previously commenced an unsolicited tender offer for LendingClub’s stock in July 2017 and withdrew the tender offer less than a month later. IEG’s letter states its intention to acquire up to 4.99% of the outstanding common stock of LendingClub on the basis of 13 shares of IEG common stock for each share of LendingClub common stock. On January 5, 2018, IEG announced the commencement of its proposed exchange offer. The Board believes there is no rational economic basis upon which LendingClub stockholders should accept IEG’s proposed exchange offer, which appears intended to mislead investors into mistakenly tendering into a discounted offer. The Board has unanimously concluded the offer is grossly inadequate, is not in the best interests of LendingClub and its stockholders and urges stockholders not to be misled into tendering into the offer.

Citi unleashes single digital platform for mortgages (Banking Tech), Rated: AAA

Citi has made dual agreements to integrate its suite of US mortgage products into a single digital platform for its clients.

A new front-end digital solution, LoanFx, from Digital Risk, a provider of technology platforms and services, will be complemented by a new loan origination system, LoanSphere Empower, from Black Knight.

The bank says this development will enable its mortgage clients to go through the full loan cycle, from research to application, processing, scheduling appraisals, handling title, to closing, “through the channel of their choice – and at their own pace”.

LendingTree Personal Loan Offers Report – December 2017 (LendingTree), Rated: AAA

I wanted to let you know we just released the inaugural monthly 

  • The average best APR offered to all borrowers with credit scores of 760 or above was 7.54%, an increase of 17 basis points from the prior month, and a drop of 24 basis points from the same period one year ago.
  • At $24,177, the average loan amounts offered with the best APRs to all borrowers with a score of 760 and above was down almost 2% ($451) from November, and up 26% ($6,179) 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 5.07% on average, and loan amounts of $41,768. A borrower with this APR and loan amount would save $3,407 by consolidating debt with a 10% APR over a three-year term.
  • Good credit (680 – 719 score): Loan offers to consumers with a credit score between 680 and 719 averaged over $15,000 in December.

    • The average best APR for all borrowers with credit scores of 680 – 719 was 15.91%, down 1.5% from last month, but up 2% from a year earlier.
    • At $15,468, borrowers with scores of 680 – 719 saw the amounts offered with the best APRs drop by 4% ($624) in the last month, but rise by 343 basis points ($530) over the last year.
    • The top 10% of offers, presented to the borrowers with the best profiles within the 680 – 719 credit score range, saw an average best APR of 7.37%, offered with an average loan amount of $25,385. A borrower with this APR and loan amount would save $3,306 by consolidating debt from a 15% APR over a three-year term.

    Credit card debt hits all-time high of $ 1.023 trillion (American Banker), Rated: AAA

    U.S. revolving consumer debt reached an all-time high of $1.023 trillion in November, according to Federal Reserve Board data released Monday.

    The card market’s previous peak came in April 2008, when $1.021 trillion in revolving consumer debt was outstanding.

    Will Consumer Lenders Benefit from the Removal of Tax Benefits for HELOCs? (Lend Academy), Rated: AAA

    Since a HELOC is backed by an asset, interest rates are typically lower than an unsecured loan, such as the ones offered by LendingClub and Prosper. There was an added benefit to a HELOC with the ability to deduct the interest, something that differentiated HELOCs from pretty much all other loan products. Now that this benefit is, in many cases, removed with the new tax code, we may see homeowners opt for other loan types. It is important to remember that the interest deduction only benefited individuals who itemize their deductions, which tend to include individuals with higher incomes.

    Unsecured Lenders May Benefit

    As the deduction benefit is removed, other options which offer a pleasant user experience look even better. Platforms like Goldman Sachs’ Marcus charge no origination fee and currently offer fixed rates as low as 6.99% for the best borrowers. Another player in the unsecured consumer lending space called LightStream offers loans as low as 2.49% depending on the use of proceeds. This could lead to the very best borrowers moving to products offered by these companies while borrowers with a less than perfect credit history, who would qualify for a higher rate, may rely on HELOCs.

    Americans Don’t Understand Auto Loans, Millennials Understand Less (instamotor), Rated: A

    In order to find out what people know and don’t know about auto financing, we surveyed 800 Americans who have applied for auto loans about their auto financing knowledge and found:

    Many Americans are qualifying for auto financing, but aren’t sure how.

    • Nearly 4 in 5 (79%) were approved for the last auto loan they applied for
    • More than half (51.9%) can’t name the 3 major credit bureaus
    • An overwhelming majority of respondents (94%) weren’t aware that auto lenders often use a specialty credit score, called an Auto FICO, when evaluating auto loan borrowers
    • Nearly 3 in 5 (60.9%) think lenders consider age and marital status when evaluating loan applicants

    Most Americans don’t know how to properly evaluate an auto loan offer.

    • Nearly 3 in 5 (59.9%) don’t understand the relationship between loan term and interest.

    What Americans Think is the Most Important Factor When Evaluating a Loan

    • All factors considered holistically – 47.9%
    • Interest rate – 21.9%
    • Monthly payment – 14.3%
    • Loan amount (price of car) – 7.9%
    • I don’t know – 2.4%

    Most Americans are unaware of a common, yet deceiving auto dealing practice.

    • 2 in 3 respondents didn’t know dealers can add interest to your loan to make more profit. in fact, more than 2 in 5 (41.3%) believed this practice was illegal

    Other concepts people don’t understand? Being “upside down” and gap insurance.

    • More than 2 in 5 (42.6%) don’t know what it means to be “upside down” or “underwater” on your loan
    • More than 3 in 5 (62.1%) don’t know what gap insurance is

     

    Community Banks Aim To Amplify Competitive Edge With FinTechs (PYMNTS), Rated: A

    Community banks approved 49 percent of SMB loan applications in November, according to the latest data from the Biz2Credit Small Business Lending Index.

    But small business lending is only one part of the banking puzzle. SMBs demand access to robust solutions, from mobile banking to advisory services.

    The Fed released a report, “Community Banking in the 21st Century,” last October, which surveyed more than 600 FIs. While analysts found small business lending dropped by 2.2 percent in 2016, the decline was significantly smaller than that at larger banks, which reduced SMB lending by 5.1 percent.

    Finance Professionals Preparing For Technological Innovation & Disruption (Crowdfund Insider), Rated: A

    On Monday, TD Bank released its 2017 Treasury Management Survey, which revealed that technological innovation and disruption is set to greatly influence the investment priorities and business plans of financial executives.

    The survey noted that disruptive technologies are top of mind for the participants, who also cited that they are preparing for changes in the treasury management industry by:

    • Leveraging solutions from fintech providers (31%)
    • Developing in-house technology for competition (23%)
    • Hiring more tech-savvy employers (15%)

    Meet the First 100 Speakers (LendIt), Rated: A

    Source: LendIt

    Read speaker bios here.

    Payday rule will protect, not harm, vulnerable consumers (American Banker), Rated: A

    Criticism of payday lenders is well-earned. They have devised a system that rolls customers into one 300% annual interest loan after another, until those customers very often reach a point of serious financial desperation — they may lose their bank accounts and are more likely to declare bankruptcy than nonpayday borrowers.

    In 2015, over 83% of Florida payday loans went to borrowers stuck in seven or more loans, based on data from the office of the regulator himself. The average annual interest rate is still 278%, and these unscrupulous lenders drain $311 million out of the economy every year, disproportionately affecting African-American and Latino communities and a growing number of seniors.

    The New York Institute of Credit & Financial Poise Announce BUSINESS BORROWING BASICS (Benzinga), Rated: A

    This webinar series provides a guided tour of the various borrowing options available to businesses, from both a business and legal perspective. Major topics covered include asset-based lending, P/O Finance, Factoring, Merchant Cash Advances, and Market Place Lending / Fintech.

    The first episode of the series, Understanding the Lending Landscape, airs on January 17th at 2:00 PM CST (Register Here) and features Moderator Jonathan Friedland of Sugar Felsenthal Grais & Hammer.

    Future episodes in the series include “Asset-Based Lending,” airing on February 21st, “Purchase Order Finance” airing on March 21st, “Factoring,” airing on April 18th, “Merchant Cash Advances” airing on May 23rd, and “Marketplace Lending/Fintech,” aring on June 20th.

    Marlette Funding Names Mark Elbaum as Chief Financial Officer (BusinessWire), Rated: B

    Marlette Funding, LLC, the parent company of Best Egg, is pleased to announce the appointment of Mark Elbaum as the company’s new chief financial officer (CFO). As CFO, Elbaum will join the executive management team and lead the finance, accounting and capital markets activities from the company’s headquarters in Wilmington, DE.

    Most recently, Mark was the CFO of Merrill Lynch, Bank of America’s Wealth Management business. Prior roles included 18 years in the mortgage industry as CFO of Bank of America’s mortgage lending division, appointed to the position after the company’s acquisition of Countrywide Financial. At Countrywide he held the position of CFO of the Residential Lending Division. After starting his career at Price Waterhouse, Mark worked at Aames Financial Corp, a midsize consumer finance company, where he helped upgrade the finance capabilities to post IPO requirements. Mark has a Masters in Accountancy from University of Southern California and is a CPA and experienced in FP&A as well as capital markets.

    LendingTree, Inc. to Present at the 20th Annual Needham Growth Conference (Business Insider), Rated: B

    LendingTree, Inc. (NASDAQ: TREE), operator of LendingTree.com, the nation’s leading online loan marketplace, today announced that it will participate in Needham & Company’s 20th Annual Growth Conference at the Lotte New York Palace Hotel in New York City.

    The Company is scheduled to present on Wednesday, January 17 at 10:00am ET.

    Enacomm, Advantel Partner on AI Conversational Banking and Next-Generation IVR (GlobeNewswire), Rated: B

    Enacomm, Inc., a provider of intelligent interactions and customer authentication technologies for banks, credit unions and credit card companies, has teamed up with Advantel, a technology solutions provider deploying integrated voice and data solutions for clients around the world. Through the partnership agreement, Advantel will make available to financial institutions both VPA (Virtual Personal Assistant) banking and the Enacomm Financial Suite (EFS), which includes a hosted, dynamic interactive voice response (IVR) system for personalized customer interactions.

    United Kingdom

    The House Crowd achieves FCA authorisation (P2P Finance News), Rated: AAA

    THE HOUSE Crowd is looking to unveil a new website and auto-lending option after achieving authorisation from the Financial Conduct Authority (FCA) at the end of last year.

    The property peer-to-peer lending platform had first applied for full permissions in October 2015 and had previously expressed concerns about delays.

    Innovative finance Isa comparison site launches (FT Adviser), Rated: AAA

    A new Isa comparison site, including Innovative Finance Isas, has been launched directly to potential investors.

    Apples for Oranges will allow customers to shop around for Isas and be able to see the different returns from stocks and shares, cash and innovative finance Isas in the same place.

    Figures last Autumn showed that investors had put just £17m into Innovative Finance Isas in their first year in existence, according to data from HM Revenue & Customs, significantly less than both stocks and shares Isas and cash Isas, which had £22bn and £39bn put into them respectively during 2016 to 2017.

    Fintech firm Marqeta has hired its first UK employee as it prepares to launch in Europe (Business Insider), Rated: A

    The 180-employee company has hired Ian Johnson, formerly the European commercial director at payments processing firm Wex, to be Marqeta’s Head of European Growth, and there are plans in the works to open a formal office in London and hire further staff later this year. The company has also appointed a head of international strategy, Renata Caine (who also previously worked at Wex), who will be based in the San Francisco Bay Area.

    UK Direct Lender Goji Nabs Multi-Million Pound Anthemis-Led Round (Crowdfund Insider), Rated: A

    Goji, the UK-based specialist direct lending investment manager and platform, secured an undisclosed multi-million pound funding round from investors including Anthemis’ Venture Fund 1 (AVF1) and AXA Strategic Ventures (ASV).

    Investors in alternative investments driving change in manager behaviour, says SEI survey (hedgeweek), Rated: A

    Released today and based on a survey of 70 alternatives investors, “How to Meet Operational Challenges while Pursuing Opportunities in Alternative Investing” illustrates the alignments and disconnects between those investors and the managers with whom they allocate capital.

    The trend toward greater transparency is well established, but expectations continue to outpace reality, as many investors remain dissatisfied with the level of transparency available to them. While 67 per cent of managers surveyed thought existing levels of transparency surrounding operating expenses were sufficient, only 25 per cent of investors agreed. Additionally, almost nine out of 10 investors say it was important (or extremely important) that they are given the opportunity to negotiate fees, yet this negotiation occurred far more often with the larger investor than with those at lower asset levels: 73 per cent of investors with more than USD25 billion of assets reported they had success negotiating fees compared to only 29 per cent of those with less than USD1 billion of assets.

    China

    Jack Ma’s Ant Apologizes for Baiting Users Into Credit System (Bloomberg), Rated: AAA

    Ant Financial, the internet finance behemoth controlled by billionaire Alibaba founder Jack Ma, has apologized for roping unsuspecting users into its fledgling but fast-growing credit-score system.

    Ant Financial’s Alipay kicked off a free service this week to help users generate a consumption profile based on their shopping history. But buried at the bottom of its landing page was a small box — checked by default — that automatically enrolled users to its Sesame Credit unless they opted out. The subsequent online uproar prompted Ant to change that setting and to call the move “extremely idiotic,” according to a post on its official social media account.

    Jack Ma Debt Giant Grinds to Halt as China Curbs Micro-Loans (Bloomberg), Rated: AAA

    After selling billions of dollars of debt backed by consumer loans last year, Chinese billionaire Jack Ma’s Ant Financial is pausing such fundraising as the government steps up curbs on micro lending.

    The company hasn’t sold any asset-backed securities since early December, according to data compiled by Bloomberg and China Securitization Analytics. That marks an abrupt shift after it issued a record 238 billion yuan ($37 billion) in 2017 of such securities backed by consumer loans.

    Source: Bloomberg

    China moves to shutter bitcoin mines (Financial Times), Rated: A

    China is moving to eradicate the country’s bitcoin mining industry over concerns about excessive electricity consumption and financial risk, reflecting authorities’ judgment that cryptocurrencies are not a strategic industry.

    International

    TransferWise begins private launch of its consumer borderless account and bright green debit card (TechCrunch), Rated: A

    Money transfer company TransferWise has begun a private launch of its “Borderless account” for consumers. It marks the first time the European unicorn has offered a debit card (pictured below), a move that is bound to draw further comparisons with newer fintech upstarts such as Revolut.

    Initially rolling out to a thousand customers, with several thousand more to be invited in the coming weeks and a full public launch pegged for Q1 this year, the online banking account gives you local bank details for the U.K., U.S., Australia and Europe, and lets you hold and convert 28 currencies.

    If, like me, you receive income from abroad and in a different currency to your home bank account (as a contractor for TechCrunch, I’m paid in U.S. dollars), then you are very likely hit by extra bank charges and an uncompetitive exchange rate by your existing bank. This could be avoided if you had a local bank account in the country and currency you are paid in, and could then choose when and how to do the currency exchange.

    100 Most Promising AI Startups Globally (CB Insights), Rated: A

    The companies were selected from a pool of 2,000+ startups based on several criteria, including investor profile, tech innovation, team strength, patent activity, mosaic score, funding history, valuation, and business model.

    Source: Fortune

    See CB Insights’ take on the 100 top artificial intelligence startups.

    Nets Group Announces Partnership with Plug and Play (PR Newswire), Rated: B

    Nets Group, the largest Nordic-based payment service provider, announced its newest strategic partnership with Plug and Play, a global matchmaker for startups, corporations, and investors. They joined Plug and Play FinTech’s innovation platform to engage in both the European and North American startup ecosystem. This collaboration will introduce Nets Group to top tier startups that align with their innovation strategy.

    India

    Peer-to-peer lending companies join hands to form the Association of P2P Lending Platforms (Economic Times), Rated: AAA

    India’s leading peer-to-peer lending companies on Wednesday said they have come together to form the Association of P2P Lending Platforms. The first-of-its-kind association will act as a representative for its members, as well as the country’s P2P lending industry. In addition, the association will work in conjunction with the government and regulatory authorities in matters of compliance, and to further the cause of financial inclusion in the country.

    The association also intends to undertake research and development, collect data and conduct surveys that will further the development of the P2P lending industry in India. The research and its findings will be shared publicly, and exchange of ideas will be encouraged through various conferences, lectures and sponsored events.

    Other founding members include Bhavin Patel, Founder and CEO, LenDenClub and Bhuvan Rustagi, Co-Founder and COO, Lendbox.in who will be the association’s Secretary and Treasurer respectively.P2P lending, Vinay Mathews,Faircent.com,Shankar Vaddadi, i-lend.in, Bhavin Patel, LenDenClub,Bhuvan Rustagi, Lendbox.in

    Ola, ICICI Bank partner (Outlook), Rated: A

    Private sector lender ICICI Bank and ride-sharing app Ola have signed an agreement to offer a range of integrated services to their customers.

    Through this alliance, ICICI Bank customers can book Ola and pay the fare by using the bank’s mobile banking applications, ‘iMobile’ and ‘Pockets’.

    The facility will also help Ola customers to get small ticket digital credit instantaneously from ICICI Bank, on the Ola platform, a statement said, adding it will also enable digital payments to driver partners.

    i2ifunding applies for NBFC-P2P licence

    Peer-to-peer lending platform i2ifunding has applied for registration certificate from RBI to operate as non- banking financial company-peer-to-peer lending (P2P).

    Fintech moves in the new year (livemint), Rated: A

    The other pending issue is completing the formation of a Payments Regulatory Board, which was set up through an amendment to the Payment and Settlement Systems Act.

    Finally, RBI’s guidelines on peer-to-peer (P2P) lending need further refinement to bolster the nation’s growing fintech credentials. The rules have confusing eligibility criteria, are ultra-conservative in lender exposure limits and allocate too much discretionary power to the central bank without spelling out specific trigger points for regulatory action.

    Muthoot Pappachan plans strategic investments in fintech start-ups (livemint), Rated: B

    Muthoot Pappachan Group, a Kerala-based lending and financial services conglomerate, plans to make strategic investments in fintech start-ups as part of a larger digital transformation exercise to drive synergies and profitability among its business units, as it chalks out a plan to list its flagship lending arm Muthoot Fincorp Ltd, a top company executive said.

    The group may look to invest $1-5 million in each deal, he added.

    A key focus is technology solutions that will help the organisation disburse loans faster and conveniently to its target low-income customers. This will be achieved by exploring non-traditional data sources for credit appraisal, innovative repayment models and assistive technology solutions at branches.

    Muthoot Pappachan recently invested in two start-ups: peer-to-peer lending platform Faircent and RemitGuru, that offers online money transfer service to Indians settled abroad.

    Asia

    KK Fund backs founders with an ‘unfair advantage’, says founder Saito (Deal Street Asia), Rated; A

    Koichi Saito, the Founder and Partner of KK Fund, a Singapore-based venture fund with roots in Japan, is bullish on the opportunities that ASEAN offers, with the inflow of Chinese and Japanese capital into the region providing more opportunities for deal flow and exits.

    In terms of the KK Fund, can you discuss the funds it currently manages? 

    We started fund one in early 2015, which has a corpus of a few million dollars, so it was a micro fund. From that fund, we made 13 investments in online marketplaces in the e-commerce space. At the time, we were investing between $50,000 and $200,000. Then we closed a second fund at the end of 2016, a $20-million fund. We’re still focusing on seed-stage startups.

    P2P lending platforms are a proven model in the US, China and Japan, as well as in Southeast Asia. However, there is a lack of credit scoring data, so with the need for alternative financing solutions in the region, there are substantial opportunities.

    Besides the founders, what do you look for in terms of the business concepts?

    Let’s say, in the Philippines, there are a lot of remittances players. Now, I reckon only about 10 per cent of people in the Philippines have a bank account. They need a platform for admittance to a bank. If there is a solution that addresses such an issue not only in the Philippines but across Southeast Asia, then I am impressed.

    MENA

    Egyptian Fintech Startup Moneyfellows Secures Investment (Forbes), Rated: AAA

    Egypt-based fintech startup Moneyfellows has raised a $600,000 investment from a group of investors led by Dubai Angel Investors and 500 Startups, the company’s founder Ahmed Wadi revealed.

    Moneyfellows is a web and mobile-based platform allowing users to create, manage and track money circles online with members of their social networks. The startup makes money by charging users a small fee when they withdraw their payout from their money circle.

    Although rarely recognized by mainstream financial institutions, money circles have long given people who lack access to the formal banking system the ability to save money and take small loans. This type of finance is known by many different names. In Egypt, it’s called gameya while in India, it’s a chit fund. In North America, it would be a rotating credit and savings association, or ROSCA.

    To date, Wadi reports Moneyfellows has had 2,600 paying users and about 240 active circles.

    Africa

    Entrepreneurs and innovators to watch out for (The Nation), Rated: AAA

    So many fintech companies have birthed, including , Startcredits.com, to provide   online loan marketplace for  entrepreneurs to fund their  start-ups, promoting financial inclusion in the bid to fix the access to credit problems. A fintech  to watch  is Social Lender, a  digital   lending solution based on social reputation on mobile, online and social media platforms.  Social Lender is designed to bridge the gap of immediate fund access for people with limited access to formal credit. Social Lender uses its own proprietary algorithm to perform a social audit of the user on social media, online and other related platforms. Loans are guaranteed by the user’s social profile and network allowing users to then borrow from banks and other financial institutions based on their social reputation.

    Flutterwave, a payments platform is  making  it easier for banks and businesses to process payments across Africa. U.S. investors  have  invested  $10 million into it.

    Canada

    TD Bank’s first fintech acquisition is an AI company (Digiday), Rated: AAA

    TD Bank just bought its first technology firm, Toronto-based artificial intelligence startup Layer 6.

    The Canadian banking giant, also based in Toronto, invested an undisclosed amount in Layer 6 to help it “continue to transform itself” in the industry shift from mobile-first to AI-first customer experiences, said Rizwan Khalfan, TD’s chief digital and payments officer. The transaction was completed Tuesday morning.

    Authors:

    Allen Taylor

    Friday December 22 2017, Daily News Digest

    LendingClub charge offs

    News Comments Today’s main news: DV01 finishes year with $7.9B in consumer unsecured bonds. PayPal invests in Raisin. Affirm CEO affirms its product is a personal loan. LexinFintech share price surges. The state of P2P lending in New Zealand. InvestUp considers cryptocurrency investing. Today’s main analysis: Why bitcoin is a threat to LendingClub. Today’s thought-provoking articles: High-tech lenders go after […]

    LendingClub charge offs

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    United States

    High-tech lenders target the decades-old store credit card (Reuters), Rated: AAA

    The once-hot online lending industry has been battered by scandal and losses since last year, but one of the oldest forms of lending – store credit – is increasingly attracting tech companies aiming to supplant a retailer’s credit card.

    One such lender, San Francisco startup Affirm, is attracting investment and large customers by using a new approach to underwriting that allows it to approve more borrowers than traditional store credit cards.

    Max Levchin, Affirm’s founder who also co-founded one of the earliest digital payments companies, PayPal, boasts that Affirm approves 126 percent more borrowers than Synchrony Financial, the largest issuer of private-label credit cards.

    Startup Affirm CEO Clarifies that Product Is a Personal Loan – Not a Credit Card (LendEDU), Rated: AAA

    Consumers looking for a personal loan option have another one to consider in Affirm, which is a startup from PayPal co-founder Max Levchin. With Affirm, consumers can access a loan, a form of credit, to buy items at a store, which was originally interpreted to be similar to how a credit card works.

    But Levchin has pointed out there are important differences between an Affirm loan and credit cards.

    Who Uses Affirm?

    Generation X and Millennials are the customers who most frequently use Affirm. Younger consumers have seen how carrying high credit card balances affected their older relatives, and they are less likely to want to have much credit card debt.

    The annual percentage rate can be steep, going from as low as 10 percent to as high as 30 percent. But, unlike credit cards, the interest isn’t compounded.

    Why Bitcoin Frenzy Is Terrible News For LendingClub (SeekingAlpha), Rated: AAA

    LendingClub (LC) has had plenty of troubles over the years. Back in 2015, you could throw a dart at a list of financial stocks and hit a double if you held it through today. LC stock, by contrast, has destroyed shareholder value since its IPO. Even the recent Trump financials rally did next to nothing for LC stock, and now shares are back to near new all-time lows after a downbeat earnings report:

    Source: SeekingAlpha

    In a booming economy, the G-rated loans did so badly that they jacked up interest rates almost 3% on consumers while also reducing expected returns by more than 3%. This suggests that the G-rated loans were fully 6% short of expectations. This speaks to massive problems with the company’s underwriting, and leaves you to wonder just how badly internet-originated subprime loans will fare when a recession hits and the unemployment rate goes up again.

    Source: SeekingAlpha

    Bitcoin Losses Ahead?

    If you are someone with a low income and a challenging financial position, you have an almost no-lose proposition (if ethics don’t get in the way). You borrow money on a credit card or from LendingClub, “invest” it in Bitcoin or Ethereum, and then hope it keeps going to the moon. If it does, you make many multiples of your interest expense, and have hit the lottery.

    Now if the trade goes bad, and Bitcoin plummets, what is your debtor going to do? Since there is little consequence to defaulting on unsecured debt (and LendingClub has a reputation for being a lax debt collector), you simply stop paying on the note. The borrower has a win/win situation – essentially the lender is financing purchase of lottery tickets. I don’t know about you, but I’d need a much higher interest rate than even the 15 or 20% you might get off a low-end LendingClub note to justify that risk.

    Source: SeekingAlpha

    DV01 to Finish 2017 With $ 7.9 Billion in Consumer Unsecured Bonds (Crowdfund Insider), Rated: AAA

    dv01, the data management, reporting, and analytics platform that offers institutional investors transparency and insight into lending markets, announced on Thursday it is set to close 2017 with $7.9 billion of consumer unsecured bonds. This news comes just a few months after the company launched its Cashflows for Securitizations feature.

    The company revealed that it has launched a redesigned Securitizations homepage to celebrate the $7.9 billion of consumer unsecured bonds.

    SoFi Vs. Earnest Student Loan Product Comparison (StudentLoans.net), Rated: AAA

    SoFi offers their clients an option. You can choose variable refinancing rates which currently range 2.75 to 6.84 percent if you enroll in the company’s autopay option. Fixed rates range from 3.25 to 7.24 percent.

    Earnest offers their clients both variable and fixed rate options. For the variable option, the rates currently start at 2.57 percent APR while fixed rates start at 3.35 percent APR with their autopay options.

    Both SoFi and Earnest do not have a maximum within their loan amounts, but the amount a client owes will affect the interest rates that are offered.

    Repayment Options

    SoFi offers a number of repayment options for their refinancing product. This includes flexible rates, terms, and an ability to set automatic payments that drop your rate by 0.25 percent. Repayment terms range from 5 to 20 years.

    Earnest refinance loans offers the flexibility in the way of terms that range from 5 to 20 years. With their loans, you will be able to increase payments, pay lump sums, provide bi-weekly payments, skip a payment to pay later, and offers an interest break for those who set up automated payments.

    American Financial Exchange (AFX) Announces Two-Year Anniversary Highlights (PR Newswire), Rated: A

    American Financial Exchange (AFX), an electronic interbank lending market focused on U.S. small and mid-sized banks, announced today the second anniversary of its electronic trading platform. AFX facilitates the determination of Ameribor®, a transaction-based interest rate benchmark for small- to mid-sized banks via its electronic trading platform.

    Since opening, more than $100 billion cumulative has been successful transacted. Recently, daily volumes have averaged approximately $350 million with several days of volume highs over $500 million principal traded.

    Is Peer to Peer Lending the Best Option for Small Company Financing? (Newswire), Rated: A

    If your small company needs a borrowing arrangement but does not have a credit rating that benefits instant endorsement from the banking institutions, you need to sign up for an alternative solution of capital such as peer to peer lending.

    Rather than signing up to a recognized traditional bank for a financial loan, you create a proposal to be lent from people who, (if they are interested in your offer), sign up for the loan request in amounts as low as $25.

    Unsecured business loans and where to get the best ones if you have bad credit (Las Vegas Informer), Rated: A

    Kabbage

    Kabbage offers loans that go between $2000 and $150,000, and the APR goes between 24% and 99%. They ask for no minimum credit score but you need to have been in business for at least one year in order to qualify, and have annual revenue of over $50,000.

    Fundbox

    With Funbox you’re looking at a loan amount of $1000 that can go all the way up to $100,000. The APR goes between 15% and 59%, and they also cater to the needs of people with bad personal credit.

    OnDeck

    With OnDeck you’re looking at loans that go up to $100,000 and an APR that can go from 14% to 40%. Unlike the other two, here you need good personal credit and also you need to be good at managing your cash flow. You will need a personal credit score of at least 600, not to mention an annual revenue of at least $100,000.

    LendingClub

    At LendingClub you can get a loan of up to $100,000, from a minimum of $5,000, with an APR that goes between 9.8% and 35.7%.

    New Real Estate Investing Resource Platform is Changing the Landscape (Benzinga), Rated: A

    Think Realty is a membership-based resource platform developed exclusively for real estate investors. Since launching in 2016, investors across the nation and around the globe have signed up at ThinkRealty.com to become Think Realty Members, with an 81 percent increase in membership in the past six months.

    Think Realty’s reach continues to expand with its national talk radio show, Think Realty Radio, which will begin airing January 1, 2018 on Wall Street Radio. Think Realty is presenting four national conferences for investors in 2018, beginning with the Think Realty Conference & Expo in Dallas, Texas, February 24 and 25. The other locations are Baltimore, Maryland, April 14 and 15; Irvine, California, July 14 and 15; and Atlanta, Georgia, September 22 and 23.

    The 10 biggest real estate tech deals of 2017 (The Real Deal), Rated: A

    WeWork is now worth $20 billion. Compass is valued at $2.2 billion following a December funding round. Have you heard of Placester? Well, investors think it’s worth $202 million. The Jared Kushner-backed real estate crowdfunding startup Cadre now has a $800 million price tag.

    • 1) WeWork, $4.4 billion fundraising round
    • 2 & 3) Compass, $100M and $450M fundraising rounds
    • 4) Cadre, $65 million fundraising round
    • 5) Placester, $50 million fundraising round
    • 6) Common, $40 million fundraising round
    • 7) HomeLight, $40 million fundraising round
    • 8) Roofstock, $35 million fundraising round
    • 9) Knock, $32.5 million fundraising round
    • 10) Opcity, $28.77 million fundraising round

    Congress: Hands off new rule protecting families from payday lenders (Herald Sun), Rated: A

    Ignoring the voices of families and communities who have worked for many years for relief from the harms of predatory payday lending, a handful of members of Congress have introduced legislation that would nullify the Consumer Financial Protection Bureau’s national rule to rein in payday-lending abuses. Their legislation uses Congressional Review Act authority to repeal the rule and prevent the Consumer Bureau from issuing a similar rule in the future, giving predatory payday and car title lenders a free pass.

    Why Amazon won’t buy a bank in 2018 (Tearsheet), Rated: A

    Forget the speculation about Amazon buying a bank next year. But don’t count it out from adding banking to its near endless line of offerings.

    For Amazon, providing financial services is just a means to an end: making more money by selling more things. Other retailers are still its main competition — not banks.

    Why banks want to collaborate now on open banking standards (Tearsheet), Rated: A

    Every U.S. banker is watching their European counterparts react to the looming Payment Services Directive, or PSD2, which will come into effect in 2018. When that happens, banks will lose their monopoly on customer data as merchants and retailers like Amazon will be allowed to retrieve customer account data from the banks (with customers’ permission).

    Now, U.S. banks want to get ahead of their own regulators when it comes to creating data exchange standards. It can take 18 to 36 months to get a framework in place, Courbe said, but banks know they need to start exchanging data with other companies today.

    LendingTree Adopts the RevJet Marketing Creative Platform (Sys-Con Media), Rated: A

    RevJet, the first smart marketing creative platform, today announced that LendingTree has adopted RevJet’s system for producing, approving, personalizing, serving and automatically optimizing all formats of digital ad creative. Using RevJet to take a methodical approach to experimentation, LendingTree is able to deliver a higher volume of leads to their business partners while optimizing for revenue.

     

    United Kingdom

    December’s Lending Impact and Borrower Stories (Funding Circle), Rated: AAA

    Whatever the season, small businesses work harder on any given day than Mr Claus on Christmas Eve. To celebrate their hard work and determination, we’ve created our very own Christmas Carol, looking at the past, present and future of small businesses. We begin with the small business past, looking at the history of small businesses, and how they adapted during the industrial revolution. Next up, dive into the small business present and learn about the impact they have on today’s world and the trends that have helped them along the way. Finally, discover what the landscape might look like for businesses in years to come in our small business future.

    In our latest case study video, meet David, founder of The Creative Whisky Company.

    Peer to Peer Robo-Lending Platform InvestUp Sizes Up Cryptocurrency Investing (Crowdfund Insider), Rated: AAA

    FCA authorised crowdfunding aggregation platform InvestUp may be going crypto. The UK based Fintech has so far focused on the peer to peer lending space but management is currently looking at adding algorithm driven cryptocurrency investing.

    InvestUp shares that 2017 has been another good year for P2P lending having delivered, on average, 10.74% to investors.

    Protecting the future of peer-to-peer lending (Gov.uk), Rated: A

    Today the peer-to-peer lending industry was given a boost of confidence as the government began legislating to clarify that no business borrowing through a peer-to-peer platform needs to be regulated as a ‘deposit taker’ (often referred to as a ‘banking licence’) unless that is their core business. The legislation will ensure that the industry can continue to thrive and innovate while still benefiting from the UK’s high quality regulatory standards.

    The Committee on Exiting Europe Publishes Sector Reports Including Document on Fintech (Crowdfund Insider), Rated: A

    The Exiting the European Union Committee, appointed by the House of Commons to examine the process of the Department for Exiting the European Union , released a grouping of documents from the Department today. As one may expect, the slew of reports addressed certain aspects regarding ramifications of the UK’s departure from Europe.

    The Fintech Sector Report highlights the current regulatory regime in the EU and how cross border transactions take place between continental Europe and the UK. The document describes Fintech as covering four different categories:

    • Investment, advice (including Robo-Advisors) and  neo or challenger banks
    • Regtech for compaliance
    • Payments including digital currencies such as Bitcoin
    • Alternative finance including crowdfunding and peer to peer lending

    Read the full UK Fintech Report here.

    Bank of England approves Tandem’s Harrods Bank takeover (AltFi), Rated: A

    Tandem can now end the year on a high note after the Bank of England today gave regulatory approval for the challenger’s purchase of Harrods Bank.

    The deal will now give Tandem access to a full banking license and the 10,000 customers attached to Harrods Bank, as well as the bank’s mortgage and savings books. According to Tandem, the purchase will also come with a “significant capital injection”.

    UBS and EPAM Win Best Use of IT Private Banking/Wealth Management for SmartWealth App at Banking Technology Awards (NASDAQ), Rated: B

    EPAM Systems (NYSE:EPAM), a global provider of digital platform engineering and software development services, and UBS AG, the world’s largest wealth manager, have been awarded for Best Use of IT Private Banking/Wealth Management at the Banking Technology Awards held on December 13, 2017 in London.

    China

    Chinese online lender LexinFintech surges in U.S. market debut (Reuters), Rated: AAA

    Chinese online lender LexinFintech Holdings Ltd’s (LX.O) shares surged in their U.S. market debut on Thursday, brushing aside worries related to Beijing’s recent crackdown on the booming micro-credit industry.

    LexinFintech’s shares touched a session high of $14.88, a 53 percent jump from its IPO price that valued the Shenzhen-based company at $4.51 billion.

    China online lending IPO meets tepid demand as fintech zeal wanes (Financial Times), Rated: AAA

    LexinFintech, the latest Chinese online consumer lender to complete a US initial public offering, has met with muted investor demand amid concerns over Beijing’s regulatory clampdown on dubious lending practices.

    Lexin scaled back its planned $500m IPO on Nasdaq to $109m, and final pricing was at the bottom end of the price range initially marketed to investors.

    Qudian, which is backed by Alibaba affiliate Ant Financial, raised $900m on the New York Stock Exchange in October — the largest US IPO by a Chinese fintech group. After hitting that high point investor interest quickly slid: last month PPDAI raised $221m in a deal that priced below the initial price range.

    Since their IPOs, both Qudian and PPDAI have faced allegations of issuing misleading financial disclosures. Qudian closed at 48 per cent below its IPO price on Thursday, while PPDAI was down 44 per cent.

    Source: Financial Times

    Is Qudian A Bargain Or A Falling Knife? (SeekingAlpha), Rated: A

    QD’s stock price has taken a nosedive, plummeting from its $24 IPO price to $12.9 as of 12/19/2017. Given QD’s strong earnings and fast growth rates in the past, the current price may appear to be a great bargain. Is that true?

    QD’s strong past operating performance is mainly driven by its online cash-loan business, which brings in 83.3% of its total revenue.

    The regulations can be distilled into three key rules: (1) cap the interest rates at 36% (2) limit the leverage of cash-loan companies at 3 or lower, and (3) forbid commercial banks, insurance companies, P2P, etc from investing in cash loans. These rules will put QD’s extraordinary profits to an end, as discussed below.

    • Rule #1: The interest rate caps may turn QD’s strong profits into negative. While QD may have already compiled to the 36% interest cap by the time of its IPO, QD’s revenue will still take a nearly 1/3 cut, holding all else equal.
    • Rule #2: The leverage limit will bring QD’s entire cash-loan business to a halt. According to QD’s 3Q report (Qudian Inc. Reports Third Quarter 2017 Unaudited Financial Results), as of 09/30/2017, its capital structure consists of Liability: 11.18 billion; Mezzanine equity/convertible preferred shares: 5.94 billion;Total Shareholders’ deficit: 1.78 billion. However, the national regulation limits the maximum leverage at 3, or even at 1 according to some regional regulations (21jingji news). It is clear that with 1.78 billion shareholders’ deficit, QD has to raise literally billions of additional funds to satisfy this rule, which is “mission impossible” given the third rule as discussed below.
    • Rule #3: restricting the financing sources will shut the door for QD to raise additional capital.
    QD PPDF
    Market Cap 4,243 2,175
    Total Transactions 3,938 3,231
    Revenue 223 192
    Net Income 100 83

    Brett Diment: 2018 Will be China Fintech’s Breakout Year (FiNews), Rated: A

    Fintech will increasingly be associated with Beijing, Shenzhen and Hangzhou in 2018 instead of Silicon Valley, Aberdeen Standard’s Brett Diment details in a contribution for finews.asia.

    The Chinese online-payment industry already accounts for around half of global transactions. Alipay, operated by Alibaba’s financial arm, is the market leader.

    But Tencent’s Tenpay has been catching up fast. Tenpay’s stroke of genius was to allow its users to send electronic hongbao – the red envelopes of money traditionally given as a Chinese New Year gift. Some 16 million online hongbao were sent in 2014 – rising to a billion in 2015. This helped Tenpay’s share of the online-payment market to reach around 40 percent in just three years.

    The University of Hong Kong Online Fintech Course Now Open for Registration (Crowdfund Insider), Rated: B

    The Fintech MOOC is a six-week online course on innovations in finance and is designed to provide a foundational understanding of the global changes impacting all financial services.

    European Union

    Mayo businesses raise almost €800,000 through Linked Finance (The Connaught Telegraph), Rated: A

    LINKED Finance, Ireland’s leading peer-to-peer (P2P) lending company, has raised almost €800,000 for Mayo-based businesses.

    Eighteen Mayo businesses, including Doherty for Men, Main Street, Castlebar, and Electric Escapes, based in Westport, have raised funds through Linked Finance’s online lending platform (www.linkedfinance.com) to facilitate business growth.

    Electric Escapes has raised €50,000 over two separate funding rounds, facilitated through the platform.

    PayPal backs fintech deposit marketplace Raisin (AltFi), Rated: AAA

    Raisin has secured an undisclosed sum of investment from digital payments platform PayPal. The money will be used to accelerate the growth of Raisin across its core European geographies.

    International

    Blockchain is “no longer in proof of concept” phase (Global Trade Review), Rated: AAA

    Sin has just helped launch the world’s first cross-border bancassurance distributed ledger technology (DLT) platform, working with China Life Insurance and Guangfa Bank in Macau.

    In another sign that the technology may be fit for commercial purpose, SME lending platform ModulTrade has settled its first blockchain-based export transaction out of China.

    This transaction was small –  just over US$1,000 – but again shows that the technology is beginning to be used outside of the laboratory.

    The company teamed up with Rabobank to complete an inventory financing transaction on the blockchain that resulted in a real-time payment for farmers.

    All payments were made in real time, using a Rabobank-backed digital dollar, pegged to the Aussie dollar. The digital dollar was issued and cleared by a central issuing and settlement institution.

    BENCHMARKING DISTRIBUTED LEDGER TECHNOLOGY (All About Alpha), Rated: A

    Two scholars affiliated with the Cambridge Centre for Alternative Finance, in Great Britain, have prepared a fascinating overview of the present state of blockchain and distributed ledger technology (DLT).

    • The protocol layer of this ecosystem is only slowly maturing, and the limit of this maturation is one of the key challenges for the broader adoption of DLT;
    • Most users experiment with only small-scale, isolated layers, with live applications allowed only as “permissioned” layers;
    • There is an increasing focus on creating common standards of enterprise DLT frameworks that will allow for interoperability, but this effort to overcome fragmentation is itself fragmented into “a variety of consortia”;
    • Ethereum in particular has been tested at 57% of central banks, either via the public network or a permissioned version.

    Nearly half of the surveyed DLT start-ups are in North America (47%). The second largest group by continent is that which hails from Europe (28%), then 19% (Asia Pacific).

    But employment isn’t precisely aligned with the number of enterprises on each continent. A full 61% of employees working in this field are in North America, and only 13% are in Europe.

    RCN ANNOUNCES DECENTRALAND PARTNERSHIP (Bitcoinist), Rated: A

    Earlier this week, RCNannounced their new partnership with Decentraland, the blockchain-based virtual reality platform where users can acquire virtual land to create and monetize their content.

    Under the new partnership, RCN will be able to integrate its credit protocol with the Decentraland platform. This will enable users who own plots of land, content, or businesses created in the 3D world to issue and receive loans.

    The Top FinTech Trends of 2017 … were they? (The Finanser), Rated: B

    Rise of InsurTech

    True. I’ve seen a lot of InsurTech movement this year with a number of standout start-ups like BackmeupBrollyBuzzmoveCuvvaInmybagLuther and Neos.

    Rise of RegTech

    Yep, I’ve heard more about RegTech this year than ever before, although that’s unsurprising when most banks have at least two staff checking the work of each employee (Citibank has 40,000 compliance people!). Consultancy picks out 100 of the most innovative firms in this space.

    Platforms, APIs and Open Banking are the key

    I feel like I’ve been talking platforms all year and, with PSD2 and Open Banking coming into play in January 2018, it is certainly true that platforms, APIs and Open Banking have definitely been the theme of 2017.

    China and emerging markets focus

    Ah yes, I definitely think this year has been a big year for financial inclusion and discussions of Ant Financial and Tencent.

    Australia/New Zealand

    Banking without the banks: the state of peer-to-peer lending three years on (The Spinoff), Rated: AAA

    In 2014, New Zealand was one of the first countries to legalise peer-to-peer lending.

    For the latter, Snowball Effect and PledgeMe led the way with the FMA awarding its first equity crowdfunding licences to the two firms. For the former, the first licence for P2P lending was granted to Auckland-based platform Harmoney, which was founded by Neil Roberts that very same year.

    To date, there are eight licensed P2P lending services currently operating in New Zealand with more than 20,000 investors currently registered with P2P lending intermediaries. When it comes to borrowers, there are more than 200,000 individuals currently registered with P2P services.

    Source: The Spinoff

    Since launching in September 2014, it’s lent more than $655 million via 37,000+ loans and paid more than $87 million interest in total. In the most recent financial year, Harmoney saw over more than 830,000 investments made in loans by almost 5,400 unique investors.

    Source: The Spinoff
    India

    Want Good Financial Advice? Ask a Digital Lending Platform (BW Disrupt), Rated: A

    The need for credit can come for a variety of reasons, and can be catered to by a vast plethora of different loan products.

    Clearly, if you had to get good financial advice, AI-leveraging algorithms are a better bet than humans. So why not use the same technology to help individuals and SMEs find the right credit options for their needs?

    Asia

    NewsBTC Interviews the Crowd-genie Team (NewsBTC), Rated: A

    NewsBTC: Why is licensing so important? How difficult is it to get in Singapore? 

    Crowd-genie: Being registered and licensed are two different stories. As peer to peer lending platform involves enormous monetary transactions, a securities license is crucial for regulated lending activities.

    NewsBTC: Can you please explanation of how reputations coin work?

    Crowd-genie: For each repayment, from the borrower to lenders, we will incentivise on-time payment by adding CGCOIN “Credits” to the borrowers’ wallets. This will be a spendable asset that will be tracked separately in the Digital Passport. The more CGCOIN Credits earned, the higher their reputation, and that in turn, will increase their chances of getting higher investments from more lenders and/or a lower interest rate.

     

    Source: NewsBTC
    Cayman Islands

    Robot to speak at Cayman Alternative Investment Summit (Cayman Compass), Rated: B

    Sophia, the world’s first robot to be granted citizenship of a country, will be one of the speakers at the Cayman Alternative Investment Summit on Feb. 8 to 9, 2018, organizers announced Thursday.

    At the Cayman Alternative Investment Summit, Sophia will be interviewed on stage by a representative from event sponsor KPMG.

    Organizers say the robot’s appearance complements the theme of the investment conference, “Wired: the rise of alternative investments in a digital age,” which targets opportunities at the intersection of alternative investing and technology.

    Authors:

    George Popescu
    Allen Taylor

    Monday December 4 2017, Daily News Digest

    mortgage delinquencies by credit score band

    News Comments Today’s main news: Lending Club closes first-of-kind MPL transaction. Zopa the first P2P lender to lend 100M GBP in one month. Marcus’s personal loan hits the mark. China issues new rules for cash loan market. Lexinfintech delays IPO. China Rapid Finance posts quarterly earnings. Today’s main analysis: Mortgage delinquency case study. International P2P lending volumes. Today’s thought-provoking articles: China […]

    mortgage delinquencies by credit score band

    News Comments

    United States

    United Kingdom

    China

    International

    Australia/New Zealand

    India

    Asia

    Canada

    Africa

    News Summary

    United States

    LendingClub Closes First-of-Its-Kind Transaction in Marketplace Lending (PR Newswire), Rated: AAA

    LendingClub (NYSE: LC), America’s largest online marketplace connecting borrowers and investors, today announced that it has closed a first-of-its-kind transaction in marketplace lending — a whole loan transaction structured as a tradeable, pass-through security called a CLUB Certificate*. This first milestone transaction totaled $25 million with an institutional investor seeking a liquid vehicle with which to access the consumer credit asset class.

    The CLUB Certificate transaction consisted of whole loans structured as a pass-through security. The instrument trades in the over-the-counter market with a CUSIP and is efficiently cleared through the Depository Trust and Clearing Company (DTCC).

    Lending Club diversifies with pass through deal (Global Capital), Rated: A

    The $25m transaction was purchased by an institutional investor seeking “a liquid vehicle with which to access the consumer credit asset class”, chief capital officer Patrick Dunne told GlobalCapital, though he declined to reveal pricing information or the buyer’s identity.

    The inaugural CLUB certificate consists of whole loans structured as a pass-through security, and trades in the over-the-counter market with a CUSIP number, and cleared through the Depository Trust and Clearing Company (DTCC).

    Unlike a securitization, the certificate only pools three year and five year loans of a particular grade that the investor is looking for.

    Goldman Sachs’ Marcus Personal Loan Hits the Mark as Other Lenders Struggle (LendEDU), Rated: AAA

    When Goldman Sachs launched Marcus, a personal loans product, a little over a year ago, it set an aggressive goal: lend $2 billion by the end of 2017. And while competing online lenders have reported a series of losses since then, Goldman announced this month that Marcus has hit that milestone.

    Marcus offers loans from $3,500 to $30,000 on an unsecured basis, meaning they don’t require collateral such as a car or house. Borrowers must make monthly fixed payments, and interest rates range from 6.99 percent to 23.99 percent. On the Marcus website, a sample loan of $15,000 at 13 percent APR is estimated to cost a borrower $19,312 at the end of a 48-month term.

    While Marcus has been soaring, other online lenders have been struggling. Lending Club, Prosper, and OnDeck all reported losses over the past 18 months.

    Donuts at the CFPB, LC’s Pass-Through Security, Mortgage Delinquency Case Study (PeerIQ), Rated: AAA

    On Friday, Lending Club completed a first-of-its-kind transaction in marketplace lending by selling a whole loan pass through security. The transaction size was for $25 Mn and was sold to a single institutional investor. LendingClub held 5% to comply with risk retention rules. The transaction is notable for the following reasons:

    • Expands the market. The pass-through security reflects the same risk and return characteristics of a whole loan pool.
    • Lower Financing Costs. Additionally, as market liquidity grows, the CUSIPs may enjoy lower-cost repo financing as an alternative to higher-cost credit facilities.
    • Secondary Markets. The product addresses certain investors’ demand for secondary market liquidity.
    • Valuation. The price discovery generated from markets in CUSIPs will enable valuation agents such as PeerIQ and Duff & Phelps to calibrate pricing to observed trades in the market.

    Mortgage Delinquencies and the 2008 Crisis

    Following the integration of TransUnion’s deep datasets on the PeerIQ platform, we examine the historical delinquencies for mortgages over the last 15 years. As seen below, we find that Mortgage delinquencies increased meaningfully, across all credit scores, one-year before the financial crisis.

    Source: PeerIQ, TransUnion

    We also show that the rise in delinquency levels above corresponds to the rise in Debt-to-Income levels (and other underwriting statistics – not shown) leading up to the crisis.

    Source: PeerIQ, TransUnion

    There’s a gift for student lenders in the education bill (American Banker), Rated: A

    After the 2016 elections, there were high hopes that student lenders (and servicers) would benefit from a more favorable environment regulatory environment and expanded lending opportunities.

    Until recently, however, there was not much to show in either respect. While the industry cheered the Department of Education’s decision in August to stop sharing servicing data with the Consumer Financial Protection Bureau, higher education did not appear to be a high priority for the Trump administration.

    Ethan Senturia of Dealstruck (Lend Academy), Rated: A

    Our latest guest is Ethan Senturia. He was the CEO and Co-Founder of Dealstruck, an online small business lender that was founded in 2013 and shut down in late 2016. Ethan talks about his journey as the CEO of Dealstruck and what led to its demise. He does not sugar coat anything and he takes a great deal of personal responsibility for everything that happened.

    His has written a book about this journey called Unwound: Real-time Reflections from a Stumbling Entrepreneur and it is being released on Amazon today.

    Beware Those Sketchy Loans Advertised on Instagram (Lifehacker), Rated: A

    We’ve warned readers before about new, slick credit companies like Affirm, which want to replace credit cards with on-the-spot loans integrated right into online purchase pages. For all their talk of helping consumers, these companies aren’t much more than friendly loan sharks, re-branded to offer a “premium experience,” but still dangerous and even predatory.

    But as Cagle points out, Affirm’s median interest rate of 19 percent is above the median credit card rate, and retailers use the company to build, and then aggressively advertise, the model of buying expensive products on credit. For all of Affirm’s talk of responsibility and helping consumers make better choices, their third most-popular buying category is fashion.

    Affirm seems to be making the problem worse. As Cagle puts it: “Affirm is not just meeting a demand, but creating one, encouraging shoppers to buy and spend more. Affirm claims an average 75 percent boost in order values across all its merchant partners.”

    MiaDonna Lifts AOV 36%, Repeat Purchases 17% With Financing Option (Retail TouchPoints), Rated: A

    With a young, tech-savvy consumer base, MiaDonna, an online jewelry retailer specializing in ethically sourced lab-grown diamonds, wanted to be up-to-the-minute with its payment options as well. The retailer selected financing company Affirm, enabling shoppers to pay in three-, six- and 12-month increments.

    MiaDonna, which now makes approximately 20% of its sales through Affirm, noted that shoppers using the service are both spending more and coming back. Affirm users make 17% more repeat purchases, with average order values (AOV) that are 36% higher compared to non-users.

    The company’s target consumer is females aged 18 to 34 who are in a relationship and are close to getting engaged or married (within six to 12 months).

    Marketplace Lenders Should Remember Experience Can Be Replicated, Experts Say (Bank Innovation), Rated: A

    “The borrower experience at a marketplace lender is better than [the experience] at a bank, and that’s why it’s here to stay,” Don Davis, portfolio manager for Prime Meridian Capital Management, said today. during a panel discussion at the 3rd Annual Investors conference for Marketplace Lending, pointing to the ease of the online lending experience for borrowers.

    Coinsource Adds 18 Bitcoin ATMs in Atlanta, Among Ten Most Unbanked US Cities (Bitcoin.com), Rated: A

    The Texas-based bitcoin ATM network, Coinsource has deployed 20 new machines in the state of Georgia, marking its single largest installation to date. 18 bitcoin ATMs have been installed in the city of Atlanta, and 2 machines in the nearby college town of Athens.

    survey by the Federal Deposit Insurance Corporation (FDIC) found that 7% of households (9 million) in the US are unbanked and an additional 19.9% of households (24.5 million) are underbanked.

    “Atlanta, Georgia is in the top ten of most unbanked cities in the country, and more than one in ten households have no involvement with traditional banks. Around 30% of residents are underbanked, meaning they might have to check accounts, but have to rely on other kinds of services like pawn shops, check-cashing and payday loan companies to get cash and credit,” Clark said.

    To maximize exposure to potential clients, the ATMs were set up near high traffic areas, as well as close to the Georgia State University and Emory University in Atlanta, and the University of Georgia in Athens. 16 of the new machines are for buying bitcoin only, while 4 have both buy and sell functionality.

    The state of Georgia now has a total of 101 bitcoin ATM kiosks, making it the third largest US market for bitcoin ATMs behind the cities of Chicago and New York.

    Data Science is Becoming the Most Important Skill in Fintech (Lend Academy), Rated: A

    The world generates some 2.5 quintillion bytes of data every day.

    Chris Skinner penned this interesting piece last week claiming the critical importance of data in banking:

    Data is the new air, and the banks that breathe the best will win. In other words, banks that really get data analytics, and can apply machine learning to gain deep customer insights are the ones that will survive.

    Data scientists are going to be needed in many areas of fintech businesses such as customer acquisition, cybersecurity, customer service – even compliance. For online lending businesses the other two critical areas are underwriting and collections.

    Glassdoor releases an annual 50 Best Jobs in America report and for the second year in a row Data Scientist had the top spot.

    Elevate Credit, Inc. to Present at KeyBanc Capital Markets Consumer Conference and Jefferies Consumer Finance Summit (BusinessWire), Rated: B

    Elevate Credit, Inc. (NYSE:ELVT), today announced that it’s CEO Ken Rees and CFO Chris Lutes will present at the following upcoming conferences:

    CU urges lawmakers to oppose repeal of CFPB’s payday loan protections for consumers (ConsumersUnion), Rated: A

    Consumers Union, the policy and mobilization division of Consumer Reports, today urged Congress to not repeal a rule adopted by the Consumer Financial Protection Bureau (CFPB) in October that would protect consumers who take out high-cost payday, installment and auto title loans. Under a Congressional Review Act resolution introduced today in the House of Representatives, the CFPB’s new rule could be repealed by lawmakers before it goes into effect in mid-2019.

    New House bill would kill consumer watchdog payday loan rule (CNBC), Rated: B

    A congressional resolution introduced Friday in the House would kill the CFPB’s new rule aimed at making sure borrowers of so-called payday loans can afford to repay their debt.

    Consulting for regulatory approvals to open a peer to peer lending platform in USA (Upwork), Rated: B

    I need an expert who can help with regulatory approvals to open a peer to peer lending platform in USA. You can be a lawyer or financial consultant who have experience in the domain and knows what’s involved. You must have experience related to lending industry.

    United Kingdom

    Zopa zooms ahead to become the first peer-to-peer group to lend out £100m in a month (City A.M.), Rated: AAA

    The financial services firm lent £100m to low-risk borrowers in the UK last month, a 48 per cent increase on November 2016.

    Zopa said it has lent more than £900m in 2017 to the end of November, with the increase in lending volumes being driven in part by its integration with price comparison websites.

    It expects to have lent out £3bn in total by January 2018.

    P2P platforms rush to launch innovative finance Isas (Financial Times), Rated: AAA

    Peer-to-peer lenders including Funding Circle and RateSetter have set dates for the launch of their innovative finance Isas, but high demand and a clampdown from providers on the highest risk borrowers will slow the process for new investors.

    This week, Funding Circle became the latest to launch an IF Isa.

    Yet the platform, which facilitates lending to small businesses, will not be rolling out its IF Isa to new investors immediately to make sure it can match new loans to borrowers. Instead, it is opening access to its 74,000 existing lenders in batches. Those who have used the platform for the longest and who lend most frequently will be offered first chance to apply.

    RateSetter also confirmed this week that it had set a February launch date for its IF Isa after receiving authorisation from the Financial Conduct Authority (FCA) in October. The platform, which facilitates loans to businesses and consumers, says it expects to raise £500m in the first full tax year after opening, but would only offer the IF Isa to existing investors in the short term. The platform said it had made that choice to reward loyal customers.

    No Christmas cheer for P2P sector as Brexit pushes FCA review into 2018 (P2P Finance News), Rated: A

    PEER-TO-PEER lending platforms will need to wait until at least the new year for the outcome of the Financial Conduct Authority’s (FCA) post-implementation review as Brexit and other market issues have taken priority at the City watchdog, Peer2Peer Finance News has learned.

    However, it can also be revealed that a snippet of the industry data compiled by the Cambridge Judge Business School’s Centre for Alternative Finance (CCAF) for use in the FCA report will be unveiled before Christmas.

    Crowd For Angels Launches £50 Million Bond Investment Opportunity (Crowdfund Insider), Rated: A

    On Thursday, peer-to-peer lending platform Crowd For Angels reportedly announced the launch of its £50 million bond investment opportunity. This news comes less than a year after Crowd for Angels launched its first crowd bonds, which are described as specially created secured, high-interest products act are eligible for the platform’s IFISA.

    According to P2P Finance Newsthe online lending portal is looking to raise the funds for a Liquid Crypto Bond, which will pay investors 3% over five years. The investors will then receive cryptocurrency tokens through an Initial Coin Offering (ICO) that may be traded on external exchanges or used for project investments on the Crowd For Angels peer-to-peer lending platform.

    Brits to spend £1bn worth of work hours planning for Christmas (London Loves Business), Rated: A

    With less than a month to go for Christmas, a new research from online lender Sunny has found that the number of hours Brits spend planning for Christmas and buying gifts online while at work are worth £1bn, with over 15m Brits admitting to planning for Christmas during work hours.

    Whether at work or at home, Sunny’s research demonstrates a clear gender divide, with women most likely to take on the task of planning for Christmas. Almost a third (31%) of men admit they don’t spend any time planning meals and a quarter (24%) say they don’t do any cooking or preparing of meals, compared to only one in seven (15%) women. Men also don’t make time for Christmas cards, with a fifth (20%) not giving any time to writing them versus fewer than one in ten (9%) women.

    Money saver Men who have tried this Women who have tried this
    Shopped around online for gifts to make sure I’m getting the best deal 35% 51%
    Started next year’s shopping in the January sales 12% 22%
    Re-gifted presents 9% 26%
    Used coupons/vouchers to buy food and drink for the Christmas period 24% 36%
    Participated in secret Santa rather than gifting everyone 7% 16%


    P2P platform appoints ex-Barclays manager
    (Bridging&Commercial), Rated: B

    RateSetter Business Finance has appointed Richard Steele as its regional manager for the Midlands.
    The peer-to-peer lending platform said Richard brought experience to its team having previously served at Barclays as a relationship manager and BCRS Business Loans as a business development manager.

    Revealed – the 25 people doing the most to spread the PropTech word (EstateAgentToday), Rated: B

    This year the list was compiled in association with the UK PropTech Association, the trade body set up in February; in addition to property investment platform LendInvest, two UKPA figures – chairman Eddie Holmes and Estate Agent Today contributor and PropTech consultant James Dearsley – were on the judging panel.

    Dan Hughes, director of data and information product management for RICS, has been named the top PropTech Influencer of the Year.

    Professor Andrew Baum of Oxford University took second place, after authoring PropTech 3.0, a much-discussed document in the field of PropTech.

    Third was digital strategist Antony Slumbers, while fourth was Gary Chimwa, the organiser behind Future:PropTech events.

    You can see the full list of 25 here and the top 10 International Influencers here.

    RICS director tops proptech influencer list (Development Finance Today), Rated: B

    Dan Hughes of the Royal Institution of Chartered Surveyors (RICS) (pictured above, right) has topped LendInvest’s PropTech Influencer List for 2017.
    In fourth place was Gary Chima, the organiser behind Future:PropTech events, and in fifth was Dominic Wilson, managing partner of proptech start-up incubator Pi Labs.
    China

    China issues new rules to clean up runaway cash loan market (SCMP), Rated: AAA

    China on Friday issued new rules to clean up its controversial cash loan and online micro lending market, including prohibiting lending to people without an income and putting a curb on the total charges on runaway credit, according to an official notice seen by the South China Morning Post.

    It ordered therefore, that with immediate effect, all organisations and individuals must obtain a licence to conduct lending business. All lending institutions must also state clearly a comprehensive charge, which includes interest rates and various fees charged for different categories of offerings for the loan.

    The tightened controls attempt to curb a common practice where online lending platforms bypass the maximum legal interest rate charge of 36 per cent with additional add-on fees.

    Lenders are also banned from rolling over the credit more than twice and must put a cap on the cost of each loan.

    Funds from online micro loans are also banned from being used to speculate in stocks and pay for property down payment. In addition, asset management products offered by financial institutions and banks are disallowed to invest in products securitised by cash loans, campus loans – loans granted to students with no regular incomes – or property down payment loans.

    Online micro lenders expanded by 23 per cent in two years to 452.4 billion yuan (US$68.4 billion) by the end of 2016.

    China’s debt crackdown hits cash loan providers (Reuters), Rated: A

    On Friday, China’s financial regulators introduced new measures aimed at restricting the industry, which is estimated to be worth 1 trillion yuan ($151.5 billion).

    The number of repeat borrowers is rising, which could signal financial stress on borrowers, analysts say. The companies, however, say the repeat lending is just a sign of the attractiveness of their platforms.

    Online consumer lending in China, of which cash loans are a significant portion, dwarfs similar activity in the rest of the world combined, accounting for over 85 percent of all such activity globally last year, according to a recent report by the Cambridge Centre for Alternative Finance.

    The boom in micro-lending comes as lenders seek to cash in on rising incomes in a country where credit card penetration remains at about one-third of the population, according to data from the central bank, which says about half a billion consumers don’t have a credit score.

    And the online cash loan sector is projected to reach 2.3 trillion yuan by 2020, according to the research firm iResearch.

    Outstanding household debt in China equalled 45.5 percent of gross domestic product at the end of the first quarter, according to the Bank of International Settlements, compared to 27.9 percent five years ago.

    Lexinfintech delays U.S. IPO pricing as China reins in micro-loan sector (Reuters), Rated: AAA

    Chinese consumer lending firm Lexinfintech will delay the pricing of its planned Nasdaq IPO to conduct more due diligence, a source with direct knowledge of the situation said – a move that comes after Beijing issued new rules to tighten control of the micro-loan sector.

    The source, who was not authorized to speak to the media and declined to be identified, did not say how long the IPO was likely to be delayed.

    China Continues Its Quest For A Credit Ranking System (PYMNTS), Rated: AAA

    China is on the hunt for a homegrown alternative to the U.S.-based FICO score credit ranking system as it attempts to keep up with the rapid expansion in consumer loans being offered through mobile.

    Lacking such a single system, online lenders instead use a patchwork of methods to assess consumer credit worthiness, including things like online questionnaires and analysis of consumer data such as individuals’ eCommerce purchases.

    The National Internet Finance Association of China — a two-year-old agency closely aligned with China’s central bank — is tasked with the job, but has offered little in the way of specific detail about how the three-year-old search for a system is progressing — past noting in a brief report late Monday that “this would complete an important rung in procedural order.”

    China’s “Social Credit System” Will Rate How Valuable You Are as a Human (Futurism), Rated: AAA

    In a contentious world first, China plans to implement a social credit system  (officially referred to as a Social Credit Score or SCS) by 2020.

    Every citizen in China, which now has numbers swelling to well over 1.3 billion, would be given a score that, as a matter of public record, is available for all to see. This citizen score comes from monitoring an individual’s social behavior — from their spending habits and how regularly they pay bills, to their social interactions — and it’ll become the basis of that person’s trustworthiness, which would also be publicly ranked.

    The companies that are implementing SCS include China Rapid Finance, which is a partner of social network giant Tencent, and Sesame Credit, a subsidiary of Alibaba affiliate company Ant Financial Services Group (AFSG). Both Rapid Finance and Sesame Credit have access to intimidating quantities of data, the former through its WeChat messaging app (at present with 850 million active users) and the latter through its AliPay payment service.

    According to local media, Tencent’s SCS comes with its QQ chat app, where an individual’s score comes in a range between 300 and 850 and is broken down into five sub-categories: social connections, consumption behavior, security, wealth, and compliance.

    THE CHINA RAPID FINANCE LTD – (XRF) POSTS QUARTERLY EARNINGS RESULTS (Bangalore Weekly), Rated: AAA

    China Rapid Finance Ltd – (NYSE:XRF) announced its quarterly earnings results on Thursday. The company reported ($1.01) EPS for the quarter. The company had revenue of $10.46 million during the quarter.

    Alibaba launches $ 7bn bond issue (Capital.com), Rated: A

    Chinese e-commerce giant Alibaba has launched a bond issue aimed at raising $7bn just three years after selling $8bn of debt.

    The bonds are being offered in five tranches – 5.5-year, 10-year, 20-year, 30-year and 40-year.

    Proceeds from the sale will be used to invest in long-term growth.

    Private equity funds found to be investing in banned digital currencies offerings (SCMP), Rated: A

    Beijing’s municipal financial regulator has warned private equity (PE) funds not to continue investing in initial coin offerings (ICOs), a practice banned by the mainland’s central bank three months ago.

    Huo Xuewen, chief of the Beijing Bureau of Financial Work, said in a report published on Sunday that some of the funds had been found taking part in ICOs – fund-railings by the issuers of digital currencies such as bitcoin – outside the regulatory framework and he pointed out it was a wrongdoing that the regulator would seek to weed them out.

    He added the authorities now plan to set up a strict monitoring system to track operations and investments by PE funds.

    P2P Lender Hexindai: A Discussion with CFO Johnson Zhang Regarding the Recent IPO (Crowdfund Insider), Rated: A

    Hexindai (NASDAQ:HX), a China based peer to peer lender, became the most recent Chinese online lender to trade on a US exchange early last month. The company will report fiscal year results this coming Tuesday before markets open. Last month, Hexidai become another Chinese online lender to list their shares on the US markets in a successful IPO that raised approximately $50 million with each ADS priced at $10/each. The market cap of Hexindai stands at over $550 million today with shares in the company having traded between $10.90 and $17 since the IPO.

    We asked Zhang why his company decided to list on the NASDAQ.  Zhang explained that in comparison to Hong Kong the US capital markets is wider and has more comparitive companies. Zhang noted that Yirendai and other online lenders now trade on US exchanges.  NASDAQ was selected because Hexindai is more tech focused. 

    Zhang said a key component of their competitive advantage is their sophisticated risk management. Their application pass through rate is equal to just 25% of submitted applications and their default rates are very low.

    Their second competitive advantage is their extended off line channels. For example, if a customer goes to a travel agency and wants to book a trip, the agency may say they have a financing solution and will provide the application to Hexindai and then they will determine whether or not they should provide a loan to the borrower.

    “For our last fiscal year there were 200,000 borrowers and 110,000 active investors. An average loan size is 80,000 RMB. The typical use of the loans are for personal use like overseas traveling, continuing education or housing renovation. We believe loan proceeds are for self investment. Their life. For their job to become better. We help the emerging middle class.”

    International

    International P2P Lending Volumes November 2017 (P2P-Banking), Rated: AAA

    Funding Circle reaches the milestone of 3 billion GBP loans originated since launch.

    I removed Comunitae, because of the stop due the fraud case.

    Source: P2P-Banking

    The Market Maker’s Guide to Decentralized Exchange (Airswap), Rated: AAA

    Market making is generally an ongoing process that includes ingesting data, generating a price, and placing an order on an exchange.

    Source: Airswap

    Decentralized exchange promises two major benefits:

    • Security and control
    • Global marketplace

    Unlocking the ability to transact globally, through a decentralized exchange, will affect society in profound ways. Global information transfer birthed the term “globalization”. Global asset transfer will birth some new term that we all haven’t yet thought of, and in the end the borders that blockchain break down will be greater than the borders we saw the internet break down.

    Decentralized exchanges will succeed, likewise, when there is liquidity and usability, both of which do not exist yet on any solution.

    Source: Airswap

    Micro-finance: do good and turn a profit (MoneyWeek), Rated: A

    The ultimate example of this is the “micro-finance” movement. The idea is that you lend money to a micro-finance institution that in turn lends the money to ordinary folk (frequently women) in the developing world for practical projects that generate returns for investors. Investors hope to get back all of their money plus a return – net returns of around 2% a year aren’t uncommon.

    The only trouble is that while micro-finance does score highly in terms of “impact”, it is often not so much crowd-based as “command-and-control” in style. In other words, it’s usually a credit institution making the actual lending decisions and you invest via their pool of funds.

    Now, however, we have the crowd revolution and the rise of alternative finance and peer-to-peer (P2P) lending. In the Netherlands, this has given rise to companies such as Lendahand, which provide a marketplace for investing in individual projects for a defined return, usually via some form of bond. Over here in the UK, Ethex provides a similar marketplace for investors to back individual projects with real impact.

    So, why not marry micro-finance, the crowd, and renewable energy into one product? That’s the idea behind a relatively new website called Lendahand, a joint venture between the Dutch platform and Ethex. The platform is working with local providers such as SolarNow in Uganda as part of its Energise Africa initiative to provide finance for solar panels. This is done via unsecured bonds that pay out 5%-6% a year for a period of between one and three years, with interest usually paid every six months (along with some of the debt, which is amortised as it is repaid).

    Top 100 fintech companies revealed (Banks.am), Rated: A

    First, second and third place, on this year’s Fintech100, are occupied by Chinese fintech firms: Ant Financial, which owns Alipay payments platform; ZhongAn, which uses big data to automate online property insurance; Qudian, an online electronics retailer offering monthly instalment re-payments.

    The fourth and fifth places are occupied by Oscar, which seeks to radically transform health insurance through technology and Avant, the fastest-growing marketplace lending platform for short-term consumer credit.

    The sectorial breakup of the Fintech100 is as follows: 32 lending companies, 21 payments companies, 15 transaction and capital markets, 12 insurance companies, 7 wealth companies, 6 regtech (regulatory technology-Banks.am) & cyber security companies, 4 blockchain and digital currencies companies, and 3 data and analytics companies.

    Fintech100 includes a broad range of fintech companies from 29 different countries.

    SelfKey Will Greatly Aid the Expansion of the FinTech Sector (Cryptocoins News), Rated: B

    One blockchain based startup, SelfKey, is creating a blockchain-driven decentralized digital identity system that gives users full control over their personal information. The platform allows individuals to create their own secure personal identity wallet that stores important identity documents. This wallet also stores KEY tokens, which can be used to purchase services on the SelfKey marketplace. These services, which range from passport applications to opening bank accounts, don’t control users’ data–users do.

    Users have the key, so to speak, that releases their own data.

    Australia/New Zealand

    CollinStar Holdings to Acquire BiWang Group in a 100 Million US Dollars Buyout (BusinessWire), Rated: AAA

    On December 2, 2017, CollinStar Holdings paid $ 100 million US dollars to acquire the entire BiWang Group, including BW.COM.

    AUSTRALIAN FINTECH LAUNCHES ALTERNATIVE FUND (Money Management), Rated: A

    Australian fintech and fully licensed marketplace lender, Zagga has launched its Alternative Growth Fund aimed at wholesale investors, including self-managed super funds (SMSFs), which will target net returns of 6.5 per cent per annum.

    The fund, which would have the minimum investment for wholesale investors of $50,000, was designed to add scale to the Zagga business model which uses a bespoke algorithm to match wholesale investors with borrowers, the firm said.

    Banking gap widens as tech-savvy consumers look to new products (News.com.au), Rated: A

    Peer-to-peer lender RateSetter has examined big bank profit margins and found that while they are paying record low rates on deposits their lending rates for personal loans and credit cards continue to climb.

    “You can drive a bus through the spread between bank deposits and consumer lending rates,” said RateSetter CEO Dan Foggo.

    “Publicity stunts such as dropping fees on ATMs are little more than a smokescreen for the poor value,” he said.

    • Online savings account rates have dropped from 6.55 per cent to 1.6 per cent;
    • Bonus saver account interest rates have fallen from 4.8 per cent to 1.85 per cent, but;
    • Credit card interest rates have climbed from 18.6 per cent to 19.75 per cent, and;
    • Unsecured personal loan rates rose from 13.8 per cent to 14.5 per cent.

    FMA statistics show the fledgling NZ P2P lending sector is serving banks and fund managers well (Interest), Rated: A

    But the Financial Markets Authority’s first statistical report on P2P lending, issued this week, highlights just how little actual P2P lending there has been in NZ to date.

    The useful and informative FMA report details that there are 20,744 investors registered with licensed P2P services. At 207,230, there are about 10 times as many borrowers registered with P2P services. The volume of investors, or savers, versus borrowers sounds unbalanced and it is. But the bulk of money being lent through P2P platforms is coming from banks and institutional, or wholesale, investors.

    Far and away the biggest NZ P2P lender is Harmoney. According to the FMA report, as of June 30 the total value of Harmoney loans outstanding was just under $239 million. The five other active P2P lenders had a shade under $50 million worth of outstanding loans between them.

    India

    Customers without credit scores can take the digital journey to get loans (livemint), Rated: AAA

    Mumbai-based CreditVidya, a fintech start-up, uses alternative data sources to assess fraud and risk. It has recently raised $5 million Matrix Partners and had previously raised $2 million from Kalaari Capital. The money is being used for product development and hiring manpower. A lot of the investments are going into research and development and setting up the team right, which will include data scientists from the US. The plan is to have a total of 146 employees by end of 2018, said the founders of the company.

    Currently you work with over 20 banks and non-banking financial (NBFCs) who are looking to assess customers of small unsecured credit. What is the quality of these banks and NBFCs?

    Rajiv Raj: We have a mix of small and big banks and NBFCs. We have big banks such as State Bank of India, ICICI Bank Ltd and Axis Bank Ltd. There are many micro services that these companies use.

    Abhishek Agarwal: We are also in talks with an MNC (multinational corporation) banks. Right now, 10 relationships are with large banks and NBFCs, out of the 27, and remaining are in mid- and small-sized banks. Every bank is focused on retail loans and in that pie on unsecured lendings. Personal loans, consumer durables and two-wheeler loans are the segment where there has been a tremendous rise.

    Recently, P2P regulations came out. These companies will have to start reporting to credit bureaus. Has any P2P platform approached you to use alternate data?

    Agarwal: We are currently working with three P2P lenders. Here again, it is for risk assessment of first-time borrowers. People who are digital savvy and want to access this facility, are first-time borrowers and under 35 years. Cibil’s (a credit bureau in India) penetration in the 25-35 age group is poor. Hence, 75-80% of the cases will have a no Cibil score.

    Raj: These are thin-file customers who don’t qualify for loans.

    Why are the traditional credit bureaus not using alternative or digital data to assess customers?

    Raj: One, there is a regulatory issue. Two, they have never done this before.

    Agarwal: Experian (a credit bureau) in the US has been around for the last 40 years. Digital lending in the US exists for the last 12 years. Experian never used alternative data in the US. It is not in their DNA. All the traditional bureaus in India are heavily influenced by their parent companies in the US. There is no product that the bureaus have launched in India that is only for the Indian market. They haven’t done anything that is new and specific to India.

    While analysing customers, what parameters do you use to evaluate credit worthiness?

    Agarwal: You look at five types of fingerprints—social finger print (anything you put on social media), device fingerprint (such as SMS), browser fingerprint (anything that identifies your device), click stream fingerprint (how fast you type) and biometric fingerprint (the physical fingerprint).

    Fintech Trends to Watch Out for in 2018 (Entrepreneur), Rated: A

    With a continuation to the credit line onboarding the digital trend, the next year will see more and more people borrowing using data, believes Vikram Sud, former APAC operations and technology head of Citibank and also ex-group COO of Kotak Mahindra Group.

    Algorithm-based investments will see a hike, interactive brokers too will grow in numbers, while the cost of availing them will keep dropping.

    While the majority of fintech users today rely on wallets and prepaid investments for transactions, many in the industry believe that that is set to change.

    Citing a 360 degree financial inclusion and a future of uniform payments globally, Himaghna Dey Sarkar, Chief Expansion Officer, ToneTag spoke about how they are enabling sound-based payments. The app listens to the frequency of tones in the existing EVC machines, and enables transactions directly to the merchant’s bank account.

    Sud believes that we are moving closer to a stage where the cards business is at a risk. With more and more retail lending options like buy now and pay later, Sud said that the line of credit will become more prominent.

    A little bit of data can go a long way! (ETCIO), Rated: A

    Imagine there being minimal record of your existence – your credit history and identification papers being almost non-existent. Unfortunately, this is not a movie plot but a reality that millions across the world have to grapple with. Both developing and under-developed economies have their fair share of people who have no formal credit footprint. These are people who have never borrowed from or interacted with formal banking channels in their lives. This lack of interaction with banking channels is one of the primary reasons that these people do not possess sufficient format documentation, a primary requirement of banks. The repercussion of this is that there is minimum information available about their credit history and when they do approach a lender for capital; more often than not they are deemed ineligible and are turned away.

    Over the last few years, digital lending platforms have emerged as viable sources of credit for such borrowers.

    By 2022, over 70% of India’s population is expected to own a smart phone. With a current smart phone user base of 300 million, smart phone penetration in rural India is growing at a much faster pace as compared to the urban India. This means that each one of us is generating reams of digital data giving online lenders a glimpse into our habits and preferences.

    Asia

    Integrated finance services in e-commerce (TelecomAsia.net), Rated: A

    Again there is speculation in the US over whether companies like Amazon, Facebook, Apple or Wal-Mart could acquire a banking license.

    If you go to buy items online, you might need finance for your purchase. The easiest solution nowadays is probably to use a credit card to make the payment. Then, depending on your card, you have more time and flexibility to make the payment. The problem is the actual annual interest rate of the card is easily 30% to 40%. You could get a loan with much lower interest rates, but it is complex to get a loan quickly when you are buying something.

    Now we see a situation FinTech that integrated finance solutions are easily available for all kinds of retail services and they offer also a smooth customer experience. This is part of a much bigger development in the finance industry. Finance services are no longer their own isolated islands, but they can be components in any service.

    Fintech competitiveness depends on AI technology (The Korea Times), Rated: A

    Limiting individual investment in peer-to-peer (P2P) financing at 10 million won ($9,220) is a typical one. The ban on non face-to-face contracts on discretionary investments in the asset management field also limits the domain of fintech startups online. It is necessary to change perspectives in modifying regulations to something that will help new fintech companies.

    Fintech can be classified into three areas: well-known money transfer and payment; P2P finance represented by cloud funding; and asset management represented by robo-advisors. The common technology necessary for all three is artificial intelligence (AI).

    In P2P lending, supervised learning can be used in P2P for credit scoring and anticipation of expected returns. For asset management firms, reinforcement learning can be used for automated portfolio building.

    Canada

    National Bank of Canada capped off a better fiscal year with strong fourth-quarter profit as the Montreal-based lender enters a new phase of an aggressive plan to redefine itself.

    And chief executive officer Louis Vachon said the bank is now shifting from a phase of heavy cost-cutting and job losses to one that reduces costs by using technology to automate more of its processes.

    The bank is spending a total of $750-million a year on technology, about $350-million of which goes to new projects.

    Profit from the core personal and commercial banking segment was $239-million in the fourth quarter, compared with $191-million a year earlier, as loans and deposits grew and deposit margins improved. The wealth-management arm also posted a 29-per-cent increase in profit to $110-million.

    Provisions for credit losses – the money set aside to cover bad loans – rose to $70-million in the fourth quarter, from $59-million a year ago. But the increase effectively belonged to Credigy Ltd., a U.S. subsidiary that specializes on buying distressed loans at discounted prices.

    The bank expects Credigy will continue to grow, but is tapering its appetite for unsecured consumer debt as it winds down an agreement that saw the firm buy $1.3-billion in prime loans from Lending Club, a U.S.-based online lending firm. Credigy will instead look at doing more deals for secured loans with lower spreads but also lower losses.

    Africa

    Kenyan, Nigerian startups make global Fintech 100 (Disrupt Africa), Rated: AAA

    They include two Nigerian startups, namely payments company Flutterwave and financial management app Riby. Kenyan insurtech startup GrassRoots Bima also makes the list.

    Authors:

    George Popescu
    Allen Taylor