Thursday April 25 2019, Weekly News Digest

fintechs

News Comments Today’s main news: LendingClub restructures SME lending. Funding Circle lowers return projections. RateSetter receives Queen’s Award for Enterprise. SoFi could get $500M funding from Qatar. Today’s main analysis: How personal loans impact credit scores a year into repayment. Today’s thought-provoking articles: Employer payday loans and continuous billing using today’s technology. Interview with Deserve’s […]

The post Thursday April 25 2019, Weekly News Digest appeared first on Lending Times.

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United States

LendingClub shuts down SME lending arm (Banking Tech), Rated: AAA

US peer-to-peer lending pioneer Lending Club has closed the doors on its in-house small business lending operation, reports Julie Muhn at Finovate.

Opportunity Fund, a non-profit small business lender; Funding Circle, one of the largest alternative small business lending platforms in the US; and Lending Club have teamed up to offer Lending Club’s small business clients’ access to credit. Businesses can now borrow up to $300,000 for rates as low as 5%.

How Personal Loans Impact Debt and Credit Scores a Year Into Repayment (LendingTree), Rated: AAA

Key findings

  • One year after taking on a personal loan, 52% of borrowers owed less overall on credit cards and personal loans. These borrowers’ balances — the sum credit card and personal loan balances — fell $811 on average.
  • Among baby boomers who took out personal loans, 56% lowered their overall balances after their first year of repayment, compared with 52% of Generation X and 48% of millennials.
  • Boomers also lowered their balances by much larger amounts, owing an average $2,048 less after a year. Balance reductions of younger borrowers were more modest: Generation X lowered their overall balance by $338, and millennials reduced their overall balance $250.
  • A year into repaying a personal loan, credit scores declined slightly for all age groups. Boomers’ credit scores declined the least, with the median falling just 1 point from 669 to 668. The median score of Generation X personal loan borrowers fell 7 points, from 659 to 652. Millennial credit scores fell 10 points, dropping from 661 to 651.
  • Credit utilization rates — the ratio of the sum of credit card balances to the sum of credit card limits — show a similar trajectory. One month after taking a personal loan, the median utilization rate fell from 35% to 26%. But after the first month, utilization increased. The median utilization rate one year after taking a loan increases to 44%.

How To Get Your Paycheck Early (Forbes), Rated: AAA

Speaking of Walmart, the retailer has partnerships with two fintech startups–Even Responsible Finance and PayActiv–that enable its US workers get part of their salary paid before payday.

Employees can get up to eight drawdowns (called Instapays) on their salary ahead of scheduled payouts. The first eight drawdowns are free to the employees, and then in subsequent use, fees are levied across a personal finance app available through Even.

Continuous Billing

There’s no reason why billers can’t provide continuous information about what a customer owes, in real time, online or through mobile apps.

Deserve’s Kalpesh Kapadia: ‘We promise the best credit card for our customer’s profile and life stage’ (Tearsheet), Rated: AAA

The financial system has always struggled with young people. Because the system uses credit history, young people were frequently excluded from credit products because they’re new to the system. If you’re an immigrant or foreign student studying in the US, it’s way worse. Kalpesh Kapadia set out to change a system that was skewed against young people. He’s the co- founder and CEO of Deserve, which offers credit cards to college students at 2500 universities in the US.

To do this, he’s created an analytics-based lending platform that’s also branching out into powering credit cards as a service. We talk about how Deserve is able to underwrite credit-thin files and why he thinks his firm is at an advantage when it comes to competing against Marcus’s credit products and Apple’s new credit card.

Resolve Accelerates Shift to B2B eCommerce with Automated Net Payment Terms (GlobeNewswire), Rated: A

According to Forrester Research, business-to-business (B2B) eCommerce is poised to reach over $1.8 trillion by 2023. To help power this explosive growth, Resolve today announced that it has formally spun out of Affirm to launch an automated payments platform offering extended net terms. Early customers using Resolve’s payment automation technology have realized significant increases in B2B sales, growth in order size, and faster sales cycles.

Online Auto Loans: The Pros and Cons (U.S. News), Rated: A

Things are different now. Almost every financial institution has an online presence, and most offer information about car loans on their site. Most also provide an opportunity to apply for financing online, with a growing number able to take car buyers through the entire auto loan process without ever having to visit a bank or credit union branch.

It’s Not Easy Solving For $ 1.5 Trillion In Student Debt (PYMNTS), Rated: A

There is $1.5 trillion worth of student loan debt outstanding in the U.S. and it is creating problems.

Admittedly the plan is quite a bit more complex than that, as detailed by Sen. Warren in a Medium post that went live yesterday (April 22). In broad strokes, for students from families with less than $100,000 a year in annual income, $50,000 in student loan forgiveness would be available. The post also calls for “substantial debt cancellation for every person with household income between $100,000 and $250,000.” The Warren plan also calls for the elimination of tuition at all two-year and four-year public institutions of higher learning, and would create a fund of at least $50 billion specifically for historically black colleges and universities. Federals subsidies for for-profit colleges would be banned.

Would You Take a Job Just for the Fertility Insurance? (Glamour), Rated: AAA

The cost, however, put it out of reach. A single round of IVF rings in at about 

dv01 Launches Credit Risk Transfer Market Surveillance Offering (dv01 Email), Rated: A

dv01 today announces the launch of its Credit Risk Transfer (CRT) Market Surveillance offering, which will be showcased on April 25 at the 4th Annual Credit Risk Transfer Symposium in New York.

dv01’s latest offering adds $1.8 trillion of Freddie Mac (STACR) and Fannie Mae (CAS) CRT securitizations to dv01’s modern web-based data analytics platform, furthering their goal of bringing greater transparency to capital markets. Building on the success of dv01’s Market Surveillance offering for consumer loans (launched in 2017), the CRT offering will allow investors to analyze historical performance of CRT deals both individually or as combined deals, perform whole market analysis, and run cash flow scenarios.

Let’s give post offices another job (The Student Life), Rated: A

As of 2017, approximately 6.5% of households in the U.S., totaling more than eight million, don’t have an account open at an insured bank, according to the Federal Deposit Insurance Corporation. An additional 24.2 million households utilize non-traditional financial services that often make them vulnerable to usurious lending rates.

Americans utilizing alternative forms of credit spend nearly 10% of their salaries on fees alone. For a family making the average salary of $25,500 in 2012, those fees average out to $2,412.

The USPS has 59% of its locations in zip codes that have one or fewer banks, according to a 2011 government report. This could help people to overcome a geographic boundary.

Equifax acquires PayNet to help expand access to capital for small and mid-sized businesses (PR Newswire), Rated: A

Equifax Inc., a global data, analytics and technology company has acquired PayNet, a company that provides commercial credit risk underwriting and management solutions to online and alternative finance lenders, and commercial finance and leasing companies in the U.S. and Canadian markets.

Marketplace Lending Update #5: The Very Long Arm of Colorado Law (The National Law Review), Rated: A

Recently a state court in Colorado ruled that securitization trusts that acquire marketplace lender loans originated to Colorado consumers are subject to Colorado jurisdiction. The court’s ruling derailed the attempt by the securitization trusts to escape the ongoing battle between the State of Colorado and marketplace lenders over rates and fees that can be charged to Colorado residents.

Berman Tabacco Announces Major Win for Victims of Plain Green Online Lending Scheme (BusinessWire), Rated: A

In a long-awaited opinion, the U.S. Court of Appeals for the Second Circuit today ruled that borrowers who took out loans from the Native American-affiliated online lender Plain Green can proceed with their nationwide RICO class action in Vermont federal court. The Second Circuit affirmed a May 2016 ruling by District Judge Geoffrey W. Crawford and comes nearly two years after oral argument on Defendants’ appeals. Berman Tabacco and Gravel & Shea PC are Lead Counsel in the case, Gingras, et al. v. Rosette, et al., No. 5:15-cv-00101-gwc (D. Vt.).

2nd Circ. Says Tribal Officers Not Immune In Payday Loan Suit (Law360), Rated: B

The Second Circuit on Wednesday rejected a bid by officers of tribe-owned lending company Plain Green LLC to escape a suit claiming they charged exorbitant interest rates on so-called payday loans,…

White Oak Global Advisors Completes $ 30M Loan for Danimer Scientific Holdings (AP News), Rated: B

White Oak Global Advisors, LLC (“White Oak”) today announced it acted as sole lender and administrative agent to provide a $30 million senior credit facility to Danimer Scientific Holdings, LLC (“Danimer”), a manufacturer of specialty compostable and biodegradable plastics. This transaction expands on White Oak’s ESG-lending platform, which aims to finance small and medium-sized enterprises (“SMEs”) that are developing solutions to help address environmental and social issues around the world.

Online Lender Upgrade Recognized as Top Place to Work in San Francisco (Crowdfund Insider), Rated: B

Online Lender Upgrade, a Fintech serving the consumer credit market, has been named a “Best Place to Work in the Bay Area’”by the San Francisco Business Times and Silicon Valley Business Journal. Upgrade is the creation of  CEO Renaud Laplanche, the founder of publicly traded marketplace lending platform LendingClub. This is the second time Upgrade has been recognized as a nice place to work in the notoriously work focused bay area.

United Kingdom

Funding Circle lowers return projections (P2P Finance News), Rated: AAA

FUNDING Circle has revised down its annual return projections in the face of a weaker environment for consumer credit.

The peer-to-peer business lender now predicts investors in its Balanced portfolio will achieve a return of 4.5 to 6.5 per cent a year.

Investors in its Conservative portfolio, meanwhile, could achieve 4.3 to 4.7 per cent a year.

Peer to Peer Lender RateSetter Receives Queen’s Award for Enterprise (Crowdfund Insider), Rated: AAA

Peer-to-peer investment platform RateSetter has been recognized with a prestigious Queen’s Award for Enterprise for excellence in innovation.

Challenger bank Tandem to double headcount as CEO warns of Brexit brain drain (Yahoo! Finance), Rated: A

Tandem Bank said on Tuesday it had moved into a new 16,000 square foot office in London as part of plans to double headcount this year to 230 and grow to 300 people by the end of 2020.

“Last year we hit 500,000 customers when we had an expectation for 150,000,” Knox told Yahoo Finance UK.

Consumer P2P loans weigh on P2PGI fund returns (P2P Finance News), Rated: A

P2P Global Investments (P2PGI) has warned that its legacy peer-to-peer lending portfolio continues to be more volatile than expected despite posting an improved net asset value (NAV) return for 2018.

P2PGI – the world’s first P2P-focused investment trust – revealed in its annual report that its NAV for 2018 was 5.2 per cent, up from three per cent in 2017.

China

How Leverage Turns Market Corrections into Crashes (Yale Insights), Rated: AAA

Q: Is shadow borrowing unique to China?

It’s difficult to study the phenomenon very precisely. We do observe shadow lending in various forms growing throughout the world, including in the U.S., and, if left unregulated, this type of lending could mean that household and financial institution leverage keeps rising in a way that is both unregulated and undocumented.

Because the Chinese government believed that the shadow sector was partly responsible for the crash, it seized the data from some shadow lending platforms and allowed us to analyze it.

Q: Who’s providing the financing in these situations?

The exact sources of financing are not well known. Some of it could be other stock investors that have put up their own holdings as collateral and borrowed against it and then lend out the proceeds on the shadow market. It could also be peer-to-peer lending platforms. It’s also believed that some of the financial institutions and brokerage firms within China may have also lent out within the shadow sector.

Trade war with US could lead to economic ‘cold war’ for China, Beijing researchers say (SCMP), Rated: A

The tit-for-tat tariff war with the US and the broad hostility is seen as a major risk endangering China’s “economic security”, along with a property bubble, local debt, unemployment and online financing including peer-to-peer lending, according to the latest edition of China’s Economic Security Outlook.

European Union

French Lender Societe Generale Issues $ 112 Million Bond on Ethereum (CoinDesk), Rated: AAA

French financial services giant Societe Generale Group has issued about $112 million worth of bonds in the form of a security token on the public ethereum blockchain.

Announced today, a subsidiary called Societe Generale SFH used the OFH token (obligations de financement de l’habitat, or home financing obligations) to represent 100 million euros of covered bonds, a type of security that is backed by specific assets but remains on the issuer’s balance sheet.

The bond has a five-year maturity with a 12-month extension period, Moody’s said.

N26 opens tech hub in Vienna with a focus on security (TechCrunch), Rated: A

Fintech startup N26 is opening an office, its fourth, in Vienna. Eventually, the company plans to hire 300 software engineers, product managers and IT specialists.

API card platform Marqeta signs up three customers in Europe (Verdict), Rated: B

The platform has been signed up by French digital bank Morning, Swiss digital bank Yapeal, and Spanish POS lender Aplazame.

CoinLoan Plans IEO and Seeks Partners (Digital Journal), Rated: B

CoinLoan crypto-backed lending platform declares its intention to launch an Initial Exchange Offering and invites discussion with major crypto exchanges interested in the listing.

International

SoFi Is in Talks With Qatar for $ 500 Million Funding Round (Bloomberg), Rated: AAA

Fintech startup Social Finance Inc. is in the final stages of closing a funding round from the Qatar Investment Authority and others, according to four people familiar with the matter.

The new round, which could close as soon as this week, is said to value the startup at an amount similar to the $4.3 billion valuation of its 2017 funding round, led by Silver Lake. Two of the people said that in order to achieve the same valuation, investors were asking for more protections should the company raise money or sell itself for a lower price tag in the future. The terms of the deal have not been finalized and could still change, the people said. All of the people asked not to be identified because the discussions are private.

These are the top 10 hottest fintech startups and companies in the world (Business Insider), Rated: AAA

Fintech industry funding has already reached new highs globally in 2018, with overall funding hitting $32.6 billion at the end of Q3.

Brex

What it does: Brex is a US-based corporate credit card provider, which initially focused on serving startups.

Raisin

Why it’s hot in 2019: Raisin became a fintech unicorn after raising $114 million in January, and has since then formed partnerships with Commerzbank and ClearScore. Additionally, the startup partnered with Starling Bank in 2018 to launch bank accounts in the UK

SoFi

Why it’s hot in 2019: While the company previously focused on loans, including student loans, in 2019 it has made some significant moves into the wealth management space, and launched both free ETFs and an investment product, dubbed SoFi Invest. As it becomes a more rounded financial product, SoFi will be worth watching in the next few years.

Lending Express

What it does: Lending Express is a US-based lending platform, which focuses on SMBs, and helps them gain access to more funding by providing them with advice.

Volt Bank

Why it’s hot in 2019: In January, Volt became Australia’s first fully licensed neobank. The challenger bank will first offer a suite of retail banking products, as well as budgeting and account aggregation tools, and plans to enter the SMB banking sector in 2020.

U.K. fintech now has war chest to push stateside (American Banker), Rated: A

Fresh off a $100 million funding round last year, the British startup OakNorth is preparing to license its business lending technology to U.S. banks and beyond.

The 3-year-old small-business lender is entering the U.S. at a time when fintechs and banks have stepped up their digital business lending efforts. Though OakNorth has not announced any official partnerships in the U.S., CEO Rishi Khosla said there’s appetite for what the firm is offering.

BlockFi Is Now Paying Interest on $ 53 Million of Crypto Deposits (CoinDesk), Rated: A

Crypto lending startup BlockFi has gathered another $18 million of bitcoin and ether deposits since last month, bringing its total interest-earning accounts to $53 million.

The company also lowered its minimum balance to earn interest on bitcoin from 1 BTC to 0.5 BTC and expanded its operations to India, meaning its service is now available globally, except for territories sanctioned by the U.S., U.K. and E.U.

No crypto winter for BlockFi as client base reaches 50% (CoinGeek), Rated: B

Crypto lending startup BlockFi has been growing, and now claimed that it has grown its client base by 50% in just one month.

Funds at your disposal: Digital lending making inroads into traditional lending (Finextra), Rated: A

The penetration of the internet of things and devices such as smartphones has brought in many advancements. This has made economic activities available at the touch of a button. Among the various sectors, the digital world has evolved the way traditional banking processes are being carried out. A growing number of businesses and individuals are filling applications online for taking loans rather than getting into the lengthy lending process.

Microsoft Will Pay You To Develop… Ethereum? (CryptoBriefing), Rated: B

“[ConsenSys Labs] has put up a few bounties in the vein of rethinking the lending market, and thinking about a peer-to-peer lending and a decentralized credit score system,” explains ConsenSys’ Operations Lead Vivek Singh. Instead of relying on centralized credit agencies, such a system—if successful—could allow borrowers to leverage their social connections into a sort of decentralized credit score.

India

Indian lendtech ZestMoney raises $ 20m (Banking Tech), Rated: AAA

ZestMoney, a start-up that helps consumers with no credit history get loans to buy online, has raised a $20 million Series B.

‘Money Loji’ launches App that offers loans to salaried professionals within 5 Minutes (Business Standard), Rated: A

Money Loji, a modern money ending platform, has launched its App, which offers quickest and the most secure loans to salaried professionals for an immediate requirement with flexible repayment options starting from 7 days to a maximum of 90 days. They follow a unique three-step process – application, approval, disbursement which is carried out within 3-4 minutes. The eligibility criterion is a minimum in-hand of Rs 20,000/month and a minimum age of 23 years. The application requires the users to upload an identity proof, an address proof, last 3 alongside the slips.

Blockfi Launches High-Interest Crypto Lending Program in India (Bitcoin.com), Rated: A

New Jersey-based crypto startup Blockfi announced Tuesday that it has expanded service to users in India. Its flagship Blockfi Interest Account (BIA) for BTC and ETH is now available in 65 countries.

Asia

Nuo Network Crypto Lending Platform Becomes Asia’s Biggest with $ 2 Million in Reserves (Bitcoin Exchange Guide), Rated: AAA

ConsenSys ventures backed Nuo.Network, which is a non-custodial lending platform recently made it to the top 5, dollar Defi (Decentralized Finance) projects and it presently the largest lending platform based in Asia. In the past month, the value of loans given has doubled, this is partly due to the growth of DAI reserves, which is now about 500,000 USD and the surge in Maker stability fees.

Why China’s Ping An OneConnect picks Indonesia for expansion (The Asset), Rated: A

The archipelago is viewed as an ideal market to benefit from the services offered by the enterprise. According to the Ping An Group, Indonesia, at around US$27 billion in 2018, is the largest and fastest-growing internet economy in Southeast Asia.

MENA

Banks use fintech to make up for lost time on financial inclusion (Financial Times), Rated: AAA

It fell to a mobile phone company more than a decade ago to financially empower tens of millions of Africans who found themselves passed over by the traditional banking sector. Now, some 12 years after Vodafone co-founded M-Pesa, the mobile payments venture that took east Africa by storm, banks are upping their game to improve financial inclusion rates across Africa and the Middle East, as technology widens their ability to deliver banking services at lower costs.

Source: Financial Times

In east Africa, the Catalyst Fund has backed Sokowatch, a three-year-old Kenya-based fintech that enables small retailers to order goods from suppliers registered on the mobile-focused platform and receive same-day deliveries. It also offers access to credit. The platform has already expanded into Tanzania and Rwanda.

In the Middle East, Citigroup has given $5m to a microloans fund in Jordan that helps give women access to credit. The financial support will help provide loans to around 10,000 additional women.

Iraq’s financial inclusion drive boosted by homegrown fintech (Financial Times), Rated: A

Around 7m Iraqis are now receiving welfare benefits or public sector salaries electronically, as the government replaces cumbersome cash dispersals with biometric debit cards that can be used at ATMs and in shops.

Only 23 per cent of Iraqis aged 15 and over held an account with a financial institution in 2017, according to the World Bank — although that figure has doubled since 2011.

Source: Financial Times

YouHodler Cryptocurrency Lending Platform Adds Dash (Dash News), Rated: A

Users will now be able to borrow in EUR, USD, or Stablecoin against their Dash as well as use the site to covert Dash to any crypto or fiat on the platform and withdraw to their crypto or fiat wallet. If a user enters their credit/debit card on the platform then they can “convert DASH to fiat and instantly withdraw that amount onto their personal cards, adding a unique “real world” utility for crypto”.

Canada

7 ways emerging fintech hubs are taking on the giants (PaymentsSource), Rated: AAA

Toronto is another significant fintech force in North America, and the leading fintech zone in Canada, because of the high concentration of financial organizations and technology development in Ontario. Last year Toronto accounted for CA$221 million (US$165 million) in total fintech investments across 25 deals, according to a recent report from Toronto Financial International (TFI).

Toronto ranks ninth out of the top 15 global fintech hubs, according to TFI. Currently the region has more than 190 fintech companies and 20 incubator/accelerators in operation. Payments represent the single leading category of fintech investment in the Toronto area, and combined with lending and digital currencies/FX firms it accounts for half of all local fintech activity, according to TFI.
Source: PaymentsSource
Latin America

Brazilian Credit Marketplace FinanZero raises USD 11 Million in Series B Round (Yahoo! Finance), Rated: AAA

FinanZero, a Brazilian fintech that operates as a consumer loan broker, received a new round of investment, raising USD 11 millionfrom Atlant Fonder, Dunross & Co and Vostok Emerging Finance, among other investors.

Authors:

George Popescu
Allen Taylor

The post Thursday April 25 2019, Weekly News Digest appeared first on Lending Times.

Thursday March 14 2019, Weekly News Digest

GreenSky

News Comments Today’s main news: FTC makes final decision on SoFi. OnDeck extends two revolving credit facilities. LendingPoint sees drop in debt management loans, increase for new purchases. LendInvest to float 500M GBP. Lufax hits $39.4B valuation. Klarna adds GooglePay as payment option. Today’s main analysis: Unemployment rate and GreenSky’s earnings. Today’s thought-provoking articles: Earnest vs. SoFi for student loan […]

The post Thursday March 14 2019, Weekly News Digest appeared first on Lending Times.

GreenSky

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United States

United Kingdom

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United States

Deal Final in FTC’s Action Against Online Lender (Manatt), Rated: AAA

The Federal Trade Commission (FTC) has finalized its deal with SoFi, an online lender that the agency had accused of making false statements about student loan refinancing.

According to the FTC, the California-based personal finance company misrepresented how much money student loan borrowers have saved or could save by refinancing.

Read the FTC complaint here.

Read the FTC decision and order here.

OnDeck Announces Extension of Two Revolving Credit Facilities With Credit Suisse & Deutsche Bank (Crowdfund Insider), Rated: AAA

OnDeck, a small business online lending platform, announced on Wednesday extensions to its existing credit facilities with Credit Suisse and Deutsche Bank on improved terms.  According to OnDeck, the amended facilities provide an aggregate of $360 million of committed funding capacity and are available to finance OnDeck’s term loans and revolving lines of credit. The scheduled maturity dates for the facilities were extended three years to March 2022.

Unemployment Rate Drops to 3.8%; GreenSky’s Strong Earnings (PeerIQ), Rated: AAA

The unemployment rate dropped to a near five decades low of 3.8% even as nonfarm payrolls only rose by 20K. Average hourly earnings rose by 3.4%, above economists’ expectations.

Source: WSJ
Source: Deutsche Bank Research, WSJ

GreenSky’s Strong 4Q2018 Earnings

GreenSky’s 4Q revenue grew by 22% YoY to $109 Mn, although net income fell by nearly 43% YoY to $23 Mn. The stock rose by ~6% post earnings.

  • Transaction volume increased by 23% YoY to $1.3 Bn.
  • Loan servicing portfolio increased by 36% YoY to $7.3 Bn.
  • GSKY had aggregate commitments of $11.8 Bn from its nine bank partners, of which $4.8 Bn were unused.
  • 30+ DQ rates rose slightly YoY from 145 bps to 148 bps.
  • GreenSky now has nearly 12 k home improvement merchant partners and nearly 3 k elective healthcare partners.
Source: GreenSky, PeerIQ

How to Decide Between Earnest and SoFi for Student Loan Refinancing (Credible), Rated: AAA

Earnest and SoFi are two of the best student loan refinancing companiesout there. They both offer fixed as well as variable rate loans, a 0.25% autopay rate discount, and certain unemployment protections to help in the event of involuntary job loss, but they also have their differences.

Here’s a side-by-side comparison of both lenders to help you make an informed decision.

Source: Credible

The rate of borrowers using loans for debt management drops; growing proportion of borrowers use loans for new purchases (LendingPoint), Rated: AAA

It turns out that, over the past two years, the proportion of our borrowers who say they are earmarking their loans for debt consolidation has decreased markedly, from about 60% in 2017 to about 54% in 2018. The percent using loans to pay for new merchandise or services has grown during those two years. Home improvement jumped from 6% to 8%; loans for medical expenses rose from 2% to 7%.

In 2017, the percent of millennial consolidators was about 61%. In 2018, that dropped a full 10%, down to 51%, a bigger decrease than any other age cohort.

Source: LeningPoint

What Do Millennials Want From Banks? Non-Financial Products (Forbes), Rated: AAA

If they haven’t, then why are 56% of Millennials giving megabanks (the four largest US banks) their 

Source: Cornerstone Advisors

The “Millennials hate banks” meme is a myth.

Millennials’ Access to Subscription Services
Percentage of Millennials that…
Don’t have the service but would like to Have the service, and pay for it directly Have the service, but don’t pay for it directly Don’t have or want the service
Identity theft protection 31% 20% 29% 21%
Personal/family data storage 29% 20% 19% 31%
Child identity theft protection 27% 15% 16% 42%
Rx, vision, hearing discounts 26% 31% 25% 18%
Travel/trip insurance 26% 18% 19% 37%
Roadside assistance 19% 40% 26% 15%
Cell phone damage protection 18% 42% 20% 19%
Source: Cornerstone Advisors

Green Dot targets social media influencers in banking-as-service push (American Banker), Rated: A

A new affinity banking service developed by Green Dot proposes to tap one of the most potent — and controversial — sources of distribution in the digital economy: social media influencers.

The digital banking and payments provider is developing what it calls Bank OS, a simpler version of its enterprise banking-as-a-service platform already used by the likes of Intuit, Stash, Uber and Walmart. It would enable partners to develop their own financial products just as those brands do, including offering credit cards, debit cards with loyalty programs or even a mobile app.

How online lenders attract and service the evolving SMB borrower (Tearsheet), Rated: A

But while small businesses still struggle with cash flow, how they shop for loans and their level of financial education about their options are changing. On Tearsheet’s recent webinar with leaders at Kabbage, BlueVine, and Intuit’s QuickBooks Capital, we discussed the changing nature of the SMB borrower and how their firms have evolved to keep up.

Pay Yourself First? Last Is How Small Biz Often Works (Newsmax), Rated: A

Everyone knows the Golden Rule of business is to pay yourself first. But more than half of small business owners are going months without pay – if they are taking any at all.

About a quarter of these entrepreneurs go two to six months without pay, and another quarter have gone more than six months without salary, according to a recent survey from Kabbage (), a cash flow optimization platform.

PAYNET STRATEGIC INSIGHTS MARCH 2019 (PayNet), Rated: A

The PayNet Small Business Lending Index (SBLI) rebounded with a 17.2 point jump to 150.7 in January, climbing to its second-highest level ever. On an annual basis, the SBLI increased 4.9%. The SBLI 3-month moving average also rose in January and currently stands 1.5% above its year-ago level.

Source: PayNet

The PayNet Small Business Delinquency Index (SBDI) 31–90 Days Past Due edged up one basis point to 1.45% in January, and is up six basis points on an annual basis — its 33rd consecutive year-over-year increase. The SBDI 91–180 Days Past Due was unchanged at 0.38% but is three basis points above its year-ago level.

Less Than Zero? This Proposed ETF Would Pay Investors, But There’s A Catch (Benzinga), Rated: A

Salt Financial, which currently offers one ETF, has filed plans with regulators to launch a low volatility that would pay investors, but there’s a catch.

Equifax Deleted Key Data Breach-Related Docs, Senators Say (Law360), Rated: A

Equifax Inc. failed to preserve key internal discussions over its massive 2017 data breach, U.S. senators said Thursday at a hearing where elected officials grilled the credit reporting giant’s CEO and the…

Home Equity Line of Credit Providers Face Growing Threat from Alternative Lenders, J.D. Power Finds (JD Power), Rated: A

Despite record-high levels,[1]new home equity line of credit (HELOC) originations have been steadily declining[2] as a perfect storm of rising interest rates, new tax laws and growing competition from alternative lenders has crimped traditional HELOC growth. According to the J.D. Power 2019 U.S. Home Equity Line of Credit Satisfaction Study, released today, HELOC customers are more likely than ever to shop for alternative sources of funding and HELOC providers are falling short on digital offerings.

This week in Chicagoland real estate: One Chicago Square, Woodlawn and more (Chicago Agent Magazine), Rated: A

New York-based DDG, Chicago-based Marc Realty and Ruttenberg Gordon announced plans for a 13-story hotelwith 250 rooms in Fulton Market. The developers are raising $55 million to fund the project through Prodigy Network, a New York-based real estate crowdfunding platform. The hotel will be located at 1234 West Randolph Street and will be operated by New York-based Standard Hotels. It’s set to be completed within two years.

PeerStreet Expands Executive Leadership with Two Senior Hires in Finance Team (BusinessWire), Rated: B

PeerStreet has announced the hiring of two executives with extensive experience in the financial services and real estate sectors: Ellen Coleman and Bob Brown. Ms. Coleman joins as Executive Vice President of Finance, and Mr. Brown joins as Executive Vice President of Finance & Corporate Development.

CoreLogic : Introduces Verification of Employment and Income Solution to Expedite Borrower Verification Process (MarketScreener), Rated: A

CoreLogic, a global property information, analytics and data-enabled solutions provider, today released an enhanced Verification of Employment and Income(VOE/I) product. The comprehensive new VOE/I product takes time, touch and cost out of traditional employment and income verification through a three-step ‘waterfall workflow’ process, ensuring that every mortgage applicant can be verified.

The enhanced VOE/I product features a three-step ‘waterfall workflow’ that ensures each borrower’s employment and income is verified as efficiently as possible.

  • Step One: Instant verification via a direct integration to The Work Number (TWN)
  • Step Two: Automated verification leveraging dozens of third-party data sources
  • Step Three: Manual verification by a team of dedicated CoreLogic verification experts

CORELOGIC INTEGRATES CONDOSAFE WITH THE ELLIE MAE ENCOMPASS ALL-IN-ONE MORTGAGE MANAGEMENT SOLUTION (CoreLogic), Rated: B

CoreLogic today announced the integration of its CondoSafe product with the Ellie Mae Encompass® all-in-one mortgage management solution. CondoSafeis a one-stop condo project review tool that enables lenders to have a single, consistent, standardized review process, allowing them to determine eligibility earlier in the process, resulting in quicker approvals.

ArborCrowd Announces New Equity Offering in 707-Unit Multifamily Portfolio (AP News), Rated: B

ArborCrowd, the first crowdfunding platform launched by a real estate institution, today announced a new offering that allows investors to acquire equity interests in the Sioux Falls Multifamily Portfolio, a collection of class-B apartment communities located in Sioux Falls, S.D. The properties exhibit strong upside potential due to Sioux Falls’ sound multifamily real estate fundamentals and notable lack of professionally managed workforce housing product.

The investment has a targeted internal rate of return (IRR) of 12 to 14 percent over a three- to five-year hold period. Tzadik has budgeted $5.2 million to perform a comprehensive capital improvement plan that will include upgrades to all renovated units, common areas and public spaces.

LendPro’s Female Leaders Celebrated on International Women’s Day (LendPro Email), Rated: B

As the financial technology (fintech) industry continues to grow, innovators are increasingly looking for leadership and expertise to grow their companies and stand out from competitors. LendPro, a Lending-As-A-Service (LaaS) fintech company, prides itself in hiring strong talent.  Women make up 50% of staffing at LendPro’s Charlottesville corporate office, versus 37% female staffing at most fintech companies.

United Kingdom

Property finance hub Lendinvest plots £500m London float (Sky.com), Rated: AAA

The online property finance hub Lendinvest is plotting a £500m stock market flotation that will provide a fresh test of investors’ faith in a fast-growing but volatile area of the non-bank lending market.

Sky News has learnt that Lendinvest, which was set up in 2008 and has so far lent roughly £2bn to help buy, build or renovate British homes, has appointed Lazard, the investment bank, to advise on its strategic options.

Lending revolution: fintechs vs banks (Raconteur), Rated: AAA

Eight out of ten SME loan applications were approved by banks in the third quarter of 2018, according to the latest figures from trade association UK Finance. While this is a far cry from the days of the global financial crisis, when SME lending all but dried up in part due to regulatory pressures to shore up capital, smaller companies are still citing challenges in securing funding from traditional players, according to Stuart Chalmers, commercial banking lead for Accenture UK.

Alternative lenders understand the hunger for a seamless customer experience and have built credit journeys that align to business expectations

Almost 30,000 companies used non-traditional channels over the year, with peer-to-peer lending and equity-based crowdfunding now established investment vehicles for seed, startup, early-stage and fast-growth companies seeking capital. In fact, CCAF estimates that 29 per cent of all new loans issued in 2017 to small businesses with annual turnovers less than £2 million came from alternative finance.

Source: Raconteur

Burnham residents are the most thrill-seeking in the UK according to new study (Windsor Observer), Rated: A

It may come as somewhat of a surprise, but according to research from Zopa, Burnham has been revealed to be the most thrill-seeking town.

Peer-to-peer firms told to improve wind-down arrangements (Out-Law), Rated: A

In a letter to chief executives (4 page / 352KB PDF) sent last week, the FCA said a recent supervisory review of firms’ current arrangements against current requirements “strongly suggests” some P2P firms were falling short of the standards required by its rules.

Augmentum Capital signs up to Innovate Finance (P2P Finance News), Rated: A

AUGMENTUM Capital has joined Innovate Finance as its first investor member.

It is currently planning to issue extra ordinary shares in its investment trust as it looks to fund around £300m of potential opportunities in the sector.

PEER TO PEER LENDER RELAUNCHES PRODUCTS (Insider Media), Rated: A

A South West-based peer to peer lender is to re-launch its lending products aimed at individuals and businesses.

Folk2Folk is to offers 9 per cent interest rates for investors with a loan to value ratio of up to 60 per cent.

The business has so far brought £275m into rural businesses in Britain over the past six years.

Wonga compensation claims four times higher than expected (TechRound), Rated: A

It has been recently revealed that the number of compensation claims made against the failed payday lender Wonga, which filed for administration in August 2018, has ended up increasing four-fold. The initial figure given by the Financial Ombudsman Service in a Treasury Committee in January this year suggested that there were around 10,500 customers who had open complaints with the short-term credit, high-interest company.

Now, it turns out that the number of redress claims that have been made against Wonga is considerably higher, totalling over 40,000. It is potentially the case that these people will not end up getting their money back after having been mis-sold loans.

The IFISAs you can open for £100 or less (P2P Finance News), Rated: A

According to the most recent HMRC statistics, overall ISA savings fell from £79.8bn in 2015/16 to £61.5bn in 2016/17. Meanwhile, Bank of England statistics found that the amount of money that Brits were saving (both within and outside of the ISA wrapper) fell by £7bn in 2018 alone.

  • Abundance

Minimum investment: £5

  • Assetz Capital

Minimum investment: £1

  • Crowd2Fund

Minimum investment: £10

  • RateSetter

Minimum investment: £10

  • Octopus Choice

Minimum investment: £10

Environmental benefits of ISA investment (The Ecologist), Rated: A

Crowdfunding and peer to peer lending grew out of the banking crisis of 2008. According to the European Central Bank, the availability of bank loans to SMEs declined 23 percent immediately following the crash, causing a devastating impact on the economy.

Over 100 Finastra customers upgraded trade software in time to meet new SWIFT standards (RealWire), Rated: B

Over 100 Finastra customers were upgraded to the latest compliant versions of its transaction banking software, Fusion Trade Innovation, ahead of the new SWIFT standards deadline of 17 November 2018. The new ‘Standards MT Release’ included significant changes to category 7 messaging standards used in trade finance – the most significant set of changes to the SWIFT trade finance messaging interface in over 30 years.

China

China’s Lufax hits huge $ 39.4bn vaulation thanks to Primavera Capital-led Series C (Alt Assets), Rated: AAA

Chinese peer-to-peer lending business Lufax has confirmed it has reached an enormous $39.4bn valuation thanks to a Series C round led by private equity house Primavera Capital.

Chinese fintech unicorn Lufax in no rush to IPO (Technode), Rated: A

Chinese peer-to-peer (P2P) lender Lufax is not in a hurry to list on the stock markets, said an executive of its biggest shareholder, Ping An Insurance, during its earnings call, Chinese media reported (in Chinese) on Wednesday.

Ping An Insurance Group deputy CEO Jessica Tan said after Lufax’s latest round of funding, Ping An still holds approximately 41% of its shares.

European Union

Google Pay Added to Klarna’s Bank of Payment Options (WWD), Rated: AAA

Today, Klarna, the global payments provider “smoothing” out kinks in the checkout process for retailers, announced a partnership with GooglePay. Available for Klarna customers in Sweden, the intention is to make mobile payments “even easier and more secure.”

CreditEase Invests in wefox Group, the European Largest Insurtech Platform (PR Newswire), Rated: AAA

CreditEase, a Beijing-based leading FinTech conglomerate in China, announced today that its direct investment arm, CreditEase FinTech Investment Fund (CEFIF), participated in wefox Group’s $125 million USD Series B, a fast-growing Berlin-based insurtech firm together with Mubadala’s newly created European Ventures Fund. The investment is the largest Series B round for a European insurtech and Goldman Sachs International is acting as the private placement adviser to wefox Group in connection with the transaction.

The investment will help spearhead the company’s expansion into the European broker market. It also paves the way for wefox Group to accelerate growth and create the world’s most innovative product and engineering team applying advanced data analytics to create an all-in-one insurance platform in which all interactions are personalized. The company, which was founded in 2014, has grown its revenue to around $40 million USD, while serving more than 1500 brokers and over 400,000 customers, making it Europe’s number one insurtech platform.

Luna Connect: A new digital disrupter in the lending landscape (Irish Times), Rated: A

Luna Connect is a new digital lending platform primarily aimed at those lending to SMEs. It is designed to fit into the rapidly evolving financial services ecosystem and its founder, Brian D’Arcy, drew the inspiration for his business from the disruption currently underway in the financial services sector.

The company’s target market are lenders offering loans of under €200,000, whose borrowers typically require a fast decision on their application and want a more transparent lending process. The initial focus will be on Ireland and the UK with Europe and the US to follow. Investment in the project to date has been around €120,000 which was self-funded with support from the NDRC and Enterprise Ireland through the competitive start fund.

Australia/New Zealand

New US ambassador warns of China’s ‘payday loan diplomacy’ (The Washington Post), Rated: AAA

The new U.S. ambassador to Australia said Wednesday that he’s concerned about the way China lends money to developing Pacific nations in what he describes as “payday loan diplomacy.”

China categorically rejects accusations that it uses loans, grants and other financial inducements to extend its diplomatic and political reach, saying it is merely acting in the best interests of both sides in such transactions.

New way to borrow takes Australia by storm (Mozo), Rated: A

As distrust of the nation’s big banks and mortgage brokers swells amongst the wreckage of the banking royal commission, online lenders are emerging as real challengers in the home loan, business loan and personal lending markets.

NAB’s UBank launches ‘green’ deposits to chase Millennials’ savings (Financial Review), Rated: A

The CEO of National Australia Bank subsidiary UBank, Lee Hatton, says future retail depositors will want more control over where banks lend their money, prompting it to launch a “green” term deposit targeting environmentally concerned Millennial customers.

How marketplace lending meets investor needs (Cuffelinks), Rated: A

However, it’s also true that today’s investors face a risk environment of unprecedented complexity. In 2018, the S&P/ASX200 declined by 6.8%. Residential property values are falling and bank deposit rates fail to match inflation. In the last year, the Australian media landscape was dominated by the findings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, with its revelations of duplicitous lending practices, improper fees, and general misconduct that, by the banks’ own admission, fell far short of community expectations.

Financial Markets Authority executive steps down over employment matter (NZ Herald), Rated: B

Financial Markets Authority (FMA) executive Garth Stanish left the investment watchdog at the end of last month over an internal employment matter, a spokesman for the authority said.

Stanish was also a director of markets oversight, a group that includes oversight of NZX, crowd-funding/P2P lending platforms and frontline supervisors.

India

P2P startup PaisaDukan raises 1st round of investment from JITO (UNI India), Rated: AAA

Vivriti Capital raises second round of funding of Rs 110 Cr from Creation Investments (YourStory), Rated: A

Vivriti Capital, a Chennai-based lending platform for corporate entities, secured Rs 110 crore worth of equityin an additional round of funding from its existing investor Creation Investments.

This comes just within two months of the Series A funding closure in December 2018, in which the company raised Rs 200 crore from Creation Investments. With the current equity infusion, Vivriti’s overall capital stands at approximately Rs 320 crore.

MSME Lending fuelled by Digitisation (Free Press Journal), Rated: A

MSMEs play a major role in Economic development of India. There are around 63.4 million units and they contribute to 6.11% of the manufacturing GDP and 24.63% of the GDP from service activities and 33.4% of India’s manufacturing output. They have been able to provide employment to around 120 million persons and contribute around 45% of the overall exports from India. The sector grows at a rate faster than the large ones at more than 10% pa.

About 20% of the MSMEs are based out of rural areas.They provide employment to more than 130 million people and contribute to 45% of exports. MSMEs are also the largest employment generator every year. As of Sep18, the total credit in India was Rs 105.5 Lakh crores and MSMEs had borrowed Rs 24.7 cr. Large and Mid Caps borrowed Rs 44.4 cr. Year on Year the growth of overall commercial credit was at 13.5%.

Micro loans which are less than Rs1 cr grew 22.2% year on year and SME loans between Rs1 cr – Rs 2.5 cr grew at 18.3%.The growth was faster than the overall growth. Share of NBFCs in SME credit increased from 13% in Sep 15 to 17% in Sep 18. The number of NBFCs lending more than Rs 100 cr to MSMEs stood at 77 at the end of Sep 18.

Asia

Investment Task Force suspend operation of 168 illegal fintech firms (Antara News), Rated: AAA

The Investment Alert Task Force has suspended the operation of 168 entities allegedly running peer-to-peer lending services without a legal business license from the Financial Service Authority (OJK).
The task force has also suspended the operation of 47 illegal investment entities which has the potential to harm the public.
“Based on the monitoring on website and application in Google Playstore, the Investment Alert Task Force has stopped the operation of 168 entities that have violated OJK regulation no. 77/POJK.01/2016 on fintech peer-to-peer lending services, which has the potential to harm the public,” head of the task force Tongam L Tobing said in a statement here on Wednesday.

Fintech group to help develop P2P lending (The Jakarta Post), Rated: A

A group of financial technology (fintech) lenders wants to help develop a healthier lending industry and protect consumers by setting out a strict code of conduct for its members.The Indonesian Fintech Lenders Association (AFPI) will help stimulate the industry, which only gained government recognition three years ago, by providing risk management certification, public education campaigns and a compulsory code of conduct, which should be uploaded to the AFPI website soon.AFPI chairman Adrian Gunadi said the association had been established to ease the Indonesian Fintech Association’s (AFTECH) workload in dealing with fintech companies that provide lending services, including peer-to-peer (P2P) lending, crowdsourcing and digital credit cards.Such lenders account for 30 percent of all licensed fintech companies, whereas the remaining 70 percent are companies engaged in, among other thing…

Government moves to legalise P2P lending (Vietnam Vet), Rated: A

During a recent meeting with relevant ministries and agencies to discuss P2P lending, Hue instructed that during the pilot operation, P2P lending would be restricted to connecting lenders and borrowers as currently being run by most P2P lending companies in Viet Nam. P2P lending companies would not be allowed to mobilise capital, but act as intermediaries to connect lenders (investors) and borrowers.

The development of P2P lending will also create a new capital supply channel. Research conducted by Transparency Market Research showed that P2P lending would surge by 48.2 per cent annually in the 2016-24 period, while Morgan Stanley forecast the business model would reach a growth rate of 53.5 per cent globally by 2020.

Authors:

George Popescu
Allen Taylor

The post Thursday March 14 2019, Weekly News Digest appeared first on Lending Times.

Thursday January 31 2019, Weekly News Digest

fintech vc 2018

News Comments Today’s main news: Kabbage expands into India. GreenSky launches loan product for elective health care. Lending Works hits 150M GBP in loans in five years. Ant Financial’s money market fund shrinks to two-year low. Ant Financial raised close to combined raise of all U.S., Europe fintechs last year. Varo Money raises annual percentage yield on savings accounts to […]

The post Thursday January 31 2019, Weekly News Digest appeared first on Lending Times.

fintech vc 2018

News Comments

United States

United Kingdom

International

India

Other

News Summary

United States

GreenSky launches new loan product for elective health care (American Banker), Rated: AAA

The Atlanta fintech on Tuesday announced the launch of a revolving credit line of up to $25,000. GreenSky previously offered only installment loans; the new product is designed to be a better fit for elective medical providers that rely heavily on repeat business.

Is SoFi Money the Bank Account of the Future? (Lend Academy), Rated: AAA

There are three main benefits that SoFi touts with the SoFi Money account:

  1. Pay zero account fees.
  2. Earn more interest.
  3. Free ATMs everywhere.

SoFi will pay (as of this writing) 2.25% on balances held in a SoFi Money account. Note about the small print: you will only earn this 2.25% for the first three months and then the interest rate drops to a (still respectable) 1.25% unless you do one of two things. Either setup a salary direct deposit of $3,000 or more a month or do $500 in debit card transactions each month. I am in the process of moving my salary deposit to my SoFi Money account.

The cash balance in SoFi Money Accounts is swept to one or more program banks where it earns a variable rate of interest and is eligible for FDIC insurance. FDIC Insurance is not provided until the funds arrive at partner bank. There are currently six banks available to accept these deposits, making customers eligible for up to $1,500,000 of FDIC insurance (six banks, $250,000 per bank).

Mixed Credit Card Issuers’ Earnings (PeerIQ), Rated: AAA

Credit card master trust data shows that delinquencies have picked up from their lows but remain significantly below their peaks. Issuers (with the exception of Capital One), have increased loan loss reserves at a rate higher than loan growth as credit renormalization continues.

30 and 90-day delinquency rates from credit card master trust data

Source: Bloomberg, Bank Credit Card Trust Data, PeerIQ

How online platforms shook small-business lending in America (Financial Times), Rated: AAA

In the years after the financial crisis, small businesses that needed credit were stuck. New capital rules discouraged big banks from touching any borrower perceived as risky. The bond and loan markets, where larger businesses flocked for inexpensive debt capital, have little use for sums under $100,000 — which is what most small enterprises need.

A handful of non-bank lenders, payment and e-commerce companies have leapt into the gap. In an environment of easy money and economic expansion, small business lending operations at OnDeck, Kabbage, PayPal, Square and others have grown fast.

LendingTree Analysis Reveals How Personal Loan Purposes Vary by States and Credit Scores (PR Newswire), Rated: AAA

Key takeaways

  • Managing existing debt is far and away the most popular reason for a personal loan, representing 61 percent of all loan requests in 2018. Thirty-nine percent of borrowers plan to use their loans to consolidate debt, and 22 percent plan to use it to refinance credit cards.
  • Consumers seeking personal loans to manage debt also requested the highest origination amounts: $14,107average amount for credit card refinance, and $12,670 for debt consolidation.
  • Almost 15 percent of loans reasons are categorized as “other” — the third most popular choice. Home renovation and improvement loans are the next-most popular loan purpose, accounting for 7.7 percent of loan requests with an average loan amount of $12,384.
  • New Englanders are the most likely to use their loans to manage existing debt, taking the top five spots. The residents of MississippiLouisiana, and Arkansas are the least likely.
  • Washington, D.C. is home to the highest rates of a few offbeat loan purposes, with more residents requesting loans here for a move (7.4 percent) or business (2.6 percent). It’s also tied with New York and Louisiana as the place where wedding loans are most requested, with 1.5 percent of loans in these states intended to cover the costs of tying the knot.
  • West Virginia is the top state for borrowers requesting loans for their home, specifically home improvements (8.6 percent of loans requested in this state) or home buying (4.9 percent).
  • In Wyoming, residents request personal loans for medical expenses more than anywhere else (6.5 percent). In fact, most of the states where people are more likely to request a loan for medical costs are low-density states with more rural areas.
Source: LendingTree

See the full report here.

Cities Where Homeowners Stay Put the Longest (LendingTree), Rated: AAA

  • Cities with shorter housing tenure have greater price appreciation. The top 10 cities had an average tenure of 7.46 years and an average three-year home price appreciation of 12%. The bottom 10, with an average tenure of 6.63 years, have average price appreciation 30%. This suggests that higher housing turnover drives prices upwards, while faster price appreciation could be enticing home owners to sell.
  • The northeast dominates the list of cities with the longest tenure. The top three cities, Pittsburgh, New York and Buffalo are all in the northeast. An additional three northeastern cities are in the top 10 for a total of six.
  • Hot and sunny places have the shortest tenures. The three cities with the shortest tenures — Las Vegas, Phoenix and Austin — are all in warm-weather areas. This reflects high migration rates to those cities, something we looked at in a prior study on where Americans are moving. Denver is the only city in the bottom 10 that experiences a significant winter season.

A George Soros-backed fintech has raised millions to analyze consumer loan trends just as recession worries pick up steam (Business Insider), Rated: A

dv01, a New York-based startup, has raised $15 million in a series B round led by Pivot Investment Partners, a venture capital firm started by a a trio of bankers who worked together at Deutsche Bank AG. One of those ex-bankers, Dinkar Jetley, will join dv01’s board.

Kabbage hires chief revenue officer from LegalZoom (Biz Journals), Rated: A

Atlanta-based Kabbage Inc. has hired the chief marketing officer at LegalZoom as its new chief revenue officer.

Laura Goldberg‘s appointment is effective immediately, according to a Kabbage spokeswoman. She succeeds Victoria Treyger, who vacated the CRO position at Kabbage in August 2018 to accept a position with Felicis Ventures.

Varo Raises Annual Percentage Yield on Savings Account to Industry-Leading 2.80% (PR Newswire), Rated: AAA

In a move to make high-yield savings available to more Americans, no-fee mobile banking company Varo Money, Inc., announced today that it raised the Annual Percentage Yield (“APY”) on its FDIC-insured Varo Savings Account to 2.80% for customers whose Savings Account balance is $50,000 or less, and who have qualifying direct deposits and debit card purchases from their Varo Bank Account.1 An APY of 2.12%1 will apply if these conditions are not met.

Elevate’s RISE Brand Announces Scholarship to Promote Financial Literacy (BusinessWire), Rated: A

Elevate Credit, Inc. (“Elevate”), a tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced that its largest consumer product, RISE, will offer college scholarships in an effort to promote financial literacy.

The RISE scholarship will offer five $5,000 awards each year to students who demonstrate a desire to improve their financial knowledge and educate others on personal finance. To be eligible for the scholarship, students must complete an online financial literacy course that was developed in partnership with digital education expert EVERFI.

Credit card player Petal picks up $ 30m funding (Fintech Futures), Rated: A

New York-based credit card firm Petal is back in the money with $30 million in Series B funding.

This is Petal’s second investment from Valar, which was also the lead investor in its Series A funding round. Back in October 2018, Petal got $34 million in financing.

Fintech targets banks keen for out-of-market CRE loans (American Banker), Rated: A

As more banks take the often risky step of expanding outside their traditional markets, especially through digital means, some fintechs sense an opportunity to offer them data they need to find new customers and assess risk.

LendingClub, OnDeck Capital and Lending Tree are each online lending platforms that have bet on this trend. CrediFi, a finance data provider, aims to do the same with a focus on one of the largest asset classes around: commercial real estate.

LoanSnap Raises $ 4.7M in Funding (Finsmes), Rated: A

LoanSnap, a San Francisco, CA-based creator of smart loan technology, raised an additional $4.7M in funding.

The round, which brought total financing to $17M, was led by Thomvest Ventures and existing investors.

Oxygen gets $ 2.3m funding for digital banking life (Fintech Futures), Rated: A

San Francisco-based digital banking service Oxygen has raised $2.3 million in funding to breathe life into its gig economy plans.

In this round it got funding from Digital Horizon Capital; Cynthia Chen, investor, advisor, executive and board member for several US-based fintechs and now co-founder and chief risk officer at Figure; ZMT Capital (China); Locus Ventures; Endure Capital; PioneerFund; Magic City; Light Bridge; Strawberry Creek; Base Ventures; The House Fund and Sam Yam, co-founder of Patreon.

Better Mortgage Secures $ 70 Million in Series C Funding from American Express Ventures and the Healthcare of Ontario Pension Plan (PR Newswire), Rated: A

Better Mortgage, one of the leading digital mortgage lenders in the U.S., today announced its closing of $70 million in Series C financing from American Express Ventures and the Healthcare of Ontario Pension Plan (HOOPP), in addition to existing investors Kleiner Perkins, Goldman Sachs, and Pine Brook. The new capital will support continued growth and investment in Better’s technology platform.

CFPB Announces $ 3.2 Million Settlement with Online Payday Lender (JD Supra), Rated: A

On January 25, 2019, the Consumer Financial Protection Bureau (CFPB) announced that it had entered into a consent order with an online lender that extends unsecured payday and installment loans, as well as lines of credit, resolving allegations that the lender had engaged in unfair acts or practices in violation of the Consumer Financial Protection Act (CFPA), 12 U.S.C. §§ 5531, 5536.

Popular ‘robo-advisor’ Betterment picks Philly for its first office outside New York; to hire 20 by end of 2019 (Philly.com), Rated: A

Betterment, a digital wealth manager popular among millennials, has picked Philadelphia for the first office outside its New York home base.

The company, which manages $15 billion in assets, plans to open a Philadelphia office as soon as February, according to founder Jon Stein. Betterment is looking for office space in Center City, with the intent of adding 20 employees in its computer and engineering departments by the end of 2019.

Numerated and PayNet Partner to Improve Digital Lending (BusinessWire), Rated: B

Numerated announces that it will integrate PayNet’s MasterScore v2 within its real-time lending and growth platform. PayNet, a leading commercial lending data and analytics firm, will integrate its proprietary database within Numerated’s customizable rules- and segment-based credit decisioning engine to offer banks additional business scoring criteria for managing risk when lending to businesses in real-time.

Planet Home Lending Opens Several Branches; Sees Growth in Business Channels (PR Newswire), Rated: B

Planet Home Lending, LLC opened 26 active distributed retail branches and brought on 165 mortgage loan originators in 2018. Planet Home Lending also enjoyed additional growth in 2018 in its other channels.

Senior Counsel, Litigation (Employment Focus) (Built in Chicago), Rated: B

Guaranteed Rate is building a winning team to reinvent the mortgage experience through innovation, technology and a relentless focus on providing industry-leading mortgage products and superlative customer service.  The Senior Counsel will embrace and support these efforts by working to pursue claims and resolve disputes as appropriate through negotiation, arbitration or litigation, with a particular focus on employment claims and matters.

United Kingdom

Lending Works hits £150m of loans in five years (AltFi), Rated: AAA

Lending Works, the peer-to-peer lender, has surpassed £150m in loans to households and firms.

Nick Harding, Lending Works Co-Founder and CEO, says the firm is aiming to reaching £300m loans by the end of 2019 thanks in part to its “greatest ISA season yet ”.

LendInvest provides GBP7.35 million bridging loan in under seven days (Property Funds World), Rated: A

UK property finance specialist LendInvest has facilitated a GBP7.35 million bridging finance loan for a developer in just seven days.

Brexit blamed for slowdown in consumer lending (P2P Finance News), Rated: A

UNSECURED consumer lending has slowed to its lowest level since 2014, as Brits scale back their spending amid Brexit uncertainty.

The latest Bank of England Money and Credit statistics also found that the total number of mortgage approvals fell from 126,794 to 124,829 in December 2018, indicating an overall lag in the lending market.

Meanwhile, mortgage approvals for house purchase were around 63,800 in December – just slightly less than the 2018 average of 65,200.

Ultimate Finance lends record £1.4bn to small firms (AltFi), Rated: A

Small business financer Ultimate Finance said it lent a record £1.4bn to small firms across the UK last year.

The Bristol-based business said its overall lending jumped 35 per cent in the year to December 2018, boosted by writing more loans across its operations.

It said its bridging loans more than doubled to £31m over the period, asset finance jumped 37 per cent to £46m, while invoice finance also increased by almost a quarter to £117m.

Primary Factors to Have At Hand When Borrowing Money Online (EconoTimes), Rated: A

Online borrowing should be all about convenience, and Loanski loans have made this aspect their rising pillar for excellence. The only requirement for one to apply for a loan through the platform is they must be United Kingdom residents and have an active bank account. These minimum requirements essentially mean that anyone who uses their bank accounts frequently can have the pleasures of having an instant loan when they need it the most.

China

Ant Financial’s money market fund shrinks to 2-year low (Financial Times), Rated: AAA

The world’s largest money-market mutual fund, Ant Financial’s Tianhong Yu’E Bao, was at its smallest for two years by the end of last year as Chinese regulators pressured it to downsize over concerns about systemic risk.

The shrinkage is a sign that Ant, the financial services business of Alibaba Group, is shifting away from marketing its own financial products to serving as a platform for other groups to access its huge customer base.

Cryptocurrency and pyramid schemes add to US$ 44.5 billion surge in illegal fundraising in China (SCMP), Rated: A

Chinese police investigated more than 10,000 cases of illegal fundraising last year, a 22 per cent rise in the caseload, according to China’s top prosecutors.

The total amount involved also rose, more than doubling to about 300 billion yuan (US$44.5 billion), the Supreme People’s Procuratorate said on Wednesday.

Apart from traditional hotbeds such as product marketing, real estate investment, and education, there has been a big rise in fundraising schemes in online lending, wealth management, private equity, cryptocurrency, and elderly care services.

European Union

Europe’s fintech companies are preparing for a no-deal Brexit (CNBC), Rated: AAA

Europe’s fintech companies are getting serious about the possibility of a no-deal Brexit.

As uncertainty looms over the U.K.’s split from the EU, the industry gathered this week at the Paris Fintech Forum. Payments providers, cryptocurrency exchanges and digital banks all said they were taking steps to prepare for the worst-case scenario.

N26 is a Berlin-based digital bank that was recently named one of Europe’s largest fintech start-ups.

Synsam Group and Klarna Launch Innovative Contact Lens Subscription in the Nordics (Webwire), Rated: A

Synsam Group has over 50 years of experience in improving people’s eye health and is today Sweden’s largest optician chain with over 190 stores in Sweden, and 500 stores throughout the Nordic region. One of the company’s most popular services is Synsam Lifestyle Contact Lens Subscription, which includes home deliveries and annual contact lens examinations. To create a better and smoother customer experience, Synsam Group and Klarna have developed a new concept that allows customers to subscribe to contact lenses by using their mobile phones instore, while they can manage all the administration around the subscription online.

International

China’s Ant Financial raised almost as much money as all US and European fintech firms combined (Quartz), Rated: AAA

When it comes to financial technology companies, Ant Financial is in it own league. The affiliate of e-commerce giant Alibaba raised $14 billion in venture capital last year, not far from the $15.9 billion for all fintech investments in the EU and US in the same period. A key question is whether the growth of the world’s most valuable fintech firm is an anomaly or a sign of things to come from China.

Ant Financial accounted for 35% of global venture capital investment in fintech firms last year, according to CB Insights.

Source: Quartz

Cross River and Railsbank Announce Partnership (BusinessWire), Rated: A

Cross River Bank (“Cross River”), a leading innovator and provider of banking services for financial technology companies, and Railsbank Technology Limited (“Railsbank”), a leading UK-based open banking and RegTech technology services platform, today announced that they have entered into a partnership arrangement that will provide Railsbank the opportunity to offer a variety of API-powered, banking and payment processing services across the U.S.

Fintech companies raised a record $ 39.6 billion in 2018 (Reuters), Rated: A

In the last three months of the year, five companies joined the coveted ranks of fintech “unicorns”, or companies valued at more than $1 billion. These include credit card provider Brex, digital bank Monzo and data aggregator Plaid.

Australia

Canada’s Eguana will set up local manufacturing to join South Australia Home Battery Scheme (Energy-Storage.news), Rated: AAA

The South Australia Home Battery Scheme, launched by the state government, offers a maximum of AU$6,000 assistance per household for the purchase of battery energy storage. Home storage systems are typically, but not always, paired with solar PV, and homeowners can get back between AU$500 and AU$600 per kilowatt hour of battery storage capacity purchased.

Announced in September and then launched a month later, the scheme will assist up to 40,000 households financially, with the state government putting in AU$100 million and peer-to-peer lending group RateSetter later committing the same amount of funding in the form of low-interest loans.

ING latest lender to hike variable home loan rates (Mozo), Rated: A

Online lender ING has become the latest bank to lift its variable home loan rates following an announcement earlier today.

The lender will raise rates across all of its variable rate home loan products by 15 basis points, effective as of February 7, 2019.

India

Small Business Lender Kabbage Expanding to India (Lend Academy), Rated: AAA

Kabbage has opened an office in Bengaluru (formerly Bangalore) and plans to have 125 employees by year end. For comparison, the company has about 350 employees in their Atlanta headquarters.

To our knowledge Kabbage is the first US-based lender to enter the Indian market.

RBI directs P2P lenders to file quarterly reports on key metrics (TechCircle), Rated: AAA

Lending has been our star performer: MobiKwik founder (India Times), Rated: A

As of the end of the last financial year, we have a register user base of more than 107 Mn users and a network of over 3 Mn merchants. We are aiming at 400% growth this fiscal. We are aiming at 400% growth this fiscal. We are adding over 3 Mn new users every month, one of the highest in the industry. We will have close to 200 million users by the end of 2019.

A) Lending is growing by leaps and bounds ever since we started out. The opportunity is huge with less than 10% of Indians having access to credit.

Blockchain-based Loan Marketplace Streamsource Raises $ 1 Mn Seed Funding from Accel India (IndianWeb2), Rated: A

Gurgaon-based StreamSource Technologies, a decentralized marketplace for loans, has raised $1 million in seed funding from Accel India, making it Accel’s first local investment in the blockchain sector.

Indian banks unveil blockchain-linked funding for SMEs (Fintech Futures), Rated: A

A group of 11 Indian banks have teamed together to unveil the nation’s first blockchain-linked funding for SMEs.

According to the Economic Times, the participants include ICICI, Axis, HDFC, Kotak Mahindra, Yes Bank, Standard Chartered, RBL, South Indian Bank, IndusInd Bank, State Bank of India and Bank of Baroda.

How are interest rates set on P2P platforms? (India Times), Rated: A

“Borrowers on our platform are given a score out of 100, which determines their risk profile. A score of 52 to 60 points is high risk while a borrower with more than 60 points will get a lower interest rate,” says Bhavin Patel, Founder & CEO, LenDenClub.

IndiaMoneyMart App Brings P2P Investment and Wealth Creation for Masses (Business Standard), Rated: A

lending or lending is a mode of direct financing that enables individuals to borrow and lend on mutual terms. Platforms like IndiaMoneyMart (IMM) eliminate the traditional financial institutions and enable businesses to flourish through a people to people contact.

P2P industry expectations from Budget 2019 (India Times), Rated: A

“While a great boost to the P2P industry would be via the regulator easing lending caps, we look forward to a critical role from the finance ministry for better financial inclusion by extending SOPs to retail investors,” says Dhiren Makhija, CEO, Cashkumar.

Here’s how you can invest in peer-to-peer lending (CNBCTV18), Rated: A

According to i2ifunding.com, a category A borrower may face the least risk while a category F borrower faces the highest risk.

Following interest rates are paid by borrowers across categories:

  • A category borrowers – 12.00 percent to 14.99 percent
  • B category borrowers – 15.00 percent to 17.49 percent
  • C category borrowers – 17.50 percent to 19.99 percent
  • D category borrowers – 20.00 percent to 22.49 percent
  • E category borrowers – 22.50 percent to 24.99 percent
  • F category borrowers – 25.00 percent to 36.00 percent

CreditVidya receives $ 3m funding to develop credit score tech (Fintech Futures), Rated: A

CreditVidya, an Indian alternative credit score firm, has raised $3 million in a funding round led by Bharat Innovation Fund.

Ryan Khoury, Navroz D. Udwadia and Rick Gerson (founding members of Falcon Edge Capital) also participated in the round.

Abhinav Kumar, of Trivago fame, joins Paisadukan as a marketing advisor (India Times), Rated: B

Digital marketing strategist Abhinav Kumar who shot to fame because of his appearance on television commercials of travel search engine Trivago has joined peer to peer lending platform Paisadukan as a digital marketing and branding advisor and also will be on the company’s advisory board.

Asia

P2P lending third most complained about business sector (The Jakarta Post), Rated: AAA

The country’s growing peer-to-peer (P2P) lending sector has become one of the most complained about business sectors partly because of high interest rates and aggressive debt collection practices, according to a report.

The report by the Indonesian Consumers Foundation (YLKI) shows online lending platforms are the third most complained about business sector while property and banking rank second and first respectively.

NTU and Chinese online lender WeBank launch research centre (Straits Times), Rated: A

Nanyang Technological University (NTU) and China’s first digital-only bank have opened a research centre that aims to help customers manage their finances in real-time wherever they are.

NTU research scientists and engineers from WeBank will also study how to provide personalised wealth management advice to customers, among other projects, in the five-year partnership.

Authors:

George Popescu
Allen Taylor

The post Thursday January 31 2019, Weekly News Digest appeared first on Lending Times.

Friday July 6 2018, Daily News Digest

p2p loan korea

News Comments Today’s main news: PayPal, Synchrony close consumer credit portfolio deal. Personal loans hit record high. Funding Circle updates projected returns. Furongbao gets $121M investment. Creditshelf to IPO on Frankfurt Stock Exchange. Today’s main analysis: Swindlers in Korea tarnish P2P lending. Today’s thought-provoking articles: Why Kabbage isn’t ready to go public. Why a lack of local payment options hurts […]

p2p loan korea

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United States

United Kingdom

China

International

India

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News Summary

United States

PayPal closes sale of consumer credit portfolio (FinExtra) Rated: AAA

PayPal Holdings, Inc. (NASDAQ: PYPL) today announced the closing of its consumer credit receivables transaction with Synchrony (NYSE: SYF).

Under the terms of the transaction, and related transactions with unaffiliated third parties, Synchrony acquired $7.6 billion in receivables, including PayPal’s U.S. consumer credit receivables portfolio, which totaled $6.8 billion at the time of closing, and approximately $0.8 billion in participation interests in receivables held by unaffiliated third parties. PayPal received approximately $6.9 billion in total consideration at closing.

Why This Ambitious Startup Isn’t Going Public–Yet (INC) Rated: AAA

Petralia was discussing her Atlanta-based company’s ambitious expansion plans this year, which include buying other startups and rolling out new payments products. But she was also joking about what’s shiny and new in the world of financial technology startups: everything and anything involving cryptocurrency, relating to the blockchain, or connected to artificial intelligence. Such startups were heavy on the ground in mid-June, when I interviewed Petralia and her co-founder, Rob Frohwein, at the annual MoneyConf event in Dublin, a 5,000-person gathering of entrepreneurs and established companies in every corner of the fintech ecosystem.

Lending remains a large draw for fintech-focused venture capitalists, who put $900 million into the sector in the first quarter of 2018, according to an April CB Insights report. However, venture capitalists are “on pace for a new low” of money spent on lending startups, even while overall global fintech investment is “on pace for a new high,” the report found. Instead, investors are increasingly willing to bet on startups working in wealth management or robo-advising, insurance and blockchain or cryptocurrency.

Karrot Personal Loans Got Chopped: Here’s Where to Borrow Instead (Student Loan Hero) Rated: A

In 2014, Kabbage introduced Karrot, a program that provided unsecured personal loans up to $35,000.

But Kabbage recently stopped offering Karrot personal loans to grow its other offerings. Customers who already borrowed Karrot personal loans can continue making payments online. But those in need of a personal loan will have to look elsewhere.

Business Loan Company Receives Highest Award from TopConsumerReviews.com (Markets Insider) Rated: B

TopConsumerReviews.com recently awarded their best-in-class 5 star rating to OnDeck, a leader among online lenders who facilitate Business Loans.

SoFi Elects Peggy Alford & Magdalena Yeşil to Board of Directors (Crowdfund Insider) Rated: B

On Tuesday, SoFi announced the election of Peggy Alford and Magdalena Yeşil to its Board of Directors. According to the online lender, Alford is the Chief Financial Officer and Head of Operations for the Chan Zuckerberg Initiative. Previously she held positions at PayPal as CFO of Americas, Global Credit and Global Products and COO in the Asia Pacific region. Most recently, she served as the head of Human Resources-People Operations as well as the head of Cross-Border Trade for PayPal.

Personal Loans Surge to a Record High (Bloomberg) Rated: AAA

Personal loans surged to a record this year and are the fastest-growing U.S. consumer-lending category, according to data from credit bureau TransUnion. Outstanding balances rose about 18 percent in the first quarter to $120 billion. Fintech companies originated 36 percent of total personal loans in 2017 compared with less than 1 percent in 2010, Chicago-based TransUnion said.

Web-based firms like LendingClub, Prosper Marketplace Inc. and closely held Social Finance Inc. are driving the expansion of personal loans. LendingClub said in a filing that personal-loan originations in the first quarter soared 20 percent from a year earlier to $2.1 billion.

Why DC Developers Heart Crowdfunding (Commercial Observer) Rated: A

Small Change, was founded by Eve Picker, an architect and urban designer, with the idea of connecting investors with real estate professionals. The company’s first offering was for a tiny house in Pittsburgh, Penn in 2015. (Picker and Small Change could not provide comment due to federal law. Regulation Crowdfunding requires that all information about an offering reside on the Small Change portal and nowhere else.)

While Small Change is one of the newer platforms to the scene, other online real estate crowdfunding platforms, like Fundrise and Patch of Land, have been around for years.

19 State Attorneys General Unite Against “Madden Fix” Bills (OLPI) Rated: A

The Attorneys General of 19 states and the District of Columbia (the “AGs”) on June 27, 2018, publicly opposed to previously proposed pieces of legislation pending in Congress often referred to as the “Madden fix” bills.   Namely, the AGs made their views against HR 3299 (“Protecting Consumers’ Access to Credit Act of 2017”) and HR 4439 (“Modernizing Credit Opportunities Act”) in a letter (“AG Letter”) to Majority Leader McConnell, Minority Leader Schumer, Chairman Crapo, and Ranking Member Brown.  A copy of the letter can be found here: AG Letter.  HR 3299 passed the U.S. House of Representatives and is pending in the Senate and revises various laws to state that a loan valid when made does not become invalid when it is sold, transferred or assigned.  HR 4439 pending in a House committee would explicitly state that a bank’s being named lender is not affected by any arrangement is has with a service provider.

Nelnet Files Application for Industrial Bank Charter (Nelnet) Rated: A

Nelnet (NYSE: NNI) today announced it has filed an application with the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions (UDFI) to establish Nelnet Bank, a Utah-chartered industrial bank. If the charter is granted, Nelnet Bank would operate as an internet bank franchise with a home office in Salt Lake City. Nelnet Bank would be a separate subsidiary of Nelnet, and the industrial bank charter would allow the company to maintain its other diversified business offerings.

Nelnet has hired Andrea Moss to lead the application process, and then Nelnet Bank if the charter is granted.

PayNet Sees Small Business Lending Reaching New Heights (Business Wire) Rated: A

The Thomson Reuters / PayNet Small Business Lending Index (SBLI) jumped 9.4 points to 152.7 in May and is up more than 10% on the year. The SBLI 3-month moving average also rose in May and is 11% above its year-ago level.

Of the ten largest states, growth was led by Texas (+12.9% Y/Y) and North Carolina (+12.3% Y/Y), which both climbed to record highs. The majority of industries also experienced growth in May, led by Transportation & Warehousing (+15.0% Y/Y), Mining (+9.4% Y/Y), and Construction (+7.5% Y/Y). Notably, all four of the industries that declined on a year-over-year basis are in the service sector, including Information (-9.3% Y/Y) and Accommodation & Food Services (-8.1% Y/Y). However, Health Care posted its third consecutive monthly gain (+4.1% Y/Y) after a steady two-year decline.

The PayNet Small Business Default Index (SBDFI) fell two basis points to 1.82% in May and is down seven basis points compared to a year ago, its sharpest annual decline since late 2014. On an annual basis, more than half of the major industries saw defaults fall in May, led by Mining (-183bp Y/Y), Transportation & Warehousing (-133bp Y/Y), and Professional Services (-32bp Y/Y). Regionally, defaults fell in eight of the ten largest states on a monthly basis, but were up in half of the largest states relative to year-ago levels. Notably, Texas (-36bp Y/Y) has seen defaults fall by double-digits in each of the last nine months.

United Kingdom

Funding Circle updates projected returns (Bridging & Commercial) Rated: AAA

Following the latest review, the P2P platform has updated the projected returns it displays for each lending option and will now show these returns as a range.

Projected returns are the annual returns that a diversified investor could earn after fees and bad debt, but before tax.

The projected returns for its balanced and conservative lending options are now:

• balanced: 6-7%
• conservative: 5-5.5%

P2P platform Lendy tops £400m funding (Mortgage Finance Gazette) Rated: A

Lendy’s latest milestone comes as some banks pare back their lending and more property developers seek out alternative finance options.

The firm reached £300 million in lending in April last year and has funded hundreds of bridging and commercial property development loans since its launch in 2012. These include residential developments, commercial property, and conversions.

The £400 million has been invested by over 21,500 investors who have earned more than £40 million in interest so far.

Money saving product recommendations “biggest incentive” to use Open Banking (Credit Strategy) Rated: A

Six months into Open Banking, two fifths of customers willing to share their bank transaction data with a new lender would do so if it provided product recommendations which save them money.

That’s according to research carried out by Equifax. Other motivations to share transaction data through Open Banking include the ability to easily compare products from different financial institutions (36 percent), being offered tailored incentives for switching to a new provider (34 percent), and a streamlined process when applying for mortgages (28 percent) and loans (25 percent).

Record first half for Scottish alternative lender (Business Insider) Rated: A

LendingCrowd , the Scottish alternative lending specialist, has reported record first half lending of almost £14m in 2018 and has upped its proportion of loans to Scotland-based businesses, helped by its £2.75m partnership deal with Scottish Enterprise’s investment arm.

After three consecutive months of record lending in April, May and June, the Edinburgh-based company loaned £13.9m in the first six months of the year, compared to £4.9m for the same period last year. Activity during the second quarter also reached an all-time high, with lending of £8.8m – a 225 per cent increase on the £2.7m delivered in the second quarter of 2017.

LendInvest notches another year of profit (AltFi News) Rated: A

Its loan originations came close to doubling, up 91 per cent to £536m. Revenues were also up, increasing to £53m for the year. Originations look set for further growth too, with lending capital growth of 94 per cent to £791m.

However, despite a surge in these key metrics, profits remain relatively modest at just £1.9m before tax for the period, up from £0.1m before tax the previous year, according to the firm’s gross management accounts. By IFRS standards, LendInvest recorded a similar £1.8m in profit last year, but made a loss of £1m in the preceding year (ending 31 March 2017).

Landbay co-founder looks to shake up property market (Peer2Peer Finance) Rated: A

GRAY Stern (pictured), the co-founder of buy-to-let peer-to-peer lender Landbay, is aiming to shake up the UK property market with his new company.

The investment portal, called Dot, enables amateur landlords to invest in UK and US properties that it has already sourced via estate agents and property portals. The properties come with a pre-approved mortgage, enabling anyone with a 30 per cent deposit to buy them instantly.

As part of its package, Dot provides all the services a landlord would need, including insurance, tax compliance, lettings and management, thereby taking some of the hassle out of the process.

Who is guiding the Big Three? (Peer2Peer Finance) Rated: A

The ‘big three’ P2P lenders – Zopa, Funding Circle and RateSetter – have often led the way in this process.

And as these firms have evolved, their board members – both executives and non-executive directors (NEDs) – have reflected these changes.

Here we look at the make-up of these boards and analyse the expertise and experience of the people who are guiding the big three.

Orca Cofounder Jordan Stodart Shares Update and Quiz Info (Crowdfund Insider) Rated: A

In preparation of its Lending Challenge, the P2P investment aggregation provider Orca partnered with UK P2P Lending Knowledge Leaderboard and posted a quiz targeting investors and industry players to see how much people know about the P2P knowledge. Neither questions nor answers will be posted here to keep the quiz fair.

Orca has teamed up with Peer2Peer Finance News; all winners will receive a print subscription to the magazine. The top 3 quiz placers will win:

  • 1st place: £100 John Lewis voucher, P2P Finance News magazine subscription & Trophy
  • 2nd place: Amazon Echo Dot and P2P Finance News magazine subscription & Silver medal
  • 3rd place: Regency Hamper and P2P Finance News magazine subscription & Bronze medal
China

Chinese P2P Lending Platform Furongbao Receives $ 121M Strategic Investment (China Money Network) Rated: AAA

Chinese peer-to-peer lending platform Furongbao announced that it has received a RMB800 million (US$120.6 million) series B round, strategic investment from a controlling shareholder of Wanjiale Gas Appliances, a Chinese household appliances manufacturer.

Chinese P2P platform fails to pay back $ 15m (Global Times) Rated: A

A Hangzhou-based peer-to-peer (P2P) lending platform  has failed to pay around 100 million yuan ($15 million) back to its investors, media reports said on Thursday.

An investor surnamed Zheng who is based in Hangzhou, East China’s Zhejiang Province, told the Global Times on Thursday that he had invested about 50,000 yuan on niubangold.com, but now he cannot withdraw money from the platform. “[Investors] have reported the case to local police,” Zheng said.

According to a statement posted on niubangold.com late Tuesday, projects worth 98.5 million yuan are overdue.

DLA Piper Adds Beijing Partner From Shearman (The American Lawyer) Rated: B

DLA Piper has recruited capital markets partner Yang Ge in Beijing from Shearman & Sterling, where she was counsel.

Ge’s practice focuses on equity and debt securities offerings. During her time at Shearman, which she joined in 2011, she was involved in several Chinese companies’ initial public offerings in the U.S., including advising the underwriters on online lender LexinFintech Holdings Ltd.’s $124.2 million Nasdaq IPO earlier this year and online micro-lender China Rapid Finance Ltd.’s $60 million listing on the New York Stock Exchange last year.

European Union

Creditshelf Plans Initial Public Offering on Frankfurt Stock Exchange in Q3 (Crowdfund Insider) Rated: AAA

Creditshelf Aktiengesellschaft, a Germany based online lender, has announced its intent to do an initial public offering (IPO) on the Frankfurt Stock Exchange. The IPO is currently scheduled to take place for the third quarter of 2018. The offering is expected to be newly issued shares with a capital increase in the amount of around € 15-20 million. Creditshelf says that Hevella Capital GmbH & Co. KGaA (backed by Rolf Elgeti) has placed a backstop order of up to € 15 million if and to the extent the shares are not subscribed for by investors in the course of the offering.

Creditshelf is an online lender that targets the German marketplace providing access to capital for SMEs. The platform targets a larger ticket size than many other SME lenders with an average loan size of around €500,000 and €600,000 – and moving higher.

International

‘Dollars On The Floor’ — Why A Lack Of Local Payment Options Hurts Retailers (PYMNTS) Rated: AAA

As digital technology keeps bringing new efficiencies to transactions, and more consumers around the world turn to eCommerce for retail and other purchases, an accompanying trend is making life interesting for merchants and payment providers. Local payments options are increasing, resulting in a sector that promises to undergo more fragmentation in the coming years.

Scandinavian consumers have embraced Klarna and other pay-by-invoice services — for reasons not entirely understood by Booth and other analysts, it seems.

If a Chinese consumer trying to make an online purchase cannot do so through Alipay or WeChat Pay, that consumer is more likely to search for another merchant that takes that form of payment rather than, say, using their own UnionPay-branded payment card, Booth said.

Key Learnings at the Cambridge Centre for Alternative Finance 2018 Conference (Lend Academy) Rated: A

Greg Medcraft is the former head securities regulator in Australia and is now the Director of the Directorate for Financial and Enterprise Affairs of the OECD. He talked about trust and how trust in business is low today, particularly in finance. The power of the crowd is impacting trust where companies misdeeds are amplified and public opinion can turn against a company quite quickly. One of the antidotes to this is distributed ledger technology that can create networks with more trust, transparency and traceability.

Probably the country with the biggest success story when it comes to financial inclusion is Kenya. While I have heard the story of M-Pesa before I have never heard it from the person that was in charge of overseeing the economy as it was transforming Kenya. Professor Njuguna Ndung’u was the Governor of the Central Bank of Kenya from 2007 to 2015 during which time M-Pesa went from a curiosity to having half of the country’s GDP flowing through its platform. The introduction of such a system was a major challenge for central bankers as they worried about KYC concerns and financial instability.

India

PolicyBazaar.com Becomes First Indian Unicorn Foraying into Blockchain (BW Disrupt) Rated: AAA

Blockchain has been the talk of town primarily because of bitcoin and other crypto tokens’ parabolic rise in price and then the recent downfall. However the underlying technology, blockchain, rarely gets its fair share of limelight. But when a billion-dollar fintech startup plans a foray in this tech, it deserves attention.

In a chat with their CTO and CPO, Ashish Gupta, he revealed their plans to implement blockchain technology at PolicyBazaar.com, his outlook on the technology as well as how it could affect the fintech space in general.

Artha Venture Fund makes first close at Rs 40 crore (The Economic Times) Rated: A

Early stage venture capital firm Artha Venture Fund (AVF) has achieved the first close of its maiden fund having raised Rs 40 crore. Artha Venture Fund I, which received the approval of the Securities and Exchange Board of India in March this year, will have a corpus of Rs 200 crore along with a greenshoe option of Rs 100 crore.

The fund, which is structured as a Category I alternative investment fund, will invest in startups across seed, pre-series A and series-A levels of growth.

Lending platform BigWin Infotech gets NBFC-P2P certification from RBI (Media Nama) Rated: B

Fintech start-up, BigWin Infotech (PaisaDukan.com) has received its Certificate of Registration (CoR) from the Reserve Bank of India (RBI), paving the way for the launch of its Financial Platform – PaisaDukan.com, a release from the company said today.  Though the company received an in-principle approval from RBI to set up an NBFC Peer-to-Peer lending platform in May, the operations could only commence after the firm received a CoR from the central bank. The RBI issued those guidelines last October, to register and accredit P2P lending firms that resell loans from individuals who have money to invest.

P2P platform Monexo Fintech to raise $ 5 million in equity (The Economic Times) Rated: B

Armed with a licence from the banking regulator to operate an NBFC-cum-P2P lending platform, Monexo plans to invest in IT and infrastructure, which require continuous capital injection in the initial stages of any online marketplace.

The Mumbai-headquartered firm received the RBI licence last Friday.

Asia

Swindlers tarnish P2P loans’ reputation (Korea Joongang Daily) Rated: AAA

Korea’s peer-to-peer (P2P) lending market is turning out to be a Wild West of hucksters and frauds, and government regulations are nowhere in sight.

According to Crowd Institute, a research center that specializes in P2P financial markets, to date, about 3.65 trillion won ($3.2 billion) of P2P loans have been taken out in Korea, about five times the amount from two years ago.

Indonesia’s OVO platform to start peer-to-peer lending in Q4 – head (Nasdaq) Rated: B

Indonesian conglomerate Lippo Group’s payment platform OVO plans to start peer-to-peer lending in the fourth quarter of 2018, its head said on Thursday.

Authors:

George Popescu
Allen Taylor

Monday October 30 2017, Daily News Digest

third-party collections

News Comments Today’s main news: Lending Club closes 5 investment funds, rebrands LC Advisors. CommonBond closes $248M securitization, receives AA S&P rating. LendingTree Q3 results. LandlordInvest expects to double IFISA intake. Ant Financial puts off IPO. Renredai volume surpasses 37.8B RMB. New Zealand prepares for open banking. SMART Box to debut in Canada. Today’s main analysis: Don’t forget about loan recoveries. Today’s […]

third-party collections

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United States

United Kingdom

China

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India

Asia

Africa

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United States

Lending Club Closes Five Investment Funds, Rebrands LC Advisors (Lend Academy), Rated: AAA

Yesterday, Lending Club announced the closure of several funds. The funds were part of what was previously known as LC Advisors, an investment management company dedicated to investing in notes originated by the platform.

Since each fund is a separate legal entity there were many different buyers that participated. While we don’t know the terms of the deals or who purchased these loans, Suri did share with us that there were over 40 bids for the assets and 5 of the 6 funds have been sold at fair value or a slight premium.

 

What happens next?

Lending Club is rebranding its asset management business. Now called LendingClub Asset Management or LCAM for short.

When we asked Suri about positioning the new offerings to investors he stated that their biggest flagship fund under LC Advisors had delivered slightly over 6% annualized since 2011.

CommonBond Closes $ 248 Million Securitization, Secures Inaugural S&P Rating of AA (CommonBond), Rated: AAA

CommonBond, a leading financial technology company that helps students and graduates pay for higher education, today announces the close of a $248 million securitization of refinanced student loans. The offering’s most senior notes achieved AA ratings from Moody’s, S&P, and DBRS – Aa2, AA, and AA (high), respectively – the company’s highest ratings to date.

The transaction was CommonBond’s fifth and largest to date. Investors submitted $1 billion in orders, making the deal more than four times oversubscribed. Goldman Sachs served as structuring agent, co-lead manager, book-runner, and co-sponsor. Barclays and Citi also served as co-lead managers and book-runners on the transaction, while Guggenheim Securities served as co-manager.

The transaction was the first of CommonBond’s to be rated by S&P, who assigned AA ratings to the transaction, alongside similar ratings from Moody’s and DBRS. Moody’s and DBRS also recently upgraded CommonBond’s ratings on previous deals in recognition of the company’s strong credit performance.

Don’t Forget about Loan Recoveries (Orchard Platform), Rated: AAA

To showcase the significance of the third-party debt collection industry in America, the New York Fed publishes in their Quarterly Report on Household Debt and Credit a ‘Third-Party Collections’ chart (below). As of 2017-Q1, between 12-13% of consumers with debt have debt being collected by third-party agencies (blue line). Of those, the average amount of debt in collections is ~$1,400 (red line).

Source: Orchard Platform

The 2015-2016 roll rate matrix is experiencing a higher percentage of loans going from non-performing (60-89 DPD & 90-119 DPD) to current when compared to the 2013-2014 roll rate matrix. This 100 bps difference for 60-89 DPD and 200 bps for 90-119 DPD can be attributed to the improvement of servicers’ collection and outreach programs for delinquent loans.

Source: Orchard Platform

Consumer loans have experienced a monthly recovery rate between 5% to 15% within different portfolios on our platform. Based on this table, a $100M pool of loans would have a $1M valuation difference between a 5% and 15% recovery rate input.

LendingTree Reports Record 3Q 2017 Results; Increasing Full-Year 2017 Guidance (Business Insider), Rated: AAA

LendingTree, Inc. (NASDAQ: TREE), operator of LendingTree.com, the nation’s leading online loan marketplace, today announced results for the quarter ended September 30, 2017.

Third Quarter 2017 Business Highlights

  • Record revenue from mortgage products of $73.8 million represents an increase of 38% over third quarter 2016 driven by strong growth in both purchase and refinance revenues at 87% and 24%, respectively. According to Mortgage Bankers Association, originations industry-wide were down 16% in the comparable period.
  • Record revenue from non-mortgage products of $97.7 million in the third quarter represents an increase of 138% over the third quarter 2016 and increased to 57% of total revenue compared to 43% one year ago.
  • Home equity revenue growth accelerated, increasing $9.0 million, or 176% over third quarter 2016, and marked the eighth consecutive quarter of year-over-year growth exceeding 100%.
  • Personal loans revenue of $25.4 million grew 44% over third quarter 2016 and grew 24% sequentially.
  • Revenue from our credit card offerings grew to $39.4 million in 3Q compared to just $6.6 million in 3Q 2016. On a proforma basis, giving effect to the CompareCards and MagnifyMoney acquisitions as if they had occurred on January 1, 2016, credit cards revenue grew 43%.
  • More than 6.5 million consumers have now signed up for free credit scores and savings alerts through My LendingTree, and the volume of new enrollments accelerated. Revenue contribution from MyLendingTree grew 96% in the third quarter compared to the prior year period as new features and smarter savings alerts are driving increased engagement.

Third Quarter 2017 Financial Highlights

  • Record consolidated revenue of $171.5 million represents an increase of $76.9 million, or 81%, over revenue in the third quarter 2016.
  • GAAP net income from continuing operations of $10.1 million, or $0.74per diluted share.
  • Record Variable Marketing Margin of $59.1 million represents an increase of $22.8 million, or 63%, over third quarter 2016.
  • Record Adjusted EBITDA of $34.7 million increased $16.2 million, or 88%, over third quarter 2016.
  • Adjusted Net Income per share of $1.17 represents growth of 65% over third quarter 2016.
  • During the quarter, the company repurchased 42 thousand shares of its stock at a weighted-average price per share of $237 for aggregate consideration of $10.0 million. As of September 30, 2017, the company has $38.7 million in repurchase authorization remaining.

Business Outlook – 2017

LendingTree is revising Revenue, Variable Marketing Margin and Adjusted EBITDA guidance for full-year 2017, as follows:

  • Revenue is anticipated to be in the range of $603 – $608 million, representing growth of 57% – 58% over full-year 2016 and an increase from prior guidance of $580 – $590 million.
  • Variable Marketing Margin is anticipated to be $202 – $205 millioncompared to prior guidance of $190 – $195 million.
  • Adjusted EBITDA is anticipated to be in the range of $111 – $113 million, up 59% – 62% over full-year 2016 and an increase from prior guidance of $103 – $106 million.

McKinsey Report on Financial Services Big Tech vs. The Big Banks (PeerIQ), Rated: AAA

A recent report from McKinsey on the global banking industry addressed the threat banks face from technology firms. Amazon stock jumped 13% on earnings and reporting that Amazon is increasing its lending footprint. Tune into Bloomberg Radio archive to hear more about this topic as PeerIQ’s CEO discusses the threats and opportunities of big technology with Bloomberg’s Lisa Abramowicz and Pimm Fox.

Summary of Amazon’s Lending Business
Amazon finances small businesses that sell products through the Amazon marketplace on an invitation-only basis. Interest rates range from 6 to 15%, tenor ranges from 4 to 6 months, and loan size is up to $750K.

Although there is no segment-level P&L reporting for the lending unit, loss-rates according to Amazon’s Peeyush Nahar have been “very, very small.” Amazon’s lending makes up a small part of their business (e.g., $3 Bn in loans to date vs. Amazon’s $136 Bn annual revenue). Amazon is also not directly financing the consumers indicating substantial opportunity to grow.

Owning the Customer
The most compelling advantage big tech has outside of data and customer acquisition are the creation of entirely new channels that banks cannot easily replicate.

A few examples:

  • In-Home: Large consumer tech firms occupy the most intimate space of consumer through services such as Amazon’s Echo, Google’s Home, or Apple’s Siri. These platforms represent a trojan horse for delivering new products and services in a highly personal and exclusive manner.
  • Personal assistants that are increasingly anticipatory and have access to the calendars, preferences, and daily lives of consumers.
  • Mobile and virtual wallets which shift the battleground from legacy “share of wallet” and “primary card” concepts to mobile platforms and virtual wallets
  • Virtual spaces created via social media including Facebook or services such as Lyft or Uber which enable unobstructed access to the consumer.

Anticipation For Amazon’s SMB Lending Disruption Grows (PYMNTS), Rated: A

Technology giants like Google and Amazon, which gained their market muscle from non-finance-related ventures, are slowly stepping into the space. Their next target could be small business lending, and according to some experts, it’s fast approaching the market.

Amazon in particular is positioned to dominate. The company has already lent more than $1 billion to merchants selling on its platform, and, just as alternative lenders put the pressure on traditional FIs with their quick surge into the market, the Amazons of the world will do the same, Mills predicted.

Chatter Picks Up Steam

Karen Mills’ statements have found new backing in the latest banking report released by McKinsey & Co. this week. New reports in Bloomberg on Wednesday (Oct. 25) said the report identifies Amazon as the newest, biggest threat to the small business lending status quo.

The report points to sagging return on equities for the banks, which have not been able to surpass 10 percent since the 2007/2008 global financial crisis. The FIs that collaborate with those FinTechs could boost their return on equities to 14 percent and even higher if they develop their own solutions in-house.

Amazon, Tech Companies, Are Challenging Big Banks (Bloomberg), Rated: A

GUEST: Ram Ahluwalia, CEO and co-founder of Peer IQ, on how Amazon and other big tech companies are challenging big banks.


Why Student Loan Companies Like SoFi Are Becoming Useless (Fortune), Rated: A

In fact, starting this year the entire business model of private student loan refinancing may prove to be less viable.

First, only a tiny percentage of all student loan borrowers can reap significant savings from private loan refinancing. And second, the private refinance boom was created by a historically large spread between federal and private rates. As today’s federal student loan rates fall and private loan rates rise, that gap is shrinking.

SoFi, for example, claims the average lifetime savings of borrowers who have refinanced with them is $22,359. I tried using SoFi’s own calculator to arrive at such a figure, and found that a borrower paying 8% on $100,000 in loans with 10 years remaining could refinance down to 4.5%, saving up to $177 a month or $21,285 over the life of the loan.

Consumer finance site NerdWallet indicates that the average approved borrower at SoFi has an annual income of $130,000 and an average credit score of 766. From this we can infer what kind of borrowers fit SoFi’s profile: lawyers, doctors, MBAs, and other professionals who are high earners.

It turns out that private lenders are targeting a very small slice of student loan borrowers. To put things in perspective, as of September 2017, only 6.9% of all working professionals make $130,000 or more per year.

Credit Sesame Raises $ 42 Million in Growth Funding (PR Newswire), Rated: A

Credit Sesame, a fast-growing, personalized credit service and financial wellness company, announced today it has raised over $42 million in equity and venture debt. The funding comes from existing and new investors including Menlo Ventures, Inventus Capital, Globespan Capital, IA Capital, SF Capital, among others, along with a strategic investor. The funds will be used to accelerate the company’s growth, hiring, and member acquisition, and to advance its analytics, robo-advisor and machine learning technologies.

There’s something broken in small-business lending (American Banker), Rated: A

Banks often tout the strength of their small-business loan programs. So why are their small-business customers so hacked off?

It’s hardly an enigma, according to J.D. Power. The thing that sticks in the craw of most small-business owners is that their banks have not assigned account representatives to take care of their needs, the market research firm said in its latest Small Business Banking Satisfaction Study.

McDonald’s Owners Settle PA Payroll Card Class Action (PYMNTS), Rated: A

McDonald’s franchise owners in Pennsylvania have settled a lawsuit filed in 2015 over their use of payroll cards, news reports on Wednesday (Oct. 25) said.

Owners of 16 McDonald’s locations across the state have agreed to pay nearly $3 million to hourly employees that joined a class action lawsuit against the fast food restaurant owners’ use of payroll cards they said were riddled with unfair fees. Employees were forced to pay fees whenever they went to an ATM to withdraw funds from their payroll cards, as well as when they made online bill payments.

The class action named the McDonald’s franchisees as well as the card-issuing banks, JPMorgan Chase & Co. and JPMorgan Chase Bank N.A., as defendants.

BankMobile’s long road to profitability (American Banker), Rated: A

What will BankMobile’s future look like once it is spun off from Customers Bancorp?

Customers launched the digital-only bank, designed to target millennials and technophiles, in January 2015. Since then, BankMobile has adapted an app for Apple Watch, formed an innovation unit and created a financial literacy and self-help podcast series.

Overview of US real estate platforms (online lenders) (MonJa), Rated: A

Having said that, the real estate construction sector is showing no signs of slowing down and in 2015 it reached a size of $1.113 trillion as per the U.S. Census Bureau. There was an evident demand-supply mismatch in the market that led to the rise of alternative online lenders.

Source:
  • LendingHome () – It has raised over $166 million in various rounds of funding and has originated loans in excess of $1.75 billion.
  • Fundrise () – This incredibly efficient new model enables access to a diversified portfolio of private real estate assets with as little as $500. It has raised over $55 million and has invested $1.4 billion in real estate so far.
  • Sharestates (www.sharestates.com) – It has so far funded $656 million.
  • RealtyShares (www.realtyshares.com– It has raised over $100 million in various rounds of funding and over $500 million has been invested through its platform.
  • Patch of Land (patchofland.com– It has raised almost $25 million in different rounds of funding and has done over $366 million in loan origination.
  • RealtyMogul.com (www.realtymogul.com– It has raised over $46 million in funding and over $300 million has been invested through its platform.
  • GroundFloor () – In 2015, GroundFloor became the first issuer to be qualified by SEC for selling private real estate debt investments to non-accredited investors.
  • Allrise Financial Group Inc () – It has originated $ 162 million in loans so far and has a network of 169 borrowers in four different countries.
  • CrowdStreet (www.crowdstreet.com) – It has raised over $5.5 million so far and has done $155 million in equity loan funding.
  • Money360 (– The company’s total loan origination stood at $70 millionin 2015. It has raised almost $165 million in debt financing from multiple investors.
  • Wealth Migrate (www.wealthmigrate.com– It has raised $5.6 million so far and over $64 million has been invested through its platform.
  • Roofstock (www.roofstock.com– It has raised over $68 million in funding.
  • PeerStreet () – It has raised over $ 21 million in various rounds of funding.
  • AssetAvenue (www.assetavenue.com– It has raised over $19 million so far.
  • AlphaFlow (www.alphaflow.com) – It is the first and the fastest growing automated real estate investment service. It managed to raise $6.4 million as seed funding from various investors notably Y Combinator, FundersClub and Red Swan Ventures.
  • Acquire Real Estate (www.acquirerealestate.com– It has raised $6 million in various rounds of funding.
  • EarlyShares (www.earlyshares.com)  It has raised over $5.8 million in funding.
  • Fundthatflip (www.fundthatflip.com– It has raised over $2 million so far.
  • RealCrowd (www.realcrowd.com) – It has raised $1.6 million.
  • DiversyFund () – It has raised over $1.2 million so far.

PayNet Provides Expert Testimony to U.S. Congress on The State of Fintech (BusinessWire), Rated: A

PayNet, Inc., the nation’s provider of credit assessments on privately held commercial lending businesses, addressed The Congress of the United States, U.S. House of Representatives, Committee on Small Business to testify on online lending’s role in improving small business capital access.

New mobile application designed to reinvent personal credit (Muskogee Phoenix), Rated: A

A recent study conducted by Affirm, a company intent on reinventing personal credit, found that 67 percent of 1,600 U.S. adults surveyed expressed personal fears about debt. Almost a third — 32 percent — are fearful because they don’t know how long it would take to pay off that debt, and 72 percent of those who have carried a credit card balance worried about how much their purchases would end up costing after interest was included.

Findings like those and other factors prompted PayPal co-founder and serial entrepreneur Max Levchin to develop and roll out a new mobile application designed to reinvent personal credit. The Affirm app — rolled out this week and available for download from the App Store and Google Play — allows customers to split big online purchases into smaller, fixed payments with a virtual card.

Braviant Holdings Announces $ 40 Million Credit Facility with Redpoint Capital Group (PR Web), Rated: A

Braviant Holdings, a leading fintech startup that offers analytics and technology-driven credit solutions for underserved Americans, has entered into a $40 million Senior Secured Credit Facility with Redpoint Capital Groupfor its wholly-owned subsidiary, Balance Credit.

SBA Approves a Record $ 869 Million in Loans to NJ Small Business (Cap May County Herald), Rated: A

The U.S. Small Business Administration approved a record $869 million in loans to New Jersey small business owners during the agency’s fiscal year 2017(the period from Oct. 1, 2016 thru Sept. 30, 2017). Nationally SBA approved over 68,000 loans for over $30 billion, during the past year.

This past year, SBA has launched its online lender referral tool Lender Match. “The idea is to always be thinking of streamlining and simplifying whenever possible, when it comes to giving entrepreneurs access to capital,” said Titone. “In 2017, SBA loans have helped New Jersey companies to create 8,666 jobs and retain another 10,671 jobs. When you look at it that way, our programs are having significant impact on our local economy.”

Genesis Financial Solutions, Inc. agrees to service Signet Jewelers’ non-prime consumer accounts (Genesis Email), Rated: A

Online lenders can get needed credit to small businesses (The Hill), Rated: A

This challenge has resulted in a global small-business financing gap, estimated by the International Finance Corporation (IFC) to be between $2.1-$2.6 trillion in developing countries.

Four leading trades — Electronic Transactions Association, Innovative Lending Platform Association, the Marketplace Lending Association and the Small Business Finance Association — commissioned a comprehensive survey of U.S. small business owners from Edelman Intelligence.

The survey found that a large majority (70 percent) of small business owners believe there are more credit options today compared to five years ago, and 97 percent of those feel that the growing number of financing options is a good thing.

The Kauffman Foundation has found that even in the depths of the U.S. financial crisis, young and small firms (fewer than five years old and with less than 20 employees) 

State of Small Business Lending: 2017 Spotlight on Women Entrepreneurs (Fudera), Rated: A

After reading stats like women entrepreneurs receive only 16% of all traditional small business loans, we wanted to know: do these same stats also ring true in online business lending?

Our 2016 report, which can be revisited here, found that women entrepreneurs who applied for financing through Fundera were applying less, getting approved less often, receiving smaller loan amounts, and paying more for financing than their male counterparts.

In our 2017 report, you’ll find some things have remained lamentably the same as last year. But, we’re excited to say that in some of the most important areas, there have been positive and significant shifts since 2016.

  • Women are now being approved for larger loan amounts than their male counterparts in certain product categories.
  • Women are receiving offers with lower APR than men in certain product categories.
  • Women business owners still apply for business financing less frequently than male business owners do, and when they do apply for financing, women still ask for less than their male counterparts.

A startlingly low 28% of applicants at Fundera are women. However, since our last report, this number has gone up from 25%. Additionally, our last report showed that female entrepreneurs ask for roughly $35,000 less in business financing than men. Since then, the number has decreased only slightly to less than $33,000.

In The Battle For Low-Fee Financial Advice, DIY Beats The Robos (FA-Mag), Rated: A

When customers open an account at one of these automated investing firms, they’re put into funds from companies like Charles Schwab Corp. and Vanguard Group and charged a fee of anywhere from 25 to 50 basis points. In return, they get some extra benefits, like tax loss harvesting, which can result in a lower tax bill, and automatic re-balancing at no extra cost.

But there’s a catch, the funds that customers buy through these advisors are all available on free trading platforms such as Robinhood Financial, where there’s no added cost.

SelfScore rebrands as Deserve, raises $ 12m funding (Banking Technology), Rated: A

Consumer analytics company SelfScore has rebranded as Deserve, writes Julie Muhn at Finovate (Banking Technology‘s sister company).

The California-based company continues to be committed to providing underbanked Americans with access to credit, and to fuel that mission, Deserve has received $12 million in funding. The round was led by Accel, with participation from Aspect Ventures, Pelion Ventures, Mission Holdings, Alumni Venture Group, and GDP Venture, and brings Deserve’s total funding to $27 million.

Mortgage lenders: Here’s your blockchain primer (Housingwire), Rated: A

Blockchain is particularly relevant to the lending market. Lending is a contract-intensive process with an extensive lifecycle; it carries significant risk and limited trust across its value chain – from origination to funding through to the fulfillment and servicing of the loan.

Moreover, the integration of blockchain with digital lending ensures transactions are tracked in an open and transparent way. Banks and lenders get direct visibility into exactly what happened during the lending process – who was involved, who had control over the authoritative copy of the digital assets and ultimately, who owns the value of those assets, as required by law.

Jiko Raises $ 7.7m in Series A Funding (FINSMEs), Rated: A

Jiko, an Oakland, Calif.-based personal bank startup, raised $7.7m in Series A funding.

The round was led by Upfront Ventures and Radicle Impact with participation from Social Capital, 500 Fintech, Digital Currency Group, Core Innovation, Embark Ventures and Story Ventures.

Templum Raises $ 2.7M in Seed Funding (FINSMEs), Rated: A

Templum, LLC, a NYC-based fintech startup facilitating regulatory compliant ICOs as securities and secondary trading of digital assets, closed a $2.7m seed funding round.

The round was led by Raptor Group, Galaxy Investment Partners, Blockchain Capital and firstminute.capital.

Digital bank for teenagers raises $ 5m in Series A investment round (AltFi), Rated: A

Current, a new mobile-only banking platform for parents and teenagers, has raised $5m in a Series A funding round led by QED Investors.

 

10 Takeaways from the ULI Fall Conference 2017 (National Real Estate Investor), Rated: A

Touching on the recent boom in real estate crowdfunding firms, John McNellis, co-founder of Palo Alto, Calif.-based development firm McNellis Partners, divided the crowdfunding sector into two groups: firms that simply connect investors with developers and firms that invest in projects themselves. The first concept should work in the long term, he noted. But when it comes to crowdfunding firms underwriting real estate deals, McNellis pointed out that it takes at least a decade in the business to become a reliable underwriter. “To expect these 20-year-olds who are good at tech to be good at underwriting” is unrealistic, he said. McNellis added that established developers normally already have financial partners that they prefer to work with. The developers most in need of crowdfunding dollars would be either those just starting out in the business or developers with a spotty track record.

Appetite grows for riskier MPL collateral and deeper sub notes (Global Capital), Rated: A

The decline in underlying collateral quality — a theme across wider consumer ABS sectors — has been playing out in marketplace loan ABS, with recent deals from Prosper, Marlette Funding and Avant featuring a growing proportion of loans taken by borrowers with credit scores of less than 680.

Local veterans get help launching businesses through crowd lending (WFLA), Rated: A

There is now a way anyone can help veterans launch their new life through a concept called StreetShares.

You can invest just a few dollars or thousands to the fund. Investors can earn 5 percent on their money.

For Shane and Melissa Underwood, a $20,000 loan allowed them to purchase a piece of equipment that launched their small business Driveshaft Specialists.

3 Places Women-Owned Businesses Turn for Financing (NAV.com), Rated: A

Crowdfunding

A 2017 crowdfunding reportby the National Women’s Business Council, for example, found that 47% of successful campaigns on the popular crowdfunding platform Indiegogo were run by women.

Online Lenders

Keep in mind that online business loan shopping sites may operate in a variety of ways:

  • Lead generation sites will simply gather your information then sell it to various lenders, which may then call or email you with information or offers.
  • Online lenders may offer a specific set of loan products aimed at specific types of borrowers (for example, those with significant credit card sales). Remember: just because you can’t qualify with one lender doesn’t mean you can’t quality with others.
  • Online brokers may try to help get you funding with various lenders with whom they have a relationship. They may charge a significant fee for this service, so be sure to ask.
  • Online marketplaces will present you with options and allow you to choose which ones seem right for your needs. Ideally, you’ll also see which loans are best matched to your qualifications. (Disclosure: Nav’s small business loan marketplace operates this way.)

Zeus CrowdFunding Year-End Hard Money Offer Helps Real Estate Investors Finish 2017 Strong (PR.com), Rated: B

Zeus CrowdFunding once again offers borrowers what other lenders won’t – low rates designed specifically for the real estate investor and their year-end needs. For a limited time, qualified applicants will pay only six percent interest for the first six months of the loan term.

The company loans up to 100 percent of a project’s cost to qualified applicants in as little as four days.

On Deck Capital, Inc. (ONDK) Set to Announce Quarterly Earnings on Wednesday (Ledger Gazette), Rated: B

On Deck Capital, Inc. (NYSE:ONDK) is scheduled to be issuing its quarterly earnings data before the market opens on Wednesday, November 1st. Analysts expect the company to announce earnings of $0.03 per share for the quarter.

MākuSafe Raises $ 1.25m Convertible Funding Round (FINSMEs), Rated: B

MākuSafe, a West Des Moines, Iowa-based Insurtech startup, raised $1.25m convertible note round of funding.

Wells Fargo Adds Smart Beta to FA Platform (Financial Advisor IQ), Rated: B

As banks rush to catch a wave of robo technologies, Wells Fargo Advisors is rolling out a factor-based approach designed for advisors and their clients.

The wirehouse has launched an expansion to its electronic model portfolio services platform, according to Patty Loepker, WFA’s head of research directed advisory programs. The new managed accounts program features allocations built around smart beta ETFs.

Newable Business Finance partners with Open Risk Exchange (Fintech Finance), Rated: B

Litigation Finance Specialist Pravati Launches Third Fund (FINAlternatives), Rated: B

Litigation finance specialist Pravati Capital has launched its third fund vehicle to capitalize on opportunities in the burgeoning litigation finance sector.

The new fund, named Pravati Credit Fund III, will invest in mature stage, high-probability, high-value cases or case portfolios where there is established liability and precedent for settlement, according to a statement.

United Kingdom

LandlordInvest expects to double IFISA intake this tax year (P2P Finance News), Rated: AAA

LANDLORDINVEST is expecting its Innovative Finance ISA (IFISA) intake to double this tax year.

The property peer-to-peer platform, which launched its IFISA in January, said it attracted £419,385 in the previous tax year and was hoping to see that double to nearer £1m.

Could this platform satiate investor appetite for manual lending? (P2P Finance News), Rated: A

LENDINGCROWD has been ranked as an alternative to Funding Circle for investors looking to continue with manual lending, as they both offer similar interest rates and borrower profiles.

Peer-to-peer analyst Orca said that before Funding Circle shifted to manual lending last month, 27 per cent of investors used the manual option, suggesting there is demand for this functionality.

UK Treasury: Cryptocurrencies Pose Low Terrorist Financing Risk (Coindesk), Rated: A

The U.K. government’s economic and finance ministry has released a new policy document stating that cryptocurrencies like bitcoin pose a “low risk” for terrorist financing.

The paper further cited the peer-to-peer lending industry, which it said has the potential to be used as a “terrorist financing tool,” though no incidences have been observed in the U.K. to date.

Regtech and financial inclusion: “For Millennials opening a bank account online is a no-brainer” (Bob’s Guide), Rated: A

How did you find your way to founding Onfido?

Initially, my co-founders and I had experience verifying identity documents meant for an offline world. The current way of verifying documentation for a standard current account requires hours and hours of face-to-face in-branch and still not getting approved; it’s no wonder there’s a 40% drop-off.

Of the 7 billion people in the world, Facebook has brought their social identity online, LinkedIn has brought their professional identity online and now we’re looking to bring their legal identity online.

How exactly are Onfido providing something that mainstream banks should take notice of?

Very simply, we help business verify the identity of the people they are onboarding digitally. That can be with a photo of their government issued ID that the user can send with a smartphone. We cover 600 IDs globally and use machine learning to verify whether the ID is genuine or not. There are three steps to our core technology. The first, we extract the details, see if the patterns are consistent and compare them to the millions of historically computed IDs. The second step is asking the user to take a photo or short video of their face, which we compare to the photo on their identity document for similarity. The third step is to check that their details – name, date of birth and address – are consistent with records on multiple databases. Altogether this verifies the person is who they claim to be and, end-to-end, takes two minutes.

We use a hybrid machine/human approach – the technology is able to automatically process the vast majority of documents, and the small number of outliers are passed to our expert human team for review. It means that human resource can be put to more effective use, and would heavily cut down on the 30,000 people employed by Citibank, for example, who just work on onboarding and compliance checks.

As a Millennial yourself, how much of a role do you think generations play on attitudes to banking?

Millennials are just so used to doing absolutely everything on their phone.

Fintechs have really monopolised the millennial market and they’re building the models to ensure they keep that market for the next 15-20 years. That’s where PSD2 becomes very relevant as a leveller of the playing field for the market – it’ll increase healthy competition.

Silicon Valley investors double funding for UK tech after Brexit (The Telegraph), Rated: A

Silicon Valley investors have more than doubled funding for UK technology companies this year, in a sign of strengthening links with the world’s biggest tech hub after the Brexit vote.

British start-ups received £884.8m from venture capital backers based in San Francisco and the Bay Area in the first nine months of this year, compared to £342m in the whole of 2016, according to London & Partners, the London mayor’s promotional agency.

London fintech firms set for record investment despite Brexit (Descrier), Rated: A

According to the latest figures from London & Partners (L&P), the Mayor of London’s official promotional firm, investors from around the world have backed London-based fintech firms to the tune of £825m so far this year. This is a positive sign for the industry after UK fintech investment plummeted by more than a third in 2016 as investors put off decisions in the wake of the Brexit vote.

One of the biggest London fintech success stories, currency exchange platform Transferwise, is reported to be in discussions with investors to raise a further £77m, which would value the company at more than £1.2bn.

What the peer-to-peer lending industry learnt from Lego (City A.M.), Rated: A

Strange as it may seem, using the analogy of Lego may be the best way to demonstrate why we believe the peer-to-peer (P2P) industry also isn’t – and can’t be – a one trick pony. While some see the industry as a fad that is set to become redundant, there are many reasons why this isn’t the case.

P2P platforms are exploring a range of new and old ways, and their aim is to create something which is more equitable, satisfactory and useful for everyone.

Homelyfe Raises £2.4M in Seed Funding (FINSMEs), Rated: B

Homelyfe, a London, UK-based insurtech startup, raised £2.4m in seed funding.

Uber appoints former Bank of England senior adviser as non-executive UK chair (Independent), Rated: B

Uber has appointed a former senior adviser to the Bank of England as non-executive chair in the UK, as it endeavours to clean up its image and “make things right” after Transport for London last month revoked the ride hailing company’s licence to operate in the city.

Laurel Powers-Freeling, who will take up the newly created position, is currently senior independent director at online lender Atom Bank.

Quantuma Joins UK Peer to Peer Finance Association (Crowdfund Insider), Rated: B

Quantuma, a corporate recovery and business advisory firm that works with several peer-to-peer lending platforms, has joined the UK Peer to Peer Finance Association(P2PFA). Earlier this year, the P2PFA announced the creation of Associate Membersto broaden its membership beyond strict lending platforms.

China

Alibaba-Affiliate Ant Financial Isn’t Itching to Go Public (WSJ), Rated: AAA

Flush with cash, Chinese financial-technology giant Ant Financial Services Group is putting on hold plans for an initial public offering while it steps up investments in everything from startups to artificial intelligence, according to a senior company executive.

Investors and analysts have been expecting Ant to go public sometime in 2018. The Hangzhou-based company last raised $4.5 billion from private investors in April 2016 in a deal that gave it a $60 billion valuation—and its business has since expanded significantly.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

51 CreditCard (u51.com), an online platform for credit card bill management, is reported to be listed on Hong Kong Exchanges and Clearing Limited (HKEX) in 2018, aiming to raise at least 500 million dollars.

According to a report of China Daily, the credit database of PBOC has collected credit information of more than 840 million individuals as well as more than 19 million companies and organizations by the end of April. Among these agencies, only 255 licensed micro loan companies have been connected to the company credit information system and 156 to the individual credit information system.

From November 1st, customers will be able to pay their train tickets by using WeChat Pay through the official booking website 12306.com or in the train station (booking office/self-service ticket machine).

On October 26thBihubao.com reached cooperation with France’s No.1 mutual insurance provider VYV.

On October 18th, Trustdata released the long-awaited “Trustdata: China Consumer Finance Analysis Report (2017)”. The document presents a comprehensive review of consumer finance development in China, makes a deep analysis of payday loan, installment credit and consumer behaviors, and proposes a new concept called “Consumer Finance Development Index”.  Statistics from the research notes that, by the end of last month, the credit scale of consumer finance in China has reached more than 110 billion yuan with 3.7 million registered users.

Chinese fintech firms set for flurry of IPOs in US, HK (China Daily), Rated: A

The phenomenon of “Chinese companies lining up for an IPO in the United States or Hong Kong” has re-surfaced recently, Tiger Brokers, an online brokerage helping Chinese investors trade US- or HK-listed stocks, told chinadaily.com.cn Thursday.

Beijing-based Jianpu Technology Inc, which is 100 percent controlled by RONG360 Inc filed its preliminary prospectus with the US Securities and Exchange Commission, without the estimated IPO price range, on Oct 20.

Prior to Jianpu, Chinese online small consumer credit provider Qudian Inc made its debut on the New York Stock Exchange on Oct 18. Qudian priced its IPO of 37,500,000 American depositary shares (ADSs) at $24.00 per ADS for a total offering size of about $900 million, according to Xinhua News Agency. Qudian closed at $26.39 Wednesday after diving 7.24 percent, still above its IPO price.

Total Volume of Renrendai Surpass 37.8 Billion RMB (Xing Ping She), Rated: AAA

Recently, Renrendai issued its performance report for the third quarter of 2017.According to the report, the cumulative turnover of the platform surpass 37.88 billion RMB, with 524 thousand transactions in total.

More details, Renrendai remained steady growth in the third quarter. The volume on the platform reached 6.51 billion RMB this quarter, a 109% increase over the same period last year, and the amount of money that investors earn is up 55% from the same period last year. In addition, the per capita borrowing amount on the platform is 80.8 thousand RMB, which represents the capital requirements of small business owners and self-employed people in the class, and always below the national regulations of loan balance ceiling of $200000.

Qudian Stock Fell Below its Offer Price (Xing Ping She), Rated: A

On 27th October, the shares of Qudian tumbled again, closing down $3.59 to $22.8, down 13.6% below the offering price of $24 a share.

The company has fall into constant questioning just after it landed in the SEC. Luo Min, the CEO of Qudian, responded several questions through an interview Qudian’s Luo Min Respond To All, but this move has raised more query. Many media and media outlets gathered to lambast Luo Min for “lying” in her response.

On 23th October, Luo Min avoided all the media interviews again. Since then, the shares of Qudian began to slump, which closed at $26.39 on 26th Oct, down nearly 20 percent from the opening price of $31.89 on Wednesday.

Chinese fintech Rong360 targets 0m US IPO for subsidiary Jianpu (Deal Street Asia), Rated: A

Jianpu Technology Inc, a wholly-owned subsidiary of Chinese fintech firm Rong360, has filed for a $200 million IPO in the US. Goldman Sachs, Morgan Stanley and JP Morgan are bookrunners for the deal, according to a stock exchange filing.

Read more at:

China to tighten regulation of fintech consumer loans (Financial Times), Rated: A

China is preparing to tighten regulation of online consumer lending as part of a campaign against financial risks, dealing a possible setback to Chinese fintech groups that hope to sell shares in the US.

Household debt in China remains low as a share of GDP, and authorities have encouraged growth of consumer credit as a way to rebalance the economy towards consumer spending, but now concerns are rising about irresponsible lending practices online.

Online consumer lending has replaced peer-to-peer lending as the trendy new area in Chinese fintech, as a regulatory crackdown on P2P reduced that sector’s profitability. Short-term consumer loans outstanding in China grew by Rmb1.49tn ($225bn) through the first nine months of this year, compared to an increase of Rmb830bn for all of 2016, according to PBoC data.

China a fast learner when it comes to artificial intelligence-powered fintech, experts say (SCMP), Rated: A

Chan also said the rapid growth of new fintech services, such as peer-to-peer lending marketplaces and online money market funds, was made possible by a lack of innovation by the country’s traditional banks in addressing the needs of not only the average consumer, but also many small and medium-sized enterprises.

High-flying start-up Ant Financial Services Group, which runs online payments service Alipay and money market fund Yu’ebao, has made AI a key driver for expanding its businesses and improving customer service.

China was the world’s second-biggest investor in AI enterprises last year, injecting US$2.6 billion into the sector, according to the state-run think tank, Wuzhen Institute. The United States topped the list with US$17.9 billion in investments.

Source: South China Morning Post

Sesame Credit, fintech and social credit scores in China (Technode), Rated: AAA

What would your reaction be if you wanted to get a loan and your bank asks to go through your Facebook profile? In China, this is already happening on a large scale, but it’s not banks that are doing the rating—it’s the country’s burgeoning fintech companies. And it’s not Facebook they are looking at—its social platform WeChat and shopping website Taobao.

Social credit scoring analyses data from non-traditional sources: social media, online shopping, payment apps, cell phone accounts, and more. This type of scoring is meant to fill a gap for people who want a loan but don’t have any way of proving they can repay one. In order to gauge whether you are creditworthy or not, the score can take into account a number of variables: who your friends are, what you buy, whether pay your bills on time or even how much time you spend reading the user agreement. It’s like FICO but decidedly more creepy.

Alibaba was once a kind of shadow lender too. The company first started building its own credit scoring model to provide loans to Taobao vendors. For this, it relied solely on the platform’s ability to gather big data—transactions, user ratings, market positioning, and others.

Sesame Score (screenshot above) tracks five areas: identity information, such as information on users’ education and work, ability to keep financial obligations, credit history, behavioral preferences like shopping, money transfers, and connections with other people. In return, it offers deposit-free bike and power bank rentals as well as other benefits.

Source: Technode

China’s Social Credit System And P2P Lending: An Opportunity For Yirendai (Seeking Alpha), Rated: A

Yirendai (YRD) is a Chinese fintec company focused on facilitating unsecured loans. Leveraging the experience of its parent company, CreditEase, Yirendai has facilitated more than RMB 47 billion (US$7 billion) of loans since commencing operations in March 2012.

Financials and performance

Yirendai’s core business has seen rapid growth, facilitating over RMB 20 billion(US$3 billion) in loans in 2016, up 112% from 2015. The most recent forecastfrom the company expects loan volume to continue to grow through 2017, with RMB 35-37 billion (US$5.3-5.6 billion) this year. Earnings have been strong and growing as well, with net income for the six months ending June 30, 2017, rising from RMB 392 million to 620 million (US$58.9 million to 93.2 million) over the same prior-year period, translating to diluted earnings per ADS of RMB 6.71 to 10.26 (US$1.01 to 1.54) for the same periods.

China’s upcoming Social Credit System

Presently, eight companies have been licensed to develop algorithmic SCS scoring systems, including China Rapid Finance, a partner of social network TenCent (OTCPK:TCEHY) and Sesame Credit, which is run by Ant Financial, an Alibaba (BABA) affiliate.

European Union

 

Italian peer-to-peer lender launches its own fund, targets €100m raise (AltFi), Rated: A

Italian P2P firm BorsadelCredito.it has followed in the footsteps of its UK antecedent Funding Circle by launching a closed-end fund. The unlisted fund, which is called Colombo, hopes to raise €100m to invest across a 5 year timespan, and is managed by BorsadelCredito.it (through a vehicle named ART SGR SpA). The fund’s custodian bank is Caceis Bank.

By investing in Italian SME loans, originated exclusively by BorsadelCredito.it, the fund will target a yield of 5 per cent (5.5 per cent pre-tax).

Europe’s fintech lenders don’t want to become banks (yet) (AltFi), Rated: A

To be or not to be a bank? That was the question asked by Funding Circle boss Samir Desai at the AltFi Europe Summit in London earlier this year (video below).

Desai left the audience in no doubt that Funding Circle has “no plans” to launch a bank. Later that same day, Zopa CEO Jaidev Janardana delivered his keynote: “Why we’re launching a bank”.

José Rego, who runs Portuguese P2P firm Raize, sees the issue as black-and-white.

“By definition, if you become a bank, you stop being an alternative lender,” he said. “Becoming a bank is an extremely complex and very expensive strategic decision which typically takes into consideration other elements besides the equity value generated by the alternative lending. Only a select number of platforms are likely to have the opportunity to become banks (if they wish so). So, in reality, I don’t think it should be something we’re thinking about within the industry.”

CLP Initial Coin Offering Announcement (Cointelegraph), Rated: B

Crypto Lending Project (CLP) announces its crowdsale campaign.

Name: CLP coin

Start Date: 1st November, 2017

End Date: 30th November, 2017

International

Global Assets under Management set to rise to $ 145.4 trillion by 2025 (Finchannel), Rated: AAA

In a new report ‘Asset & Wealth Management Revolution: Embracing Exponential Change’, PwC anticipates that global Assets under Management (AuM) will almost double in size by 2025, from US$84.9 trillion in 2016 to US$111.2 trillion by 2020, and then again to US$145.4 trillion by 2025.

By 2025, AuM will have almost doubled – rising by 6.2% a year, from US$84.9 trillion in 2016 to US$145.4 trillion in 2025, with the fastest growth seen in the developing markets of Latin America and Asia Pacific.

While active management will continue to grow and play an important role, reaching $87.6 trillion by 2025 (60% of global AuM), PwC predicts growth in passive management to reach $36.6 trillion by 2025 (25% of global AuM).

If current growth is sustained, the industry’s penetration rate (managed assets, as a proportion of total assets) will expand from 39.6% in 2016 to 42.1% by 2025.

PwC anticipates assets growing at 5.7% a year in North America from 2016 to 2020, slowing to 4.0% per annum from 2020 to 2025, lifting assets from US$46.9 trillion to US$71.2 trillion over the nine years. Similarly, Europe is projected to grow at 8.4% and 3.4% per annum respectively over the two periods, with assets rising from US$21.9 trillion to US$35.7 trillion.

Banks need to fear Amazon’s finance ambitions: McKinsey report (American Banker), Rated: AAA

McKinsey said that the industry needs to continue its digital makeover to protect the up to 40 percent of revenues at risk by 2025 and prepare for competition from so-called platform companies like Bezos’s Amazon.com Inc.

As he extends Amazon’s reach, the Seattle-based company has had discussions with banking regulators about financial innovation, according to lobbying disclosures reviewed by American Banker. And it already has a small-business lending arm that has doled out more than $3 billion to more than 20,000 of the merchants on its e-commerce platform.

The global banking industry, which had an 8.6 percent return on equity last year, could offset the loss of profits from price competition by partnering with platform companies and generating more revenue from their data. Banks that go further by creating their own platforms could elevate their ROE to 14 percent, according to the report. ROE is a measure of profitability.

How Mobile Phones and the Internet are Changing Banking (The Merkle), Rated: A

Furthermore with smartphone prices of $30 to $50, Asian markets maintain a robust mobile market. 76% of Taiwan is connected to mobile, and 70% of Myanmar is connected.

Experts estimate Asia as the region to become the fastest growing Internet region by 2020. And while their internet industry is flourishing, only 27% of Southeast Asians have a bank account. In 2017, China has 731 million internet users. That is only 53.1% of the population. China represents internet development at a fast pace, but it still has 21% unbanked. Internet traffic growth in Myanmar is at 58%, yet Myanmar is one of the lowest banking rates in Asia with over 70% of adults (aged 15+ years) unbanked.

P2P Lending Will Change the Way Credit Is Dispensed Globally (Crytocoins News), Rated: A

As an example OECD research points out that financial sector works constitute 19% of the top 1% earners but the share of finance in the overall employment is only 4%.

In developed world, there are huge reserves of money lying in banks at sub zero, zero or miniscule interest rates. On the other hand in the developing world where there is a dearth of credit, loans can only be had at rates as high as 20-30%.

According to Eurostat, SMEs represent around 99% of all enterprises. In OECDcountries alone SMEs are responsible for job creation to the tune of 60-70%.

Source: Cryptocoins News

Karma plans to use the blockchain in such a way that individuals as well as legal entities can make the most of profitable relationships with each other. This will entail creating a community of participants, who will be able to lend money, borrow money, insure against default, Score loans and carry out assessments and even collections. All of this will be fuelled by the Karma token that will be at the centre of this new ecosystem.

The sale of Karma tokens is legal in all jurisdictions including the United States and China. Qualified US investors can participate. The basic price of Karma Token is US$ 0.01. Early investors can get discounts of 50% till US$ 1 mln is collected, thereafter 30% discount is available till US$3 mln is collected and 15% till US$ 8 mln is collected. There is a hard cap of US$ 10 mln on the token sale.

Click, pay, study – how fintech is impacting international education (The PIE News), Rated: AAA

Though fintech can take many forms, “I think the disruption is really in the payer experience,” says Sharon Butler, EVP, education at Flywire, a global payment solutions company. “Essentially we are leveraging banking infrastructure. I think really what fintech is, is sort of the blend of the old and the new.”

Preceding the growth in cross-border tuition fee payment services, which track the money and file it instantly with minimum costs involved, were more staff resources sifting through multiple transactions and matching them to the student, coupled with uncertainty from the student’s side about when or whether the money would actually have arrived.

Improvements in payment services is one of the biggest ways fintech has benefitted students, agrees Devie Mohan, founder of fintech research company, Burnmark.

Fertile ground in China
Financial technology as an industry has grown globally at an unprecedented scale. Last year, fintech reaped $17.4 billion of venture capital investment – a colossal increase on the $2.5 billion it received just four years ago.

And $7.7 billion of this investment went to China, seeing it overtake the US as the top investment market for fintech companies for the first time.

A platform targeting the Chinese market has recently struck a deal to partner with ChinaPay, the online payment subsidiary of China UnionPay, one of the world’s payment giants.

The mobile payment industry is one which has grown particularly quickly in China in comparison with other countries around the world, predominantly led by Alipay and WeChat Pay. These two platforms combined saw $2.9 trillion in transactions overall last year.

Modernising student loans

But it was Prodigy Finance that entered the loan market specifically to serve international students. Since its inception in 2007, the platform has lent over $310 million to international students all around the world to study overseas, and is expanding its services.

 

Ethercash Aims to Revolutionise Three Core Functions of Finance (Coinidol), Rated: B

Financial services startup Ethercash has proudly announced its Pre-ICO Campaign, which will raise funds to develop its blockchain-backed financial platform. The Ethercash platform aims to revolutionise three core functions of finance to bring greater transparency and security in the way we lend, send and spend. The Etherecash platform will allow its users to leverage their cryptocurrency holdings to acquire fiat currency loans without the need for credit history, through the application of lawyer-backed smart contracts. The Etherecash Pre-ICO campaign will run from October 25th, 2017 until November 7th, 2017 and ICO campaign will begin November 15th, 2017 and finish on  December 19th, 2017.

Australia/New Zealand

NZ prepares to join the ‘open banking’ revolution (Stuff), Rate: AAA

Andrew Sieprath is among the first people in the Europe to embrace “open banking” as a customer.

His chosen banking provider is Revolut, which isn’t even a bank.

Revolut is just one of three “open banking” services due to launch here in the next few months. They will lead New Zealand into something of a banking revolution which threatens to do to banks what Uber is doing to taxi firms, and ultimately put more pressure on them to cut staff or close branches.

There are many emerging open banking models, but as a starting point, think internet banking that’s slicker, more intuitive, and allows users to see and manage accounts from multiple banks in a single place.

Robo-advice raises alarm (Financial Standard), Rated: A

While the technology behind robo-advice is making it cheaper to invest, it doesn’t mean it is actually providing advice let alone the right advice, says the Association of Real Return Investment Advisers general manager Rebecca Jacques.

She told a recent Calastone forum that she put a few global and domestic robo-advisers to the test by giving each the same simplistic target: to pay her young children’s private school fees.

Every robo asked for a country of origin; only one asked for a tax bracket – but what was “scary” was that not one asked if the funds would be used for private school tuition, she notes.

COBA conference 2017: small banks need to work together on tech (The Courier Mail), Rated: A

IN the competitive fight against the big banks, smaller lenders such as credit unions find themselves hopelessly outgunned in terms of technology budgets.

But the chairwoman of the Customer Owned Banking Association said smaller lenders were taking opportunities to collaborate on budgets and spruce up their technological offering.

3 apps helping Australians buy real estate in ways that traditional banks can’t (Business Insider), Rated: A

But the report found property transactions made up a very small part of that alternative financing industry, making up just $49 million, or 8%, of the $609 million dealt out in 2016.

Australia lags behind the Asia-Pacific average (excluding China) of 17% of alternative financing going towards real estate. The popularity of peer-to-peer property financing in South Korea is a big contributor to the high average.

The $49 million alternative lending spent on real estate in Australia is made up of $36 million in peer-to-peer lending and $13 million in crowdfunding. In the US, peer-to-peer is worth $1 billion and crowdfunding $800 million.

  • CrowdfundUP –  The startup has so far allowed 2,000 people invest in 17 projects, with individual investments typically ranging from $5,000 to $2 million.
  • BrickX – BrickX, as previously reported by Business Insider, allows everyday folk to invest in fractions of a residential property through units called “bricks”, which can cost as little as $66.
  • CoVESTA – The real estate on offer includes residential, commercial and even agricultural properties, with investors requiring to contribute at least 5% of the purchase price if they wish to be a tenant in the property. For passive ownership, just 1% ownership is required.
India

RBI Regulations For P2P Lending Industry: A Win Win Situation For Both Platforms And Consumers (Inc42), Rated: AAA

It has been observed that, when the P2P lending industry or any other industry is prudently regulated, it attracts more participation. In terms of P2P, the regulation will increase entry of investors as well as borrowers. This is a reason why RBI regulating the NBFC-P2Ps is a long-term positive for the Indian P2P lendingindustry.

RBI regulating the sector means dead-end for players that are looking only to generate money without adding any value.

P2P regulations: A missed opportunity (Livemint), Rated: A

However, the potential social benefits of P2P lending are contingent on a facilitative and proportionate regulatory ecosystem. A review of the P2P regulations issued by the RBI leaves much to be desired in that sense. Saliently, the P2P regulations delegate potentially arbitrary discretion to RBI in gatekeeping, impose high market-access barriers that would inhibit innovation in a technology-intensive sector, and lack clarity around critical issues like leverage ratio.

A. Excessive regulatory discretion: One of the principal governance issues of a modern state is injecting accountability into regulatory discretion.

B. Disproportionate minimum capital requirements: The RBI has prescribed a mandate that would require a minimum net-owned fund (NOF) of Rs2 crore.

C. Lack of clarity around critical issues like leverage ratio: Leverage ratio is defined as “total outside liabilities divided by owned funds, of the non-banking financial corporation in P2P (NBFC-P2P)”. This leverage ratio has been capped at 2.

Online Lending Platforms Rewriting Traditional Lending Habits in SME and MSME Financing in India (BW Disrupt), Rated: A

The current marketplace for financial products in India is still highly inefficient, time-consuming & uncertain for customers – especially the SMEs and the MSMEs. When they require loans as working capital or for expenditures like purchase of raw materials, payment towards wages etc. to achieve scale and growth, approaching a bank directly or even visiting loan aggregator websites becomes challenging in terms of time & information. Also, due to varied risk appetite of traditional financial institutions, many SME and MSME entrepreneurs are often puzzled in terms of documentation requirements; different banks and lenders have their own set of risk parameters which they assess while sanctioning a lending facility. This results in high rejection rates within the loan ecosystem.

Why online lending is emerging as an enabler for India’s MSME industry

New-age fintech lending marketplaces endeavor to revolutionize the country’s financial lending patterns by changing the way it works. They are enabling easy access to loans by connecting these small businesses to financial institutions on a consolidated platform for quicker sanctions. Such neutral platforms, with customer-centric features offering a wide range of loan products and end-to-end loan fulfillment, enable MSMEs to concentrate on building their businesses rather than worrying about finances to fulfill the gap in their cash flows or fund their expansion and growth.

I2I Funding cofounder Neha Agarwal: Saw significant business growth post-demonetisation (Financial Express), Rated: A

While the Reserve Bank of India’s (RBI) guidelines for lenders and borrowers on peer to peer (P2P) lending platforms are important cautionary moves, caps on lending should ideally be linked to lenders’ incomes, Neha Agarwal, co-founder of i2ifunding, told Shritama Bose. The company has disbursed more than Rs 3 crore so far in FY18 and has a full-year target of Rs 10 crore, she added.

We have had more than 30,000 registrations on our platform so far, of which around 25,000 people are registered as borrowers and around 5,000 as lenders. Since launch, around 500 loans have been disbursed and we have around 2,000 active lenders.

The average loan size is about Rs 1.5 lakh.

Almost 90% of the lenders have invested more than once. Around 40% of lenders are lending regularly on our platform.

Five platforms which were a boon during demonetization (Business-Standard), Rated: A

  • Paytm
  • Faircent
  • Rubique
  • LoanTap
  • BankBazaar
Asia

P2P Gold Lending, Bullion, and Physical Crypto Storage (Palisade-Research), Rated: A

Gregor has a company in Singapore where individuals can securely store their gold and silver.

Using peer to peer lending you can withdraw up to half of your holdings in loans at low-interest rates. For example, if you have $100k worth of gold you can deposit and take out a loan for 50k at around 3.5% interest per year.

Here are some emerging bright spots in fintech innovation in Asia (e27), Rated: A

The fast growing Fintech industry is another feather in the cap of rising Asia. According to EY FinTech Adoption Index 2017, there is a palpable global shift of fintech activities from the UK and the US to Asia.

Source: e27

Another report provided by KPMG and CB Insights says in 2016, investments in Fintech companies in Asia hit $8.6 billion across 181 deals.

Source: e27

In light of this, fintech innovation labs and fintech accelerator/incubator spaces are rapidly growing throughout Asia, especially in Hong Kong. The FinTech Innovation Lab Asia-Pacific is collaboration between Accenture and leading financial institutions including Bank of America, Merrill Lynch, Goldman Sachs, HSBC, J.P. Morgan, and Standard Chartered, etc.

A bout of high-profile mega-rounds in the Chinese market has also played a vital role in uplifting Fintech investment. One such activity was a whopping US$4.5 billion funding round by Ant Financial, an affiliate of Alibaba group. The other smaller but successful funding rounds in China during 2016 were: US$73 million to Quant Group, and US$30.4 million to China Rapid Finance.

According to a recent research conducted by Startupbootcamp FinTech Mumbai and PwC, it was found that more than 95% of financial service companies are seeking partnership with Fintech startups through collaboration rather than competing with them.

Another report regarding Indian Fintech ecosystem is more interesting. It says Indian Fintech market is expected to double from current US$1.2 billion to US$2.4 billion in 2020.

VCs call on startups to set sights on SE Asia (The Investor), Rated: A

Tan, who formerly partnered with Sequoia Capital Asia, said his Singapore-based fund is looking for ambitious, strong Korean tech startups to invest in what could become the next unicorn.

He believes Asian-based VCs have a competitive advantage over established VCs from Europe or the US in the region as they can effectively tackle the needs of startups.

Fintech and software as a service, especially targeting small and midsized businesses, are the buzzword in Southeast Asia, according to Yoo Jung-ho, investment manager at Korea Investment Partners.

“In many of these countries, payment, banking abd finance, are still in a nascent stage with only 10 percent of the population utilizing credit and banking services,” said Yoo. “There is a great demand for firms that provides peer-to-peer lending and payment services. “So companies that target small and medium enterprises that make up the majority in Southeast Asia, will have a fighting chance.

 

Africa

The Credit Crisis in Malawi (Maravipost), Rated: A

According to recent reports, only 12 percent of households in Malawi have access to credit. With 65 percent of the population living under the poverty line, the rural population is especially vulnerable to the limitations of credit.

In today’s modern age, a physical bank is no longer needed to conduct financial services. Virtual and automated banking is expected to replace 30 percent of bank roles in the next ten years. These virtual banks even the playing field for Malawians by allowing consolidated rates, 24/7 access to services, and a location for information about other services. Some of these alternative, virtual services include:

  • Personal Loans: To find a personal loan, Malawians can use search sites such as this example from Finland.
  • Peer to Peer Loans:Rather than receiving a loan from a financial institution, peer to peer loans allow people to receive a loan directly from an individual financer. In order to apply for a loan, you must visit a peer to peer lending platform such as Prosper or Perform, and the online marketplace will match borrowers and lenders. Although the site still uses credit scores, individuals may have more sympathy towards you and your situation as opposed to a national bank.
  • Crowdfunding:Another way to finance an opportunity is through crowdfunding. Crowdfunding is a fairly recent innovation that utilizes crowdsourcing as a way to raise funds for a project or business.

The change in financial technologies in the coming years will have a great impact in Malawi, and create more access to services for the entire population.

Canada

CANADIAN LENDERS ASSOCIATION & INNOVATIVE LENDING PLATFORM ASSOCIATION LAUNCH SMART BOX IN CANADA (Canadian Lenders Association), Rated: AAA

The Canadian Lenders Association (CLA) and the Innovative Lending Platform Association (ILPA) today announced the introduction of the SMART Box™ into Canada – a model pricing disclosure and comparison tool that will enable Canadian small businesses to better assess and compare their finance options. Top small business lenders in the country, including Company CapitalEvolocity Financial GroupIOU FinancialLendifiedMerchant Advance CapitalOnDeck and Thinking Capital, have committed to adopt the tool for use by their customers.

Canadian Small Business Lender Lendified Secures $ 60 Million Credit Facility From ClearFlow (Crowdfund Insider), Rated: A

Lendified, a Canada-based lender who provides small business loans online has entered into an agreement with ClearFlow Commercial Finance to increase its lending capacity. According to the lending platform, through the agreement, ClearFlow is providing it with a $60 million credit facility to fund loans delivered through its website.

Finn.ai Raises $ 3 Million in Institutional Financing Round (Finn.ai), Rated: A

Finn.ai, the award-winning, AI-powered virtual assistant built for banking and personal finance, today announced it has raised $3 million in its recent institutional financing round.

Authors:

George Popescu
Allen Taylor

Tuesday August 8 2017, Daily News Digest

LendingClub

News Comments Today’s main news: OnDeck posts quarterly adjusted profit. OnDeck expands partnership with JPMorgan Chase. More than half Wellesley borrowers are in default or behind on payments. Tencent tests credit scoring. Westpac Banking invests in zipMoney. SoftBank says Q1 profit jumped 50.1% after adding Vision Fund. Fintech investments tripled in Singapore. Today’s main analysis: LendingClub Q2 earnings. Today’s thought-provoking articles: […]

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China

European Union

International

Australia

India

Asia

Middle East

Latin America

Africa

News Summary

United States

Online lender OnDeck posts surprise quarterly adjusted profit (NASDAQ), Rated: AAA

Online lender OnDeck Capital <ONDK.N> posted a surprise quarterly adjusted profit on Monday, driven by lower costs and higher interest income.

Excluding items, OnDeck earned 2 cents per share in the second quarter ended June 30, compared with the average analyst estimate of loss of 1 cent, according to Thomson Reuters I/B/E/S.

Net loss attributable to common shareholders narrowed to $1.49 million, or 2 cents per share, in the quarter, from a loss of $17.9 million, or 25 cents per share, a year earlier.

Originations fell 21.3 percent to $464.4 million.

Operating expenses fell about 6.3 percent to $44.6 million.

OnDeck Will Focus on Better Borrowers, Expanded Partnerships to Grow Originations (Bank Innovation), Rated: AAA

The online lender will continue this focus on higher quality borrowers going into the remainder of 2017, and will also be expanding several of its loan features, including prepaid benefits for term loans and a “more tailored” underwriting experience for businesses, said Breslow.

OnDeck Capital up more than 6% after earnings beat (Seeking Alpha), Rated: AAA

  • Adjusted EBITDA of $3.3M vs. a negative $12.4M a year earlier.
  • Full-year guidance is reiterated: Revenue of $342M-$352M, and adjusted EBITDA of $5M-$15M. Q3 revenue is seen at $82M-$86M, with adjusted EBITDA of $1M-$5M.

OnDeck announces expanded partnership with JPMorgan Chase (MarketWatch), Rated: AAA

OnDeck Capital, Inc. ONDK, +18.48% on Monday announced it had expanded a collaboration with JPMorgan Chase, JPM, -0.02% which is providing technology that runs the online lending platform.

Chase extends relationship with OnDeck (Finextra), Rated: A

JPMorgan Chase (NYSE: JPM) and OnDeck (NYSE: ONDK) today announced a contract extension to continue their collaboration on the bank’s digital small business lending product, Chase Business Quick Capital, for up to four years.

Why On Deck Capital Stock Jumped More Than 20% on Monday (The Motley Fool), Rated: A

Shares of On Deck Capital (NYSE:ONDK) were up more than 21% as of 3:15 p.m. EDT, after the company announced a smaller net loss during the second quarter and a promising expansion in its partnership with JPMorgan Chase (NYSE:JPM). Shares of LendingClub(NYSE:LC), its primary rival in the world of online lending, rose 7%, as investors see On Deck’s recent performance as a good omen for the industry as a whole.

A focus on higher-quality borrowers seems to have relaxed investors’ worries about the company’s loan quality, a perennial concern given that the average On Deck loan carries an APR in excess of 40% per year.

Lending Club Q2 2017 Earnings – Back to Growth (Lend Academy), Rated: AAA

Lending Club’s second quarter earnings marked an important milestone for the company – a return to growth. Originations have been hovering around $1.9 billion since Q2 of last year. This quarter Lending Club announced originations of $2.15 billion for the quarter, up 10% from the prior quarter of $1.96 billion. While this is still down from their previous highs, it shows that the company is back on a growth trajectory.

Source: Lend Academy

Last quarter the company announced banks were funding 40% of loans, but that reached higher in the second quarter to 44%.

Source: Lend Academy

Borrowers

  • Achieved 10% sequential growth to over $2.1 billion in originations, driven by strong borrower demand
  • Successfully launched multiple conversion initiatives, including pricing optimization and a redesigned website
  • Improved sales and marketing efficiency by over 7% sequentially
  • Credit continues to perform in line with expectations as observed in both vintage and portfolio trendsInvestors
  • Successfully executed the first self-sponsored securitization thereby opening a new funding source, expanding the investor base with 20 new investors, and generating a new repeatable revenue stream
  • Record number of managed accounts and institutional investors participating on the platform in the quarter
  • Successfully launched new iOS mobile application for retail investors

LendingClub Shares Soar 13% on Smaller Loss (Fortune), Rated: A

Online lending platform operator LendingClub reported a smaller loss on Monday, helped by higher net interest income and a drop in expenses.

Shares of the company (LC, +12.86%) were up 13.2% at $5.90 in after-hours trading.

LendingClub shares rise 8 percent on positive outlook, higher revenue (Reuters), Rated: A

Online lender LendingClub Corp (LC.N) raised its earnings outlook on Monday after reporting the second-highest quarterly revenue in its history and a drop in costs, sending shares up nearly 8 percent.

LendingClub now expects full-year total net revenue to be in the range of $585 million to $600 million, compared with its earlier forecast of $575 million to $595 million.

Shares of the company, which connects consumers looking for loans with individual or institutional investors such as banks through its website, were up 7.8 percent at $5.46 in after-hours trading.

Online lenders upbeat about turnaround progress, but worries linger (Today Online), Rated: A

LendingClub Corp <LC.N> and OnDeck Capital Inc <ONDK.N> surprised investors on Monday with strong growth forecasts that sent the online lenders’ stocks soaring, but analysts said the sector’s health was still a concern.

OnDeck shares closed 18.5 percent higher at $5, and LendingClub ended up 4.8 percent $5.46. The stocks rose in after-hours trading but remain far below their initial public offering prices of $20 and $15, respectively.

Executives of both companies were upbeat about the progress in their turnaround plans after they reported second-quarter results.

Earnest Corp is looking to sell itself for $200 million, Bloomberg News reported on Friday, far less than the $300 million it has raised from investors.

Online Lenders Clear a Low Bar—Higher Ones Lie Ahead (WSJ), Rated: AAA

The online lending industry regained its footing in the second quarter, more than a year after it was knocked off-balance by severe disruptions in the loan marketplace. But investors’ sky-high hopes for the sector may have been lowered permanently.

Investors also were relieved that On Deck reiterated it would turn profitable later this year. Shares rose a sharp 18.5% Monday, but they fetch only about a fourth of their December 2014 IPO price, a sign of just how much the hype around these lenders has deflated.

Crucially, On Deck has moved on from funding loans through an online marketplace, the aspect of its business model that was truly disruptive. It now funds the vast majority through its own balance sheet, making On Deck more like an ordinary bank.

Both companies have to worry about rising competition. Innovative payment companies like Square and PayPal are extending more microloans to their merchant customers. Meanwhile, giants of finance like Goldman Sachs are extending more unsecured personal loans, which is LendingClub’s sweet spot.

Fintech Firm Fiserv Raises Offer for Monitise to $ 98 Million (The New York Times), Rated: A

U.S. financial technology provider Fiserv made an improved offer for Monitise worth about 75 million pounds ($98 million) on Monday, hoping to secure backing from the British financial services technology group’s investors.

Fiserv’s earlier offer, which valued the group at about 70 million pounds, drew criticism from Monitise’s investors led by Cavendish Asset Management, for being too low, given that the British group was worth over 1 billion pounds three year ago.

Fiserv’s final offer of 3.1 pence in cash per share represents a premium of 34.8 percent over Monitise’s closing price on June 12, the last before the initial offer was made.

Banco Santander, Monitise’s top shareholder with a 4.67 percent stake, had submitted a letter of intent to back the deal, as had Visa Inc, a large customer and investor with a 2.41 percent stake.

LendingRobot Series Second Quarter Report (LendingRobot), Rated: A

LendingRobot Series finished the second quarter with a healthy YTD aggregated return of 2.7%. Each Series’ return and portfolio health is in line with projections. Since April 1st, LendingRobot Series has added over 2,800 loans to its portfolio, more than doubling the number of loans held in each series.

Source: LendingRobot

 

Legislative Update 161 (Experian Email), Rated: A

Highlights this issue:

  • On July 10, the CFPB published a final rule prohibiting the use of mandatory predispute arbitration clauses that prevent class action lawsuits in consumer contracts for a wide array of financial products. The final rule was published in the Federal Register on July 19, and will become effective 60 days after that date, or September 18. All consumer contracts with arbitration clauses will need to comply with the rule within 180 days of the effective date, which will be March 19, 2018.
  • The House of Representatives is working to pass 12 appropriations bills by September 30 to fund federal agencies for the Fiscal Year 2018. The House Appropriations Committee passed the spending bill for financial regulatory agencies on July 13. The measure included several provisions important to Experian and our clients.
  • On July 19, Representatives Patrick McHenry (R-N.C.) and Gregory Meeks (DNY) introduced the Protecting Consumers Access to Credit Act. The bill would codify the legal precedent under federal banking laws that preempts a loan’s interest as valid when made.
  • Legislators in California continue to debate legislation that would enact a broadband privacy law in the state, similar to the rule issued by the FCC and then overturned by Congress. A.B. 375 would prohibit an internet service provider from using, disclosing, selling or permitting access to customer personal information.

Read the full update here.

4 Reasons Online Lenders Are Innovating With Purchasing Cards (Entrepreneur), Rated: A

In recent years, Kabbage and others have stepped up to introduce a purchasing card product to their borrowers, and with their early success, many lenders are now following suit for the following four reasons:

  1. Staying on top of the customer’s mind
  2. Speaking the language of large corporate partner targets
  3. Underwriting use of funds
  4. Revenue sharing

New Financial Technology Upgrades Bank’s Credit Review Process (PayNet Email), Rated: A

Enables Banks To Review All Credits and Focus on the Highest Risks

The real challenge is convincing bank management that they do not have to apply the same credit review process to the entire portfolio.  Adopting different processes based upon exposure size and measured risk (APD for example) should be the goal of every bank.  In other words, focus credit review efforts to those accounts that represent the greatest risk to the bank – and that is what you are hoping to do with your credit review process.

Conducting credit reviews are a “waste of time” in most cases because nothing has changed. What form that documentation takes is where PayNet can be most helpful to the prospect.

PayNet is introducing PayNet Credit Review Express, a risk management tool which streamlines the credit review process making credit review easier and less costly.

Credit Review Express assesses the credit risk of each C&I borrower each month. Banks can assign their definition of risk from delinquency to probability of default to assign high, medium or low risk to each borrower. Currently, PayNet sees less than 2% of C&I borrowers as high risk credits. Other features include automated action steps (such as Watch, Restructure, Work-out) and a customized dashboard to monitor and track activity.

FDIC defends right to charter new banks against OCC criticism (American Banker), Rated: A

The Federal Deposit Insurance Corp. defended its authority to approve prospective new banks in response to suggestions by acting Comptroller of the Currency Keith Noreika that his agency should be able to approve applications on its own.

Rumour mill churns in US online lending sector (AltFi), Rated: A

Whispers abound of a major financing round, an acquisition and an IPO within the US online lending space.

Perhaps chief among the rumours was the suggestion that SoFi may at last be on the brink of an IPO that was first mooted by CEO Mike Cagney in 2014.

Meanwhile, SoftBank continued to build on its portfolio-for-the-future with a $250m equity investment in small business lending fintech Kabbage.

Cities where student loan borrowers struggle with debt the most (Credible), Rated: A

So it’s important for borrowers, especially recent grads, to think about the best places to live — the cities in which they’re not only likely to find a well-paying job, but also where rents and other living expenses aren’t so exorbitant so as to add to their pile of debt.

5 cities where student loans borrowers struggle the most with debt:

  • 1. San Jose, California
  • 2. Fort Worth, Texas
  • 3. Boston, Massachusetts
  • 4. Los Angeles, California
  • 5. Denver, Colorado

5 cities where student loans borrowers struggle the least with debt:

  • 1. Dallas, TX
  • 2. Jacksonville, FL
  • 3. Houston, TX
  • 4. Columbus, OH
  • 5. Austin, TX

The key indicator for affordability was how much of a borrower’s monthly income would go towards their student loan payments and monthly housing costs.

Source: Credible

 

Marketplace Lending Explained (WealthManagement.com), Rated: A

Marketplace lending has grown by nearly 150 percent on a compound annual basis for the last half-decade. Strong growth and real longevity mean that most advisors have to consider the role that marketplace lending plays in their clients’ portfolios.

Source: WealthManagement.com

Refinancing high-rate credit card debt or other hard-money-type loans among high-quality borrowers via a marketplace lender is sensible and provides good value to all parties.

As part of a fixed income allocation, what are the risks in marketplace loans? There is the credit risk of the borrower first and foremost—here the asset can be seen as clearly pro-cyclical; in other words, as the economy improves, the asset strengthens. Correspondingly, as the economy weakens, the credit of the borrower will weaken. Additionally, there has recently been some weakness in consumer credit, primarily in auto loans and credit card defaults, though these have been largely limited to the subprime aspects of these loan categories.

United Kingdom

The Growing Alternative Finance Industry (Business Zone), Rated: AAA

The latest equity crowdfunding statistics released by OFF3R last month revealed that the first half of 2017 was the strongest 6 months for equity crowdfunding to date.

Six of the leading equity crowdfunding platforms that form the OFF3R Index raised nearly £130M in 2017 for UK private companies. This is £2M above the previous half yearly record that was reached back in the second half of 2015. March 2017, where Over £40 million was raised, buoyed the latest data and the period as a whole was characterised by some very large fundraises from Q1 2017.

The data also revealed that peer to peer lendinglevels continue to rise in the UK. The peer to peer lending statistics showed that over £1.8 billion was lent in the first half of 2017 by the nine platforms that make up the OFF3R Index. This is an increase of over £350 million from the previous half year period at the end of 2016.

The data also revealed that Assetz Capital had a record breaking month in June 2017. The total amount lent of over £30 million by the platform was higher than any previous period since the OFF3R Index began.

Toxic loans blight property peer-to-peer lender Wellesley – with more than half its borrowers behind on payments or in default (This is Money), Rated: AAA

More than half of the customers of an internet loan firm run by an aristocratic financier are behind on their payments or in default, the Mail can reveal.

Wellesley, a peer-to-peer lender which allows property developers to borrow cash from savers, is grappling with losses on its loan book.

Online lender Tandem acquires Harrods Bank in bid to expand services (Belfast Telegraph), Rated: A

Start-up lender Tandem has snapped up Harrods Bank in a deal that will bring it closer to launching a savings account.

The undisclosed deal will hand the online-only lender £80 million of additional capital and enable it to regain its banking licence , if it wins regulatory backing.

The institutional investor selling down its stake in VPC Speciality Lending (AltFi), Rated: A

Old Mutual, a sigificant shareholder in the £351m VPC Speciality Lending fund, has further reduced its holding in the closed ended portfolio following previous reductions in exposure earlier in the year.

Its holding in the fund fell below 6 per cent back in March 2017, now it has sold more shares with its stake now less than 4.99 per cent, according to regulatory filings.

VC firm behind Zopa among judges at PitchIt funding competition (P2P Finance News), Rated: B

A VENTURE capital (VC) firm that backed Zopa in its early days has been named among judges for the second annual PitchIt Europe competition.

Rob Moffat, partner at Balderton Capital, an early Zopa backer, will be one of the VC judges alongside Seedcamp’s Reshma Sohoni, Blenheim Chalcot’s Dan Cobley and managing director of CommerzVentures Patrick Meisberger.

China

Tencent credit check takes mobile payments battle to Alibaba (Financial Times), Rated: AAA

Tencent is developing a credit scoring system as it ramps up its battle with rival Alibaba for a share of China’s $5.5tn mobile payments market.

Ant Financial, Alibaba’s payments affiliate, launched its Sesame Credit two years ago, parlaying its data on consumers into a measure of their trustworthiness, providing comfort for small businesses and consumers alike.

Credit scoring is popular in China, especially among younger subscribers who lack a credit history but might be eligible for a high rating that would let them rent hotel rooms, bikes or phone chargers without leaving a deposit. The services are particularly valuable given the lack of access to credit cards in the country.

Tencent is testing a credit scoring service among a small group of its subscribers, upping the stakes as the two tech titans engage in an aggressive promotion this week encouraging Chinese to forgo cash in favour of payments made with a swipe of the phone.

Top 100 List of Chinese Internet firms in 2017: Tencent surpassed Alibaba to become NO.1, and Letv was Out of the List. (Xing Ping She), Rated: AAA

Recently, Internet Society of China (ISA) and the information center of Industry and Information Technology Ministry Jointly issued the list of “China’s Top 100 Internet Companies in 2017”. For this time, Tencent overtook Alibaba to become the No.1. Tencent, Alibaba and Baidu were still the top three for five consecutive years, while Letv was out of the list.

The top 10 of the list were:

  • No.1 Tencent
  • No.2 Alibaba
  • No.3 Baidu
  • No.4 Jingdong
  • No.5 NetEase
  • No.6 Sina
  • No.7 Sohu
  • No.8 Meituan
  • No.9 Ctrip
  • No.10 360

The list of “China’s top 100 Internet Companies” has been published every year since 2013 and has been published five times so far.The evaluation index combines seven core indicators of enterprise scale, profitability, innovation, growth, influence and social responsibility.

Central bank to regulate rapidly growing fintech (China Daily), Rated: AAA

In a report released last weekend, the People’s Bank of China said some financial products offered through internet channels by fintech companies are “systemically important” and hence will be included in its macro-prudential assessment or MPA.

The aim is to prevent cyclical risks and cross-market risk transmission, it said.

Analysts said this is the first time that the PBOC said it will include fintech businesses in its MPA.

With $ 3.58 bn in newly increased loan balance, Weli Dai becomes the largest microcredit platform in China (Xing Ping She), Rated: A

On 7th August, a Webank staff said in WeChat Moments that the loan balance of Weli Dai reached a milestone of over 100 billion RMB (equivalent to $14.91 bn). In a speech at the LendIt on July 16, Fang Zhengyu, the director of retail credit section in Webank, revealed that the loan balance of Weli Dai was $1.13 bn. And it has increased by $3.58 bn within just 22 days. What an amazing growth!

Weli Dai is focused on providing a cash loans product, with the loans amount from ¥500 to ¥300,000, and is operated in pure online pattern. With its white list invitation system, Weli Dai identifies the target customers effectively. The loan period is flexible from one day to twenty months, which makes users borrow and repay money at any time. Many factors contributed to the performance of Webank today, the most important is that Webank developed its business in the huge customer base of QQ and WeChat. Besides, Webank has built partnerships with nearly 40 banks for jointly making loans.

Hong Kong startup close to US$ 500mil valuation (The Star), Rated: A

TNG FinTech Group Inc, a Hong Kong-based digital wallet operator founded in 2013, is poised to close a funding round and is targeting a valuation of about US$500mil, according to a person familiar with the matter.

It has attracted almost US$60mil in the series A round from investors including a Beijing-based private equity fund, said the person, who asked not to be named discussing private deliberations.

TNG, which offers global money transfers, foreign-exchange transactions and bill payments, expects to be profitable this year and is targeting a listing in either New York or Hong Kong by 2019, the person said.

Jeffrey Chen of ZhongAn Insurance (Lend Academy), Rated: A

Our next guest on the Lend Academy Podcast is Jin (Jeffrey) Chen, the CEO of ZhongAn Insurance. I sat down with him when I was in Shanghai recently for Lang Di Fintech (LendIt’s Chinese event) and we conducted this interview with the assistance of his translator.

People’s Bank of China Has Fintech on Its Mind (Fox Business), Rated: A

The People’s Bank of China said in a report that it is considering expanding its risk-assessment system beyond banks to include major online financial businesses. Last month, it reached agreement with 45 nonbank financial firms– including payment systems affiliated with internet giants Alibaba Group Holding Ltd. and Tencent Holdings Ltd.–on joining a new payment-clearing platform called Wanglian, according to listed-company documents.

This effectively gives the PBOC a clearer view of payments, enhancing regulation, said Tencent, which owns the TenPay payment system.

European Union

Fellow Finance Adds Invoice Financing (P2P-Banking), Rated: A

Finnish p2p lending service Fellow Finance has opened a new invoice finance service for companies, which allows businesses to convert their trade receivables into cash immediately. In the new invoice finance service, a company gets funding against its invoice receivables directly from investors.

In adjacent Estonia p2p lending marketplace Investly, which specializes on invoice financing for Estonian and UK SMEs, is growing. The last figures we reported for them show 78% month on month and 319% y-o-y growth.

Balderton Capital on European Fintech (Stitcher), Rated: A

Rob Moffat is a Partner at Balderton Capital, a London-based venture capital firm that has invested in fintech businesses including GoCardless, Revolut, Crowdcube, Nutmeg, Seedcamp, ComplyAdvantage, Wonga, Zopa and more. Prior to joining Balderton, Rob worked at Bain & Company and Google. Rob holds degrees from Cambridge and INSEAD.

Listen to the podcast here.

International

Senate To Mull Financial Choice Act, UK Officials Look For Tighter Controls (PYMNTS), Rated: A

As has been noted in the financial and trade press, the Financial Choice Act, which was passed last month by the U.S. House of Representatives, now awaits a vote in the U.S. Senate.

In other regulatory news, one executive in Britain is calling for tighter financial regulations in the United Kingdom. Douglas Flint, departing chairman of Britain’s largest bank, HSBC, said in a statement that, amid issues such as Brexit and a revamp of the European financial order, a lack of homogeneity in regulation means there should be cooperation between overseers to find — and stop — “bad actors.” Flint advocated that “greater cooperation between the public and private sectors, together with a refresh of bank secrecy laws and regulation designed for a different age, would significantly increase the effectiveness of our joint efforts.”

Visa And The QR Code Evolution/Revolution (PYMNTS), Rated: A

As it turns out, putting that spec on the shelf helped to inform the development of the EMVCo QR code standard, which was released yesterday into a payments ecosystem that looks at them as anything but uninteresting.

China is a prime example as, over the course of the last five years, the QR code-based mobile payment has almost entirely displaced cash in the country — and leapfrogged credit and debit cards — to become Chinese consumers’ preferred alternative for payment. There are $5.5 trillion worth of mobile payments made in China per year, the vast, vast majority of which are handled via QR code.

But perhaps most striking is India and its government’s November 2016 decision to move toward a cashless society. That led the country to the accompanying adoption of a QR code-focused payments scheme based on Visa’s mVisa standard.

Getting To Scale

Visa is currently developing mVisa as a worldwide solution. The key to scale, Shrauger told Webster, is making it useful and accessible for their two client groups — merchants and their customers.

Australia

Westpac Banking Invests $ 40 Million into zipMoney (Crowdfund Insider), Rated: AAA

zipMoney (ASX:ZML) has announced a $40 million strategic investment from Westpac Banking (ASX:WBC). The investment was paired with an agreement for the two companies to explore the integration of Zip’s products and services into Westpac’s network across Australia. The investment will be by subscription of ordinary equity of 49,382,716 shares at a price of $0.81 per share. This represents a 14.1% premium over the close of $0.71 on August 4th.

India

How technology is helping investors achieve their financial aspirations (Financial Express), Rated: A

Most Indians save first and think of spending later. However, when it comes time for them to plan their expenses, they end up relying on mental estimates of their financial position. As a result, most people are never confident of 1) how much to save and 2) whether they can reach their financial aspirations with their current investment plan. This is especially true for young professionals who want to save for a secure future but also want a more fulfilling life experience. What is required is financial advice that delivers the answers to these questions in a clear and quantified way.

A solution to these issues has come from the field of artificial intelligence. Cognitive technologies is a branch of artificial intelligence that deals with the application of computers towards tasks traditionally performed by people. The aim of this process is to design a software solution that has comprehensive and detailed instructions, that enables it to do the same work that a person can. The benefits of this approach are that the same work can be done at a much faster pace, at a higher accuracy and at a lower cost.

Asia

Japan’s SoftBank says Q1 profit jumps 50.1% after inclusion of Vision Fund (CNBC), Rated: AAA

Japan’s SoftBank Group Corp on Monday reported a 50.1 percent rise in first-quarter operating profit, after the company included Vision Fund, the world’s largest private equity fund, as a new reportable segment and booked a valuation gain.

The internet and telecoms giant said profit for the quarter through June increased to 479.2 billion yen ($4.33 billion).

Fintech investments tripled in Singapore (The Star), Rated: AAA

GLOBAL investment in financial technology (fintech) firms more than doubled in the second quarter of the year, compared with the first quarter, to US$8.4bil (S$11.4bil) across 293 deals, KPMG said in a recent report.

Investment in fintech in Singapore more than tripled to US$61.5mil (S$83.3mil), although there were only four deals, compared with seven the quarter before.

Indonesian P2P Lending Platform UangTeman Secures Million During Series A Funding Round Led By K2 Venture Capital (Crowdfund Insider), Rated: A

On Monday, Indonesia-based peer-to-peer lending platform UangTeman announced it successfully secured $12 million during its Series A funding round, which was led by K2 Venture Capital, with participation from STI Financial Group and Draper Associates.

Middle East

UAE Authorities Plan SMB Crowdfunding Framework (PYMNTS), Rated: AAA

United Arab Emirates (UAE) regulators are setting out to establish a framework to guide the small business (SMB) crowdfunding market, news reports on Sunday (Aug. 6) said.

Equity crowdfunding is expected to provide $93 billion to small- and medium-sized enterprises by 2020, reports added. In the UAE, SMBs stand to gain significantly from that trend, as these businesses make up an estimated 85 percent of all UAE companies. In Dubai, that number is even higher, at nearly 95 percent of all businesses, reports added.

Meanwhile, research from the Khalifa Fund for Enterprise Development found that as many as 70 percent of small business loan applications in the UAE are rejected by traditional banks, despite efforts from the national government and the Central Bank of the UAE to promote SMB financing.

Latin America

Mexican fund invests in peer-to-peer lending network (Latin Lawyer), Rated: A

Greenberg Traurig SC in Mexico City has helped Mexican venture capital fund Ignia invest in peer-to-peer lending network Afluenta.

Africa

Why African fintech startups are becoming even more attractive for investors (Quartz), Rated: AAA

Take Flutterwave, a payments company which builds infrastructure to ease processing payments across Africa, it’s just raised $10 million in its Series A round. Significantly, the round was led by leading Silicon Valley venture capital funds Greycroft and Green Visor Capital, with participation from Y Combinator and Glynn Capital.

Fintech startups are the “most attractive,” for tech investors looking towards Africa, according to a recent report by Disrupt Africa. Nearly 20% of fintech startups tracked raised money in the last two years and in 2016, there was a 84% increase in the number of fintech startups secured investment compared to the previous year. In total, since 2015, fintech startups in Africa had raised $93 million in investment as of June 2017. Flutterwave’s raise takes that total past the $100 million mark.

In more advanced economies, fintech startups are focused on disrupting the traditional banking industry by changing how people access financial services. But in most parts of sub Saharan Africa, that’s not the case. In fact, fintech startups are typically creating products and services to plug many of the gaps which currently exist.

Indeed, as of 2014, only 34% of adults in sub Saharan Africa had bank accounts. Given the sheer size of the market which remains under-served, fintech startups are presented with a huge opportunity. And for investors, all that represents a major upside.

Authors:

George Popescu
Allen Taylor

 

How Online Lenders Can Reduce Default Rates, Increase Margins, and Remain Competitive

Paynet

In recent years, the SME lending ecosystem has evolved at a rapid pace. As more competitors entered the market, there has been an interest rate reduction across the board. After the 2008 financial meltdown, the market tilted toward a more conservative credit outlook causing default rates to fall and start-up rates to decline. SMEs employ […]

Paynet

In recent years, the SME lending ecosystem has evolved at a rapid pace. As more competitors entered the market, there has been an interest rate reduction across the board. After the 2008 financial meltdown, the market tilted toward a more conservative credit outlook causing default rates to fall and start-up rates to decline.

SMEs employ more than 50 percent of private sector employees and generate 65 percent of new private jobs. They also represent 98 percent of U.S. exporters and 34 percent of U.S. export revenue. When banks withdrew from the lending sector after the financial meltdown, alternative lenders stepped up to capture the $4.4 trillion dollar market. Still, there is latent demand for affordable pricing and a time-sensitive, hassle-free experience for business borrowers, leaving the market under-penetrated. PayNet rose to fill this need by helping lenders mitigate risk and leverage alternative credit data.

More than just a credit agency, PayNet measures the health of a business using sales, production, and other business data, provided mostly by lenders who in return gain access to an overview of global credit information.

Why It’s So Hard for Alternative Lenders to Compete

Banks have better access to customers due to regular deposits and other banking activities. Online lenders, however, must use innovative channels to reach their customers. Instead of cutthroat competition to steal each other’s business, online lenders look for creative ways to compete. One approach used involve aggregators, which act as middlemen for the lender and the borrower. Another approach is bank partnerships. For the market to grow, everyone needs a common view of the system. While there is enough business to go around, the most important thing is to build a robust system that will help the industry grow.

A slowing economy and a small secondary market are two other reasons it is hard for SMEs to access capital. A few marketplace lenders have joined the SEC, but not many. A lot of lending companies are struggling due to inability to compete at scale. Securitization is gaining momentum, but because there are so few players, it is still at a nascent stage. In recent years, the mortgage market has become more sophisticated and serves as a great opportunity for borrowers. But because of the emergence of new players, there is more standardization. It took lenders a few years to understand the importance of brand and consistency. As a result, they have now offer recognized products with more consistent terms. PayNet envisioned this long ago and developed products like the Small Business Lending Index and the Small Business Delinquency Index to help companies optimize the underwriting process.

How PayNet Solves the Problem for Lenders

PayNet has always been an advocate for equality and industry best practices. Hence, they are a member of a coalition formed by lenders in favor of transparency. PayNet intends to help the CFPB understand the small business market and lending industry disparity so the CFPB can create better regulations.

To stay true to its reputation, PayNet developed MasterScore for the alternative lending market, the first of its kind. Other companies are trying to replicate the model or make one of their own. MasterScore data was taken from FinTech companies in order to reduce the lender default rate.

Headquartered in Skokie, Ill., PayNet opened its doors in 1999. Founder Bill Phelan holds a CFA degree. Prior to starting PayNet, he managed fixed income securities for Trustmark Insurance Company. He also advised privately-held companies on acquisitions and valuations. Under Phelan’s leadership, PayNet has grown into a firm with the largest collection of commercial loan and lease payment histories. The company has collected data on more than 23 million privately held businesses in the U.S. and Canada including their cumulative GDP. Using a subscription-based model, PayNet has realized a 10x return on investment while transacting more than $200 billion in business.

Because Fintech offers quick accessibility to cash and lenders, all kinds of borrowers apply for credit. On the other hand, lenders want more loan applications. With PayNet, they can demystify borrower creditworthiness in a few minutes. All they need to do is enter a name, address, or business name and all the information they need is at their disposal.

With delinquencies on the rise and increasing default rates, there is a growing need for online lender vigilance and caution. Therefore, PayNet is a strategic product essential for lenders to ensure default rates do not destroy margins.

Written with Heena Dhir.

Author:

Allen Taylor

Wednesday October 5th 2016, Daily News Digest

Wednesday October 5th 2016, Daily News Digest

Mailbox Lending Times reviewed LendKey’s first Bellwether Report on Private Student Loans on September 14 but raised questions about the default rate graph (see page 3 of the study here). Last week, LendKey’s Salil Mehta, SVP of Credit Risk & Analytics, addressed the data in an interview with Lending Times: How does the data in LendKey’s report […]

Wednesday October 5th 2016, Daily News Digest

Mailbox

United States

United Kingdom

European Union / Switzerland

China

 

United States

Is BDC Prospect Capital looking to a tie-up with Lending Club?, (AltFi), Rated: A

Peer-to-peer and marketplace lending platforms and Business Development Companies (BDCs) have been increasingly mentioned in the same breath, now synergies may be starting to occur.

Prospect Capital, a Business Development Company (BDC) based in New York is in the process of buying Lending Club loans, according toreports.

Prospect Capital, which has a $2.9bn market capitalisation, has previously been a buyer of US platform OnDeck’s loan book. During the year ending June 30, 2016, it purchased $68.8mof small business whole loans from OnDeck.

Now, according to the reports it has entered into an arrangement with Morgan Stanley to bring a $150m book of seasoned Lending Clubloans to market.

Prospect Capital normally invests in private and mezzanine debt as well as private equity and currently has a debt to equity ratio stood at 69.5 per cent. It invests primarily in first-lien and second-lien senior loans and mezzanine debt, which in some cases include an equity component, providing capital to middle-market companies and private equity financial sponsors for re-financings, leveraged buyouts, acquisitions, recapitalisations, later-stage growth investments, and capital expenditures.

It listed on the New York Stock Exchange in 2004 and including its October 2016 distribution, assuming our current share count for upcoming distributions, has distributed $15.12 per share to initial shareholders, exceeding $2.0bn in cumulative distributions to all shareholders

Since its IPO 12 years ago, it has reported net asset value (NAV) per share of $9.62 with a current dividend yield of 12 per cent based on closing stock price of $8.48. Its last distributable income was $96.6m or $0.27 per weighted average share, exceeding dividends by $0.02 per share.

LendingClub Probe Said to Review Buyback as Laplanche Faced Loss, (Bloomberg), Rated: AAA

Wall Street’s top cop is scrutinizing whether the founder of LendingClub Corp. advocated for the company to prop up its shares without telling the board about a possible conflict of interest, according to people with knowledge of the matter.

the U.S. Securities and Exchange Commission is reviewing Renaud Laplanche’s role in a $150 million share buyback approved in February, said the people, who asked not to be named because details of the probe aren’t public. Laplanche, who was chairman and chief executive officer at the time, had pledged some of his shares as collateral for a loan and was required to put up more money if the stock slid below a certain price, the people said. As it turns out, the share rally didn’t help Laplanche. In addition, LendingClub was barred at the time from repurchasing shares until its next earnings report, the person said.

If a CEO’s personal business dealings are tied to the share price it’s “clearly the kind of thing” that should be disclosed to the board, said Jill Fisch, a corporate governance expert at University of Pennsylvania Law School.

The SEC initially opened an investigation into San Francisco-based LendingClub to review the company’s disclosures that dates on loans sold to Jefferies Group had been altered and that the board hadn’t been informed of Laplanche’s investment in a firm that posed a potential conflict. The probe has since expanded, the people said.

To avoid having to sell some of his shares to raise cash, Laplanche borrowed money from fellow director John Mack, the former chief executive officer of Morgan Stanley, according to a person familiar with the matter.

In April, LendingClub disclosed a new policy that requires executives to get approval from its general counsel and inform the board’s audit committee before pledging LendingClub securities as collateral for a loan or holding them in a margin account.

Student Loans Putting a Hole in Retirement Savings for Millennials, (Plan Sponsor), Rated: A

For many Millennials, student loans are delaying important financial decisions. The most frequently cited include saving for retirement (38.7%), buying an automobile (44.74%), purchasing a home (45.31%) and traveling (53.27%).

When asked how much student debt affects spending ability, 30.54% answered, “Very much;” 30.40% answered, “Somewhat;” and another 14.91% said “very little.” Slightly less than one-quarter (24.15%) reported that their student loan debt had no effect on their spending habits.

LendingTree’s research also offered some insight into how Millennials would treat excess funds if student loans were hypothetically absolved. Respondents said this money will go toward saving for emergencies (53.98%), buying a home (41.76%), saving for retirement (31.68%), or travel and vacations (31.25%).

According to LendingTree’s research, the average salary for employed Millennials is $48,146. When considering factors such as taxes, Social Security payments, and insurance costs, the average Millennial is taking home 70% of gross income or $2,808 per month in this example. The study also found that student loan debt consumes about 11.3% of the average Millennial’s net monthly income.

More than half (55.9%) of those surveyed have feelings of financial regret related to their post-secondary education.

These findings are from a survey of 1,338 Millennials, defined as those born between 1980 and 1995, who enrolled in at least some post-secondary education. According to the survey, 63.3% of this group graduated or will graduate with student debt, and 46.5% currently owe student loans.

Prosper Shutting Down Secondary Market For Loans Later In October, (Pymnts), Rated: A

Comment: we have covered these news extensively. However the context is very well included in this article.

The move on the part of Prosper comes at a time when the company is exploring strategic options, having hired investment banks JPMorgan and Financial Technology Partners and having disclosed it is considering selling equity in the firm. Media reports said the privately held U.S. online lender is mulling the equity raise because, in part, the firm needs to tap markets to raise more money and strengthen balance sheet holdings. Specifically, the capital would improve funding sources. Equity sales could run the gamut between minority and majority stakes. As has been noted widely in the financial press, the industry itself has been buffeted by news that has been enough to make investors shy away from buying loans.

Should Bankruptcy Stop You From Getting A Personal Loan?, (The Global Dispatch), Rated: A

Having filed for bankruptcy doesn’t make the possibility of getting a personal loan zero.

Secured Credit Cards: The First Step in How to Get a Loan After Bankruptcy.

We have two kinds of personal loans: the secured personal loan and the unsecured personal loan. As for a secured personal loan, for those with credit issues, just relinquish your property or deposit cash to the lender.

Bad-Credit Personal Loan Lenders.  You need to provide data on your savings as well as your home and car. Whether you’re going to qualify for a secured or unsecured personal loan will depend on your credit.

The Americas alternative finance market accelerates its 3-digit growth in 2015, (SMB Weekly), Rated: A

Comment: this report was published in April during Lendit. However I find it useful to sometimes step back and look at the big picture. 

In 2015 the Americas alternative finance industry grew 212% from 2014, to reach a volume of $36.49 billion, shows a benchmarking report of the Cambridge Centre for Alternative Finance (CCAF), in partnership with KPMG and the CME Group Foundation. For comparison, in 2014 it was $11.68 billion and grew 162% from 2013.

In the period 2013-2015 the alternative lenders delivered more than $50 billion in funding to individuals and businesses, with the US having the lion’s 99% share of the total volume.

The US is also the second-largest alternative market per capita, after Mainland China, with $113.43. In comparison, China’s per capita volume was $74.54. Canada, which comes in second in the Americas market, has barely $5.82 per capita.

The Latin Americas and the Caribbean regional market is negligibly small, but nevertheless has achieved a 130% in 2015, to reach $110.46 million.

Another finding of the CCAF dwells on the entrenched institutionalization of the US loan market, in contrast to the UK alternative finance market where the lenders are predominantly retail investors. Between 2013 and 2015 more than 72% of the alternative business loans and 53% of the consumer loans were funded by institutional investors. The institutional lending is even deeper entrenched in invoice trading – 84% and real estate loans – 74%. Among the institutional lenders are mutual funds, pension funds, hedge funds, family offices, asset management firms and traditional banks.

International P2P Lending Services – Loan Volumes September 2016, (P2P-Banking), Rated: AAA

Comment: Lending Times covers broker’s volume (here is the page) as well for free. 

Funding Circle, Ratesetter and Zopa had a record month. The total volume for the reported marketplaces adds up to 424 million Euro. I track the development of p2p lending volumes for many countries. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending services. Milestones in total volume originated since inception:

PayNet Releases MasterScore for Alternative Lending, (Email), Rated: AAA

PayNet, Inc., the nation’s small business credit expert, announces the release of the new PayNet MasterScore for Alternative Lending, the first ever pooled-data score for the Alternative Lending space. This score, which is a coming-of-age milestone for the industry, will help alternative finance lenders enhance their credit decisioning and increase profitability.

The over 25 million private U.S. companies constitute a $4 trillion credit market. Alternative lenders are becoming a more integral source of credit for small business growth providing over 100,000 loans totaling approximately $5 billion to small businesses in 2015.

This new score builds on PayNet MasterScore v2 by bringing in additional variables and by optimizing specifically on a population of Alternative Loans and Merchant Cash Advances originated by a wide range of Alternative Lenders.

Global M&A value climbs against decline in volume in Q3 2016, (Bureau Van Dijk), Rated: AAA

Global PE investment declines by volume and value Both the volume and value of private equity and venture capital (PE and VC) activity declined in the third quarter of 2016, with volume hitting its lowest ebb since Q4 2011, when 4,574 deals were announced. In all there were 4,713 deals worth USD 139,141 million in Q3 2016. This represents a weakening of 10 per cent in volume and 9 per cent by value from 5,252 deals worth USD 153,316 million in Q2 2016, while the decline was even steeper when compared to the same quarter in 2015 (Q3 2015: 6,577 deals worth USD 186,614 million).

The value of global mergers and acquisitions increased in Q3 of 2016, marking the second straight quarterly improvement. According to information from 

RealtyMogul’s Investors Snag 8% Dividend Payout on New MogulREIT I Income Fund (Email), Rated: A

RealtyMogul, the online marketplace for commercial real estate investing, has announced its MogulREIT I declared a $0.10 dividend for investors. This equates approximately an 8% return on an annualized basis at a $10 per share price, calculated for the period beginning August 15, 2016 and ending Sept. 30, 2016.

The 8% annualized return represents a significant premium over other, non-traded REITs, which on average achieve a 5.4% annualized dividend, according to a recent report from The Stanger Report™.

RealtyMogul.com launched the income fund in August with the aim of helping to democratize real estate investing. Structured as a real estate investment trust (“REIT”) with a minimum investment of $2,500, the fund is open to nearly all investors and offers the potential for consistent cash dividends and equity appreciation.

United Kingdom

FCA enlists University of Cambridge to review P2P market, (Professional Adviser), Rated: A

Together with the CCAF the FCA will seek to identify any changes to the nature of the industry, consumer expectations, and its place in the financial services landscape. They will also look at whether the area needs tougher regulation.

The regulator is planning to tighten due diligence rules for crowdfunding and P2P lending amid concerns over investor risk.

It said: “We are currently conducting a post-implementation review of the crowdfunding rules, to see whether the market has evolved in such a way that we need to consider changes to the rules.

Currently, P2P investor platforms do not have to adhere to specific levels of due diligence but are allowed to develop their own approach to researching the investments they offer.

Rhydian Lewis, CEO of Ratesetter Thinks Global, (WorldFirst), Rated: A

Yes, we exported our IP by launching RateSetter Australia in 2014. RateSetter Australia has a separate management team and balance sheet. We didn’t set out to launch there, but we were presented with a particularly compelling opportunity.

European Union / Switzerland

SwissLending launches real estate crowdlending platform, (Finextra), Rated: A

SwissLending, a new player within the FinTech ecosystem and the first crowdfunding platform in Switzerland specializing in loans for real estate professionals, is officially launched this week in Geneva.

China

Car financing a new bright spot in Chinese economy, (SCMP), Rated: A

The vehicle loan market has grown exponentially in China during the past decade. The outstanding amount jumped to 670 billion yuan last year, compared to 5 billion yuan in 2005, consultancy Forward Business and Intelligence said in a report.

The penetration of auto financing in China is still lagging far behind developed markets such as the United States where about 70 per cent of car buyers use loans to finance their purchases.

It was not until 2014 that a soaring number of mainlanders, particularly those aged between 20 and 40, started to use auto financing services to buy a car. Vehicle ownership is seen as a symbol of luxury and success in the country.

Car buyers in China now have access to loans from banks, auto financing firms and online peer-to-peer (P2P) lending platforms.

A quarter of Chinese car buyers have borrowed money to finance their purchases, and the percentage is set to top 30 per cent soon, according to vehicle information website Autohome.

P2P charges a higher interest rate, but it offers an alternative to banks and auto financing firms because some of the buyers are unable to secure a loan from those institutions,” said Steve Shi, a manager with Juchen Auto Trade, an auto service firm. “It’s inevitable that some loan defaults occur, but the bad-loan ratio seems controllable.”

ABS allows the financing firms to sell off their loans to other investors while freeing up more money that can be lent to new customers.

According to Fitch Ratings, the average cumulative default rate for Chinese auto ABS was below 1.5 per cent at the end of June, 2016.

“Overall, the performance of auto-loan ABS hasn’t seen major deterioration despite slowing economic growth,” Fitch said in a research report.

Fitch expects delinquency rates will edge up as economic growth is expected to drop to 6.5 per cent this year, the slowest pace since 1990.

China’s outstanding P2P loans hit record high in September, (ECNS), Rated: A

Outstanding peer-to-peer (P2P) loans in China soared 153.5 percent year on year to hit a record high at the end of September, a latest industry report showed.

Loans had reached 956 billion yuan (145 billion US dollars) at the end of September, according to P2P industry portal P2P001.com.

The average interest rate for P2P lending stood at 8.7 percent, unchanged from a month earlier and still near a record low.

Author:

George Popescu