Thursday October 10 2019, Weekly News Digest

Lend Academy

News Comments Today’s main news: Affirm debuts shopping app. Zopa profits tick upward. RateSetter recovering from loan scandal. PPDAI stock rises 7% with lift in institutional-funded loans. Oportun ends Nasdaq debut with 8% gain. Australia: RBA cuts interest rates, online lenders follow. Today’s main analysis: The Future of Finance: Marcus, Neobank, and fintech. (A MUST-READ) […]

The post Thursday October 10 2019, Weekly News Digest appeared first on Lending Times.

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News Comments

United States

United Kingdom

European Union

International

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News Summary

United States

OnDeck Survey: Economy is Top Concern for Small Businesses Ahead of 2020 Election (New Kerala), Rated: AAA

OnDeck today announced the results of a national survey of U.S. small business owners that finds economic issues are the most important factors in determining their choice for president in 2020.

  • Economic concerns arise in several dimensions, including tax policy, job growth, support for small businesses, government spending and the overall economic climate. These issues were cited as the top concerns of more than 33% of those surveyed;
  • Immigration was an issue of interest for 11.3% of small business owners surveyed, ranking second behind the economy as a concern.
  • 57% of small businesses surveyed said they were either Very Optimistic or Somewhat Optimistic about the economic outlook for their businesses;
  • 93% of those surveyed said they plan to vote in the 2020 election.
  • 60% of small business owners surveyed said they already know who they plan to vote for in the 2020 presidential election.

Affirm debuted a new app encouraging customers to start their shopping journeys with it (Business Insider), Rated: AAA

The point-of-sale (POS) financing provider 

Source: Business Insider

Affirm ships new shopping and bill splitting app (Finextra), Rated: A

Affirm’s app also allows consumers to pay at any brick-and-mortar store that accepts Apple Pay or Google Pay, which is increasingly important as 24% of consumers want the flexibility to look online and shop in-store.

Those with Apple Pay or Google Pay enabled have also seen up to 14% of transactions driven in-store, making the Affirm app a rare omnichannel solution for customer acquisition.

Max Levchin On The Future-Present Of Everywhere POS Lending (PYMNTS), Rated: A

Since Affirm’s launch, the landscape in the POS space is radically different than it was when Affirm entered. It is, first and foremost, a much bigger and more populated space than it once was. Other startups have come to the field — AfterpayUplift and Sezzle for example — but also bigger and more established names in financial services. In the last 12 months alone SquareMastercardPayPal and Chase have all rolled out POS installment lending products or enhancements as the market continues to pick up popularity among consumers, particularly younger ones.

Latest Macro; latest from Marcus; Oportun goes IPO (PeerIQ), Rated: AAA

Q4 is off to a brisk start. The jobs report released this past Friday shows 114K in net new jobs (vs expectations of 120K), generally flat wages, and a drop in the unemployment rate to 3.5%.

On the one hand, the US economy is near ‘stall speed’ – around 1 to 1.5% growth rate.

Source: PeerIQ, The Daily Shot, Conference Board

House prices are expected to rise 5.8% over the next year due to low mortgage rates.

Two major financing announcements this week. FinTech lender, Oportun, led by CEO Raul Vazquez, ends its Nasdaq debut with an 8% gain. The debut is notable as it represents a positive shift in the sentiment to the reception of lenders to the IPO market.

My Quarterly Marketplace Lending Results – Q2 2019 (Lend Academy), Rated: AAA

The upward trend in my returns continued in Q2, making it the fifth quarter in a row with increasing returns. My preliminary return for the 12 months ending June 30, 2019 is 6.20% (one investment is still not final), the best I have achieved since Q3 2017.

Source: Lend Academy

The Maybe-Dubious Rise of the Loans-for-Sneaker Business (GQ), Rated: AAA

Afterpay is one of a number of platforms that have sprouted up over the past couple years that are willing to float customers a couple hundred or thousand dollars to shop. In addition to it, there are Affirm, Sezzle, Klarna, and Quadpay. They are positioned as a more consumer-friendly option than credit cards, a whole host of services bent on—because this is 2019—disrupting the powers that be.

Globally, Afterpay, which launched in Australia, has over 4.6 million customers and 35,000 retail partners. In the U.S., where Afterpay only launched in May of last year, it has two million customers and is available at 6,500 retailers. Over three million people use Affirm, while another 500,000 have shopped with Sezzle.

Silicon Valley promises aside, Afterpay is, at best, a platform that allows you to take out what amounts to a small loan on an item. After an approval process—Afterpay does not check a credit score; others like Affirm do—the customer pays a fourth of the price upfront and the rest is paid off in three equal installments every two weeks.

Also new is the $1,500 limit, up from $500, that Afterpay raised after Hyde-McCormick proved himself a responsible shopper and the $87.50 payments currently due every two weeks.

What Happened to Borro? (deBanked), Rated: A

In 2013, Borro, an innovative online lending company that was poised to disrupt pawn shop lending forever, invited me to their stylish offices at 767 Third Avenue in Manhattan.

Borro made $50 million worth of such loans in 2013 and doubled that number in 2014.

Auto, home equity are soft spots in consumer lending (American Banker), Rated: A

In its quarterly report that tracks consumer delinquency trends, the American Bankers Association said that 30-day past-due rates ticked up in eight of 11 categories in the second quarter when compared with the first quarter, but stressed that delinquencies remain well below historic norms.

Finally! Maker Offers Multi-Collateral DAI Lending (Cryptovest), Rated: A

Maker DAO, the most active decentralized finance app on the Ethereum network, has announced a date for its long-awaited multi-collateral DAI generation. According to observers, November 18 may be the date MKR starts accepting other assets as collateral.

Multi-collateral DAI creation has the potential to be riskier in comparison to ETH-based models. Currently, Maker is deliberately over-collateralized at above 300%, with the minimum at 150%, due to the high volatility of crypto assets.

A $ 40 Billion Pile of Leveraged Loans Is Battered by Big Losses (Bloomberg), Rated: A

Loans tied to more than 50 companies have lost at least 10 percentage points of face value in just three months, according to data compiled by Bloomberg. Some have dropped a lot more, with lenders lucky to get back just two-thirds of their investment if they tried to sell.

It’s hardly a full-blown apocalypse for the junk-rated leveraged loan market, which totals $1.2 trillion.

Energy is the hardest-hit sector on the list, with more than $12 billion of loans falling more than 10 cents on the dollar. Consumer and health care follow, comprising around $8 billion and $5 billion of loans outstanding, respectively.

Source: Bloomberg

Ruling cuts short debt collectors’ victory lap over CFPB proposal (American Banker), Rated: B

Under the CFPB’s May proposal, debt collectors could have unlimited contact with debtors through email and text messages, though consumers could opt out of such communications. Additionally, collectors could satisfy disclosure requirements with a hyperlink embedded in an email that takes consumers to a description about how they can dispute a debt.

The SEC is hiring a chief data officer (Business Insider), Rated: B

The Securities and Exchange Commission is hiring its first chief data officer, according to a job posting for the role.

Voyager Selects Celsius Network to Manage Certain Assets (AP News), Rated: B

Voyager Digital, LLC, a subsidiary of publicly-traded Voyager Digital (Canada) Ltd (Ticker VYGR.CN), an industry-leading best execution crypto asset broker, today announced a partnership with Celsius Network, in which Celsius will manage a portion of Voyager’s digital assets.

United Kingdom

Zopa’s P2P profits tick up but group losses widen due to heavy investment in bank (P2P Finance News), Rated: AAA

Zopa Group – which incorporates the P2P platform and upcoming digital bank – reported a pre-tax loss of £18.295m for the year ended 31 December 2018, compared to a pre-tax loss of £5.536m the previous year.

Zopa: nine in 10 shoppers confused by car finance options (Verdict), Rated: A

In a survey of 2,000 consumers, 47% of people who had recently bought a car with finance are unable to identify which type of finance deal they signed up for. Zopa estimates that the average car buyer could save up to £11,000 over the course of their lifetime by working out the best finance deal available.

Ratesetter recovering from loan scandal (The Times), Rated: AAA

One of Britain’s largest peer-to-peer lenders appears to be recovering from a toxic loan scandal after its latest results showed it edging towards breaking even.

Accounts for Ratesetter, which links 56,000 ordinary investors with consumer and business borrowers, show that pre-tax losses narrowed by 69 per cent in the year to March.

Wonga customers’ average compensation payout may be just £118 (The Guardian), Rated: A

Customers who were mis-sold loans by the collapsed payday lender Wonga are expected to receive less than 10% of what they are owed in compensation after administrators revealed that only £41m will be put aside for claimants.

Payday loan alternative Savvy secures £20 million funding facility (Finextra), Rated: A

Stockport and Wilmslow based fintech company Savvy.co.uk is to create 25 jobs after securing a £20 million investment.

The funding, from London-based Cairn Capital, will increase lending capacity for the company who provide an ethical alternative to pay-day loans.

MEET THE FRENCHMAN WHO WANTS TO SOLVE THE UK’S HOUSING CRISIS (Business Leader), Rated: A

WHY DID YOU START BLEND NETWORK?

I started working in the financial industry as an FX trader before moving to trading gold and copper, both much more inefficient markets than FX. I realised that the UK property market was a hugely inefficient market in the sense that lenders and borrowers are not meeting. On the one hand, you have very experienced property developers across the country who are trying to access funds to build homes but traditional lenders are no longer active in providing development finance.

Instead, we lend in places such as Coventry, East Anglia, Doncaster, Northern Ireland. Northern Ireland is a very good example of our strategic approach to lending. Last year, we did around 80-85% of our business in Northern Ireland.

Crowdfunding a start up options explained for businesses and investors (What Investment), Rated: A

Crowdfunding a start up brings to mind the statement ‘Nothing worth having comes easy’, never truer than in the case of launching a start-up. Getting a new business off the ground will often require capital. Something which a lot of people don’t know how to go about getting.

These are:

  • Reward based crowdfunding;
  • Equity based crowdfunding;
  • Debt based crowdfunding, and
  • Donation based crowdfunding.

Landlords wary of tax changes (Money International), Rated: A

Half of the 200 landlords approached agreed tax changes and tougher mortgage borrowing criteria have thwarted their plans to buy more properties, while 15% admitted they had been put off buying homes to rent.

A third who still wanted to invest are considering a switch from buy to let to peer-to-peer lending secured against property, while 8% have already done so.

China

PPDAI Stock Soars 7% on Increase in Institutionally-Funded Loans (Capital Watch), Rated: AAA

The stock in PPDAI Group Inc (NYSE: PPDF) closed 7% higher on Wednesday, at $2.83 per American depositary share, after it announced a positive trend in funding of loans by its institutional partners and increased loan origination volume.

For the third quarter, the Shanghai-based company, which operates an online consumer finance marketplace, said in a statement on Wednesday that the volume of loans facilitated by its institutional funding partners jumped to $2.64 billion, up 91% from the second quarter. Total loan origination volume was above PPDAI’s guidance, it said, as it reached $3.51 billion, up 14% from the previous quarter.

European Union

What we learned at this year’s LendIt Fintech Europe (Business Insider), Rated: AAA

At the conference, Business Insider Intelligence identified four emerging themes that we expect to set the tone for the space for the next year: further proliferation of partnerships between banks and fintechs, increased focus on digital banks’ sustainability, accelerated innovation and disruption from small- and medium-sized business (SMB) lenders, and more challenges ahead for the UK’s P2P lenders.

  • CYBG bank and price comparison site GoCompare recently partnered to offer an energy compare and switch service for all of CYBG’s B customers.
  • Barclays bank partnered with SMB finance fintech MarketInvoice last year to give Barclays’ SMB clients access to MarkeInvoice’s solutions. 
  • French Banking-as-a-Service platform Treezor was acquired by Société Générale last year, as the bank looked to enhance its ability to innovate and decrease time to market.
Source: Business Insider

Linked Finance launches ‘Beyond Brexit’ business loans (Bridging and Commercial), Rated: A

The new 18-month loan period will allow borrowers to access working capital facilities of up to €300,000 (approximately £265,194) in just 24 hours.

ID on track to double revenues as it eyes €300m+ of revenue within 2 years (Fintech Finance), Rated: A

ID Finance, the fintech operating in Europe and Latin America, saw revenue growth of over 100% in the first 9 months of 2019 and is on track to double its revenues to €90m revenue this year. The data science, credit scoring and digital finance company is now planning its first equity crowdfunding round via Crowdcube as it targets €300m+ of revenue within 2 years.

Binance Launches New Lending Program Phase (CoinCodex), Rated: A

The Binance cryptocurrency exchange has launched the latest phase of its relatively new lending program. For the program’s eighth installment, Binance is sticking with the model of short-term loans, as users only have to commit their crypto for 14 days.

International

A Guide to What’s Happening in the Fintech Revolution (Bloomberg), Rated: AAA

These underbanked markets, led by countries in Asia and Africa, have inspired fintech innovation that’s leapfrogging the technology available in the developed world. Ant Financial Services Group’s Alipay and Tencent Holdings’ WeChat Pay in China, Paytm in India, and Safaricom’s M-Pesa in Kenya are some well-known examples.

Source: Bloomberg

Take Facebook Inc.’s plan to launch a digital currency called Libra in 2020. The social network’s gigantic reach—more than 2.4 billion active monthly users—could draw a much wider audience to Libra than has used previous cryptocurrencies. For instance, global remittances by migrants reached a record $689 billion last year, according to the World Bank.

Source: Bloomberg

San Francisco-based 500 Startups staked 43 such companies in the 12 months ended June 30.

Goldman’s $ 1.3B Marcus burn, Neobank £200MM loss; plus 14 short takes on top developments (Lex), Rated: AAA

Goldman is losing $1.3 billion on Marcus, trying to build a Fintech leader. Etrade is going to lose $75 million from cutting trading fees to $0 to keep up with Robinhood. Revolut is losing £35 million on £60 million in revenue, with another £140 million burned by Atom, Monzo, Tandem, and the rest.

Source FT Research and Future of Finance

Generally speaking, from a deposit point of view, these are still all small businesses at £1 billion in assets (e.g., Betterment manages $20 billion).

Source: ARK Invest and Future of Finance

The first is that the Robinhoods and Monzos of the world are 10x overpriced relative to the payments apps. I can sort of buy this — though money in motion is way easier to capture than money at rest. The second is that venture investors think a finance user is worth $1,500 in a digital bank.

Source: Future of Finance

Blockchain: the future of finance (Financier Worldwide), Rated: A

Recent examples of blockchain’s impact on financial markets go well beyond these initial applications or P2P lending or crowdfunding.

The first wave of applications in finance and banking is being driven by easily achievable gains in actively traded assets.

MasterCard incorporated a blockchain payment system providing vendors real time, lower cost settlements on cross-border transactions. Representing a consortium of more than 40 of the world’s largest banks, fintech firm R3 launched a payment system built on DLT platform Corda, to expedite intra-bank transfers.

St. Regis Aspen, a Colorado resort, is a partnership formed with a crowdfunding site, Indiegogo, that in lieu of a traditional IPO completed a private placement via DLT financing real estate. This sale of ‘tokens’ – fractional interests in the underlying property – raised $18m, compliant with securities laws.

Australia

Hot home loan rates starting with a 2 (mozo), Rated: AAA

The RBA has cut official interest rates for the third time this year, and already a handful of lenders have responded by slashing rates across their range of variable rate home loans. Right now, if your home loan doesn’t have a ‘2’ in front of it, you’re missing out.

loans.com.au jumps on October RBA home loan rate cut party (mozo), Rated: AAA

The online lender has announced its response to the 0.25% drop in the official cash rate though, with loans.com.au taking 0.15% off a number of variable rate home loan offers for both owner occupiers and investors.

The changes, which come into effect on October 17, will have an impact on a number of  loans.com.au home loan offers including:

• Essentials Variable loan – reduced by 0.15% with rates now as low as 3.04% (3.06% comparison rate*).

• Smart Home Loan – reduced by 0.15% with rates now as low as 2.88% (2.90% comparison rate*).

• ZIP Home Loan – reduced by 0.15% with rates now as low as 3.08% (3.10% comparison rate*).

• Offset Variable loan – reduced by 0.15% with rates now as low as 3.12% (3.14% comparison rate*).

OnDeck appoints Robbie Fidler as new national broker chief (IT Wire), Rated: B

Online SME lender OnDeck Australia has appointed experienced commercial lending operator Robbie Fidler as its national broker channel manager.

Asia

SPV 2030: Sharing of risks and reward (The Malaysian Reserve), Rated: A

The growth and success of peer-to-peer (P2P) lending is a testament of the viability of risk-sharing contracts, where the investors take on some risks (for higher return) from the ventures they are financing. This way, finance will be grounded in the real economy, which is another core principle of Islamic finance.

MENA

Beehive funds first SME in Bahrain (Arabian Business), Rated: AAA

Dubai-based Beehive, the region’s first regulated peer-to-peer lending platform, has funded its first SME in Bahrain.

Canada

BFS Capital Opens New Data Science and Engineering Hub in Toronto (Financial Post), Rated: B

BFS Capital, a leader in small business lending, has officially launched a data science and engineering hub in Toronto as the company accelerates its plans to develop best-in-class digital financial products for small businesses across the globe.

Authors:

George Popescu
Allen Taylor

The post Thursday October 10 2019, Weekly News Digest appeared first on Lending Times.

Friday May 25 2018, Daily News Digest

The likelihood that business would choose fintech over banks

News Comments Today’s main news: Prosper qualifies borrowers up to $40K. GreenSky completes largest fintech IPO of the year. RateSetter hits $2.5B in lending. Lebashe increases RainFin stakes to 75%. Today’s main analysis: Peter Renton’s quarterly MPL results. Today’s thought-provoking articles: Alternative loan customers may perform well on traditional credit products. Banks, credit unions, and alternative lenders. How Ashton Kutcher […]

The likelihood that business would choose fintech over banks

News Comments

United States

United Kingdom

China

International

Other

News Summary

United States

Prosper Introduces Loans Up To $ 40,000 For Borrowers (Prosper Blog) Rated: AAA

Today we’re pleased to announce that Prosper now offers qualified borrowers access to loans up to $40,000.

GreenSky Completes Largest Fintech IPO of the Year (Lend Academy) Rated: AAA

There is a lot that sets GreenSky apart from many of the fintech companies that exist today. The biggest differentiator is that the company is profitable and runs a high margin business. In fact, the company has been profitable for the last five years. They reported $139 million in net income on revenues of $326 million last year. They also have a highly differentiated, boots on the ground model to originating loans, empowering contractors to offer financing to homeowners at the point of sale. They also partner with other types of merchants to offer financing. GreenSky only holds a small portion of loans on their own balance sheet with most loans being funded through around 15 bank partners.

Segment of Population Using Alternative Loans May Perform Well on Traditional Credit Products (Globe Newswire) Rated: AAA

Two-thirds of consumers active in the alternative loan market fall in the subprime risk category, the riskiest of all credit tiers. Yet, a new TransUnion (NYSE:TRUstudy found that many of these consumers perform well when opening traditional credit products such as credit cards, auto and personal loans.

TransUnion studied over five million consumers who originated a traditional credit product between Q2 2015 and Q1 2016 and measured their performance 12 months after originating the loan. Of the over five million consumers, approximately 450,000 (or 8%) were present in TransUnion’s alternative lending database. TransUnion then compared the performance of the alternative loan population to those consumers who were not seeking or did not possess an alternative loan product.

The study corroborated that many alternative loan borrowers do present greater risks on traditional loans. However, there is a material subset of this population that would present reasonable risks on an auto loan or credit card, among other traditional products.

For instance, in the near prime risk tier (consumers with a VantageScore 3.0 credit score of 601-660):

  • Approximately 14% of those borrowers who possessed only one short-term loan went 90 or more days past due on a traditional account 12 months later.
  • The delinquency level declined to less than 12% when a consumer possessed two alternative loans.
  • The delinquency figure dropped even further to around 9% when a consumer had eight or more alternative loans over the course of seven years.

Near Prime Consumers with Strong Alternative Loan Payment History Perform Better on Traditional Loans

Number of
Satisfactory
Alternative
Loan
Accounts
0 1 2 3-4 5-6 7-8 9-10 11+
Ever 90+
Days Past
Due in 12
Months on
Traditional
Loans
18 % 11 % 11 % 11 % 10 % 9 % 8 % 8 %

Comparing Origination Activity of Alternative Loan Borrowers to the Rest of the Population

Approximately 26% of alternative loan borrowers who originated a traditional loan product in the study opened an auto loan and 50% took out either a personal loan or auto loan. This latter statistic compares favorably to the 37% origination rate for the rest of the population in the study.

From a supply perspective, traditional finance companies are providing by far the most loans to alternative lending consumers, with a market share of 59%. However, credit unions (9%) and FinTechs (3%) supply about 12% of such loans to this credit population.

Five Banks and Credit Unions Rocking The Small Business Market (The Financial Brand) Rated: AAA

FIS found that more than one-quarter (27%) of small businesses in the U.S. are using alternative lenders like these. Among Millennial business owners, that percentage is double (48%). And yet only 7% say they are using these platforms for lower interest rates; in most cases, banks and credit unions offer better rates. FIS also found that small businesses have been turning to non-bank financial apps to make B2B payments.

In research conducted by ath Power Consulting, two-thirds of small business owners said they would consider switching to a competing banking provider if it offered products and services to help them better manage and grow their business, and over half (54%) would consider switching to a non-bank alternative for the same reasons.

Source: The Financial Times

Digital Federal Credit Union and offers a service to small businesses to raise capital and give its members an opportunity to invest in community business. The credit union has partnered with GrowthFountain, a funding portal of crowdfunding solutions. Tennessee Valley Federal Credit Union has also done the same thing.

San Francisco startup Seed is a free mobile-only banking service for small businesses, who can get a checking account and a debit card through Seed’s partnership with The Bancorp and have access to bill payment, mobile check deposit and ACH and wire transfers. Seed is sort of like Mint and QuickBooks except that Seed directly partners with a FDIC-insured bank (like how Simple started out). There’s not a physical checkbook in sight.

My Quarterly Marketplace Lending Results – Q1 2018 (Lend Academy) Rated: AAA

My preliminary return of 4.70% is close to where it was last quarter but still down. I don’t expect my final Lend Academy P2P Fund return to increase this number so I am still stuck in the downward trend of returns.

My six original accounts at Lending Club and Prosper have all been open for at least six years so they are very mature accounts that have experienced several turns of capital as I have kept reinvesting over the years. The returns for the past year are still bad at 2.34% as I continue to pay for poor underwriting performance in 2015 and 2016 at both companies. When you see today that you can get 3% on a 10-year Treasury Note a sub 3% return is just not acceptable for an unsecured consumer loan.

Source: Lend Academy

SoFi finds new downtown San Francisco office a talent magnet as it expands services (San Francisco Business Times) Rated: A

San Francisco-based SoFi said a downtown San Francisco office it picked up this year through an acquisition is paying an unexpected dividend: greater interest from engineers that the fintech wants to hire.

SoFi has 44 engineers at the company’s downtown San Francisco office at 222 Sutter St, consisting of almost 15,000 square feet on one floor. Another 40 or so employees float between SoFi’s downtown office and Presidio headquarters.

How [and why] I invest in startups (TechCrunch) Rated: AAA

A lot of venture funds try to optimize for returns. They run complex ratio economic models to determine what their diluted value will be at the end of the life cycle of the optimal and non-optimal case of every given company.

What I look for in founders

I don’t have a magic formula, but there are four important factors that must all check out for me to invest in a founder.

  1. Domain Expertise
  2. Grit
  3. Purpose
  4. Charisma

Amazon’s Finance Ambitions Are Drawing Attention From the Fed (Bloomberg) Rated: A

Fed Vice Chairman Randal Quarles, the U.S.’s most influential banking watchdog, is monitoring the potential for disruption to the industry and has expressed concern about how tech companies could provide financial services outside of regulators’ oversight, according to people who’ve spoken with him privately. Quarles hasn’t yet made any moves to intervene and the Fed’s influence would be limited.
Should the Fed get involved in the debate, it could be welcome news for traditional banks, who view Amazon and other technology companies as potential threats that enjoy fewer regulatory constraints. The companies are increasingly encroaching on lenders’ business, as evidenced by Amazon’s recent interest in offering a product akin to checking accounts.

Autotrader and Kelley Blue Book Team with LendingTree to Empower Shoppers with Auto Lending Options (PR Newswire) Rated: A

Securing vehicle financing in advance can save car buyers both time and money on their car-shopping journey. With this in mind, Autotrader and Kelley Blue Book, both Cox Automotive companies, have teamed with LendingTree. LendingTree’s auto finance marketplace provides each site’s visitors simple and easy online financing that can be used for new and used cars and trucks, anywhere in the United States.

Plenty of payday loan customers have good credit: TransUnion (American Banker) Rated: A

When Liz Pagel and Matt Komos began analyzing a slew of alternative credit data gathered by FactorTrust, an alternative credit bureau TransUnion acquired last year, they sought to understand the behavior of consumers who use payday loans, pawnshop loans, auto title loans, rent-to-own arrangements and “buy here, pay here” credit.

But 12% turned out to be prime and super prime. Only 3% were unscored.

The researchers then looked at what other credit these short-term borrowers have and found 75% have traditional credit, too.

Developers could make bank from Dodd-Frank rollback (The Real Deal) Rated: B

New legislation passed by the House of Representatives would relax restrictions on thousands of smaller lenders, potentially opening up the spigot for developers seeking commercial loans. The bill, which is awaiting President Trump’s signature, would remove provisions of the 2010 Dodd-Frank Act that many community and regional banks had deemed too costly and unfairly burdensome.

14 Chicago tech companies made Inc.’s 2018 Best Workplaces list (Built In Chicago) Rated: B

OppLoans is an online lender that uses a data-driven credit-scoring algorithm to provide loans to consumers who can’t access credit from traditional institutions. OppLoans is one of the fastest-growing tech companies in Chicago and has been named to the Inc. 500 two years in a row.

 

 

Fundbox Named “Best Overall Business Lending Company” In 2018 FinTech Breakthrough Annual Awards Program (PR Newswire) Rated: B

 Today Fundbox,  a leader in credit and payments for small businesses serving other businesses (SMB2B), announced that it has been selected as winner of the “Best Overall Business Lending Company” award by FinTech Breakthrough, an independent organization that recognizes the top companies, technologies and products in the global FinTech market today.

“We are delighted to recognize Fundbox for one of our program’s marquee awards, the Best Overall Business Lending Company award, an uber-competitive award category for our program with many compelling companies nominated,” said James Johnson, Managing Director, FinTech Breakthrough. “Fundbox stood out from the competition with its artificial intelligence-based underwriting platform. By fully automating the underwriting process with a data-driven risk model, Fundbox promises to underwrite faster, more cost-effectively and with greater accuracy than many other lenders – opening up lending possibilities for more customers. Congratulations to the entire Fundbox team for their industry recognition with our 2018 FinTech Breakthrough Award distinction.”

United Kingdom

RateSetter hits £2.5bn of lending (Peer2Peer Finance) Rated: AAA

The peer-to-peer lender, which launched in 2010, said 65,000 people have RateSetter investment accounts, financing more than 460,000 borrowers.

Investors have lent more than £1.55bn to individuals and almost £950m to businesses and have earned an average annual return of 4.4 per cent.

ArchOver launches Innovative Finance ISA to UK investors (Global Banking & Finance) Rated: A

ArchOver, the peer-to-peer (P2P) business lending platform, is helping British investors make the most of their annual tax-free allowance with the launch of its Innovative Finance ISA (IFISA). ArchOver’s IFISA service offers investors premium credit control and security, proven by ArchOver’s no-loss rate. It allows investors to invest directly in successful businesses, earning tax-free interest of up to 10% p.a. – far more than the average return on a cash ISA.

OakNorth: Brexit creates opportunity to reform banking regulation (AltFi News) Rated: A

OakNorth has called on the Treasury to use Brexit as an opportunity for regulatory reform in banking.

Responding to the Treasury Select Committee’s inquiry on SME finance, the bank said that there should be more proportionality between challenger banks and incumbents.

Mayo-based Doherty Menswear successfully raises €45,000 in peer-to-peer loans (Mayo Advertiser) Rated: B

To date, €1,012,000 has been raised through Linked Finance’s online lending platform (www.linkedfinance.com ) to facilitate business growth in Mayo, for 29 businesses.

Two more hires for ThinCats amid company growth (Peer2Peer Finance) Rated: B

PEER-TO-PEER lending platform ThinCats has appointed two new sales and marketing executives, as its hiring spree continues.

The alternative finance specialist has named Tony Smedley (pictured) as head of sales operations, and Richard Wilson as head of marketing, as part of a new push to “ramp up the provision of vital funding for small- and medium-sized enterprises (SMEs).”

China

China Rapid Finance Announces Preliminary First Quarter 2018 Results (PR Newswire) Rated: AAA

China Rapid Finance Limited (“China Rapid Finance” or the “Company”) (NYSE:XRF), operator of one of China’s largest consumer lending marketplaces, today disclosed preliminary financial results for the first quarter of 2018.

The Company expects to report a net loss in the range of $25 to $30 million, the majority of which consists of approximately $16 million of one-time expenses: 1) non-recurring expenses associated with preparing for registration; 2) write-offs related to receivables and amortizations; 3) non-cash accounting charges related to adoption of the new GAAP standard for revenue recognition (ASC 606); and 4) one-time costs associated with a pilot funding program that was discontinued due to regulatory changes.

Yirendai Reports First Quarter 2018 Financial Results (PR Newswire) Rated: AAA

In the first quarter of 2018, Yirendai facilitated RMB11,956.7 million (US$1,906.2 million) of loans to 174,128 qualified individual borrowers through its online marketplace, representing a year-over-year growth of 65%; 23.1% of loan volume were generated by repeat borrowers who have successfully borrowed on Yirendai’s platform before; 72.5% of the borrowers were acquired from online channels;  100% of the loan volume originated from online channels was facilitated through mobile.

In the first quarter of 2018, Yirendai facilitated 214,231 investors with total investment amount of RMB11,427.6 million(US$1,821.8 million), 100% of which was facilitated through its online platform and 95% of which was facilitated through its mobile application.

In the first quarter of 2018, total net revenue was RMB1,592.7 million (US$253.9 million), an increase of 56% from prior year; net income was RMB278.9 million (US$44.5 million), a decrease of 21% from prior year and adjusted net income in the first quarter of 2018 was RMB668.5 million (US$106.6 million), an increase of 91% from prior year.

The fuse that could light China’s debt bomb (Financial Review) Rated: A

A financial planning manager in a major Shanghai bank branch points to a flickering computer screen displaying a list of wealth management products for customers wanting a higher yield to normal deposits.

For a deposit of 100,000 yuan ($20,600), he recommends a “low risk” product with an interest rate of 4.25 per cent over one year. Alternatively, the customer can opt for a riskier 4.75 per cent yield but there is no guarantee they will get any of their money bank. The customer is advised to act fast as yields are falling rapidly following closer government scrutiny of China’s savings products since March.

European Union

New Robo.cash P2P Lending & Millennials Research & 4M€ Milestone (Crowdfund Insider) Rated: AAA

Robo.cash’s research shows that Millennials are steadily taking over the leading position from the older generation of investors. Six months ago, the average age of investors of the platform was 38 years, and the age groups were distributed as follows: Silent generation (73-90) — 0.8%; Baby boomers (54-72) — 9.5%; Generation X (38-53) — 38.6%; Millennials (22-37) — 50.3% and Generation Z (18-21) — 0.8%. Today, the typical investor has grown younger to 37 years old due to the increased share of Millennials — 53.9% and Generation Z — 1.8%.

Source: Crowdfund Insider

Dublin-founded Future Finance agrees £100m debt facility (Irish Times) Rated: A

Future Finance, a Dublin-founded student loan specialist that recently secured €40 million in funding, has signed a £100 million (€114 million) debt facility.

The deal with alternative asset management firm, Waterfall Asset Management, which includes an option to participate in a further £150 million (€171 million) extension, will enable the company to grow its student lending business further.

International

What the Blockchain Means for the Future of Small Business Funding (Business.com) Rated: AAA

Business financing has always been a thorny issue for many small and medium-sized businesses (SMBs), and is often cited as one of the reasons behind the morbid failure rates for new businesses. One report found that about 29 percent of failed businesses identified the lack of working capital as a major reason for failure, second only to the lack of market demand for their products or services.

Here are a few specific ways the blockchain can be used to bolster funding for SMBs.

1. P2P lending

The blossoming crypto market is also helping fan the flames of disruption for P2P business lending. Earlier this month, Ripple, the company behind the third-largest cryptocurrency, XRP, announced plans to push the use of XRP into other industry segments outside of P2P payments and banking, including the P2P lending industry.

2. Using blockchain and big data to improve existing systems

Wish Finance, a blockchain-based lending platform for SMBs, is using the blockchain to help improve traditional risk scoring systems while providing a simple platform for repayments.

3. ICOs and SMB funding

But as investors become wiser and as trust becomes a permanent feature of the blockchain, there’s a growing opportunity for SMBs with solid business models to cash in.

Africa

Budding SA bank buys peer-to-peer lending firm RainFin (Business Tech) Rated: AAA

Johannesburg-based Lebashe will boost its holdings in RainFin by 24% to 75% for an undisclosed sum, the company said in an emailed statement on Thursday. RainFin, the largest peer-to-peer lender in South Africa, bought back the 49% held by Barclays’s South African unit, with Lebashe acquiring its 51% stake in February last year.

Asia

Singapore’s GIC emerges as most active Asian PE investor in Q1 (Deal Street Asia) Rated: AAA

Singapore’s sovereign wealth fund GIC completed at least 11 private equity deals in the first quarter of this year, making the $344-billion fund the most active Asian PE investor during the period.

GIC joined other investors in sealing two of the biggest investments of the quarter, according to a PitchBook report. It participated in the $5.5-billion buyout of Denmark’s Nets A/S by partnering with private equity firm Hellman & Friedman, and in the $2.5-billion investment in FirstEnergy in January.

Canada

IOU Financial Inc. Releases Financial Results for the Three-Month Period Ended March 31, 2018 (Benzinga) Rated: AAA

IOU FINANCIAL INC. (“IOU” or “the Company”) (TSXV:IOU), a leading online lender to small businesses (IOUFinancial.com), announced today its results for the three-month period ended March 31, 2018.

  • Net earnings on an IFRS basis and adjusted net earnings amounted to $0.8 million in Q1 2018, the second consecutive quarter with positive earnings for the Company.
  • Loan originations increased 11.2% to $24.5 million compared to the same period in 2017.
  • Provision for loan losses decreased 50.6% to $0.9 million in Q1 2018 driven by measures taken to reduce defaults.
  • Opex decreased 23.1% to $1.9 million for the first quarter of 2018

Authors:

George Popescu
Allen Taylor

Tuesday March 6 2018, Daily News Digest

credit card charge offs

News Comments Today’s main news: Is Amazon about to partner with JP Morgan Chase? Elevate saves customers $3B over payday loan alternatives. LendInvest hosts a roadshow. Folk2Folk lenders provide 200M GBP to UK rural businesses. China issues first personal credit rating license. Today’s main analysis: Credit card losses surge at small banks. Today’s thought-provoking articles: FT Partners’ CEO monthly […]

credit card charge offs

News Comments

United States

United Kingdom

China

International

News Summary

United States

Amazon wants to make it easier to shop its website without a credit card (CNBC), Rated: AAA

Amazon is in early talks with financial institutions including J.P. Morgan Chase to help launch checking account-like products, aimed at younger customers and those without bank accounts, The Wall Street Journalreported Monday.

More than a quarter of U.S. households have no or limited access to checking and savings accounts. Unbanked doesn’t necessarily mean unconnected, about 6 in 10 unbanked consumers have a smartphone, according to the Pew Charitable Trusts.

New prime subscriptions flattened in the third quarter of 2017, according to analysts at Morgan Stanley. Another survey by Piper Jaffray in June said that 82 percent of U.S. households with more than $112,000 in annual income are already Prime members. Its reach is the lowest among those that make less than $41,000 a year.

In November, it announced that shoppers at 7-Eleven stores nationwide could deposit as little as $15 and as much as $500 into an Amazon account through its “Amazon cash” program. Shoppers can then use that cash to shop on Amazon. Nearly one-half of the U.S. population lives within one mile of a 7-Eleven store.

Will Amazon Pitch Financial Advice To Millennials? (Financial Advisor), Rated: A

If Amazon is successful in creating a banking relationship with its vast customer base of millennials, can an investment advice platform be far behind?

Stich predicts that Amazon, a company with a $700 billion market cap, will offer three levels of investment accounts to millennials and interested customers: It could offer do-it-yourself accounts and robo-advisory accounts; and for those who want a personal advisor, Amazon could create and refer customers to a state-by-state network of select investment professionals.

Consumers interested in idea of Amazon-created cryptocurrency, survey reveals (The Block), Rated: A

More than half of consumers would be open to using an Amazon-created cryptocurrency, with Amazon Prime users even keener, according to poll findings from student loan marketplace LendEDU.

The study, which polled 1,000 consumers who had purchased a product from Amazon in the past 30 days, found 51.7% would be interested in an ‘Amazon Coin’, with the number increasing to 58.27% for Prime members, and only one in five (21.9%) saying no.

Only 17% of those polled said they would trust Amazon more than a traditional bank, compared with 23% who disagreed and 38% who said levels of trust would be about the same. Nine in 10 respondents however said that overall, they trusted Amazon to have their best interests in mind, with 52.49% answering ‘yes, very much so’ and 37.56% opting for ‘somewhat.’

Elevate Milestone: Customers Have Saved More Than $ 3 Billion Over PayDay Loan Alternatives (Crowdfund Insider), Rated: AAA

Elevate Credit, Inc. (Elevate), a tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, announced on Monday its customers have saved more than $3 billion to date, versus what they would have paid for payday loans. $1.3 billion was saved in 2017 alone.

FT Partners’ CEO Monthly Alternative Lending Market Analysis  (FT Partners), Rated: AAA

This month’s report features an exclusive interview with Keith Smith, Co-founder and CEO of Payability, a platform that provides friction-free financing to sellers operating on digital marketplaces. In our conversation with Keith, he delves into the vision behind founding Payability and the unique opportunities and strategies of lending to online marketplace sellers.

M&A
Financings
 (FT Partners Advised)
 (FT Partners Advised)
 (FT Partners Advised)
 (FT Partners Advised)
 (FT Partners Advised)

Source: FT Partners

Download and read the full report here.

A Dialogue with Peter Renton: Cryptocurrency and Beyond (deBanked), Rated: AAA

deBanked: Why did you decide to rebrand LendIt as LendItFintech?

Renton: The main reason is that we have moved beyond the online lending space.

deBanked: What about online lending? The industry has gone through a lot of changes in its relatively short history. How do you expect to see the competitive landscape change in the next year or so? What about farther out?

Renton: The online lending space has gone through a lot of changes in its short history. I feel like the biggest trend we’re seeing right now is banks launching their own platforms. Take Goldman Sachs with the Marcus online lending platform, for example. More than anything else that has happened in the history of online lending that is among the most telling for the future, I think.

deBanked: What do you see as the biggest risks for online lenders today? How can they best overcome these challenges?

Renton: As an industry, we have to focus on profitability.

Credit-Card Losses Surge at Small Banks (WSJ), Rated: AAA

Missed payments on credit cards at small banks have risen sharply over the past year, a sign that their cardholders are taking on more debt than they can handle. Their charge-off rate, or the share of outstanding card balances written off as a loss after consumers failed to pay, hit 7.2% in the fourth quarter, up from 4.5% a year ago, according to Federal Reserve data.

But they’ve especially surged at smaller banks, those outside the 100 largest by assets that have less than around $10.4 billion in assets. There, the average charge-off rate is near an eight-year high, while the 3.5% loss rate at large banks remains well below the 10.6% seen in 2010.

tZero Has Acquired VerifyInvestor for Million in Cash (Crowdfund Insider), Rated: A

Buried within the tZero Offering Memorandum for its ongoing initial coin offering were several interesting items of note. The first was the fact the SEC was in the process of reviewing the offering. Another interesting bit of information was the fact tZero has acquired a majority stake in VerifyInvestor.

 

Gina Harman of Accion (Lend Academy), Rated: A

My next guest on the Lend Academy Podcast is Gina Harman, the CEO of the U.S. Network for Accion. They are a non-profit lender with 14 regional offices around the country focused on providing funding to underserved businesses. Accion has a very consultative approach to lending so their work often involves face to face meetings with the potential borrowers. But they are also serving the entire country through online means today.

LendingPoint Launches Merchant Solutions Platform (BusinessWire), Rated: A

LendingPoint, the company working to revolutionize access to consumer credit, today unveiled LendingPoint Merchant Solutions to provide merchants and other service providers a fully integrated one-stop retail financing platform to convert more consumers at the point of sale.

LendingPoint Merchant Solutions combines the LoanHero merchant onboarding, program management and reporting technology with LendingPoint’s industry-leading credit underwriting, risk management, and customer service expertise.

Grameen America eyes banks in ambitious push to expand microlending effort (American Banker), Rated: A

Grameen America is looking for banks and social impact investors to help fuel significant growth in its microlending effort.

The plan is to double the size of its loan portfolio, and lend a cumulative total of $2 billion, over the next five years, David Gough, its chief financial officer, said in an interview.

RICO suit filed against Great Plains Lending over allegations of predatory online lending scheme (Legal NewLine), Rated: A

Vanessa C. Grainger, Beverly Kristina Miller and Lilya J. McAtee, individually and on behalf of all others similarly situated, filed a complaint on Feb. 16 in the U.S. District Court for the Middle District of North Carolina against Great Plains Lending LLC, Kenneth E. Rees, Victory Part Capitol Advisors LLC, et al. over alleged violation of the Racketeer Influenced and Corrupt Organizations Act.

THE SEC’S ICO SUBPOENA EXPLAINED (Irish Tech News), Rated: A

“The SEC typically sends a subpoena for one of two reasons: you are either a direct target of a new or ongoing investigation or you are involved somehow with an entity or individual that is under investigation,” notes William Skelley, Co-founder of William Chris, a Dubai-based consulting firm founded by David Drake and Simon Cocking.

Clayton had stated that most ICOs need to register with SEC because, like other securities that the agency regulates, they trade coins in secondary markets. However, ICO companies have shown reluctance in subjecting themselves to SEC’s oversight despite the fact that up to $8.7 billion has been raised through ICOs, based on CoinDesk data.

How Stash Invest is trying to reach the underserved (Tearsheet), Rated: A

Stash is letting its customers invest in single stocks, the company’s latest major investment product launch beyond theme-based exchange-traded funds.

Stash lets customers buy portions of shares (called fractional shares) with a minimum balance of $5.

Core Upgrade Brings Orion’s Dynamic, Time-Saving Reporting to Private Assets (BusinessWire), Rated: A

Orion Advisor Services, LLC (“Orion”), the premier portfolio accounting service provider for advisors, today announced the release of its Alternative Investment Platform (“AIP”), a tool that lets Orion advisors show their clients’ private assets as easily as their public holdings at no additional cost.

AIP lets financial advisors track and maintain alternative investment data for client assets held in private equity, direct investments, venture capital, hedge funds, private real estate, REITs, and more, with ease and efficiency. AIP lets advisors aggregate and update committed capital amounts, total cash distributions, return of capital, and commitment amounts for alternative investments of all types into client reports alongside publicly-traded assets to create a cohesive picture of the client’s net worth.

Is there a sandbox in the US’s future? (Euromoney), Rated: A

The cooperation between the FCA and the CFTC will cover information sharing, referrals and learning from proofs of concept, trials or innovation competitions.

Various agencies – including the CFTC, SEC and the Financial Industry Regulatory Authority (Finra) – oversee specific segments of the market, and for a US sandbox regime to be successful there would need to be substantial collaboration and coordination between all of these agencies.

Shinnecock Partners Publishes “How to” for Private Investors on Direct Lending (PRWeb), Rated: B

Direct lending is a new category that is reshaping the asset management and investment landscape, yet most investors see the arena as a “black box.” Shinnecock Partners, a 28-year old family office boutique with significant expertise in alternative finance and fintech, offers investors insights into the category with its recently published report: High Yield for Investors in Specialty Finance: Exploring Opportunities in Factoring and Merchant Cash Advance. Written and researched by the firm’s founding partner, Alan C. Snyder and co-author Marla Harkness, the 37-page report is a virtual blueprint for investors, RIAs, advisory firms and the new generation of innovators who have started alternative lending companies to serve a vacuum left by large banks and community banks that used to serve small and mid-size business pre-recession.

The paper covers:

  •     In-depth descriptions of both factoring and merchant cash advance (MCA) loan originators
  •     Insider lingo, so investors are up to speed when reviewing documents
  •     Regulatory history and framework
  •     Detailed investor evaluation checklists

You can access the report here: High Yield For Investors in Specialty Finance.

Fintech firms are gobbling up Manhattan office space (The Real Deal), Rated: B

Fintech firms and units of larger companies accounted for roughly 877,000 square feet of Manhattan office leasing last year, according to JLL data reported by the Wall Street Journal. That’s almost triple the sector’s total for 2014.

Venture capital funding for fintech firms has roughly doubled from 2014 to $2.2 billion in 2017, according to PricewaterhouseCoopers.

Albuquerque ranks among 10 best places for new small businesses (Biz Journals), Rated: B

Albuquerque ranked No. 8 on LendingTree’s list of the best cities for new small businesses released Feb. 27.

United Kingdom

Roadshow Announcement (London South East), Rated: AAA

LendInvest Limited, the specialist mortgage provider, announces that it has mandated Peel Hunt to arrange a series of meetings with fixed income investors in the UK and Channel Islands, commencing the week of 5 March 2018, to discuss a possible second issue of sterling denominated bonds.

Folk2Folk Lenders Provide £200 Million to Rural Businesses in the UK (Crowdfund Insider), Rated: AAA

Folk2Folk, a peer-to-peer (P2P0 lending platform for local and rural businesses, announced on Monday it has now lent £200 million, providing a valuable source of capital to hundreds of local businesses across the UK. According to the online lending, this milestone demonstrates the strong demand in the company’s Local Lending Movement as Lenders and Borrowers are attracted by Folk2Folk’s platform, providing a fair exchange that sees no difference between what Borrowers repay and Lenders receive on a monthly basis.

Folk2Folk’s lending milestone was reached thanks to a growing community of local Lenders who have placed £20,000 or above on the lender’s platform. The average lent per Lender now exceeds £65,000. Lenders receive 6.5%pa interest which is paid monthly, helping them achieve their financial goals, whether it be an additional income for retirement or funding a life event like a once in a lifetime holiday.

Exchange Platform LendingBlock Boosts the Development of the Crypto Sphere (Coinspeaker), Rated: A

Lendingblock is an outstanding representative of the “picks and shovel” business of the crypto economy. The recent announcement of an ICO by this company raises an important issue: can these followers of Gold Rush traditions achieve the same success?

Lendingblock is an open exchange platform for both borrowers and lenders of crypto currencies. The platform enables owners of digital assets to earn passive, low risk interest income, while borrowers get an opportunity get assets needed to support trading, hedging and working capital needs.

Tales of failed peer-to-peer lenders (AltFi), Rated: A

A little-known pawnbroking and property-backed peer-to-peer lending platform named Collateral has gone into administration, according to reports. Its investors are in limbo, unable to access their money or even view their accounts.

Be The Lender folded in August 2014. It was a tiny peer-to-peer platform with a focus on lending to small businesses.

GraduRates was a very small peer-to-peer lender specialising in loans to post-graduate students. In 2014, with a new regulatory regime for P2P firms looming, its founder Jonathan Webb decided to close down operations.

TrustBuddy was a peer-to-peer firm specialising in short-term loans for consumers. It is perhaps the best-known example of a P2P blow-up because it was the first big platform to go belly-up.

Finally, the complete comedy that was the Ezubao blow-up. There are many, many examples of failed Chinese P2P platforms, but Ezubao takes the biscuit.

FOS tells adviser to pay client over £30k loss through unsecured Sipp loan (Money Marketing), Rated: A

The Financial Ombudsman Service has told an adviser to compensate a client who they told to make an unsecured loan to a third party with money from their Sipp.

Mr H says O’Rourke Partnership recommended and arranged for him to make an unsecured loan of £29,325 to the third party from funds he held in his Sipp.

The loan was to be over a short-term at a high rate of interest but the loan has not been repaid and Mr H has lost his money.

An investigator reviewed the complaint, thought the advice was unsuitable and recommended that it should be upheld.

P2P lending “high  up the scale of respectability” for non-standard investments (AltFi), Rated: A

BondMason boss warns that recent FSCS fines are likely make SIPP providers extra cautious in reviewing non-standard investments.  

An estimated one million people are said to have taken up a SIPP (self-investment pension plan) since the wrapper was first introduced as part of the government’s Pension Freedom Reforms in April 2015. But squeezing non-standard investments into the still relatively-new tax wrapper hasn’t been easy.

Archover announces new non-exec director, nears profitability (AltFi), Rated: A

The peer-to-peer business lender is turning dissenters into directors with its latest hire, after hitting £60m in lending.

ArchOver, the p2p business lending platform, has announced it will be appointing Bill Johnston to its board as a non-executive director. Johnston previously was an outspoken critic of p2p lending and alternative finance in general, but says he has been swayed after seeing ArchOver succeed.

Beauty marketplace founder joins Blend Network management team (P2P Finance News), Rated: A

A FORMER Morgan Stanley banker turned beauty marketplace founder is among two appointments to the board of a new peer-to-peer lending platform aiming to become the “Goldman Sachs of P2P”.

Roxana Mohammadian-Molina, a former Morgan Stanley vice president and founder of Zeebba – which arranges at-home beauty services – has joined asset-backed property lender Blend Network as business development manager.

Metro Loans Presents Unsecured Business Start up Loans for Unemployed in UK (MENAFN), Rated: B

The UK based direct lending company has come up with unsecured business start up loans to build up new entrepreneurs.

China

China Issues its First Personal Credit Rating License (Crowdfund Insider), Rated: AAA

On February 22, the People’s Bank of China published an announcement about setting up personal credit rating agencies. According to the document, Baihang Credit Rating Co., Ltd., was granted the first personal credit rating license in China, and the qualifications of its management team (including board member, supervisors and senior management) has all received approval.

A New Ransomware Virus Could Steal All Your Alipay Balance

Recently, a ransomware virus called “unicorn 2.1” raged online. It spreads through QQ and other Instant Messengers.

Once the virus hacks the computer, it will lock all the files in the computer and requires the victim to pay ¥3 yuan by scanning with his / her Alipay. As long as the victim scans the QR code, the hacker will be able to get access to the Alipay account and steal all the balance.

International

Marketplace lending platform Maliyya scores EUR1.3 million in seed funding (Finextra), Rated: AAA

Maliyya, a fintech company engaged in development of a P2P lending and borrowing platform, has just closed the first seed investment round of USD$1.3 million from Ground1 Ventures, a private investment firm based out of UK.

Targeting to become a primary P2P lending and borrowing platform for the Middle East, North African and Asian Region, Maliyya is working on to roll out its MVP in the coming months.

How can today’s generation of lenders fight global financial crime? (LendIt), Rated: AAA

What if you lent money to someone who used it to finance an act of terrorism? Or to disguise the proceeds of drug dealing. How would this make you feel and what would it mean for the reputation of your growing business?

Today’s generation of FinTechs however, face huge technology and operational challenges – they interface with banks and therefore need ‘bank-grade’ solutions for KYC/AML but existing technology solutions struggle to fit with their unique needs. Increasingly, they are looking to new technology to help them comply with global KYC/AML standards, maintain banking relationships and ultimately fight financial crime.

What are the financial crime risks for lenders and FinTechs?

Lenders spend billions of dollars a year on compliance solutions trying to combat their financial crime risk, which broadly fall into two categories: anti-money laundering / terrorist financing (AML/CTF) risk and fraud.

Crypto’s missing pieces: Building a sustainable financial ecosystem (International Business Times), Rated: AAA

Centralized, “off-chain” cryptocurrency exchanges, including Bitfinex and Poloniex, support margin-lending. Although limited to certain customer groups, and a limited number of assets, they generally fit the definition of money markets. The downside is that investors have to trust that the exchange won’t get hacked or abscond with assets. That’s a big risk. The recent $530 million heist from the Japanese exchange, Coincheck, isn’t likely to be the last, and many customers feel that the incremental returns aren’t worth the risk. That may change as exchanges move toward adoption by the existing financial system.

Peer to peer lending protocols, including ETHLend and Lendroid, eliminate the risk of centralization by allowing users to lend to each other directly. But to an outside observer, they hardly resemble money markets with a uniform interest rate.

Peer to peer lending protocols, including ETHLend and Lendroid, eliminate the risk of centralization by allowing users to lend to each other directly. But to an outside observer, they hardly resemble money markets with a uniform interest rate.

Profile Software’s innovative solutions for banking and wealth industry (Hubbis), Rated: B

The company today has a presence in Europe, the Middle East, America, Asia and Africa, throughout those regions delivering innovative solutions to both start-ups and established banking and finance institutions, through direct communication or a reliable partners network.

Profile’s leading platform, Axia is an omnichannel wealth management  platform covering all aspects of the investment operations that modularly, and with flexibility, embrace the whole spectrum of portfolio management, with continuous updates on client onboarding, online trading, compliance issues (such as MiFID II), instruments, custodian links and bank interfaces, financial planning, and so forth. The investment management solution also supports operations in insurance firms, private banking, custody, brokerage needs and more, with a successful track record.

Authors:

George Popescu
Allen Taylor

Friday February 23 2018, Daily News Digest

Marketing Lending Return

News Comments Today’s main news: LendingClub increases interest rates. LendingTree plunges 8.13%. P2P default forecasts are on the rise. 29% of Australian consumers believe comprehensive credit reporting changes how they manage finances. Today’s main analysis: LendingTree’s Q4 and full year 2017 results. Today’s thought-provoking articles: Peter Renton shares personal quarterly marketplace lending results. 6 online personal loan lenders that […]

Marketing Lending Return

News Comments

United States

United Kingdom

International

Australia

News Summary

United States

LendingClub Increases Interest Rates on Loans, Files 8K on Change (Crowdfund Insider), Rated: AAA

Marketplace lending platform LendingClub (NYSE:LC) has filed an 8K with the Securities and Exchange Commission regarding interest rate changes.

The rate changes came into affect on February 20th with notable changes including of 0.38% for loan grade E1, 0.39% for loan grades D2-D4, 0.40% for loan grade D5, and 0.47% for loan grade E5.

LendingTree Inc. (TREE) Plunges 8.13% on February 22 (Equities), Rated: AAA

LendingTree Inc. (TREE) had a rough trading day for Thursday February 22 as shares tumbled 8.13%, or a loss of $-30.2 per share, to close at $341.05. After opening the day at $343.05, shares of LendingTree Inc. traded as high as $358.80 and as low as $326.61. Volume was 688,145 shares over 9,300 trades, against an average daily volume of 221,877 shares and a total float of 11.97 million.

LendingTree Reports 4Q & FY 2017 Results Above Guidance (PR Newswire), Rated: AAA

Fourth Quarter 2017 Business Highlights

  • Revenue from mortgage products of $67.7 million represents an increase of 22% over fourth quarter 2016.
  • Revenue from non-mortgage products of $93.3 million in the fourth quarter represents an increase of 106% over the fourth quarter 2016 and comprised 58% of total revenue.
  • Credit card revenue of $36.9 million. 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 35% over fourth quarter 2016.
  • Personal loan revenue of $25.3 million represents accelerated growth of 74% over fourth quarter 2016.
  • Home equity revenue continued its strong momentum, increasing 138% over fourth quarter 2016, and marking the ninth consecutive quarter of year-over-year growth exceeding 100%.
  • More than 7.4 million consumers have now signed up for free credit scores and savings alerts through My LendingTree, and the revenue contribution from My LendingTree grew 109% in the fourth quarter compared to the prior year period.
Source: LendingTree

Fourth Quarter 2017 Financial Highlights

  • Consolidated revenue of $161.0 million represents an increase of $60.2 million, or 60%, over revenue in the fourth quarter 2016.
  • GAAP Net Loss from Continuing Operations of $6.5 million, or $0.54 per share, was impacted by a $9.1 millioncharge related to the revaluation of deferred tax assets as a result of U.S. tax law changes and a one-time $10 million commitment to establish a charitable foundation.
  • Variable Marketing Margin of $56.1 million represents an increase of $19.3 million, or 52%, over fourth quarter 2016.
  • Adjusted EBITDA of $29.6 million increased $10.7 million, or 57%, over fourth quarter 2016.
  • Adjusted Net Income per share of $0.84 represents an increase of $0.07, or 9%, over fourth quarter 2016.
  • On November 21, 2017, our wholly-owned subsidiary LendingTree, LLC entered into an amended and restated $250.0 million five-year senior secured revolving credit facility which matures on November 21, 2022. Borrowings under the revolving credit facility can be used to finance working capital needs, capital expenditures, and general corporate purposes, including permitted acquisitions. We do not currently have any borrowings outstanding under the revolving credit facility.
  • During fourth quarter 2017, the company repurchased 33 thousand shares of its stock at a weighted-average price per share of $331 for aggregate consideration of $11.0 million. In the first quarter 2018 to-date, the company has repurchased 30 thousand shares at a weighted-average price per share of $362 for aggregate consideration of $11.0 million.
  • On February 21, 2018, the Company’s Board of Directors approved an additional $100 million in share repurchase authorization. As of that date, $116.7 million in share repurchase authorization remained available.

Full-Year 2017 Financial Highlights

  • Record consolidated revenue of $617.7 million, an increase of $233.3 million or 61%, over revenue in full-year 2016.
  • Net Income from Continuing Operations of $19.4 million, or $1.42 per diluted share.
  • Record Variable Marketing Margin of $207 million, an increase of $65.8 million or 47%, over full-year 2016.
  • Record Adjusted EBITDA of $115.1 million, an increase of $45.3 million or 65%, over full-year 2016.
  • Adjusted Net Income per share of $3.78 increased $0.80, or 27%, over full-year 2016.

My Quarterly Marketplace Lending Results – Q4 2017 (Lend Academy), Rated: AAA

The long decline in my returns has continued with 2017 by far my worst year since I began investing with LendingClub back in 2009. My overall TTM return  in Q4 2017 was 5.01% compared to 6.64% in Q3 2017 and 8.07% one year ago.

Source: Lend Academy

My main Prosper taxable account has had $50,000 of investments starting in 2010 and continuing until 2013. Since then I have just been reinvesting all earnings.

Source: Lend Academy

Lend Academy P2P Fund

While 5.04% is down considerably from where the fund has been it is still significantly better than the 2.77% I received at my six original marketplace lending accounts.

AlphaFlow

What I like about AlphaFlow is that you can quickly build a diversified portfolio of 75-100 properties.

Source: Lend Academy

7 Personal Loan Companies That Help You Pay Off Debt Quickly (Student Loan Hero), Rated: AAA

2. SoFi

The main advantage of SoFi is the fact that it’s the only personal loan company on this list that allows you to borrow up to $100,000 for debt consolidation. Additionally, SoFi doesn’t have a minimum FICO requirement, which makes it the best way to consolidate debt with bad credit. The minimum annual income is on the high side to make up for it, however.

3. Earnest

Earnest has a minimum credit score requirement, but it also has a flexible underwriting program that can take into account special circumstances. There’s no income requirement, so Earnest loans can be useful for entrepreneurs.

4. Payoff

Payoff is a personal loan company that offers loans specifically aimed at consolidating or refinancing your credit card balances. However, the maximum loan amount is on the low end for our list. If you have a smaller amount of debt to consolidate, Payoff might work for you.

5. Upstart

  • Minimum FICO score: 620
  • Minimum annual income: $12,000
  • Loan amounts: $1,000 to $50,000
  • Loan terms: three and five years
  • Interest rates: fixed
  • Credit check: soft pull for rate estimates
  • Fees: origination fee of 1% to 8%

6. LendingClub

  • Minimum FICO score: 600
  • Minimum annual income: N/A
  • Loan amounts: $1,000 to $40,000
  • Loan terms: three and five years
  • Interest rates: fixed
  • Credit check: soft pull to get a rate estimate
  • Fees: origination fee of 1% to 6%

7. Avant

If you’re concerned about your credit score, Avant might be able to help. Avant is known for its accessible debt consolidation loans.

Despite careful planning, TD Bank fumbles online banking upgrade (American Banker), Rated: A

It’s been more than a week since TD Bank first revealed that its long-planned update to its online and mobile banking systems had run into technical difficulties, and many customer are still unable to access their accounts.

A bank spokesman said Tuesday that while the company is making progress on fixing the glitch, he acknowledged that a number of its customers are still unable to use mobile or online platforms to check their accounts, transfer funds or pay bills.

Scott Sanborn Joins LendIt Fintech USA 2018 As Commencement Keynote Speaker (PR Newswire), Rated: A

LendIt Fintech, the world’s leading event in financial services innovation, announced today that Scott Sanborn, LendingClub (NYSE: LC) CEO, will open this year’s conference in San Francisco, the home of technology innovation, with a plea to refocus industry efforts on solving the financial problems of everyday Americans in an increasingly divided nation. From April 9-11, the world’s most prominent and emerging fintech CEOs will gather at Moscone Center to focus on the hot-button topics and issues exploring the future of finance.

Here’s another way Amazon and banks are collaborating (American Banker), Rated: A

SunTrust Banks, Ally Ventures — the strategic investment arm of Ally Financial — the Amazon Alexa Fund and others have raised $16 million in a new round of funding for Greenlight Financial Technology, which makes “smart” debit cards aimed at instilling sound financial habits in kids, teens and college students, the parties announced Wednesday.

ORDER UNDER SECTION 8(f) OF THE INVESTMENT COMPANY ACT OF 1940 DECLARING APPLICANT HAS CEASED TO BE AN INVESTMENT COMPANY (SEC), Rated: A

PROSPECT MARKETPLACE :
LENDING CORPORATION :
10 East 40th Street, 42d Floor :
New York, New York 10016

Above named applicant filed an application on January 4, 2018, and an amendment filed January11, 2018, requesting an order under section 8(f) of the Act declaring that it has ceased to be an investment company.

The matter has been considered and it is found, on the basis of the information set forth in the
application, as amended, that applicant has ceased to be an investment company.

Research shows first-time home buying in Sacramento is tough (ABC10), Rated: A

new study by LendingTree, a leading online loan marketplace, ranks the nation’s 100 largest cities to determine the best options for first-time homebuyers.

The worst cities for first-time homebuyers:

  1. Denver
  2. New York City
  3. San Francisco
  4. Austin, Texas
  5. Las Vegas
  6. Los Angeles
  7. Oxnard, Calif.
  8. Boston
  9. Sacramento, Calif.
  10. Miami

The best cities for first-time homebuyers:

  1. Little Rock, Ark.
  2. Birmingham, Ala.
  3. Grand Rapids, Mich.
  4. Youngstown, Ohio
  5. Winston, N.C.
  6. Dayton, Ohio
  7. Indianapolis
  8. Scranton, PA
  9. Pittsburgh
  10. Cincinnati

KBSDirect.com Launches $ 1 Billion No-Load Real Estate Fund on CrowdStreet Marketplace (PR Newswire), Rated: A

CrowdStreet, provider of the leading commercial real estate investment platform for investor acquisition and relationship management, today announced KBS, one of the largest and most respected commercial real estate companies in the United States, has launched a new $1 billion “no load” and no upfront commission growth and income properties fund on the CrowdStreet Marketplace. KBS is offering its new fund, the KBS Growth & Income Fund, through both the CrowdStreet Marketplace and its own direct-to-investor platform at KBSDirect.com, which is powered by CrowdStreet technology. KBS is taking this unique omnichannel marketing approach to provide access and engage a wider array of accredited investors seeking institutional-quality investment opportunities managed by leading professionals.

ArborCrowd Offers Investors Equity in New Multifamily Real Estate Deal (PR Newswire), Rated: B

ArborCrowd, an online commercial real estate crowdfunding company, announced the opportunity for investors to own equity interest in a multifamily property with tremendous upside potential. Tower on Ryan Park (the Property) is a 141-unit, high-rise property located in downtown Mobile, AL.

The total capitalization of the deal is $12.7 million, and ArborCrowd is raising $2.6 million of equity. The Property has a targeted 16 percent to 18 percent Internal Rate of Return (IRR) and a projected hold period of three to five years.

StraightUp launches platform for NYC real estate investing (Bankless Times), Rated: A

With the launch of StraightUp, access to high-potential, curated New York residential development projects is available to investors – those who are neither the well-connected and super-rich elite, nor large institutional investors – for the first time. The platform gives investors a new level of access, transparency and opportunity in the unbeatable, but previously unreachable world of New York City development.

NY Fed finds fintech mortgages quicker, less risky than bank loans (The Hill), Rated: A

Mortgage lenders that exclusively use online applications approve loans quicker, experience fewer defaults, encourage more refinancing and respond to demand shifts better than brick-and-mortar rivals, according to a New York Federal Reserve report released Thursday.

Fintech lending has grown annually by 30 percent from $34 billion to $161 billion, 8 percent of the market, in that time, it reported.

Small Business Loans for Women (LendEDU), Rated: A

Investment Opportunities for Women

1. Golden Seeds

If you’re looking for an angel investment firm that focuses on women, consider Golden Seeds, one of the largest and most active early-stage investment firms for women. They focus on B2B and B2C firms in tech, health care, consumer products, and service industries. They look for companies that have a scalable business model and at least one woman in the C-suite.

2. Belle Capital

This early-state angel investment fund focuses on companies in underserved markets. Belle Capital requires that you have at least one female founder in order to qualify and/or that you’re willing to recruit top female talent to your C-suite. They fund digital, mobile, internet, life sciences, medical devices, health IT, CleanTech, and other sectors.

3. Female Founders Fund

As an early-stage investment fund, Female Founders Fund aims to help companies founded by women. The companies must be based on innovative solutions that will better serve customers. The organization focuses on technology that connects buyers and sellers, e-commerce, web-enabled services, and disruptive communities.

4. Women’s Venture Capital Fund II

The Women’s VC Fund II looks to help boost women in business, making investments in early-stage, revenue-generating companies that have the potential for significant growth. It requires that companies are inclusive of women. It focuses on funding companies based on the West Coast that are working on enterprise SaaS, educational technology, and consumer internet solutions.

5. Women’s Startup Lab

If you’re looking for an accelerator to help you succeed, the Women’s Startup Lab can connect you to a group of mentors who are looking to help female-led businesses. The lab boasts a stellar track record with 90 alumnae and $50 million raised for their companies. In return for their assistance, they ask for 3 percent in equity to pay it forward.

U.S. House Passes Bill Supporting Triple-Digit Predatory Lending (South Florida Caribbean News), Rated: A

A bill passed the lower chamber that would render useless state laws in the majority of states, including the 15 states and the District of Columbia where state interest rate limits prevent payday lending. HR 3299, titled the Protecting Consumers’ Access to Credit Act, passed the House on a 245-171 floor vote.

If passed in the Senate and signed into law by President Donald Trump, the measure will preempt state interest rate caps that now limit the annual percentage rates (APRs) on loans to no more than 36 percent. These respective rate caps now save consumers an estimated $2.2 billion in fees every year.

Payday lenders strip $ 50 million per year from Colorado economy (Craig Press), Rated: B

Payday lenders charge Coloradans an average of $119 in fees and interest to borrow $392, with an average annual percentage rate of 129 percent. This removes $50 million per year from the Colorado economy, according a new report released this week by the Center for Responsible Lending.

Sykes Rejoins Chapman, Expands Renewable Energy, Securitization Practices (Monitor Daily), Rated: B

David Sykes rejoined Chapman and Cutler earlier this month as a partner in the San Francisco office, adding to the firm’s renewable energy and securitization practices.

Sykes represents lenders, lessors, issuers and investors in renewable energy and fintech transactions. He has experience in matters involving debt and equity finance transactions (including tax equity transactions), securitizations, joint ventures, asset acquisitions and divestments.

New Castle Chamber to honor Boggs with community service award (Middletown Transcript), Rated: B

Boggs regularly interacts with U.S. financial regulators on matters pertaining to global and mobile payments, marketplace lending, crowdfunding and cryptocurrency. He also represents technology and innovation companies in their public sector outreach relating to data privacy and cybersecurity, e-government, public policy and regulatory compliance.

United Kingdom

P2P default forecasts are rising, but should investors worry? (P2P Finance News), Rated: AAA

Zopa figures show its expected default rate is now higher than at the start of the financial crisis in 2007, at 4.52 per cent for loans granted in 2017 against 2.74 a decade previously, but other platforms have similarly high forecasts.

Lending Works predicted default rates of 3.4 per cent for loans made in 2017, which is more than double the rate when it first started lending in 2014, and up from 3.2 per cent in 2016.

RateSetter (which originates consumer loans as well as business and property loans) indicated that its expected default rate is 3.18 per cent for 2018, the same as last year. This is down from 3.43 per cent in 2016 but its default rate was 1.4 per cent when it first started lending in 2011. It increased to 1.54 per cent in 2013 and 2.43 per cent in 2014 before hitting 3.02 per cent in 2015.

Landbay boss makes case for IFISA (AltFi), Rated: A

Buy-to-let mortgage lender Landbay first launched its ISA just in time for ISA season last year. Now, one year on, CEO John Goodall (pictured) has put forward five reasons for investing in the wrapper.

Those reasons are: it’s tax-free, it offers high interest rates, it offers an alternative means of investing, it offers access to a variety of asset classes, and it’s a source of regular income.

The balancing act in digital bank lending (AltFi), Rated: A

It’s for this reason that more or less every adult in the UK is forced to bin three or four letters a month from their bank offering them a loan or overdraft. In this day and age, users of online banking are just as likely to find themselves having to hide a not-so-surreptitious offer of a pre-approved loan of £20,000, wedged in among the payments on their online statement.

In the new world of digital banking, the want (/the need?) to lend is a source of great embarrassment. Credit is treated as a kind of dirty, best hushed up necessity. Nowhere is this more evident than in the launch of Tandem’s first major product: a credit card.

That card – available in four vibrant colours – carries an APR of 18.9 per cent.

And it’s not just Tandem. Monzo, Starling, Revolut, N26 – they’ve all launched or are thinking about launching a suite of loan options. Revolut partnered with peer-to-peer lender Lending Works to power its consumer credit offering. N26 has teamed up with auxmoney and Younited Credit. They’re all gearing up to lend money but they’re stuck in this weird position where they can’t speak plainly about wanting to lend.

Assetz Capital to host intermediary events (Bridging&Commercial), Rated: B

Assetz Capital has announced dates for its intermediary roadshow and smart lending intermediary event.

The intermediary roadshow will be held at Cedar Court Hotel, Wakefield, on 21st March, while the smart lending intermediary event will take place at Murrayfield Stadium, Edinburgh, on 17th April.

UK Consumer Credit 2017: Forecasts and Future Opportunities (PR Newswire), Rated: A

Rate of growth in consumer credit gross advances, which picked up in 2015, has slowed and year-end figures for 2017 are expected to show growth of around 4.6%. Growth will remain moderate throughout the rest of the forecast period, meaning that gross advances are expected to total of around £329bn by 2021. On the supply side, high incidences of bad debt, tighter lending criteria, and a cautious approach towards unsecured lending among providers and regulators will check the rate of growth of credit supply over the forecast period.

Critical success factors include in this report –
– Retail finance specialists should identify which retail sectors offer the best opportunities for growth, whether due to rising levels of spending or lack of current finance options. Innovation from fintech companies will soon provide small retailers with new financing options, increasing competition in the market. Hence, they should tailor their propositions to meet the needs of customers.
– Partnerships with established firms that have a longstanding reputation will help achieve the much needed scale for P2P platforms to compete.

Moreover, these report offers insight into –
– The key macroeconomic, regulatory, and other factors that will drive the demand for, and supply of, consumer credit over the next five years.
– The outlook for total consumer credit including overdrafts, P2P, motor finance, payday lending, home credit, credit cards, and retail finance.

Scope
– Peer-to-peer (P2P) lending will see double-digit growth up to 2021. The sector will continue to enjoy rapid expansion due to increased consumer awareness and partnerships with other related sectors.
– The motor finance boom has started to decline, with growth falling to a lower level of 3.4% in 2017. New car sales are falling, and the excess of vehicles that will enter the used car market over the next few years will drive down prices. Both trends will dampen demand for credit.
– Payday lending has been severely curtailed by tougher regulation, including strict price caps and comprehensive affordability checks. These measures have significantly reduced the supply of credit and will depress gross lending.

Banks not saying how they’ll support businesses hit by Brexit (The National), Rated: A

Brexit and Scottish Business, from former MPs Michelle Thomson and Roger Mullin of consultancy firm Momentous Change, reveals the concerns of 236 of Scotland’s senior business figures about leaving the EU. The report comes against a backdrop of a collapse in bank net lending. In the final two quarters of 2017, net lending to SMEs across 30 UK banks – 75 per cent of the UK lending market – was dwarfed by that from peer-to-peer lender Funding Circle.

International

 

INVESTORS NEWLY OPTIMISTIC ABOUT HEDGE FUNDS (All About Alpha), Rated: AAA

Deustche Bank recently released its Alternative Investment Survey, the 16th annual.  This year the questionnaires received replies from 436 global hedge fund investors, with assets under management of $2.1 trillion, who shared their insights, sentiments, and allocation plans.

Over the year, the HF industry grew by 6.4%; assets under management reached the record figure $3.21 trillion at year’s end. In last year’s survey, investors’ predictions had fallen a bit short, holding that the year’s end figure would be $3.14 trillion.

For the year to come, respondents are predicting further expansion, and a year’s end AUM of $3.42 trillion.

Half of the respondents expect to increase their own allocation. Another 39% said they will maintain their allocation where it is, so that only 11% plan to reduce it. Last year, only 37% of survey respondents were saying they expected to enhance this sliced of their portfolio, 41% expected to hold to the status quo, and 22% planned to reduce.

Addressing Demand (Medium), Rated: A

While we’ve made industry-leading progress in issuing over $23m in blockchain-backed loans, there is still a demand of over $1.3b in loan requests that we are diligently working to address.

 

Australia

Brokers have ‘key role’ in communicating CCR changes (TheAdviser), Rated: AAA

RateSetter surveyed 1,000 Australian consumers earlier this year and found that 29 per cent of people believe that the comprehensive credit reporting (CCR) changes will affect the way they approach and manage their finances by way of positive behavioural changes such as making payments on time and paying more than the minimum amount on their credit card.

SMEs ‘over-reliant’ on banks, but gradually changing (MyBusiness), Rated: A

The Organisation for Economic Co-operation and Development (OECD) released a new report which found that, although banks still dominate in funding small businesses, new bank lending is declining in a number of countries.

The Scoreboard found a median year-on-year drop of 6.5 per cent in bankruptcies in 2016, following a drop of 6.9 per cent in 2014 and 9.1 per cent in 2015.

The OECD report noted that SMEs accounted for 99.8 per cent of all enterprises in Australia, at just over 2.1 million in 2015/16.

It found that SME loans accounted for around 30 per cent of all outstanding business loans in Australia in 2016 and added that the average interest rate charged to SMEs in Australia between 2013 and 2016 were between 5.1 to 6.5 per cent – nearer the higher end of rates when compared to other OECD countries.

 

 

Brokers urged to help combat fear about CCR (AustralianBroker), Rated: A

Peer-to-peer lender RateSetter called on brokers to help combat misunderstanding and fear about changes to credit reporting. It said yesterday that its research found that only one-third of people have any knowledge of the impending changes to how credit records are shared.

The lender’s research shows that to achieve positive outcomes under comprehensive credit reporting, consumer awareness needs to be significantly improved, given that two-thirds of people (67%) are unaware of these changes.

Crowdfunded neobank receives credit licence (MortgageBusiness), Rated: B

Online lender Xinja is set to target mortgage borrowers in Australia’s capital cities after receiving its Australian credit licence.

The neobank, which launched its equity crowdfunding offer in January 2018, has been granted an Australian credit licence (ACL) from the Australian Securities and Investments Commission (ASIC), which will allow it to use its digital portal to offer home loans to borrowers.

Authors:

George Popescu
Allen Taylor

Tuesday August 22 2017, Daily News Digest

Peter Renton investment results

News Comments Today’s main news: PawnHero lands $9.7M financing. AltFi Data scoops equity investment, appoints advisory board. Funding Circle to launch new Autobid, Autosell lending features. SocietyOne celebrates fifth anniversary. Today’s main analysis: Peter Renton’s MPL results for Q2 2017. Today’s thought-provoking articles: How Amazon’s Alexa will upend wealth management. The future of banking investments. Will finance businesses jeopardize the credit quality […]

Peter Renton investment results

News Comments

United States

United Kingdom

China

European Union

International

  • Instant gratification and real-time vacations. AT: “In 2005, my wife and I toured Germany by train. At that time, we had our laptops and managed to book hospitality services using the public railway system’s free wi-fi. We thought it was cool that we could plan a two-week vacation on the fly and move from one city to the next with minimal planning. Today’s technology is even better and more readily available for this type of ‘vagabonding’.”
  • International REITs.

Australia

APAC

Middle East

News Summary

United States

My Quarterly Marketplace Lending Results – Q2 2017 (Lend Academy), Rated: AAA

One could almost say my returns are in a downward spiral. Since peaking in Q1 2014 at 12.44% my returns have decreased pretty much every quarter and for the last two years that decrease has averaged around 0.5% per quarter.

This past quarter my overall returns stood at 7.28% and the returns for my original six accounts were 5.07%. My worst Lending Club account was my original account there and it came in at 1.95% for the year. The only good news, if there was any, was that I did not have a negative quarter in any of my accounts this quarter unlike in Q1.

Source: Lend Academy
  1. All the account totals and interest numbers are taken from my monthly statements that I download each month.
  2. The Net Interest column is the total interest earned plus late fees and recoveries less charge-offs.
  3. The Average Rate column shows the weighted average interest rate taken directly from Lending Club or Prosper.
  4. The XIRR ROI column shows my real world return for the trailing 12 months (TTM). I believe the XIRR method is the best way for individual investors to determine their actual return.
  5. The six older accounts have been separated out to provide a level of continuity with my earlier updates.
  6. I do not take into account the impact of taxes.

Lending Club

While Lending Club shows an 8.19% return I ignore that number and do my own calculation. My TTM return here is at an all time low of 1.95% but at least I have reversed what happened in Q1 when I had a negative quarter.

Prosper

Source: Lend Academy

Direct Lending Income Fund

The Direct Lending Income Fund continues to be my most consistent performer returning solid double digit returns every quarter since I started investing back in 2013.

How Amazon’s Alexa will upend wealth management (Financial-Planning), Rated: AAA

Advisors wondering how Amazon will enter wealth management should look to its cloud computing arm, Amazon Web Services, which is pitching the natural language processing, machine-learning brain behind its voice interactive service to wirehouses, broker-dealers and robo advisors.

Already, UBS has partnered with Amazon to enable clients and non-clients of the bank to get answers to financial and economic questions through Alexa.

The Future Of Banking Investments (Modest Money), Rated: AAA

I’ve actually had this subject on my mind for awhile. In my article “Customer Experience And Retail Banking: Why Banks Need To Enter The Modern World”, I discussed a day where my district manager came to show us the ABSOLUTE IMPORTANCE OF LOBBY LEADERSHIP!!!!!!! I was rather underwhelmed by its importance, but overwhelmed by the fact that the banks were all putting such a heavy focus on greeting customers at the door and making each trip to the bank “an experience”

One of the downsides of the future of banks—and one of the things that might compel someone to avoid bank stocks—is that they are slow to change. They are loathe to change.

Other businesses are trying to please their customers. Banks are trying to please their regulators. Because customers don’t issue multi-million dollar fines on banks when they don’t get what they want.

A New Challenger Has Entered The Battle!

Businesses always have competition within their field. Banks are no exception. Banks compete with other banks to provide their services to the global market.

Except now, with fintech growing at a record pace, banks face competition from small fintech companies and major technology giants such as Google and Apple.

We’ve seen companies like Lending Club take the world of lending andinvesting by storm with their peer-to-peer lending services. LendingTree has changed the way people shopped for mortgages, and LendKey is fast becoming a leader in student loans by acting as a broker for not-for-profit lenders and providing full after-funding services. I wrote a review about LendKey here.

For non-lending companies that aren’t brought to you by the letter “L”, there’s PolicyGenius (an online life insurance broker). There’s Acorns, a “micro investment” company that takes each of your debit card purchases, rounds them up to the nearest dollar, and invests the spare change into your investment portfolio. And of course, there’s PayPal, the legendary online payments/money transfer company.

Of course, the fintech firms aren’t even the largest future competitors! Ironically, it’s non-financial technology giants that pose the greatest threat to the future of traditional banks!

Why I Think Bank Stocks Are A Great Future Investment

No, I’m bullish on banks because I think that they will adapt, in their own unique way.

Read the rest of this snarky analysis.

What Key’s fintech investments say about commercial payments (American Banker), Rated: A

Last week the Cleveland-based bank announced it had taken an equity stake in the fintech firm Billtrust, which provides digitized and automated accounts receivable capabilities for companies. The investment is one of a series the $134 billion-asset Key has made in the space in the last two years.

Other banks are also making an effort to enhance commercial payments capabilities. Wells Fargo, for example, in June announced that receipt imaging would be available for commercial card customers who use the bank’s commercial card expense reporting service, which allows them to upload and manage receipts directly on mobile devices. U.S. Bank also began offering corporate clients a virtual payments service, for employees who need to make a one-off work-related payment or who make purchases rarely enough that they don’t need a physical plastic corporate card.

Key is hoping that B-to-B payment solutions will make it stand out in the competitive landscape of commercial banking.

Making Friends with Fintech: Tips for Bankers (ABA Banking Journal), Rated: A

Time and reality have since set in, and the tone of the conversation has shifted away from “compete” toward “collaborate.” Banks increasingly see the value of capabilities developed by fintech firms, and those companies in turn are becoming better acquainted with the challenges of regulation and other barriers to bringing their products to market.

For banks, the wakeup call has been the realization that customers are coming to value—and expect—a frictionless banking experience. And if banks can’t provide that kind of frictionless experience, Henrichs says, they’ll turn to alternate solutions.

Keys to building a successful fintech strategy

1. Adopt the right cultural mindset.

First and foremost, the bank must have an appetite for innovation.

For some banks, this may involve a shift away from viewing fintech companies as simply third-party vendors or service providers, and instead as collaborators working side by side to develop something new.

2. Do something.

And size isn’t an excuse to sit back and wait, Henrichs adds. Rather, it’s about choosing an area of focus that makes sense for the bank in terms of available resources. While that may not always be a big, sexy innovation, banks can start by achieving smaller, incremental change—something as simple as building and beta testing a new email delivery system can help build up the bank’s “try and fail muscle” and help lay the groundwork for future, larger-scale projects.

3. Be forward-looking.

Consumers’ demands are shifting every day, and new products will continue to hit the market at an unrelenting pace. Knowing that, bankers must be able to keep an eye on the horizon.

Will the human-robo approach to wealth management become best practice? (WhatInvestment.co.uk), Rated: A

According to the quarterly Fiserv “Expectations & Experiences: Borrowing and Wealth Management” survey conducted in June 2016, 49 per cent of consumers are interested in receiving financial advice from a robo-advisor.

However, there are limits to a robo-only approach. That is why we are witnessing an increase in wealth management firms that incorporate both digital advice and human advice to create a hybrid model, which is likely to become best practice in the industry.

Property Partner adds student assets to portfolio (Property Week), Rated: B

Real estate crowdfunding platform Property Partner has added student accommodation assets to its portfolio for the first time due to its high returns.

Online financial websites abound with free information (Lebanon Democrat), Rated: B

Annualcreditreport.com is a free website and app which will allow you to get a free copy of your credit report every 12 months from each credit reporting company.

Nerdwallet.com is another free website and app. The site offers financial tools and objective advice to help people better understand their financial options and make the best possible financial decisions.

Mint.com is a free website and app that helps you create budgets that make sense today and set you up for success tomorrow.

Bankrate.com is a free website and app that will help you find and compare rates on financial products like mortgages, credit cards, car loans, savings accounts, certificates of deposit, checking ATM fees, home equity loans and banking fees.

United Kingdom

Funding Circle to Launch New Version of Autobid & Autosell Lending (Crowdfund Insider), Rated: AAA

On Monday, Funding Circle announced it is set to launch a new version of its existing Autobid and Autosell lending tools. Funding Circle will be eliminating the option to manually choose which businesses an investor may lend to and which loan parts to sell will be withdrawn. This is a significant shift in operation of the peer to peer lending platform as it begins to operate more like a fund.

Funding Circle created a new section on their web site dedicated to the explanation as to why they were moving away from peer to peer lending and becoming more like a fund by eliminating manual selection.

While many investors have enjoyed manually choosing loans, there are some drawbacks to it:

  • Many investors do not currently benefit from lending to all types of businesses.
  • It can mean your lending is not spread evenly across lots of businesses.
  • It can be confusing for investors.73% of new investors who join Funding Circle choose Autobid, and 80% of Funding Circle investors* say simplicity of lending is important to them.”

Regulatory spotlight on crowdfunding & P2P lenders (Moore Stephens), Rated: A

The FCA has launched a crackdown on peer-to-peer (P2P) lending, in the coming months, aiming to ensure protection for retail investors within this heavily risk-associated market.

China

Finance businesses may jeopardise credit quality of internet companies, Moody’s says (SCMP), Rated: AAA

These operations could weaken the internet companies’ credit quality, especially if their finances are consolidated on the technology companies’ accounts, Moody’s Investors Service said.

That’s because most internet companies don’t generate enough profits from operating these businesses, and they lack a track record of holding borrowers accountable for timely payments on their loans, Moody’s said.

Source: South China Morning Post

Unruly and unregulated, nation’s Internet finance sector urgently needs supervision (Global Times), Rated: A

After years of explosive but unruly growth, the online finance market requires cooling through tighter regulation.

On the contrary, there were few regulations to guide or hamper China’s Internet finance industry, with no such requirements as reserve levels or loan-to-deposit ratios. The near-absence of regulation greatly lowered the barriers to entry for the sector, which witnessed both explosive expansion and high failure and fraud rates as it grew. Take P2P lending platforms, for example. As of the end of July, 5,916 P2P lending platforms had been set up in China, but only 2,090 were operating normally, with the rest either encountering liquidity problems or simply closing, according to statistics from wangdaizhijia.com, a P2P industry portal.

Views on Yu’E Bao: easy for payment but difficult in credit! (Xing Ping She), Rated: B

Ant Financial has a big market share in the online payments industry in China. However, its ambitions go far beyond that. Recently, Ant Financial was known to get involved in the credit market.

Ant Financial seeks to merge the gap between the Yu ‘E Bao account and the general bank account through the online merchant bank. It hopes to connect the supply and demand side of the credit in its own account system, just as the bank account do.

But it won’t be easy. The biggest difference between the credit business and the payment business is that the credit business is a heavy capital business and a highly regulated licence business with a strong social spillover effect.

European Union

Sweden Cryptocurrency Boom: Top 3 Swedish Fintech Startups To Watch (IBT), Rated: AAA

The Swedish startup Klarna made waves this summer by launching its own peer-to-peer payment app called Wavy and acquiring a full banking license, which sets Klarna apart as one of the few fintech companies able to compete with traditional banks head-on. TechCrunch described it as a $2 billion startup working the  700,000 e-commerce sites. In June, Visa Inc. announced it is buying a stake in Klarna plus forming a payments partnership. Klarna is now widely considered one of the world’s most promising fintech startups.

The Stockholm Fintech Hub is less than a year old and is now reportedly home to more than 200 startups, plus representatives from a few global players like IBM and Microsoft.

There is a small but growing demand for bitcoin in Sweden. Sweden’s central bank is even considering the merits of making its own national cryptocurrency. In the meantime, Safello aims to become the “ Coinbase of Europe,” since the European bitcoin landscape is far more diverse than North America in terms of regulation and user habits. Coinbase, arguably the world’s best funded bitcoin exchange, is already available in Europe. However, Safello sets itself apart by focusing exclusively on the needs of European users, including support in nine different languages.

So far, Schuil said Safello has facilitated $10 million worth of transactions involving tens of thousands of European users.

Klarna and Safello aren’t the only Swedish startups with the potential to completely overhaul how people interact with money. Among all the startups buzzing around Stockholm, Biohax International certainly stands out. Biohax CEO Jowan Osterlund told IBT his team has implanted 3,000 microchips in people’s bodies, usually their hands, most of which happened in the past year.

These microchips can be used for purchases like train tickets and food. The Wisconsin company Three Square Market now lets employees buy office snacks with the swipe of a bio hacked hand, while also using the chip as a workplace ID for office equipment.

AltFi Data scoops equity investment, appoints advisory board (AltFi), Rated: A

The transparency agenda in online lending has taken a step forwards, as another analytics firm raises capital. AltFi Data has raised an undisclosed sum of equity funding, in tandem to forming a new advisory board.

Roger Spooner and Peter Wilson will join existing backer and executive board-member Michael Baptista on the newly established advisory board. Spooner was most recently a member of the management committee at global data firm Markit, where he was head of global client management. Following a 20 year career in private equity, Wilson was the inaugural CEO of British Business Bank Investments, where he was responsible for £1.5bn of government investment. In this role he oversaw a number of early institutional investments within the UK’s marketplace lending sector.

Funding campaign aims to establish new co-working space in Dublin (Irish Times), Rated: B

Sona 10 Newmarket, which is located next to the Teeling Whiskey Distillery, is being created in collaboration with the long-established Dublin Food Co-Op and will be hosted on its premises.

The brainchild of Adrian O’Connor, a Canadian entrepreneur who has lived and worked in the area for about a decade, Sona 10 has already raised some private funding to get the building open with some tenants already coming on board.

It is now seeking to raise an additional €25,000 via the Irish crowdfunding platform Flender to kit out the premises.

International

Real-Time Vacations: The Instant Gratification Of Fintech (Forbes), Rated: AAA

Being able to transfer money between accounts in real-time has become part of our daily lives, so much so that when these automatic services do not work, it becomes a problem.

Smartphones have become global standard: ‘conventional banking meant writing traveler’s checks and exchanging physical currency ahead of a trip, both of which are very expensive for the average consumer. Since then, new fintech providers – even in emerging markets – have dramatically increased the acceptance of foreign credit and debit cards,’ Likar said.

Vacationing in real-time is here: ‘you can now rent an apartment for same-day arrival on Airbnb or HomeAway, find last-minute dinner reservations through OpenTable, borrow a car near your location with Turo, and even book by-the-minute hotel rooms through the Recharge app.

Another aim of the fintech industry, in the same vein of the eradication of cash, is helping those that are unbanked and underbanked pay for services only available for those with credit cards. ‘Most airlines today accept payments from alternatives like PayPal. Other financial services companies, such as Affirm, offer three, six and twelve-month financing plans for customers who cannot afford to pay for the flight up front.’

WeSwap is a multi-currency card that can hold up to 18 different currencies, ensuring that consumers can lock in the exchange rate upfront rather than after the purchase,’ Likar mentioned.

International REITs: An Overlooked but Surging Asset Class (Investopedia), Rated: A

In the U.S., the real estate sector is one of the smallest groups in the S&P 500, but real estate investment trusts (REITs) are popular among income investors.

As WisdomTree points out in a recent note, a massive chunk of global real estate investments are actually found outside the U.S. (See also: Eyeing Emerging Markets REITs? See These ETFs.)

Australia

SocietyOne Celebrates Five Year Anniversary Of Helping Customers (Crowdfund Insider), Rated: AAA

Australia-based online lender SocietyOne announced on Monday it is celebrating its five-year anniversary of helping customers achieve their lending needs. This celebration comes less than two months after the lending platform surpassed $300 million in total originations. The lender revealed that more than 13,000 customers thanks to $325 million provided by its investor funders.

APAC

PawnHero bags $ 9.7m financing, partners PLDT fintech arm (Deal Street Asia), Rated: AAA

Southeast Asia’s first digital pawn shop PawnHero has closed a $9.7 million (P500 million) financing deal with a Philippine investment bank even as it signed a partnership agreement with the fintech arm of telco giant PLDT.

Middle East

Ever a lender or a borrower be… (Khaleej Times), Rated: AAA

The key to the banks’ risk taking ability is aggregation. The bank is able to get the deposits at scale and at the same time lend to a large number of customers most of which are likely to pay back. In a portfolio of loans, historically, only a small percentage is non-performing. The individual lender has so far not had the ability to create a portfolio. The start of crowdfunding a few years ago began to change that. Crowdfunding works in the area of providing returns through some level of ownership of either the product itself or the company which is promoting it. For individual investors seeking a stream of steady income on the other hand, P2P Lending or Marketplace Lending makes more sense.

However, the speed of growth of P2P lending outstrips that of traditional banking. An excellent December 2014 whitepaper, A Trillion Dollar Market By the People, For the People published by Foundation Capital, describes the blistering pace at which P2P lending grew from a base of $870 million dollars in 2012. Estimates of the size of the industry vary from between $100 billion to $200 billion. The whitepaper predicts that the market size will be about $1 trillion by 2025.

On average, P2P lending platforms like Beehive are able to reduce interest rate spreads between sourcing and lending money by about 400 basis points (4 per cent). That’s because players in this space do not keep the loans on their balance sheets.

Authors:

George Popescu
Allen Taylor