Wednesday August 30 2017, Daily News Digest

Prosper

News Comments Today’s main news: Prosper performance update for July 2017.Top Mozido executives quietly left company.White House OKs delay of fiduciary rule.Funding Circle kicks off 12M marketing campaign with TV ad.LATTICE80 to open London fintech hub.Klarna profits up 130%+.RateSetter hits 2,000 broker milestone. Today’s main analysis: Millennials prefer auto, personal loans to credit cards. Today’s […]

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United States

Prosper Performance Update: July 2017 (Prosper), Rated: AAA

Today we are sharing performance data from the Prosper portfolio for July 2017.

Our risk team implemented a credit tightening in July aimed at removing certain populations of borrowers from originations on a go-forward basis. As a result of this credit tightening, the overall distribution of the book shifted slightly towards lower risk loans. This slight shift resulted in an overall portfolio coupon decrease of 45bps and an overall return estimate decrease of 26bps.

Additional highlights from the July Update include:

  • Charge-off levels in 2016H2 vintages continue to show meaningful improvement compared to 2016H1 vintages.
  • Periodic delinquencies moved higher for 2016 and 2017 vintages.
Source: Prosper

The Top Executives Of Former Fintech Unicorn Mozido Have Quietly Left The Company (Forbes), Rated: AAA

The top two executives of Mozido, a financial technology company that raised some $300 million to develop a mobile payments business, have quietly left the company.

On its web site, Mozido currently lists Todd Bradley as its CEO, but Bradley said in a brief interview that he left the company in June. Bradley’s departure appears to have left Mozido without a chief executive officer. Bradley has also left Mozido’s board but the company’s web site still lists Bradley as a director.

Scott Ellyson, Mozido’s chief financial officer who is listed on Mozido’s web site as its second-most senior executive, has also left the company, according to Bradley. Ellyson’s LinkedIn page currently does not mention his time at Mozido. He did not respond to a request for comment.

Three weeks ago, Michael Liberty, the founder of Mozido, was sentenced to four months in prison and a $100,000 fine by a federal judge. Liberty pleaded guilty in November 2016 to making illegal campaign contributions.

Digitalization Among Factors Pushing Millennial Credit Preferences Toward Auto and Personal Loans (NASDAQ), Rated: AAA

As the first generation to be fully immersed in mass-market digitalization, Millennials are slowing their credit card usage while increasingly using other credit products such as personal loans. A just-released TransUnion (NYSE:TRUstudy found that Millennials are carrying on average two fewer bankcards and private label cards than Generation X (“Gen X”) consumers at the same respective ages. Conversely, Millennials’ appetite for new auto and personal loans has grown at a faster rate than Gen X borrowers at the same age points.

Credit Cards Out of Fashion; Cars and Personal Loans in Style

The study found that, in addition to carrying fewer credit cards than Gen X consumers, Millennials also are maintaining lower balances on those cards. TransUnion analysts believe that this is partly driven by the CARD Act of 2009, which limited the marketing of credit cards on college campuses. The increased use of debit cards also plays a role in this shift. The study pointed to recent Federal Reserve data, which found that debit card transactions grew from 8 billion in 2000 to 60 billion in 2015. In contrast, credit card transactions only increased from 16 billion to 34 billion in that same timeframe.

Source: TransUnion

Millennials and Mortgages

Among all major credit products, the mortgage market has been the slowest to recover from the Great Recession, with home ownership rates still below levels observed in 2009. Overall, homeownership is down 0.8% since the Recession, but this number grows to -1.6% for 35-44 year olds and -2.1% for those under 35.

As a result of credit access being limited and, per the U.S. Census Bureau, affordability being affected by income gaps between the two generations, TransUnion’s study found the percentage of Millennials opening mortgages between the ages of 21-34 (5%) is nearly half of the Gen X group (10%) when they were that age. TransUnion observed a smaller but still material gap (13% for Millennials vs. 16% for Gen X) within the Super Prime risk tier, suggesting that this dynamic is not driven solely by credit supply.

TransUnion’s study found that access to mortgages has declined dramatically for 21-34 year olds. In 2000, 39% of mortgage originations in this age range were comprised of non-prime borrowers.  In 2016, non-prime borrower originations declined to 20%.

Further impacting mortgage originations to Millennials are lower income levels. Per the U.S. Census Bureau, median household income of consumers ages 25-34 declined from $60k in 2000 to $57k in 2015.  The impact can be seen in the housing status of these consumers: a larger portion of younger adults ages 25-29 are living with their parents, rising from 15% in 2000 to 25% in 2014.

Despite these challenges, a TransUnion survey of 1,340 consumers in July 2017 found that nearly 75% of Millennials ages 23-37 said they plan on purchasing a home in the future.

White House OKs DOL Fiduciary Rule Delay (Financial Advisor IQ), Rated: AAA

The Office of Management & Budget of the White House has approved the Department of Labor’s request to push back the final implementation date of its fiduciary rule — originally scheduled for January — to July 2019, the Wall Street Journal reports.

Banks Send Warning Signs for Economy (WSJ), Rated: A

Being a key transmission mechanism for savings, investment and spending, the banking sector is worth watching as a barometer for the health of the overall economy. Lately it has been acting as one would expect toward the end of an expansion phase.

Most glaringly, after strong lending growth for several years, momentum clearly is slowing. In its quarterly report on the sector, the Federal Deposit Insurance Corp. found that total loans and leases by banks and other insured institutions rose by just 3.7% from a year earlier at the end of June. That is the third consecutive quarterly deceleration and is down from a 6.7% pace of growth a year ago.

After a period of strong lending, it is also typical for defaults to start ticking up as levels of indebtedness rise and bills come due. This is indeed happening, at least among consumers. Credit-card charge-offs soared by 24.5% in the second quarter, according to the FDIC, marking the seventh straight increase. Charge-offs on loans to commercial and industrial borrowers, however, declined by 9.7%, possibly due to a recovering energy sector.

‘Madden fix’ bills are a recipe for predatory lending (American Banker), Rated: A

Currently pending in both houses of Congress are versions of the Protecting Consumers Access to Credit Act of 2017 — bills that would “fix” the 2015 appellate court decision in Madden v. Midland Funding LLC. Unfortunately, these so-called legislative solutions are based on a faulty reading of case law.

The Madden case held that National Bank Act preemption of state usury laws applies only to a national bank, and not to a debt collector assignee of the national bank. The decision has potentially broad implications for all secondary markets in consumer credit in which loan assignments by national banks occur: securitizations, sales of defaulted debt and rent-a-BIN lending.

Unfortunately, the “Madden fix” bills are overly broad and unnecessary and will facilitate predatory lending.

The actual “valid-when-made” doctrine provides that the maker of a note cannot invoke a usury defense based on an unconnected usurious transaction. The basic situation in all of the 19th-century cases establishing the doctrine involves X making a nonusurious note to Y, who then sells the note to Z for a discount. The discounted sale of the note can be seen as a separate and potentially usurious loan from Y to Z, rather than a sale. The valid-when-made doctrine provides that X cannot shelter in Y’s usury defense based on the discounting of the note. Even if the discounting is usurious, it does not affect the validity of X’s obligation on the note. In other words, the validity of the note is a free-standing obligation, not colored by extraneous transactions.

Recovering Non-Performing Loans: Better Options (Lend Academy), Rated: A

A small business lender knows that a certain percentage of loans will become NPLs and typically has parameters the business must stay within to remain profitable. The lender may pursue NPLs on an in-house basis indefinitely past the charge-off date or turn them over to a collections agency at some point. Both options create problems in the fintech business model.

The best recovery option for online small business lenders is to manage NPLs in-house until they become charge-offs, then use the services of a reputable commercial debt buyer. This is how it works.

  • The lender works with the commercial debt buyer on a one-time basis, periodically, or in a forward-flow relationship where NPL information is sent regularly to the buyer.
  • A non-disclosure agreement (NDA) is signed and the lender provides information to the buyer on the pool of non-performing assets. This includes the number of accounts and amount of outstanding balances.
  • Buyer assigns a value to the NPLs and offers a price.
  • Lender signs the purchase agreement. Typically, buyers in forward-flow relationships will send payment within 24 hours.
  • Reputable buyers then work to collect the debts over time, without using the lender’s name and in a sensitive manner, and without reselling the debt.

TEN-X PARTNERS WITH MONEY360 TO OFFER FINANCING SERVICES FOR COMMERCIAL REAL ESTATE TRANSACTION MARKETPLACE (Money360), Rated: A

Ten-X Commercial, the nation’s leading online real estate transaction marketplace, today announced that it has partnered with Money360, a technology-enabled direct lender focused on commercial real estate (CRE), to offer financing for properties available for sale. The partnership will expand the investor pool for commercial properties listed on Ten-X by giving prospective buyers assurance they will be able to procure the necessary financing to fill the deal’s capital stack, while providing sellers and their brokers increased confidence that once terms are agreed upon, buyers will be able source a loan and close the deal.

Under the agreement, Money360 will work with Ten-X to determine which commercial properties listed on the Ten-X platform are appropriate for pre-arranged financing, and will then pre-underwrite bridge and/or permanent loans for qualifying properties. The lender’s offers will be listed on the Ten-X property detail page, informing prospective buyers about the available financing terms. After the property trades, Money360 will work with buyers to underwrite, process and close the loans to facilitate the transaction.

Non-Prime Boomers Struggle Financially, but Less So Than Other Generations (BusinessWire), Rated: A

Despite the widespread perception that Baby Boomers (ages 51-64) are struggling to make ends meet more than any other generation, new research from Elevate’s Center for the New Middle Class has found that Baby Boomers are actually struggling the least. In fact, Baby Boomers are the most likely to have steady employment and run out of money less often, compared to data from previous studies.

“These findings come as a surprise, as they are counter-intuitive to many of the trends we have seen widely covered around Baby Boomers,” said Jonathan Walker, executive director of Elevate’s Center for the New Middle Class. “Recently, it was reported by the Federal Reserve that Baby Boomers are leaving the workforce in such large droves that they are skewing employment numbers, but we’ve found that 60 percent of non-prime Boomers have had no employment change in the last 12 months, compared with 59 percent of Gen-X and 43 percent of Millennials.”

But even though they struggle less than other non-prime generations, they are still facing challenges in the new economy, especially when compared to their prime counterparts. Non-prime Boomers are more likely to hold more than one job and are 10 times more likely to run out of money every month.

Additional key findings include that – compared to their prime cohorts – non-prime Boomers are:

  • 2.2x as likely to say that their finances cause them significant stress
  • 4x as likely to live paycheck to paycheck and 1 in 6 use payday loans
  • 14x as likely to express difficulty predicting monthly income and are 2.5x more likely to overdraft on bank account
  • 3x as likely to take a loan against their 401k
  • 46 percent less likely to go on vacation
  • More likely to be living in households with 3 or more working adults

How Gen Z Will Affect The Future Of The Peer To Peer Economy (Forbes), Rated: A

Born in the mid-1990s to late 2000s, Gen Z accounts for one-quarter of the U.S. population. They are considered the most diverse and most multicultural generation the U.S. has ever seen. The highly influential Gen Zers are the first digital native generation. They are already impacting the current peer-to-peer (P2P) economy and will have an enormous effect on how this economy evolves.

Gallup study found that about 8 in 10 students in grades 5 through 12 reported that they wanted to be their own boss rather than work for someone else.

Additionally, a millennial branding studyreported that 72% of high school students and 64% of college students want to start their own business.

PUBLIC COMPANIES MAKING ICO-RELATED CLAIMS (Investor.gov) Rated: A

The SEC may suspend trading in a stock when the SEC is of the opinion that a suspension is required to protect investors and the public interest.  Circumstances that might lead to a trading suspension include:

  • A lack of current, accurate, or adequate information about the company – for example, when a company has not filed any periodic reports for an extended period;
  • Questions about the accuracy of publicly available information, including in company press releases and reports, about the company’s current operational status and financial condition; or
  • Questions about trading in the stock, including trading by insiders, potential market manipulation, and the ability to clear and settle transactions in the stock.

The SEC recently issued several trading suspensions on the common stock of certain issuers who made claims regarding their investments in ICOs or touted coin/token related news.  The companies affected by trading suspensions include First Bitcoin Capital Corp.CIAO GroupStrategic Global, and Sunshine Capital.

RealtyShares Reports: $ 10.3 Million Raised for Industrial Real Estate Deals in San Francisco and Boston MSA (Crowdfund Insider), Rated: A

Online real estate marketplace RealtyShares announced on Tuesday the closing of two industrial real estate financing transactions in San Francisco and Boston MSA. The amount raised between the deals was $10.3 million.

RealtyShares stated it secured  $8.7 million industrial debt loan for a San Francisco located mixed-use, industrial warehouse and office space in the city’s South of Market (SoMa) neighborhood.

Westlake Financial Services Embraces Clarity Services’ Clear Fraud to Enhance Its Auto Lending Nationwide (BusinessWire), Rated: A

Following impressive results using Clear FraudTM to mitigate losses in targeted auto lending transactions, Westlake Financial Services has expanded its relationship with Clarity Services to strengthen its auto portfolio nationwide.

Westlake, which has a network of more than 50,000 new and used auto and motorcycle dealers throughout the United States, began testing Clear FraudTM a year ago in select markets. The California-based finance company has enhanced its profitability by using Clear FraudTM to provide loan terms that are more attractive to both consumers and dealers.

By incorporating Clarity’s credit data, Westlake is able to more accurately price and structure deals with profitable loan terms, and determine down payment requirements. Westlake’s use of Clear FraudTM helps the lender evaluate subprime applicants with credit scores below 600. Clear FraudTM also makes it easy to integrate scores into Westlake’s existing scorecard.

AirFox Closes $ 6.5 Million AirToken Pre-Sale Weeks Ahead of Schedule (News BTC), Rated: A

AirFox, the company making mobile data and the internet more affordable for millions of people, today announced it closed its $6.5 million ICO pre-sale weeks earlier than scheduled. The ICO will open at 10 a.m. ET on September 19, 2017. AirFox will use the ICO funds raised to further develop and launch its new blockchain consumer platform, AirToken (AIR), in order to tokenize mobile access by unlocking mobile capital from the smartphone for the underserved and underbanked prepaid mobile subscribers in emerging markets.

FinTechs Give Banks A Wake-Up Call With Loan Disbursements (PYMNTS), Rated: A

Not too long ago, when small- to mid-sized business (SMB) Orion First, a business credit ratings firm, needed a loan, its only option was to visit a local bank, fill out myriad application forms and wait several weeks or months to (maybe) get approved. Fast forward to today, and the small business lending process has undergone a significant overhaul.

With a growing number of FinTech players competing in the lending space, small businesses now have improved access to a range of loan options — and, in most cases, funds are disbursed in as little as 24 hours.

New services that can expedite the lending process for companies like Orion First are already gaining popularity with SMBs and consumers who need short-term loans. The Innovative Lending Platform Association (ILPA), a trade organization representing several companies in the space — including prominent players like small business loan provider Kabbage and financial consultant and insights provider PayNet — says its member companies have distributed more than $14 billion in capital loan disbursements to small businesses to date.

The millennial population is estimated at roughly 83 million, and a recent survey found almost half of millennials (49 percent) plan to start their own businesses within the next three years.

recent survey by YouGov found 81 percent of both retail consumers and SMBs who turned to digital lenders said the ease and speed of completing a loan application were the reasons they made the switch. In the same survey, 77 percent of respondents cited the rapid pace of loan decision making as the key appeal for these platforms.

3Q 2017 PitchBook Fintech Analyst Note: Marketplace Lending (PitchBook), Rated: B

Key takeaways & highlights:

  • Online lenders have faced increased competition from other more established fintech companies. Furthermore, banks such as Goldman Sachs have started their own lending arms
  • Publicly traded firms have made great strides in improving financials; the analyst consensus has Lending Club moving into positive GAAP earnings by year end in part driven by securitizations as a lower-cost source of capital
  • SoFi has made strides towards becoming more bank-like after adding mortgage loans, wealth management services and acquiring (and subsequently shuttering) online bank and money transfer service Zenbanx

Online Lenders Gain Traction By Partnering With Incumbents (ValueWalk), Rated: B

As the latest PitchBook fintech analyst note points out, some of the most notable companies are becoming more like banks, with SoFi the most prominent example, as it expands from student loan refinancing into unsecured consumer credit, wealth management and more. Yet as some online lenders establish a foothold, there are still significant hurdles to overcome.

United Kingdom

Funding Circle is kicking off a £12 million marketing bonanza with a Great British Bake Off TV ad (Business Insider), Rated: AAA

Online lender Funding Circle is kicking off a £12 million ($15 million) marketing campaign with a prime-time TV advert during the Great British Bake Off.

A 30-second TV spot of a woman drumming will run during the premiere of the smash hit baking show on Channel 4 on Tuesday evening.

Singapore Fintech Hub LATTICE80 Announces UK Expansion (Crowdfund Insider), Rated: AAA

LATTICE80, a fintech hub owned and operated by Singapore-based private investment firm Marvelstone Group, announced on Monday it is set to open a fintech hub in London as part of its global expansion. The organization revealed that as of August 2017, its UK entity has been registered, but a suitable hub space remains to be found. It is currently in talks with relevant parties in the private and public sectors, with plans to secure and open a hub by 2018.

The evolution of the UK receivables market (AltFi), Rated: A

In particular, the UK market has lots of new entrants (now in excess of 100 providers) but the number of clients seems to be static at about 40,000-45,000. In order to remain competitive, lenders are required to compete on price and terms, which increases their risk and often reduces their return.

Customers also have more choice in the market, in that they have access to working capital both from banks and alternative lenders such as peer-to-peer (P2P) platforms. Consumers are becoming increasingly aware of the non-traditional players in the market that are harnessing technology. The new generation of borrowers is more tech-savvy and more comfortable embracing P2P capabilities, which makes new players more attractive.

The funding pitfalls a small business owner needs to know (RealBusiness), Rated: A

Richard Spielbichler, ABL director North West, Independent Growth Finance

“The main pitfall to consider is whether the business has a USP that will protect their position in the market. Many businesses suffer from ‘me too’ syndrome, where their USP is very similar to an existing organisation.”

Angelika Burawska, COO, Startup Funding Club

“It depends on the type of financing. In the case of loans and various types of trade finance, the main pitfalls lie in payment terms, such as how much and when, late payment fees and what happens if a company fails to pay.

“In the case of equity funding, businesses have to pay attention to the valuation they raise which may be too high or too low; and the control rights they give to investors.”

China

There Is a Major Tech IPO Boom Happening, Just Not in the United States (TheStreet), Rated: AAA

In the first half, a total of 59 Chinese technology, media and telecommunication (TMT) companies sold shares through initial public offerings (IPOs), a surge from 10 a year ago.

In value, the firms raised a combined 25.8 billion yuan (US$3.9 billion) in the first six months, five times the amount a year earlier, said the accounting firm in Shanghai.

The trend is a continuation of a boom that began in the second half of 2016, when there were 58 IPOs of such companies raising a total of 33 billion yuan.

Embracing Auto Finance Wave, Zhushang Financial Raised Tens Million RMB in Series A (Xing Ping She), Rated: A

On 25th August, Zhushang Financial, a P2P lending platform specialize in providing auto financing services, announced the closing of Tens million RMB in series A funding. Toulang Capital led the round, with participation from Cailang Capital. The “Zhushang Financial” brand has been upgraded from the “Zhushang Dai” brand and announced with this round of financing.

Zhushang Financial is based in Chengdu, a developed city in west China, providing P2P auto financing services for small companies and individuals. Currently, it has established branches in many western cities, including Chongqing, Guizhou Province, Kunming, Xi ‘an, Taiyuan and Lanzhou. Also, the company has signed agreements on depository with both Zhejiang Mintai Bank and Hunan Rural Commercial bank (Youxian Branch). Up to now, the total volume of the platform has reached over 500 million RMB.

According to the report of Central Bank, China’s auto financing market reached 700 billion RMB in 2016 and may exceed 1.85 trillion RMB in 2018. Its rapid growth comes not just from the wave of “car service”, but also from the policy support. Actually, according to the policy issued last year, the net loan assets must be small and dispersed, and since then auto finance has become a new hotspot of P2P lending industry.

sources said the SFC on the ICO advice Jianzhao pyramid schemes (Yicai), Rated: A

August 29, the first financial reporter from a block chain technology business executives were informed that the China Securities Regulatory Commission recently to some of the block chain enterprises on the ICO (Initial Coin Offering, virtual currency initial public offering) for advice, the current In the stage of collecting comments and discussions, the SFC expressed particular concern about ICO projects for pyramid schemes in the name of virtual currency.

Net mass transfer will go to the US IPO official response (01Caijing), Rated: B

According to Bloomberg News, Fintech Quantifiers currently selected JP Morgan and Morgan Stanley as US financial adviser to the US IPO, the IPO size of about 200 million US dollars.

European Union

Profits Up More Than 130 percent In Klarna’s Half-Year Report (PYMNTS), Rated: AAA

Klarna, the online payments firm based in Sweden, and one of the unicorns that came of age with a more than $1-billion valuation, posted results Friday detailing growth for the first half of the year.

The company said that net profit came in at 228 million crowns, or about $28.4 million, up 138 percent year over year, on sales of 2.05 billion crowns.  Sales were up 21 percent.

Klarna Celebrates Year-Over-Year Sales, Profit Gains (Finovate), Rated: A

On Friday the company reported sales and profit results for the first half of 2017 that represented gains of 21% and 138%, respectively. The strong financials come amid a series of headlines that show the Swedish payments company making strides on a number of fronts. This includes rumors that Klarna is partnering with Stripe to better access the U.S. market. Such a partnership would make Klarna the only non-credit card option available on the platform, and enable customers to take advantage of Klarna’s signature “pay after delivery” service. A deal between Klarna and Stripe also would provide what an anonymous source quoted in Nordic Business Insider referred to as “potentially an important piece of the puzzle” of Klarna’s plan for expansion in the U.S.

Swedish Tech Bank Klarna Launches ‘Smoooth’ Brand (PR Newswire), Rated: AAA

Last year, Klarna launched the “Smoooth” campaign with a series of award winning and critically praised advertisements showing just how smooth payments should be. Now Klarna takes the next step by fully implementing the concept of “Smoooth” across all aspects of the brand. This includes not only a new logo, graphic identity and checkout touch-points but towards a completely new user experience – transforming rational payment transactions into an emotional shopping experience for consumers.

Ice-cream melting on warm car hoods, shampooed long-haired dogs and pencils being pushed into huge jelly pastries. Klarna`s new identity is definitely not your average bank speaking.

“We are on a journey to transform Klarna from a traditional payment provider to a stronger consumer brand. Our new identity is more modern and expresses our focus on the consumer experience, innovation and simplicity in payments. It’s time for a new kind of bank.” Sebastian Siemiatkowski, CEO of Klarna

This is not only an update of the visual identity of Klarna but also changing the way consumers interact with the company. The concept of “Smoooth” will be evident when watching an ad or pushing a button to pay in the Klarna app. Every Klarna touchpoint has a new unique graphic and will be smarter and more intuitive. That will ensure a better user experience for consumers, but will also support in driving growth, conversion and consumer loyalty for all  Klarna merchants.

There are three intuitive ways to shop with Klarna:

  • Pay now. – Pay directly at checkout. No credit card numbers or passwords to remember.
  • Pay later. – Try first, pay later. Klarna lets you have 14 days or more to decide if you want to keep your goods or not.
  • Slice it. – Get all your payments on one invoice and choose how much to pay each month.

As of today, Klarna has released all touchpoints that can be updated automatically, and over the coming months will continuously roll out “Smoooth” updates to the touchpoints of all merchants.

PitchIt @ LendIt Europe 2017 (LendIt), Rated: B

Submit your application to PitchIt, a competition for fintech startups, taking place at LendIt Europe–one of the largest international lending and fintech conferences in Europe. This exclusive programme will nurture emerging talent throughout the competition, provide selected finalists with unparalleled access to industry expertise as well as invaluable exposure, branding and more at the event.

Deadline for applications is 4 September 2017.

International

NEW REPORT: Faster Disbursement Services From Alt-Lending Players Put Banks On Notice (PYMNTS), Rated: A

The August edition of the PYMNTS.com Disbursements Tracker™, powered by Ingo Money, highlights several notable developments that explain the waning influence of the paper check, and how new disbursement tools could impact the workplace, pension systems and mobile payment options.

The August edition of the PYMNTS.com Disbursements Tracker™, powered by Ingo Money, highlights several notable developments that explain the waning influence of the paper check, and how new disbursement tools could impact the workplace, pension systems and mobile payment options.

Hike recently added a digital payments wallet to its app, allowing money transfers between customers using the country’s United Payments Interface (UPI) service. Skype is another messaging service helping users quickly send money to one another using popular payment option PayPal. The partnership between Skype and PayPal enables users to send money to fellow Skype users in 22 countries, including the U.S., Canada and more than a dozen nations in Europe, through PayPal in the Skype mobile app.

Australia

Australian SMEs are turning to alternative sources of funding (Finder.com.au), Rated: AAA

Australian businesses are turning to crowdfunding, peer-to-peer (P2P) lending and online loans for finance, according to new research from Businessloans.com.au. The Small Business Credit Surveyconducted by ACA Research, found that the most sought-after alternative funding source was equity finance (34%), followed closely by online lenders (30%) and P2P business loans(21%).

However, while small- to medium-sized enterprises (SMEs) are embracing alternative sources of capital, not all of them are receiving the loans they hope for. The survey revealed that while 84.1% of businesses were successful in their applications, less than half of those (38.9%) of those were approved for all of the credit they applied for.

It is interesting to note that the number of businesses which were declined a loan is only 1.6% of respondents. The remaining 14.3% of the “unsuccessful applicant” group was approved for less than half of the loan they had asked for. Over one-third of this group (35%) had applied for more than or equal to $250,000.

The survey found that a rejected application seriously affects a business. Respondents that did not receive the full amount applied for delayed or could not expand their businesses (34%), delayed or were not able to fulfil existing orders or contracts (27%) or did not hire new employees (17%).

 

P2P lender reaches 2,000 brokers (Broker News), Rated: AAA

Peer-to-peer lender RateSetter has accredited 2,000 brokers on its lending platform, amidst a rise in P2P popularity within the general public.

Lending volumes through the broker channel, especially in auto and home improvement loans, are doubling every six months, according to the lender’s most recent settlement figures.

Across the direct and broker channels, RateSetter has also passed $150m in lending facilitated since 2014. In the last five months alone, lending grew 50% across both channels, passing the $100m milestone in March.

Source:: BrokerNews.com
India

‘Future-ready’ Industrial Policy to be out in October (The Hindu), Rated: A

The other “illustrative outcomes” are developing alternatives to banks and improving access to capital for MSMEs through ‘Peer to Peer Lending’ and ‘Crowd funding’, providing a credit rating mechanism for MSMEs to provide them easier access to funds, addressing the problem of inverted-duty structure and also balancing it against obligations under multilateral or bilateral trade agreements, studying the impact of automation on jobs and employment, ensuring minimal/zero waste from industrial activities and targeting certain sectors to radically cut emissions.

Asia

Dianrong and FinEX Asia Launch Asia’s First Fintech Asset Management Platform (PR Newswire), Rated: AAA

Dianrong and FinEX Asia today announced the launch of Asia’s first financial technology (fintech) asset management platform. FinEX Asia was established in 2017 to connect Asian investors with US consumer lending assets, such as credit card loans.

FinEX Asia combines its risk management expertise with Dianrong’s advanced fintech capabilities to give Asian investors access to a diverse and attractive portfolio of U.S. consumer lending assets. FinEX Asia’s fintech solutions offer advanced risk modeling capabilities, blockchain data security, performance monitoring, and secondary marketplace liquidity.

Seminar: Regulating Peer-to-Peer Lending to SMEs (Asian Development Bank), Rated: B

Event | 12 September 2017ADBI, Tokyo, Japan

This seminar looks at the regulation of P2P lending in the US, People’s Republic of China, Japan, and the UK, and discusses how regulators can help develop P2P as a safe and effective source of financing for SMEs.

Register here.

South America

Top VC funds in Fintech in Argentina (TechFoliance), Rated: A

Currently, Argentina has four major investment funds that have Fintech companies within their portfolios.

  1. NXTP
  2. Kaszek – Founded in 2011, it recently announced the release of a third fund of $200 million to be used for young technology throughout the region. To date, Kaszek has invested USD 1.4 billion in 43 companies, including Nubank, Brazil’s largest digital bank.
  3. Wayra
  4. Incutex
Canada

RBC WANTS TO USE AI TO GIVE CUSTOMERS FINANCIAL ADVICE (Betakit), Rated: AAA

Canada’s largest bank has announced that its mobile banking app will soon provide users with “actual insights about our client’s financials and a fully automated savings solution that uses predictive technology to identify money in a client’s cash flow that can be automatically saved.”

Dubbed ‘NOMI Insights’ and ‘NOMI Find and Save,’ the services are currently in a pilot release. A full launch is expected later this fall.

IOU Financial Inc. Releases Financial Results for the Three and Six Month Period Ended June 30, 2017 (Newswire), Rated: A

IOU FINANCIAL INC. (“IOU” or “the Company”) (TSXV: IOU), a leading online lender to small businesses, announced today its results for the three and six month period ended June 30, 2017.

FINANCIAL HIGHLIGHTS

  • Loan originations for the second quarter ended June 30, 2017 were US$26.2 million versus originations of US$31.8 million for the same period last year. Loan originations decreased by 17.8% due to changes made to the Company’s lending policies in response to increased delinquency levels. We anticipate that these changes will have a positive impact on our loan portfolio over the course of 2017. For the first half of 2017, loan originations amounted to $48.2 million, representing a decrease of 15.7% over the origination of $57.1 million for the same period last year.
  • As of June 30, 2017, IOU’s total loans under management amounted to approximately $65.7 million as compared to $79.6 million in 2016. On June 30, 2017, the principal balance of the loan portfolio amounted to $41.6 million compared to $35.5 million in 2016. The increase is consistent with the Company’s strategy to retain more loans on its balance sheet. The principal balance of IOU’s servicing portfolio (loans being serviced on behalf of third-parties) amounted to approximately $24.1 millioncompared to $44.1 million in 2016.
  • IOU recorded gross revenue during the second quarter of $4.4 millionversus $3.5 million for the same period last year, representing a 24.5% increase. The increase in gross revenues was primarily driven by a 55.3% increase in interest income from $2.4 million in 2016 to $3.7 million in 2017, as a result of an increase in the size of the loan portfolio. For the six-month period ended June 30, 2017, gross revenues improved to $8.7 million compared to $6.8 million for the same period in 2016.
  • Interest expense during the three-month period ended June 30, 2017increased by 44.3% to $1.0 million, up from $0.7 million over the previous year. The increase is attributable to an increase in borrowings under the credit facility partially offset by a reduction in the cost of funds borrowed versus the previous year. For the six-month period ended June 30, 2017, interest expense amounted to $1.9 million compared to $1.3 million in 2016.
  • Provision for loan losses (net of recoveries) increased to $2.4 million for the three-month period ended June 30, 2017, up from $1.2 million for the previous year. The increase is primarily attributable to an increase in defaults by borrowers and partially due to an increase in the size of the loan portfolio. To improve loss performance, IOU Financial has made changes to its lending policies and deployed its next generation proprietary IOU Risk Logic Score. In addition, the Company has implemented certain process changes to improve its servicing and collections which includes an aggressive litigation process against businesses who intentionally default on their loan obligations. For the six-month period ended June 30, 2017, IOU recorded a provision for loan losses of $4.3 million compared to $2.0 million in 2016.
  • Excluding non-recurring costs, operating expenses decreased 18.1% to $2.5 million for the three-month period ended June 30, 2017 as compared to $3.1 million for the previous year. During the quarter ended September 30, 2016, the Company adopted a plan to reduce operating expenses. The Company is on track to achieve its target of quarterly operating costs of $2.0 million to $2.2 million on a normalized basis in the third quarter. In the second quarter, IOU recorded non-recurring costs of $0.5 million related to vendor contract cancellations and impairment of intangible assets. For the six-month period ended June 30, 2017, operating expenses amounted to $4.9 million, excluding non-recurring costs, compared to $6.0 million in 2016.
  • IOU closed its second quarter 2017 with a net loss of $2.1 million, or $0.03per share, compared to a net loss of $1.5 million or $0.02 per share during the same period of 2016. For the six-month period ended June 30, 2017, the net loss amounted to $3.1 million versus $2.8 million in 2016.
  • IOU closed its second quarter 2017 with an adjusted net loss of $1.3 million, which excludes certain non-cash and non-recurring items, compared to an adjusted net loss of $1.1 million in the second quarter of 2016. For the first half of 2017, the adjusted net loss was $1.9 millioncompared to an adjusted net loss of $1.6 million for the same period in 2016. Assuming the cost reduction plan was fully implemented on January 1, 2017, IOU’s pro forma adjusted net loss for the three-month and six-month period ended June 30, 2017 would have been approximately $0.8 million and $1.2 million, respectively.
Africa

Should established banks fight or assimilate to tech? (African Business Magazine), Rated: AAA

The same quandary that now faces established banks stood before landline telecoms operators 15–20 years ago. In terms of fintech, it seems likely that the answer will become clear over the next few years, as different banks adopt different strategies.

Global consultancy Accenture calculates that fintech threatens more than a third of traditional banks’ revenue. Due to the march of technological innovation and the emergence of more attractive investment regimes, the challenge posed by fintech is only likely to grow.

Fintech is not just a threat to established banks but also to other companies in the financial services sector. Visa, for instance, is built on technology developed during a previous financial technology revolution, and should be able to capitalise on the fintech boom.

Other attempts to integrate the two worlds include PayDunya, an online payments system that allows African e-businesses to accept payments from credit and debit cards, as well as mobile money wallets. Similarly, Yoco provides retailers with an integrated card acceptance and point-of-sale solution, incorporating a mobile app, and either wireless or plug-in card reader.

Some established banks have sought to compete by becoming incubators for fintech. Standard Bank and Barclayshave both launched startup support programmes, with the most successful companies taken under their wing at the end of their periods of support.

Authors:

George Popescu
Allen Taylor

Thursday August 10 2017, Daily News Digest

Lending Club

News Comments Today’s main news: NSR Invest, LendingRobot merge: Now the largest alt lending robo-advisor.LendInvest makes London Stock Exchange debut.Big banks losing ground to China’s fintech giants. Today’s main analysis: Q2 update from LendingClub CIO.MarketInvoice loanbook snapshot. Today’s thought-provoking articles: LendingClub’s surprise comeback.Sanborn looks ahead.Personal financial management apps fold as banks work them into their […]

Lending Club

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

News Summary

United States

NSR Invest and LendingRobot merge to become the largest robo-advisor in the alternative lending space (LendingRobot Email), Rated: AAA

NSR Invest and LendingRobot, two of the largest specialized Registered Investment Advisors in the alternative lending space, announced today that the companies have merged to create the leading independent advisory platform for alternative lending. Lend Core LLC, the parent company of NSR Invest, acquired Algorithmic, Inc. and all its assets, including the LendingRobot website and technology.

The joint team will combine its knowledge in the industry, investment algorithms, machine learning and blockchain technologies with the goal of providing steady investment returns to more than 8000 clients.

The websites, operating, and trading systems of NSRinvest.com and LendingRobot.com will continue to function separately in the short term. In the immediate future, the company is focusing its newfound strength on the LendingRobot Series.

Q2 2017: An Update from Our CIO (LendingClub), Rated: AAA

Projected investor returns are also largely unchanged from the first quarter and continue to range from approximately 4% to 9% (see below).

A few factors that influence returns on the platform1 are listed below:

  • Economic Backdrop. The American economy remains robust but growth continues to be relatively modest. The unemployment rate has changed little over the past year, measuring at 4.4% as of July 2017. Meanwhile, GDP increased by 2.6% in the second quarter of 2017.
  • Borrower Performance. Recent vintage performance continues to come in broadly in line with our expectations. As mentioned above, we continue to see lower delinquency rates across most grades and terms than in loans issued in the second and third quarters of 2016, which we attribute to changes made in 2016.
  • Interest Rates. The overall interest rate environment remains low, though the Federal Reserve raised its Target Rate by 25 bps in June 2017. After announcing its latest rate increase, the Federal Open Market Committee signaled its willingness to raise rates further, as it “expects that economic conditions will evolve in a manner that will warrant gradual increases in the Federal Funds Rate.” Interest rates on the LendingClub platform are not changing at this time.
Source: LendingClub

Lending Club makes a surprise comeback (Business Insider), Rated: AAA

In Q1 2017, US alt lender Lending Club published disappointing results, which showed a flat performance and seemingly vague turnaround plans, sparking concerns that it could be headed for a dead end. However, the company has now reported its second-highest quarterly revenue to date for Q2 of this year, with analysts pointing outthat it appears back on a growth trajectory.

In Q1 2017, US alt lender Lending Club published disappointing results, which showed a flat performance and seemingly vague turnaround plans, sparking concerns that it could be headed for a dead end. However, the company has now reported its second-highest quarterly revenue to date for Q2 of this year, with analysts pointing outthat it appears back on a growth trajectory.

LendingClub CEO Sanborn ‘Looking Ahead’ After Scandal (Bloomberg), Rated: AAA

LendingClub Corp (NYSE:LC) Stock Soars As Banks Prove To Be Hypocrites (BNL Finance), Rated: A

Importantly, peer to peer lending is the fastest growing industry in lending, and while there are a lot of players in the game, LendingClub is one of the largest. On many occasions over the last year, BNL Finance has told members that banks would come back and that LC stock losses were overdone.

With that said, LendingClub stock has rallied 26% over the last three sessions.

PFM apps are folding as banks work them into their own apps (Tearsheet), Rated: AAA

Last week,  Level Money, the money management app owned by Capital One Financial, said it will shut down on Sept. 1. Also last week, Prosper Marketplace said it would discontinue the Prosper Daily app and urged customers to bring their PFM needs to Clarity Money. Earlier last month, SoFi said it would nix the services by Zenbanx, just six months after it acquired the online banking company, and would use its technology and personnel for its own online bank.

PFM has never been a prominent feature of consumer bank accounts. For most of banks’ existence people had to balance their own checkbooks based on debits and credits. That’s changing now as banks realize the importance of personal financial management for continued customer engagement. And they’re starting to implement PFM features into their offerings to provide more complete banking experiences. As it is today, PFM is usually a separate entity found in entirely different apps like Clarity Money, Moven or Mint.

For example, one of the biggest nuisances of PFM historically has been the lack of good financial data. Customers using an app would have to hand over their online banking credentials so the third party financial app could access their banking data to be able to provide users with their financial snapshot. The data that appeared on the home screen of their online banking wasn’t always in sync with what they would see in their PFM app.

Chinese Stock That Rallied 4,555% Could Get the Boot From the Nasdaq (Bloomberg), Rated: A

Wins Finance Holdings Inc., the Chinese loan guarantor that couldn’t explain a 4,555 percent surge in its stock, is set to be delisted from the Nasdaq Stock Market, which cited violations of exchange rules related to its shareholder base.

Nasdaq said Wins doesn’t meet regulations requiring it to have at least 300 shareholders who own 100 shares. The exchange’s decision was also based on “the making of alleged misrepresentations by the company relating to the 300 round-lot shareholder requirement,” as well as public interest concerns, Wins said in a statement Wednesday.

Source: Bloomberg Markets

Installment Loan Provider Earns Top Rating from TopConsumerReviews.com (PR Web), Rated: A

TopConsumerReviews.com recently awarded their highest five-star rating to Lending Club, an industry leader among companies offering Installment Loans.

“For Installment Loans ranging from $1000 to $40,000, Lending Club provides incredible customer service with fair interest rates and fees,” according to Brian Dolezal, of TopConsumerReviews.com, LLC.

StreetShares raises $ 10.3m for “Shark Tank meets eBay” approach to P2P lending (Banking Technology), Rated: A

Alternative lending platform StreetShares raised $10.3 million in a venture round this week, writes Finovate(Banking Technology‘s sister company).

The funds come from an undisclosed investor and bring the Virginia-based company’s total funding to almost $20 million since it was founded in 2013.

Real Estate Crowdfunding Platforms Work to Find a Niche (National Real Estate Investor), Rated: A

However, as crowdfunding marketplaces are getting bigger and more investors are coming onboard, the power to raise equity through this marketplace is growing, says Tore Steen, co-founder and CEO of CrowdStreet Inc. Initially, many sponsors have been looking to raise $1 million to $2 million as a supplement to their existing base of investors. Those levels are now moving to $3 million to $5 million. CrowdStreet’s largest equity raise on a single offering to date was close to $8 million.

Although it remains a fragmented niche that is difficult to quantify, research firm Massolution had estimated the size of the global real estate crowdfunding industry at $3.5 billion in 2016.

RealtyMogul emerged as one of the early players in real estate crowdfunding. Since the firm launched in 2013, it has raised more than $280 million in equity through its online real estate investing marketplace.

Currently, CrowdStreet has more than 25,000 registered investors on its marketplace. In addition, among its active investors, over 55 percent are repeat investors.

Crowdfunding firms such as RealtyMogul are also fueling growth with online “eREITs” that allow them to target a bigger pool of non-accredited investors. Currently, RealtyMogul has 135,000 registered users on its platform, including both accredited and non-accredited investors.

How David Zalik Skipped High School On His Way To Becoming A Billionaire (Forbes), Rated: A

With that I become the first public witness to the long, irregularly shaped basement office where GreenSky, America’s third-most-valuable fintech company (after Stripe and SoFi), has been incubating in obscurity for the past decade. And it’s Zalik who holds the golden ticket: Last September, GreenSky raised $50 million at a $3.6 billion valuation. The 43-year-old cofounder and CEO still owns more than half of the company, shooting him well into the billionaire ranks.

GreenSky’s real magic, however, is something you can’t see: a model that transfers much of the risk, as well as the work, to other parties–and profits from both sides of each deal. Those 17,000 contractors not only market the loans to homeowners but also pay GreenSky, on average, 6% of the loan amount.

From Illinois’ woes to the state of credit: Jamie Dimon lets loose (Crain’s Chicago Business), Rated: A

Obviously you’re a believer in online lending, given JPMorgan’s relationship with small-business lender OnDeck. Tell me how you see online lending going.

What the real issue in peer-to-peer lending is that the borrower will need the money in good times and bad, but the lender will not lend the money in good times and bad. The second there’s a recession, they’ll pull back. That’s exactly what you saw in February of last year when all of a sudden people were pulling back in giving money to the peer-to-peer lenders, who couldn’t then make loans. And they all got crushed. Some have been quite bright. So I think Chicago-based Avant has been quite bright, and they kind of anticipated this, and they created permanent capital. There are multiple ways to create permanent capital. Securitizations kind of work. But they don’t work in tough times. They disappear. Bank relationships work. There are ways to fix the problem. But that is an issue: Can you sustain your business model through the cycle? I think some of them will succeed.

Would you ever see banks getting directly into online consumer lending?

Remember, there is nothing online lenders can do that we can’t. ling With Insurance Companies Less Miserable

5 fintech trends disrupting retail banking (and how banks can fight back) (The Financial Brand), Rated: A

  1. Quick money transfer apps – Millennials have come to expect such an experience. Many banks and credit unions are starting to realize this, but they’re a little behind the eight ball.
  2. Chatbots and Messenger-Based Payments – Soon, you’ll be able to pay for that used TV you found on Craigslist by texting the seller directly from your phone’s messenger app, including Apple which turned on the Messagespayments functionality in June 2017.
  3. Forget the Card, Pay With Mobile Devices – On its own, this doesn’t seem like much of a Trojan horse for banks, but as more people shift behaviors so too will the expectations of banking customers. And with the global mobile payments market estimated to hit $3.4 trillion by 2022, it’s worth monitoring in relation to banking customers.
  4. Smart Budgeting and Personal Finance Management
  5. Digital Currencies That Don’t Require Central Banks

Fintech expert Maule to join British digital banking startup (American Banker), Rated: A

Fintech expert Sam Maule has been hired by nascent digital banking firm 11:FS to head up its expansion in North America.

Marketplace Lending Abs Fund Form D (Weekly Register), Rated: B

The New Jersey-based Marketplace Lending Abs Fund, Lp filed Form D for $2.75 million offering. This is a new filing. The Limited Partnership raised $2.75 million. The offering is still open. The total offering amount was $2.75 million. This form was filed on 2017-08-09.

Online Lending Policy Institute to Host Second Annual Summit in Washington, D.C. (Markets Insider), Rated: B

The Online Lending Policy Institute (OLPI), the leading voice for policy analysis, in-depth research, and education for the online lending industry, today announced it will host its Second Annual Summit on Sept. 25 at The Renaissance Hotel in Washington D.C.

Capital One VP Joins veteran-focused fintech firm (American Banker), Rated: B

A former Capital One executive has moved to StreetShares, an online lending and investing platform.

Heather Tuason, formerly senior vice president of small business at Capital One, is now the fintech startup’s chief product officer, it announced Tuesday.

EquityBuild Announces Master Class Webinar on Five Years to Wealth Through the Brand New Model (Benzinga), Rated: B

EquityBuild announces a new master class on the Power of Five, highlighting their new five-year investment model.

Here is the upcoming webinar master class to attend August 14, 2017:

EquityBuild Power of Five Master Class – Find out how this unique model changing the way investors view real estate. Join us for this special event here.

Labor Department delays fiduciary rule implementation date (Reuters), Rated: B

The U.S. Department of Labor will give wealth management companies more time to get in line with the new “fiduciary rule,” a regulation that requires financial advisers to put retirees’ interests ahead of their own, the regulator said on Wednesday.

Securities brokerages like Morgan Stanley and Bank of America Corp’s Merrill Lynch now have until July 1, 2019, to present retirement savers with new contracts that spell out the fees brokers make on certain investment products or transition them into accounts that charge a flat fee based on assets.

United Kingdom

LendInvest makes London Stock Exchange debut with £50m raise (Finextra), Rated: AAA

LendInvest, the UK’s leading online platform for property lending and investing, today listed a £50 million retail bond on the London Stock Exchange’s Order book for Retail Bonds (ORB).

The process to raise LendInvest’s first retail bond was closed early and oversubscribed, thanks to strong demand from retail and institutional investors. About half of the proceeds raised came from major financial institutions including several multi-billion pound asset managers, two global insurance businesses and a major UK state pension fund.

The bond pays a fixed annual coupon of 5.25% for five years, and is secured against a portfolio of property loans and guaranteed by LendInvest. From today, the bond trades under the LSE ticker LIV1.

P2P Lending: MarketInvoice Loanbook Snapshot (LinkedIn), Rated: AAA

MarketInvoice, founded in 2010, is the largest UK online P2P lending firm specialising in invoice discounting and invoice factoring. Selective invoice discounting is a facility that allows businesses to sell individual invoices at a discount in order to unlock immediate funding which can be an attractive solution for SMEs periodically strained with cashflow. In early 2017 the platform launched an additional product in the form of MarketInvoice Pro, an invoice factoring product that essentially is a debt facility which businesses can draw on backed by the business’s sales ledger.

Source: Sukhwinder Shoker

MarketInvoice celebrated its strongest origination quarter in 2017Q2 with £161.9m in invoices traded and a healthy 25.3% increase from the previous quarter. Annualised invoice origination growth (2013-2016) for the platform stands at 82.6% and, whilst encouraging, it is clear to see from the oscillation in monthly advanced funding that to-date annualised return performance has been highly influenced by seasonality trends.

Source: Sukhwinder Shoker

Invoice terms exceeding 60 days formed 28.3% of origination in 2016Q2, however, this has significantly increased to 58.2% of 2017Q2 origination.

Invoice originations have shifted away from riskier price grades since the introduction of Market Invoice Pro and this is welcome news for investors.

Meet Finimize: The fintech startup that turned a popular newsletter into a financial planning platform (Tech World), Rated: A

Rofagha quickly realised that the banks couldn’t help him, a financial advisor was unreachable with his income, and the rise of the robo-advisor hadn’t really taken off yet.

Then there is one of his favourite statistics: “86 percent of millennials save each month but they keep more than 50 percent of their assets in cash, because there is no suitable way for them to get financial advice.” This was his lightbulb moment.

Now Rofagha has launched the next phase, a financial planning platform called Finimize MyLife, which is currently in beta and has a waiting list of more than 24,000 people.

The Finimize MyLife platform is free to use and helps users create a financial plan by answering a few questions about their financial position, setting goals and then selecting from a range of options, be that opening an ISA or investing with a partner like Nutmeg or Moneyfarm.

The next steps for Rofagha will be to invest in data science so that the platform can make more tailored product recommendations for users, once it has built out its data set.

WiseAlpha opens up corporate bond market for investors (AltFi), Rated: A

Online lending platform WiseAlpha is adding corporate bond and loan investments to its platform.

Retail investors can now access Tesco’s £300m institutional bond that has a 4.8 per cent return.

Users can buy the debt for as little as  £100 and cash in their bonds via the secondary market on the platform. The grocers bond matures in 2042.

Six of the best alternative income ideas (IG.com), Rated: A

Looking at the ten years to the end of May 2017, inflation as measured by the Retail Price Index (RPI) rose 31.8%, while anyone receiving the Bank of England (BoE) base rate would have made a total return of 13.2%. In other words, cash in a bank account has lost 18.6% of its real value over ten years.

Over several years, the Investment Trust sector has seen huge growth in alternative income products, and here we list six products from sectors that investors may want to consider for inclusion in their investment allocations.

MARKET INSIGHT: OLD MONEY, NEW METHOD (Campden FB), Rated: A

Marketplace or ‘peer-to-peer’ lending can be attractive for family office investors for several reasons:

  • attractive absolute and relative returns compared to other fixed interest instruments
  • ability to create some granular/diverse portfolios through investment in loan parts
  • transparent credit process and loan pricing
  • ability to match maturity profile to desired outcomes

At present, the lack of a uniform set of standards places some obstacles for investors willing to invest across multiple marketplace lenders. The data structure, terminology, and methodologies differ greatly from platform to platform. However, good platforms are able to clearly demonstrate how loans are underwritten, an expected loss rate and basis for making investment decisions.

How can family offices engage with marketplace lenders?

Firstly, investors need to consider the asset class and risk profile they wish to invest in.

Secondly, investors need to consider how active they wish to be—in its truest form marketplace lender allow absolute discretion to bid on individual loans at whatever size suits.

Glint is a stealthy London fintech startup that promises to turn gold into a ‘new global currency’ (TechCrunch), Rated: A

Glint, a stealthy London fintech startup that promises a new “global currency,” has raised £3.1 million from a plethora of individual backers in the financial services and asset management space, alongside early-stage investor Bray Capital.

However, I understand that Glint will offer a frictionless way to both store and spend your money in gold, including at the point of sale, just like a regular local currency.

Railsbank, a new fintech startup from founder of Currencycloud, raises $ 1.2M led by Firestartr (TechCrunch), Rated: A

Railsbank, a relatively new fintech startup co-founded by CEO Nigel Verdon, who previously founded money exchange and payments platform Currencycloud, has raised $1.2 million in a funding round led by seed investment firm Firestartr.

The company, yet to see its full launch and over a year in the making, offers what it describes as an open banking and compliance platform aimed at other companies, including other fintechs, that have global banking requirements that need to be accessed programatically via an API.

China

China targets mobile payments oligopoly with clearing mandate (Financial Times), Rated: AAA

China’s central bank has ordered online payment groups to operate through a centralised clearing house, a move likely to undercut the dominance of Ant Financial and Tencent by forcing them to share valuable transaction data with competitors.

China is the world leader in mobile payments, with transaction volumes rising nearly fivefold last year to Rmb59tn ($8.8tn), according to iResearch. They are now widely used for everything from high-street shopping to peer-to-peer lending.

Now the People’s Bank of China is requiring all third-party payment companies to channel payments through a new clearing house by next June, according to a document sent to payment companies on August 4 and seen by the Financial Times.

Ant Financial, the financial services affiliate of Alibaba Group, is the market leader in mobile payments, with its Alipay unit processing 54 per cent share of all transactions in the first quarter of the year, according to iResearch. WeChat Pay, linked to Tencent’s mobile messaging app, held a 40 per cent share.

Big banks on notice that they’re losing ground to China’s fintech giants (SCMP), Rated: AAA

“JPMorgan every year, as we speak, processes through our QuickPay 94 million payments,” she said, “But Tencent, the Chinese company, over Chinese New Year, in five days processed 46 billion payments. Basically that means 800 million payments per hour.

“Visa has a maximum capacity of processing 25,000 payments per second. But Alipay can process 50,000 payments, twice as much, per second.”

The rise of online payments through non-bank services, exemplified by Alipay and WeChat Pay – which falls under the Tenpay umbrella – in China, has caused another banking giant, Goldman Sachs, to stand up and take notice too.

The firm recently published a report, led by Mancy Sun, which reveals the value of third-party payments in China grew more than 74 times from 2010 to 2016, from US$155 billion to a staggering US$11.4 trillion.

Of that total, 56 per cent took the form of peer-to-peer transfers while about 16 per cent was consumption-related. Furthermore, payments made via third-party payment companies comprised 40 per cent of all retail sales, a figure that is still growing.

Top3 Chinese block chain asset trading platform (the second-tier platforms) (Xing Ping She), Rated: A

First of all, how to define the Chinese second-tier platforms? We refer to the following three factors:

  1. It has been established for a long time, and there is little risk of failure for the company after a long-term market test and trials.
  2. Popular and profitable.
  3. It belong to the major currencies which are the top of the list. And it has certain dominance in a few currencies.

So, the TOP3 Chinese second-tier platforms are finally selected as:

BTC
Online date: May 2013
Website: btc38.com
Registered capital: 10 million
Office address: Shenzhen

CDC CloudCoin
Online date: April 2014
Website: yunbi.com
Registered capital: 10 million
Office address: Beijing

CHBTC
Online date: early 2013
Website:chbtc.com
Registered capital: 10 million
Office address: Zhongshan city, Guangdong province

China Commercial Credit Enters Share Exchange Agreement with Sorghum Investment Holdings Limited (Markets Insider), Rated: A

China Commercial Credit, Inc. (NasdaqCM: CCCR) (“CCCR” or the “Company”), a microfinance company providing financial services to small-to-medium enterprises (“SMEs”), farmers and individuals in Jiangsu Province, today announced that, it has entered into a share exchange agreement (the “Share Exchange Agreement”) by and through its Board of Directors and majority shareholder dated August 9, 2017 with the equity holders of Sorghum Investment Holdings Limited (“Sorghum”), an Internet platform specializing in providing peer-to-peer lending services to individuals and small business owners in China. Pursuant to the Exchange Agreement, the Company has agreed to acquire all of the issued and outstanding equity interests of Sorghum in exchange for 152,586,795 shares of the Company’s Common Stock (the “Acquisition”). Upon completion of the Acquisition, the Company will own 100% of Sorghum, and will be a financial services group operating in both smart financing as well as microfinance sectors in China.

Sina Corp Establishes $ 500M Online Finance Fund To Back Chinese FinTech Firms (China Money Network), Rated: A

Chinese Internet portal Sina Corp said it would establish an Online Finance Fund with a target fundraising size of US$500 million to invest in Chinese fintech companies.

Fintech is one of the most important opportunities in the next three to five years, Chao said during the call. The company believes that it can leverage its own online traffic, data, and microblog services Weibo to attract users and create a strong new brand.

Sina will focus on the business categories where it can obtain its own operating license, such as micro-lending. The company is currently offering micro-lending to users via a partnership with other financial firms, but it is in the process to get its own license.

LendIt Lang Di Fintech Names Omega One PitchIt Competition Winner (PR Newswire), Rated: B

LendIt, the world’s largest show in lending and fintech, named Omega One the winner of its Lang Di Fintech PitchIt competition in Shanghai on July 16. Out of eight PitchIt finalists (and hundreds of applicants) at China’s largest fintech conference, Omega One, an automated trade execution platform, was chosen as the winner for its innovation in the cryptocurrency markets.

As the winner, Omega One received a RMB 1 million investment from JadeValue and co-working space for six months. The company also received two tickets to LendIt USA 2018 as well as round trip airfare and full accommodations for the duration of the conference. The LendIt team will also curate meetings with fintech companies and investors during Omega One’s trip to the U.S.

Lang Di Fintech was held in Shanghai on July 15 – 16, 2017.

European Union

FinTech Group Counts on BearingPoint RegTech (BusinessWire), Rated: B

Management and technology consultancy BearingPoint, a leading provider of Risk and Regulatory Technology (RiskTech/RegTech), announced that FinTech Group AG, one of the leading providers of innovative financial technologies in Europe, included BearingPoint’s regulatory reporting solution ABACUS/DaVinci in its product portfolio.

International

Fintech startup brings blockchain and cryptocurrencies to invoice finance (GT Review), Rated: A

New fintech startup Populous is introducing smart contracts, blockchain technology and digital tokens to the invoice financing space.

Having raised more than US$10mn in crowdfunding in just five days, the company has now started piloting its new platform, which lets firms and individuals sell or buy invoices globally.

Australia

Locked out of property market? Five better places for Millennials to put money (The Sydney Morning Herald), Rated: A

Below are five better places to put your money as a young Australian in 2017.

Another investment opportunity emerging with the rise of fintech is peer-to-peer (P2P) or marketplace lending.

You input a few details into an online form, such as your preferred credit grade, loan term, and maximum amount you wish to invest in any one loan. The algorithm then does the rest on your behalf, and some lenders claim returns as high as 12 per cent per annum.

Women in Finance finalists revealed (TheAdviser), Rated: B

Online lender Prospa received nods in three categories — Alison Binskin, head of operations, made the cut for Fintech Leader of the Year, Lauren Davidson received recognition for Human Relations Professional of the Year and Anna Fitzgerald for Public Relations/Communications Professional of the Year.

India

Just Rent, Don’t Buy (Business Today), Rated: AAA

India has many consumer-lending companies, but there are very few consumer-leasing firms that borrow, convert the money into assets and lease them. RentoMojo does just that and says it has discovered the playbook fairly early, which could be used across categories and not just furniture.

There is one weakness in this model – it is capital intensive, and assets have to be bought before they can be leased.

Adukia, who looks after internal finances, says that the company has lines of credit with banks, non-banking financial companies (NBFCs) and high net-worth individuals (HNIs).

There has been no independent study on the market size of the consumer-leasing business, but the company claims it is about $10-12 billion. To stay on top of this market in terms of affordability, RentoMojo does not deal with middlemen and buys directly from manufacturers, says Nain. “We also act like a quasi-bank that takes a call on the creditworthiness of its customers [to protect our revenues].”

Is our banking industry facing existential crisis from fintech boom? (The Jakarta Post), Rated: A

Recent developments in the rise of Robo-advisers and investments in digital and P2P lending platforms, however, appear to support arguments on the contrary. Already we are seeing Alibaba dominating the payment scene in China while similar local companies like Go-Pay in Indonesia is also rapidly evolving into a commendable competitor of the banks in the payments scheme locally.

The level of threat does not go unnoticed within the banking professionals’ sphere. Based on a survey by PWC, about 81 percent of the banking and fintech players in Indonesia would see a degree of disruption in the way the banks are doing business, with which roughly 50 percent of them observe potential significant disruptions.

On the payment and settlements front, we have also seen how fintech has exposed the inefficiencies in the banks’ existing business processes. For example, in the cross-border interbank payment, the current average transaction costs for sending remittances abroad through bank average around 10.99 percent of the nominal amount globally, according to a report by World Bank. This is highly efficient and perhaps one of the catalysts for online remittance companies like TransferWise to exist.

Another study estimates suggest that mortgage borrowers in the US and European market could potentially save $480 to $960 per loan and banks would be able to reduce costs in the range of $3billion to $11billion by lowering processing costs in the mortgage origination process. Such figure further highlights the inefficiency in the banks’ current operating structure. The figure would likely be more substantial on the percentage basis if similar survey is conducted in Indonesia.

Asia

Globe Telecom’s Fuse to Provide Loans Powered by Mambu (Markets Insider), Rated: AAA

Mambu, the SaaS banking engine, today announced it will be powering the consumer and business lending products of Fuse, the lending arm of Filipino financial technology firm Mynt, by September 2017.

Mynt is increasing access to  financial services through mobile money, micro-loans and technology by leveraging the mobile and store networks of its partners and parent company in a country with 113% mobile penetration but only 31% banking penetration.

Micro, small and medium enterprises (MSMEs), which account for 99.6% percent of total registered companies in the country, as well as individuals face significant difficulty in accessing credit from incumbents due to stringent credit decisioning, limited authentication documentation and lack of collateral.

Singaporean fintech hub Lattice80 to launch office in India (Tech Wire Asia), Rated: A

LATTICE80, Singapore’s fintech hub will be opening an India branch at the end of September, as reported by Bloombergmarking the company’s first step in expanding their global operations.

The fintech hub is planning to open offices in world’s financial capitals, especially London, New York and cities in the Middle East.

MODALKU has become the first and only peer-to-peer (P2P) lending company to attain membership at the International Association of Credit Portfolio Managers (IACPM), a forum where financial institutions share and discuss best practices for credit risk management.

Modalku co-founder and CEO Reynold Wijaya stated that his team is focused on attaining international, even global standards.standards.

Authors:

George Popescu
Allen Taylor

Monday April 17 2017, Daily News Digest

Monday April 17 2017, Daily News Digest

News Comments Today’s main news: Republicans propose drastic overhaul of CFPB.  BOE chief sees no need for tougher FinTech regulation. CBRC assistant chair reported ‘out of contact’. Today’s main analysis: Transparency remains a sticking point for online lenders. The India FinTech Market Map. Today’s thought-provoking articles: How this FinTech CEO plans to prosper. Interview with Scott Sanborn. International regtechs […]

Monday April 17 2017, Daily News Digest

News Comments

United States

  • Republicans propose drastic overhaul of CFPB, Dodd-Frank. GP:” This is just a proposal and it will likely change a lot by the time, if and when, it gets adopted into law. In all cases, the theme here seems to be more control and less power for the agencies.”  AT: “We saw this one coming. I didn’t expect a name change, but I think that’s interesting, especially the use of the word ‘opportunity,’ which puzzles me. Why would a regulatory agency include that word in its name? Another thing I find interesting is the deputy director holding the job at the will of the president, which I expected. However, it makes the agency serve at the whim of the winds of the political climate, like all other executive agencies. What makes that interesting is it goes against the initial conception of the agency, which was intended to be independent of the chief executive. I’m not saying it’s right or wrong, good or bad either way, but we can expect the Democrats to fight this hard.”
  • How this FinTech CEO plans to prosper in 2017. GP:”The key is customer satisfaction, which itself relies on a good product, fair pricing, ease of use whom themselves depend on the cost of financing, employee satisfaction, technology quality and an infinite list of other items.”
  • Transparency remains a sticking point for online lenders. GP:”This is very interesting data. If the online lenders build a reputation of being expensive, regardless if it’s true or not, it will hurt their customer acquisition costs significantly. This has to be fought and this perception is very dangerous. In general consumers, especially opinion leaders, are not stupid. I think a good way to fight for transparency and to fight the high rate and unfavorable terms opinion is by actually releasing actual verifiable data that offers more transparency and demonstrates the rate and term points. ” AT: “It’s important that online lenders not simply claim to be transparent. Most consumers, millennials, in particular, are well aware that technology is not inherently transparent. It can be used to set up walls of opaqueness as easily as see-through curtains, or blinds. If you’re going to call yourself ‘transparent’, you’ve got to be transparent.”
  • Chatting P2P marketplaces with LendingClub’s CEO. GP:” Lending Club is really turning into a large company, run as a large company, on values and brand and letting every department alone to do what they can with controls in place. I am curious how it will defer from a large bank in two or three years.” AT: “Scott Sandborn shares some interesting insights into marketplace lending in general and LendingClub in particular.”

United Kingdom

  • BOE chief sees no need for tougher FinTech regulation. GP:”I am pleasantly surprised, and once again I understand how the UK, despite being a small market, continues to be the point of reference in finance in the entire world and has been for hundreds of years. I am yet to see a single US regulator who says even once: there is no need for more regulation.” AT: “This is a sign of maturity. In the U.S., when legacy institutions sense up-and-coming competitors, the first thing they want to do is use regulation as a protectionist scheme. Competition is good–for the goose and the gander.”
  • Researcher showcases unauthorized NFC payments with cloned Android device. AT: “This is interesting. We must all understand there’s no such thing as fail-safe security in the cyber world. Every device is a potential entry point for bad actors. In fact, every app on every device is a potential entryway for hackers and other bad actors. The key goal for security experts is to stay ahead of them. This hole needs to be plugged quickly.”

European Union

International

China

India

Asia

MENA

Africa

News Summary

United States

Republicans propose drastic overhaul of Dodd-Frank and CFPB (Housingwire), Rated: AAA

According to the summary of bill changes, the original CHOICE Act would restructure the FHFA and OCC as bipartisan commissions. The FDIC would be reorganized as a bipartisan commission with all five commissioners appointed by the president, and both the Comptroller of the Currency and the CFPB director would be removed from the FDIC board. Also, NCUA board of directors would be increased from three members to five.

The new CHOICE Act 2.0 cuts a lot of those proposed changes, and instead, the FHFA director would be removable at will by the president, with no changes to the current law regarding OCC and NCUA. The FDIC structure would stay the same as proposed in CHOICE 1.0.

The original CHOICE Act replaced the director of the CFPB with a Consumer Financial Opportunity Commission, a bipartisan independent Commission serving staggered terms.

Instead, in the newest version, the Consumer Financial Protection Bureau would be changed to the Consumer Financial Opportunity Agency, an executive agency with a sole director removable at will. The deputy director would also be appointed and removed by the president.

While the original CHOICE Act established a CFPB Credit Union Advisory Council, the updated one removed it because the bill eliminates mandatory CFPB advisory committees.

How This FinTech CEO Plans To Prosper In 2017 (Forbes), Rated: AAA

Along with FinTech industry guru Ron Suber, Prosper’s president, Kimball is intent on growing loan volumes, offering lower average rates compared to traditional lenders, delivering higher returns to investors and returning Prosper to profitability.

Prosper, which is the original online peer-to-peer marketplace, has originated over $9 billion in consumer loans over the past decade.

Since being appointed CEO of Prosper Marketplace late last year, Kimball has stepped outside his former financial role as Prosper’s CFO to take on a more operational-driven strategy.

David Kimball: Ultimately, the long-term success of platforms will be dependent on their ability to deliver a great product and a consistent experience. The success of the partnerships will depend on the ability for the two companies to communicate and understand each other (language, transparency, and culture), and it will depend on how well objectives remain compatible.

David Kimball: Last year, the industry did a lot to lay the foundation for a successful 2017, and we’re seeing that work pay off. The [recently announced loan purchase deal] gives us the funding stability we need to continue to grow, while at the same time giving us some great long-term partners that are invested in our business and its success.

David Kimball: A successful CFO is one who partners with the business instead of playing the finance sheriff. That requires a willingness to understand the business, to think holistically, to work with peers who jointly own the results. The CFO is the finance subject matter expert, but should be able to consider other disciplines, just as a CTO should be able to understand the financial implications of engineering decisions.

As CEO, I continue to think holistically and I now have an opportunity to flex into other areas of the business.

Transparency remains a sticking point for online lenders (Tearsheet), Rated: AAA

A small business credit survey by the Federal Reserve Bank of New York found 46 percent customer satisfaction at online lenders like Lending Club and OnDeck Capital with a 19 percent rate of dissatisfied customers – compared with large banks’ 61 percent of customers who indicated they were satisfied with their small business loan process and 15 percent of whom expressed dissatisfaction. Almost half of all customers specified that their dissatisfaction came from a “lack of transparency.”

Online lending customers are also dissatisfied with higher interest rates and unfavorable repayment terms, two common issues for the growing industry, which continues to have a higher cost of capital and for customer acquisitions.

Chatting P2P marketplaces with LendingClub CEO, Scott Sanborn (Simple Innovative Change), Rated: AAA

CL: The LendingClub story is a fascinating one and one that I’ve followed from the early days. So how does it feel to sit here and realize that so much of what is here today and the proliferation of all these different lending platforms is really because of this company and this team and what you have been able to build?

SB: I think it is exciting. It’s very gratifying to see how the initial idea has gained traction and how that has spawned new players who are bringing new energy and new ideas to different segments of the market. I think the clearest benefit is looking at how much value we’ve driven to consumers and investors.

For example, the personal loan market was actually shrinking when we first started. It shrank like 57% from 2007 to 2010, and yet we were still able to giveCL: There’s this great photo from the day of the IPO back in 2014 in which you can see just how elated you were. At the time you were the CMO and it was a very happy day, but when you stepped into the CEO role recently it wasn’t necessarily under the happiest of conditions. So, how have you handled the ups and downs of being a part of the Lending Club team, and how are do you lead the team through these challenging periods?

CL: That’s the answer you want to hear, by all means. Since becoming CEO at LendingClub, what have you learned about your own management style and how are you navigating the transition to this role?

SB: So much is swirling and changing in real-time, which means you need to keep everyone in the loop. In those early days after I stepped into the CEO role, I can’t tell you how many times we pulled all 1,500 employees together and marched them across the street to a hotel, to fit them into one room and explain, “Here’s what’s happening. Here’s what we know. Here’s what comes next.” That was certainly critical.

Lastly, we have focused tirelessly on assembling the right team. When a business is growing 80% to 100% a year for so many years it’s hard for the organization to keep up, and this was an opportunity to say, “Okay, new reality. Let’s look at what the right foundation is for the next decade of Lending Club.”

CL: One of the other reasons that I wanted to speak with you is because I often speak with seed and series A Fintech startups that’ll eventually face the challenges of being a larger organization if successful. So, what do you think are the challenges associated with trying to be an innovator while also being a larger organization?

SB: Literally, I left that conversation, and sat down with several team members in a room and said, “Okay, what are our values?” It was remarkably easy, actually, to identify what our values were. We put those down on paper and we revisit them, probably annually, maybe every 18 months or so and say, “Do they still resonate? Are they still right for this stage of the company?” Essentially all of our initial values have remained intact and we’ve added one or two as we’ve grown to reflect the new stage of the company.

Since then we have remained crisp on what our values are, and we have made sure we’re hiring to those values, and that our performance reviews reflect those values as well. That’s how you keep the essence of a company and that integrity of the company as you grow. The reality is, as you get bigger and layers get introduced and processes get introduced maintaining that value system will help the company stay, essentially, intact and stay functioning well.

CL: As we look to the vision of the future loan markets, do you think that startups will increasingly become the sourcing mechanisms of loans with financial institutions acting more as the wholesale banking providers?

SB: I think we’re not done seeing the different types of models that could emerge and how they could participate, and I think that’s part of what’s exciting. Not all of them will be great ideas, and not all of them will work, but some will.

If you look at our model, banks provide between a quarter and 30% of our funding and they have a very low cost of capital. When you combine their low cost of capital with our low operating cost it allows us to give, especially that super-prime customer, an incredible value that they couldn’t get at these institutions directly.

United Kingdom

Bank of England Chief Sees No Need for Tougher Fintech Regulation (Corporate Counsel), Rated: AAA

Fintech could pose a threat to traditional banks in the United Kingdom, according to Bank of England Governor Mark Carney. But that doesn’t mean he thinks they should be subject to tougher regulation.

The Bank of England created a New Bank Start-up Unit last year, which advises companies trying to become new banks. Carney said in his speech that four mobile banks have been authorized as a result of the new division.

Some of the questions that he said need to be answered, moving forward are: “Which fintech activities constitute traditional banking activities by another name and should be regulated as such? How could developments change the safety and soundness of existing regulated firms? How could developments change potential macroeconomic and macrofinancial dynamics including disruptions to systemically important markets? And what could be the implications for the level of cyber and operational risks faced by regulated firms and the financial system as a whole?”

Researcher Showcases Unauthorized NFC Payments With Cloned Android Device (The Merkle), Rated: A

While this concept sounds ridiculous to most people, they should not underestimate the power of root malware on Android devices. By using this type of malicious software, it is possible to abuse the host card emulation protocol. Google introduced this feature in Android 4,4, as it allows for NFC payments by keeping the Android device next to a payment terminal. Unfortunately, it appears this protocol can also be used to make fraudulent purchases.

Thankfully, this exploit has been discovered by a security researcher who notified both Google and all of the applications he successfully “abused” about this vulnerability.

European Union

Aegon Leaves Legacy Behind With Ohpen’s Cloud Finserv Platform (Forbes), Rated: A

Ohpen, a banking technology company based in Amsterdam,has announced that it will partner with Aegon to develop a new platform for Aegon’s Dutch services, from banking to investments. It will also support multiple labels including Aegon’s Knab (bank spelled backwards) an entirely digital bank.

Aegon, a global financial conglomerate whose American holdings include Pimco, will replace multiple individual systems for pensions, savings, current accounts and wealth management with a single Ohpen platform running in the cloud on Amazon Web Services (AWS). Aegon will plug into Ohpen’s platform through a flexible, 100% API-based interface.

Multiple companies under one corporate umbrella do many of the same things and have their own infrastructure and staff. Ohpen lets them merge all those activities onto a single cloud-based back end and then put an API on top so any application or Web site can get to it.

International

Keeping the banks honest: meet the regtech rule-obeyers (Wired UK), Rated: AAA

Under mounting pressure to become more transparent and accountable, banks and financial institutions are turning to regtech: technology that automates regulatory compliance.

London-based FundApps alerts financial institutions when regulations change, and gives them software to help compliance. Launched in 2010, it covers 88 jurisdictions.

Legislation in Europe requires companies to “know your customer” to make sure they’re not money laundering. That’s what Trulioo does.

Qumram records, retains and allows on-demand replays of digital activity across web, social and mobile.

US accounting rules require banks to store historical loan data to predict future repayment. “This is what we help them do,” says Vivek Subramanyam, CEO of Fintellix. Launched in 2006, it recently launched a website targeting US community banks and credit unions that are grappling with accounting regulations.

KYC3 (“Know Your Customer, Counterparty and Competition”) automates due diligence, so companies can screen potential clients.

How the World’s Richest Companies Can Help Its Poorest Citizens (Time), Rated: AAA

From Kenya and Tanzania, to Jordan and Peru, digital technology and simple mobile phones are opening up opportunities for millions of people by helping them to safely save and manage their money.

From Kenya and Tanzania, to Jordan and Peru, digital technology and simple mobile phones are opening up opportunities for millions of people by helping them to safely save and manage their money.

Four of the world’s largest telco system manufacturers — Sweden’s Ericsson, China’s Huawei, Canada’s Telepin and India’s Mahindra Comviva — have put aside their fierce competition and agreed to collaborate, not out of altruism but in order to better compete. Announced at the Innovate Finance Global Summit in partnership with the Bill & Melinda Gates Foundation, who works to bring competitors together to meaningfully address financial inclusion for the poor, these companies are developing a set of “application programming interfaces,” or in plain English, ways of making computers talk to each other. These APIs will create open-source standards for the development of digital financial services that are automatically compatible with each other, lowering costs for providers and increasing the utility of digital financial services for customers overall.

By governing how different digital accounts send and receive money, the APIs can be the basis for a new “internet of payments,” across which individuals, banks, merchants, employers, and governments seamlessly transact. The APIs are still under development, but when they’re complete they will be released as a global public good, available to anyone who wants to invent.

AI In Fintech: 100+ Companies Using AI Algorithms To Improve The Fin Services Industry (CB Insights), Rated: B

Funding to AI startups reached record highs in 2016 and applications for artificial intelligence technologies exist across nearly the entire spectrum of business. Highlighted here are the top 100 AI startups selected by CB Insights operating across numerous industry verticals.

China

Assistant chairman of China Banking Regulatory Commission, Yang Jiacai, reported to be ‘out of contact’ (SCMP), Rated: AAA

Fifty-six-year-old Yang Jiacai, assistant chairman of the China Banking Regulatory Commission (CBRC) was reported to be “out of contact” since Tuesday, April 11, by Chinese media Caixin and Caijing.

Caixin reported Yang had transferred all his responsibilities to his colleague, the commission’s vice-chairman Cao Yu.

Yang made his last public appearance a week ago during a press conference for the CBRC, during which he introduced some heavy-handed regulatory moves planned by the commission.

Podcast 97: Yihan Fang of Yirendai (Lend Academy), Rated: AAA

In this podcast you will learn:

  • The origins of Yirendai and how it was incubated inside CreditEase.
  • When and why Yirendai was spun-off from CreditEase.
  • Some background on all the divisions inside CreditEase.
  • The typical borrower who comes to Yirendai for a loan.
  • How Yirendai has broken new ground in China.
  • The different channels they use to obtain borrowers.
  • The typical size, rate and term of their consumer loans.
  • How these borrowers use their loan proceeds.
  • How Yirendai differentiates themselves from their competitors.
  • Who the typical investors are who participate on their platform.
  • The average amount each of their 200,000 investors deploy on their platform.
  • How their investor product works and details of their risk protection fund.
  • How their business model works as far as revenue.
  • A breakdown of their institutional investor interest.
  • Why they decided to do an IPO in New York rather than Shanghai or Hong Kong.
  • The impact of the new marketplace lending regulations in China.
  • Yihan’s perspective on the fraud that has happened in China.
  • Details of their new Yirendai Enabling Platform that they launched at LendIt.
  • What areas Yirendai will focus on in the coming years.

China is Cracking Down on Unscrupulous Financial Services (Crowdfund Insider), Rated: A

In a series of reports, ChinaNews is pointing to the increasing scrutiny of the Chinese government regarding financial fraud and over-all malpractice.

Now the China Banking Regulatory Commission has published measures to address risks in the financial and banking sectors. According to ChinaNews, CBRC highlighted 10 areas for improving risk control in both traditional and internet finance – which includes peer to peer lending.

All of this is taking place with the back-drop of Xian Junbo, Chairman of China Insurance Regulatory Commission (CIRC), being placed under investigation for “disciplinary violations.” He will be the most senior government financial regulator to be investigated in several years.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

Big Data Company Wecash raised $ 80 million in series C funding led by China Merchants Capital, Fore Bright Capital and SIG. Two new investors – Dongfang Hongdao Asset Management and Lingfeng Capital joined the existing investors in this round.

On April 10, China Banking Regulatory Commission released “Guidelines on risk prevention and control in banking industry” to make the P2P online lending market standard by perfecting the in-out mechanisms, paying more attention to the supervision and perfecting the governance of online lending companies.

According to the PwC Global FinTech Survey China Summary 2017 released on April 6, the three main areas to be disrupted by FinTech in China over the next five years will be consumer banking, investment & wealth management, and fund transfers & payments. E-retailers, large technology companies and financial institutions will be the biggest sources of disruption.

Compared with developed countries, the market-penetration level of auto finance in China is much lower. However, it also indicates that China has a tremendous room to develop and grow.

US

Australia

China

Market-penetration

80% – 85%

70%

Less than 30%

On April 6, second-hand car online trading platform Souche closed on $180 million in Series D Funding led by Warburg Pincus. Other participants in the round included VMS Investment Group, ClearVue Partners, Haitong International, CreditEase and Morningside Capital. Notably, Souche just finished Series C Funding led by Ant Financial in the last November. In the past five months, Souche has raised a total of $280 million.

 

India

The India Fintech Market Map: 72 Startups Working Across Lending, Payments, Insurance & Banking (CB Insights), Rated: AAA

Looking at Indian fintech specifically, funding to private companies in the sector boomed from about $175M in 2014 to a high of $2B in 2015 (buoyed by mega-rounds to Paytm) and then slid to $530M in 2016. Still, 2016′s total funding was more than 200% higher than total funding in 2014. A host of global corporations and their venture arms have entered the fray, eager to reach India’s mostly unbanked population and profit from the country’s tech-friendly regulatory environment.

‘Free’ credit reports from fintech portals (livemint), Rated: A

Apart from bureaus, online financial marketplaces are also offering free credit scores and reports. These reports are not counted against the free reports you can get from credit bureaus directly.

On the four fintech platforms we went to, it took no more than a few minutes to log on, authorise the fintech to access our credit report, and get it on the screen or in email. And it was also simpler to get a report here than from a bureau’s website.

On Bankbazaar, we got the report on its website and in email. Paisabazaar displays the report on its website. Both sites provided reports from Experian Credit Information Co. of India Pvt. Ltd.

FinTech: To Regulate Or Not To Regulate? Former RBI Deputy Governor R Gandhi Explains (Bloomberg Quint), Rated: A

In lending, peer-to-peer lenders and online SME (small and medium enterprises) lenders are targeting clients considered too risky by banks. They claim to use technologies that can assess credit worthiness in smarter ways than the traditional income statements used by banks. In payments, wallet companies have taken the lead in retail payments forcing banks to up their game.

One gripe that banks have is that these fintech firms are getting away unregulated, which gives them a lot more flexibility in how they do business.

That’s true for now, said R Gandhi, former deputy governor of the Reserve Bank of India (RBI) who retired after a 37-year stint at the central bank earlier this month. The dilemma for the regulator is to decide when to regulate and how to regulate so as to ensure that innovative business models get a fair chance, Gandhi explained in an interview with BloombergQuint on Tuesday.

Is India ready for Peer-to-Peer lending industry? (Faircent), Rated: A

What we are trying to do is to create a P2P (Peer to peer) lending industry. Fundamentally we are providing an alternative to banking and other financial institutions.

Karun: Investors whom we call lenders can get returns up to 18% to 20% per annum which is much better than other options today. As a borrower you can avail unsecured loans at much cheaper interest rates. What we feel is that the banks make huge margins in terms of the rates that they offering customers on their savings and the rates they are lending it out to people at, in the form of loans. By reducing the margin, with Faircent as the match maker, we are able to pass value to both sides of the table, to borrowers as well as lenders.

Karun: We are purely a digital entity.   We are trying to use technology so that there is minimal offline intervention.

We’ve done a lot of marketing technology interventions, like we have a CRM which is built on top of our platform, which is a custom made CRM. We have integrated it with our lead gen channels. We have an email marketing platform using which we nurture our customers and also do promotional activities with potential customers. We have done a lot of work in trying to become Omni-channel. Three main channels which we use are email, SMS and Voice.

Karun: We are using a lot of the off- the- shelf products. But the challenge for us is really how do we integrate them with our platform. So hence we have to be much more careful about which option we choose. We are using Octane and Amazon for email. Octane is basically a mix of email and SMS which we are predominantly using for marketing.

Karun: Yes, we have a mobile app which is available on the Android and iOS platform. Right now, our focus has been more to enable our customers to access our platform on the mobile device. So for example if there is an investor who wants to invest in loans on the fly he can do it using our app. At present we’re not really focused on the app to acquire more borrowers or acquire more investors and lenders.

Razorpay plans overseas foray (The Hindu Business Line), Rated: B

Razorpay, a payment gateway solution provider focused on online merchants, plans to go international. It is looking to enter South East Asia and West Asia markets in 2018-19, Harshil Mathur, co-founder, has said.

The fintech startup, which started its journey in mid-2014, is in talks with local and global (banking) players in these markets, Mathur said.

Razorpay, which had raised Series A funding of $11.5 million, is not worried about funding for the next two years, according to Mathur.

Asia

ORIX Launches New Online Lending Business for Japanese Small Businesses (Orix), Rated: AAA

ORIX Corporation (“ORIX”) and Yayoi Co., Ltd. (“Yayoi”), an ORIX Group company, announced today that they are launching a new online lending business, a new FinTech service utilizing accounting big data and proprietary Artificial Intelligence (AI) based credit model.

The business will provide Internet-based lending to small businesses in Japan. A new credit model is under development, utilizing ORIX’s credit expertise, Yayoi’s accounting big data, and cutting edge AI technology by ORIX’s partner company, d.a.t. Inc. Most existing credit models in the market to date relied solely on static data such as financial reports; by utilizing dynamic data, such as day-to-day journal data and other transactional data, the new credit model is expected to offer much better predictive power than before.

ALT plans to start offering lending services on a trial basis to the approximately 600,000 companies, who are existing users of Yayoi’s online services1 in October 2017. Customers will be able to apply online, during which process they grant permission to access their accounting data.

According to a survey of 7,609 Yayoi customers, 85.0% of small corporations have a need for short-term financing, but 36.5% of those have been shying away from obtaining traditional loans, due in part to the excessive amount of time and efforts required for approval of short-term financing. With respect to sole proprietors, just 16.4% of them have obtained short-term traditional loans. Utilizing online lending can reduce complex administrative procedures, including the need to submit financial reports and other paperwork and to visit financial institutions in person, and can also shorten the time needed to obtain much needed cash, making simpler, more flexible financing possible.

AN INDONESIAN peer to peer (P2P) lending startup, KoinWorks is supporting small and medium enterprises (SME) and education by launching an art exhibition, ARTificial Intelligence which will run from April 13 to April 30 at Pacific Place, Jakarta.

Benedicto also says that KoinWorks mainly focuses on SMEs that conduct their sales and marketing activities online. He also believes that by connecting SMEs to lenders, it will bring benefits to both sides.

Benefits for lenders are through net gained interest from their investment which can be up to 19.8% annually depending on the risk level. The service also fulfils social needs by helping businesses to grow.

Users may invest in KoinWorks with a minimum deposit of US$7.50 (100,000 rupiah). The funding will be deposited in real-time at a virtual bank account. Users only need to scan and upload information from their identity card, fill in the form, and deposit the money.

LendIt China Event, Lang Di Fintech, Updates on PitchIt Competition (Crowdfund Insider), Rated: A

LendIt, the global lending and Fintech conference, has announced the official launch of the Asian edition of their Fintech startup competition, PitchIt, in association with JadeValue, a Shanghai-based Fintech incubator. The competition is for all early stage Fintech startups in Asia-Pacific.

PitchIt will take place at the Lang Di Fintech conference, China’s largest global Fintech conference in Shanghai in July.

The 8 Finalists Will Receive:

  • Opportunity to secure investment and partners by meeting investors
  • Have your pitch heard by the international fintech community in front of an audience of international and local attendees across APAC.
  • Gain valuable exposure through global PR
  • Up to $1,000 for travel to Lang Di Fintech
  • Year-round exposure through press and brand visibility and the chance to gain mentorship from Global VCs on pitching and product positioning prior to the event.

The Winner Will Receive:

  • Mentorship, co-working space for 6 months and guaranteed investment of $150,000 from JadeValue
  • 2 free passes to LendIt USA 2018, roundtrip airfare and accommodations
  • Curated meetings for investment purposes in the US during LendIt USA 2018 (April, 2018, San Francisco)
  • Complimentary sponsorship at LendIt USA 2018
MENA

The future of digital money (Gulf News), Rated: A

At a time when the consumer relationship with cash is more virtualiser and abstract, and where use of physical cash continues to decline in many markets, the next phase of digital money offers undiscovered potential for a new period of expansive growth in transactions, beyond the limits of national borders.

The region’s e-commerce marketplace is thriving too, but it depends more on cash on delivery than on electronic payments. At the same time, a relatively low share of adults have bank accounts, while mobile money accounts have had limited success. That could be about to change. New Fintech entrants are playing their part in helping drive payment digitisation.

Furthermore, developments in payments technology are making it easier for us all to transact. Egypt’s Payfort recently has successfully helped smaller merchants accept electronic payments, and offers instalment payment options to help merchants improve sales. We’re also seeing global providers such as Apple Pay, Google Pay becoming more active in the region after a slow start and more global players are coming, for example Samsung, with Samsung Pay about to deploy payment services that are promising to be easier, faster and more secure using your Samsung smart phone.

Africa

VoguePay Wins Best Fintech Startup Award (This Day Live), Rated: B

VoguePay.com, a secure payment gateway has won the “Best Fintech Startup” at the 6th edition of the Cashless Africa Awards 2017, organised by Mobile Money Africa in Lagos recently.

Authors:

George Popescu
Allen Taylor

The 2017 wave of Lending Fintechs: Alt Lending 3.0

PitchIt 2017 finalists

The PitchIt startup awards is one of the best and most exciting parts of the LendIt conference. This year, there were eight finalist competitors who met in front of hundreds of investors to pitch. Four judges picked the ultimate winner, Nova. Below are the profiles of Nova and the seven other PitchIt finalists. Nova – […]

PitchIt 2017 finalists

The PitchIt startup awards is one of the best and most exciting parts of the LendIt conference. This year, there were eight finalist competitors who met in front of hundreds of investors to pitch. Four judges picked the ultimate winner, Nova. Below are the profiles of Nova and the seven other PitchIt finalists.

Nova – Credit History for Immigrants

Nova is the world’s first cross-border credit agency. Many immigrants come to the United States with no credit history. They may come from a place where credit is not an option. In many countries of the world, banks do not issue credit cards. There may not even be many, if any at all, banks. Merchants do not offer purchases on credit, so when these immigrants land on U.S. soil, their ability to interact with the economy is limited by the options they had in their native countries. Nova solves that problem.

It started as a research project at Stanford University. U.S. property managers run credit and background checks on applicants to screen for potential risks when leasing or renting housing units. Those checks typically do not include overseas credit checks. With Nova, property managers have that ability. Not only can U.S. landlords check overseas credit, but they can also report negative actions so that the credit report is affected in the applicant’s home country.

Lenders can use Nova to check the credit history of applicants that come from non-U.S. countries. While many countries around the world do not have FICO scores and credit bureaus, that does not mean citizens of those countries do not have credit histories. Nova gains access to those histories.

Aella Credit – Instant Credit for Africans

Aella Credit’s focus is on Africa where employed workers may or may not have access to credit. Through Aella, employees can access alternative credit solutions through their employers.

Companies register on the Aella Credit platform and give the company access to employee records. Through an API call, Aella Credit can loan money to employees who access the platfom through their mobile phones. In most cases, they can have access to much-needed cash at low interest rates in a couple of minutes. They pay back the loans in payroll deductions authorized during the application process. Over time, their credit improves as Aella Credit reports their payment history to the credit bureaus.

Investors make loans and are almost guaranteed payment due to the payroll deduction process. Also, the default rate is low for the same reason. Everyone wins.

Alloy – Verifying Identities

Identity verification has been a major issue for many people and companies in recent history. As the world grows more and more digitized, identity verification will become an even bigger concern. Alloy makes the process seamless.

Through an API call, Alloy verifies identity by checking multiple sources of information. Using financial technology for financial service companies that want to fight fraud, they are able to verify identities quickly and accurately to prevent loss due to fraud and dissatisfaction.

Float – Providing Access to Credit Quickly and Easily

Float‘s mission is very simple and straightforward. It’s a mobile app that allows people to apply for a line of credit and be approved in just a few minutes—as in, under five. The money being loaned is sent directly to the app and the borrower can use that money from the app. In other words, it’s digital currency.

Instead of using FICO scores, the company bases the amount of credit on what they believe the applicant can afford. Credit lines begin at $50 and go up to $1,000, amounts that no bank would touch. Another anomaly is the payback plan. Whatever applicants borrow must be paid back by the 21st of the following month. Therefore, it’s more like a payday loan than a traditional line of credit, but instead of standing in line in a seedy part of town, applicants can borrow money while sitting in their living rooms.

Qwil – Unlocking Contractor Earnings

As a freelance writer, I’ve experienced times when a slow payment made it difficult to get through the month. It’s an experience that every contractor in any kind of business has experienced. With Qwil, contractors can get through those difficult months without stress. Think of it as a cash flow plan based on the quality of your invoices.

When you invoice your clients—whether it be Net 30, Net 60, or Net 90—this is reflected in your Qwil account. Contractors simply cash out on future invoice earnings and go on about their business.

RealAtom – Helping Commercial Real Estate Borrowers Find The Right Lender

There is a lot of innovation going on in real estate lending right now. Commercial real estate is one area where could be a lot more improvement. RealAtom is here to fill in some of that gap. Their niche is helping borrowers find the right lender.

True the marketplace lending format, both borrowers and lenders sign up on the platform. Borrowers post their loan details and documents for review while lenders specify their applicant criteria. RealAtom makes the connection through the platform, matching lenders with borrower requests and borrowers with lender criteria. They deal in loan amounts from $100,000 to $100 million providing access to bridge, mezzanine, and long-term permanent loans. They’ll even work with loan brokers.

StackSource – Commercial Real Estate Lending

Another marketplace lending platform specializing in the commercial real estate lending space, StackSource allows project managers and real estate developers a way to access funding for their projects by giving them a place to upload their project details and find lenders willing to fund those projects. The basic service is free, but there is an upgrade option that allows developers to pitch their projects to more lenders for a fee. It’s only .3% of gross loan value, which is due at closing. That still beats those hefty broker fees.

WeTrust Platform – Providing a Trusted Lending Circle

WeTrust is an online ROSCA, which stands for Rotating Savings and Credit Association. It’s a simple idea that has caught on in several countries under different names, but it allows a group of people to pool their money together for a common purpose and reap the benefits together.

ROSCAs are peer-to-peer instruments that allow the members to use their pooled money to gain access to credit, make a purchase, fund a business, or whatever they agree upon. They contain all the benefits of insurance as well as credit instruments. Members earn interest on their pooled money, but members rotate the benefits so that not all of them gain access to the money in the pool at the same time. In other words, they rotate the shared benefits to distribute them fairly and evenly so that the entire membership wins.

WeTrust operates in India, Latin America, China, and the U.S. with plans to expand to other countries soon.

Author:

Allen Taylor

Wednesday February 22 2017, Daily News Digest

Marcus

News Comments Today’s main news: OCC addresses risk management for bank-MPL relationships. IFISAs dogged by further delays. Radial integrates with Klarna. Bitbond raises $1.2 mil. Today’s main analysis: Marcus marks the end of traditional banking. Today’s thought-provoking articles: 3 upcoming changes to private student lending. The Pulse of FinTech infographics. United States OCC establishes risk management expectations for bank-MPL […]

Marcus

News Comments

United States

United Kingdom

European Union

International

Australia

News Summary

United States

OCC’s Third-Party Risk Management Expectations for Bank Relationships with MPLs (Pepper Hamilton LLP), Rated: AAA

On January 24, the Office of the Comptroller of the Currency (OCC) issued a new bulletin, OCC Bulletin 2017-07 (Supplemental Examination Procedures for Risk Management of Third-Party Relationships). The stated purpose of the bulletin is to assist bank examiners in evaluating the third-party risk management practices of national banks and federal savings associations (collectively, banks). For the most part, Bulletin 2017-7 reinforces existing OCC supervisory expectations. In several notable respects, however, the bulletin breaks new ground, including by addressing relationships with marketplace lenders.

In establishing risk management expectations for relationships between banks and marketplace lenders in its new bulletin, the OCC is following the lead of the Federal Deposit Insurance Corporation (FDIC), which issued its own supervisory expectations for these relationships in late 2015. As in the case of the FDIC’s guidance, the OCC bulletin broadly defines the term “marketplace lender” to include any “companies engaged in Internet-based lending businesses (other than payday lending).”2 Specific examples of marketplace lenders stated in the OCC Bulletin include online companies that make small business loans, consumer loans, student loans and real estate loans.3

If a bank plans to contract with a marketplace lender to “perform some, if not all operational functions, including processing, underwriting, closing, funding, delivering, and servicing of loans,” OCC Bulletin 2017-7 requires the bank to have sufficient support “systems, controls, and personnel [in place] to adequately support the volume of planned loan origination, servicing, or collection activities.”4 In addition, if the bank is considering contracting with a marketplace lender to originate or purchase loans, the bank must determine whether the lender’s underwriting methods are “new, nontraditional, or different from the bank’s underwriting standards.”5 Finally, if the bank will be investing directly or indirectly in, or will be providing warehouse lines or other credit facilities to, any third-party lender, including a marketplace lender, the bank must determine whether the third-party lender’s underwriting standards are consistent with the bank’s own underwriting standards.6

Goldman Sachs’ Recent Move Marks The End Of Traditional Banking (Newsmax), Rated: AAA

At the end of 2016, Goldman Sachs launched a new online lending platform called Marcus. The move into online lending by one of the most successful investment banks in the world is a telling move for two reasons.

First, it’s a good indicator of the post-financial crisis banking industry.

Second, rising compliance costs—combined with over seven years of zero-interest rate policy from the Fed—was a bad environment for bankers.

Peer-to-peer lending has grown from nothing a decade ago to be a $26 billion industry in 2015. However, it still only accounts for 2% of the market for unsecured consumer credit.

Goldman Sachs is using Finacle, a software program owned by Infosys, to run the Marcus lending platform. With this software, Marcus customers will be able to fully customize their loan parameters within guidelines set by the bank.

Gone are the days of negotiating with a banker on loan terms. The Finacle software is fully automated and will process the transactions in real time. It’s a fully operational “bank within a bank” that only relies on approximately 200 Goldman employees, according to Bloomberg.

Marcus is not a peer-to-peer lending platform. Instead, Goldman will be making loans against its own balance sheet. This will give the bank more flexibility with setting competitive loan terms and fees.

According to a Morgan Stanley report published in 2015, the effective annual interest on the peer-to-peer lending platforms analyzed was on average 6.8% lower than those offered by banks.

All the while, P2P lending platforms have historical net annualized returns between 5% and 10%. Compare that to investing in a 5-year US Treasury note that yields less than 2% today, below the reported rate of inflation, and can you see why Goldman Sachs got involved with online lending.

3 Upcoming Changes in Private Student Lending (US News), Rated: AAA

In fact, the day after Trump was elected to office, the stock price for Sallie Mae Corp., a large student loan lender, shot up nearly double from $7.10 per share on Election Day to $12.47 on Feb. 15.

For prospective private student loan borrowers, here are a few expectations that experts say consumers may see in the next year or two as a result of changes at the federal level.

1. More lenders entering the private student loan market: Matherson says easing of lending restrictions will lead to more lenders entering the marketplace over the next two years.

Experts say large commercial banks that left the private student lending market after the 2008 financial crises may also return.

2. Interest rate hikes for both variable and fixed-rate private loans:The Federal Reserve is signaling that it’s on course to raise the short-term interest rate this year.

Lending experts say they expect to see a 1 percent rise in interest rates for private student loans over the next two years. Those increases, they say, will affect both variable and fixed-term rates on private education loans.

3. A growing number of start-ups offering income-shared agreements: Under an income-shared agreement or ISA, students use funds from an investor to pay for college and in turn agree to make payments based on a percentage of their income for a set period of time after they graduate.

Casey Jennings, chief operating officer at nonprofit 13th Avenue Funding, which works with low-income students, says clarification of the legislation will make it much easier for financial and educational institutions to enter this space.

Prosper Marketplace President Ron Suber Joins Unison as an Investor and Strategic Advisor (PR Newswire), Rated: A

Unison Home Ownership Investors, the leading provider of home ownership investments, announced today that Ron Suber, president of Prosper Marketplace, has become an investor in the company and has taken on a significant advisory role as the company is experiencing a period of unparalleled growth, opportunity and availability.

A financial services industry veteran, Suber brings to Unison a wealth of experience across multiple disciplines. As an influencer in the financial technology space, Suber will look to grow the home ownership investment category through his relationships with marketplace lenders, mortgage companies, realtor groups and banks.

LendIt Announces 2017 PitchIt Finalists (PR Newswire), Rated: A

LendIt, the world’s largest show in lending and fintech, today announced eight finalists for its fifth PitchIt @ LendIt competition. In partnership for the first time with 500 Startups, the world’s leader in investing and mentoring, and sponsored by Marqeta, PitchIt is a leading global competition for fintech startups to earn mentorship, endorsement and exposure to institutions, investors and broad visibility.

This year’s finalists were chosen from nearly 300 high caliber applicants covering all areas of fintech including insurtech, blockchain, payments, online lending, credit and artificial intelligence.

The eight 2017 PitchIt finalists are:

  • Nova Credit
  • StackSource
  • Alloy.co
  • Qwil
  • Aella Credit
  • Real Atom
  • Float Credit
  • WeTrust Platform

The finalists will pitch their concepts at LendIt USA 2017 on March 7 to a panel of judges from the venture capital community including: David Teten, ff Venture Capital; Kareem Zaki, Thrive Capital; Ben Malka, F-Prime; and Joel Monegro, Union Square Ventures.

Kabbage preps small business loan deal (Global Capital), Rated: A

Online small business lender Kabbage is marketing a $500m securitization of loans to small and medium sized businesses which will be used to refinance an existing deal from 2014.

Guggenheim is the sole lead of the $500m deal, which is expected to officially begin marketing to investors in the week of March 6.

Kroll Bond Ratings has assigned an A rating to the $370.37m ‘A’ notes, and BBB to the $79.37m ‘B’ notes.

Marketplace deals readied, with innovations (Structured Credit Investor), Rated: A

Kabbage is marketing its first marketplace loan ABS of the year and its second since inception. Meanwhile, SoFi is in the market with its second consumer loan ABS – SoFi Consumer Loan Program 2017-2 – backed by US$343m of consumer loans and comprising several elements that differ from its previous securitisation.

Kroll Bond Rating Agency Assigns Preliminary Ratings to Arcadia Receivables Credit Trust 2017-1 (BusinessWire), Rated: A

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to two classes of notes issued by Arcadia Receivables Credit Trust 2017-1 (“ARCT 2017-1”). This is a $213.137 million consumer loan ABS transaction that is expected to close March 6, 2017.

This transaction is the first rated securitization of prime unsecured consumer loans facilitated by LendingClub Corporation’s (“Lending Club” or the “Company”) proprietary technology platform supporting an online marketplace that connects borrowers and investors by offering a variety of loan products originated by issuing banks through the platform, www.lendingclub.com(the “Lending Club Platform” or the “Platform”).

Why big banks are helping financial tech startups (Tradestreaming), Rated: A

Finlab, short for Financial Solutions Lab, is an 8-month startup accelerator program funded by JPMorgan Chase and run by the Center for Financial Services Innovation. It just sent out its third call for applications from financial technology startups working on tools for underserved populations. It’s an example of how banks are now partnering rather than competing with startups — a trend that’s grown quickly over the past couple of years.

Finlab began two years ago, and winners get $250,000 of capital, one-on-one mentorship and networking opportunities. About eight or nine winners are picked each round. Winners participate in a series of workshops across the country on how to grow their businesses, including a session on regulation.

Big banks are likely to keep supporting these programs — not only for relationship building, but also because startups are working on areas major banks aren’t addressing, said Gilbert.

4 Real Estate Crowdfunding Trends You Should Be Watching (Forbes), Rated: A

Real estate is one of the fastest growing markets to take on the concept of crowdfunding and apply it in a new way.

Here are four emerging trends in real estate crowdfunding to watch this year.

  1. Regulation Brings Crowdfunding to Maturity. Today, crowdfunding has matured and investors are more intrigued than they are skeptical. This is due, in large part, to the JOBS Act and the enactment of Regulation A+. It legitimized the industry and it has been growing ever since.
  2. Foreign Investment in Real Estate Is Booming. According to The Guardian, a recent U.S. real estate study showed that Chinese investors have poured $110 billion dollars into the U.S. market in the last 5 years (both commercial and residential). This investment is set to double in the next 5 years. Because of foreign investment expansion in the U.S., it’s relatively safe to assume that a portion of those dollars will go into alternative funding options like real estate crowdfunding.
  3. Wealthy Millennials Are Investing Their Money Differently. However, with the influx of unicorn technology companies and the increase of millennial millionaires, the need to put their money somewhere is still very much on their minds. Real estate crowdfunding has the potential to help them share the wealth while staying true to their sensibilities.
  4. Crowdfunding for Retirement. Those considering real estate investing, especially through crowdfunding platforms, could potentially improve their rate of return with tax efficient strategies, more specifically IRA’s. Real estate crowdfunding platforms allow those saving for retirement to invest in real estate right from the golf course, with just a few clicks on their phone or tablet.

PeerStreet’s CEO Brew Johnson Talks Real Estate Crowdfunding Market (Forbes), Rated: A

The company was founded by former Google executive Brett Crosby and real estate attorney Brew Johnson. By the end of 2016, the company originated more than $200 million.

Johnson: The biggest differentiators between PeerStreet and other players are pretty simple: (i) our platform is very focused on one asset – first-lien debt. We think creating this focus at the outset is important in delivering value to users. And most importantly, (ii) we don’t originate loans directly to borrowers, but rather we aggregate loans from a distributed network of lenders, curate those loans, and then make it easy for investors to invest in them.

Johnson: We exceeded $200 million in origination volume by the end of 2016. Our KPIs are based on loan volume and quality.

Johnson: We maintain focused on our core asset: short-term, first position lien loans. Our data continue to show that this asset provides favorable risk-return profiles for investors, so 2017 is about growing our loan volume in order to serve even more investors.

Johnson: I think there are opportunities of various sizes across the industry. That said, a couple that I find particularly interesting are the potential implications for a more robust rating and credit scoring of alternative lending investments across platforms and those of creating a truly efficient secondary market or exchange that enables investors to seamlessly trade in and out of positions.

Misys Targets Offerings for P2P Lending (Intralinks), Rated: B

Traditionally focused on treasury and capital markets solutions, Misys revised its focus to include solutions that would allow banks to branch into peer-to-peer (P2P) lending, as well as an offering for machine learning that would detect anomalies in trading patterns.

Altisource’s Premium Title Announces Integration with LendingQB’s Loan Origination System (Yahoo! Finance), Rated: B

Premium Title, a national provider of title and escrow services, announced today its integration with LendingQB’s end-to-end, browser-based loan origination system (LOS). The integration can help provide customers with the ability to obtain title and settlement quotes faster, place orders with Premium Title and receive a title fee certificate guaranteeing fees for 30 days, all without leaving the LendingQB platform.

This integration, gives Premium Title clients the capability to experience a seamless and more efficient process within the LendingQB LOS platform. Lenders using LendingQB can receive an automated quote for title services and a title fee certificate guaranteeing title fees, which auto-populates into the LOS. LendingQB can also maintain the loan estimate and any adjustments in fees associated with the loan, assisting with TRID compliance and faster disclosure timelines.

United Kingdom

Innovative Finance Isas dogged by further delays (Financial Times), Rated: AAA

The Innovative Finance Isa was officially launched by former chancellor George Osborne in July 2015, putting peer-to-peer lending platforms — where individual investors are matched with interest-paying borrowers — on a level playing field with traditional savings and investment products which can be held within an Isa wrapper.

A year on, the FCA has still yet to grant the bulk of peer-to-peer lenders, including the three largest — Zopa, Funding Circle and RateSetter — the authorisation they need to launch an Innovative Finance Isa in time for the new tax year in April.

These three peer-to-peer platforms account for more than 40 per cent of the UK’s market share by loan origination, according to AltFi data, having lent nearly £6bn combined.

Chatbot savings app Plum partners P2P lender Ratesetter (Finextra), Rated: AAA

British AI-powered savings Facebook Messenger chatbot Plum is to start steering users that are willing to take on risk in exchange for higher interest rates to P2P lender Ratesetter.

According to Moneyfacts, the average UK rate on easy-access accounts is 0.15%, while the average return earned by RateSetter investors to date is 4.7%.

The money goes into users’ Plum savings account but the Ratesetter deal means that people can also now choose to earn a better rate – if they are willing to take on the associated risk.

Zopa Named Best Personal Loan Provider & Best Alternative Finance Provider at the 2017 British Bank Awards (Crowdfund Insider), Rated: AAA

Zopa, the UK’s very first peer to peer lending platform, announced on Monday it was named Best Personal Loan Provider & Best Alternative Finance Provider at the 2017 British Bank Awards.

This news comes just a few weeks after Zopa was named Personal Loan Provider of the Year at the Consume MoneyFacts Awards for the fourth year in a row.

Zopa recently announced it topped £2 billion in lending.  According to information provided by the online lending platform, as of today, the lender matched over 246,000 borrowers to 75,000 investors to provide access to capital in the form of loans.

RateSetter Borrowers Have Paid Back £1 Billion, Investors Have Earned £63 Million (Crowdfund Insider), Rated: A

Online lender RateSetter has said it has now collected £1 billion in capital repayments from borrowers since its first loan back in 2010. Overall, RateSetter has originated approximately £1.75 billion in loans while paying out £63 million in interest.  The average interest rate ranged between 3.1% on the Rolling market and 6.0% for the 5 Year market. In 2016, total lending was pegged at £668 million.

Awareness of P2P drops north of London (P2P Finance News), Rated: A

AWARENESS of peer-to-peer finance products among small- and medium-sized enterprises (SMEs) is at its lowest in the Midlands and the north of England, the British Business Bank (BBB) has revealed.

The figures, revealed in its latest annual Small Business Finance Markets report, showed fewer than 40 per cent of firms in the Midlands were aware of P2P lending, compared with almost 60 per cent in London.

Around half of firms in the south of England were aware of P2P, while just 40 per cent of firms in the north had come across it.

Despite the varying levels of awareness, the report found annual lending through P2P platforms increased by 34 per cent to £3.9bn in 2016. Business lending made up £1.3bn of that amount.

SME Loan Fund plans break with GLI in bid for scale (Citywire), Rated: A

The SME Loan Fund (SMEF +), the small directing lending investment trust set up by GLI Finance, plans to break ties with its founder in a bid to gain scale.

The trust launched in 2015 amid a boom in peer-to-peer lending launches, yet was able to raise just £12.4 million capital. Assets currently stand at £53 million, mostly from an initial portfolio of loans transferred by GLI Finance (GLIF +) as part of the launch.

The SME Loan Fund said that GLI had agreed to sell its 48% stake in the trust through a placing. Should the placing prove successful, the SME trust will switch management from Amberton Asset Management, 50% owned by GLI. If it is not, the board will propose the wind-up of the trust.

GLI Finance, an investment trust in its own right, said it would use the money from a share sale to repay a £14.9 million loan to strengthen its balance sheet.

Most board members of P2P trusts have skin in the game (P2P Finance News), Rated: A

THE MAJORITY of board members of peer-to-peer investment trusts have “skin in the game”, research has revealed.

Canaccord Genuity research has assessed the pay and investments of board members of investment trusts. The analysis included funds focused on the P2P sector.

It showed that the highest annual pay packet among P2P investment trusts is £50,000, taken by the chairmen of the Funding Circle SME Income Fund and Victory Park Capital (VPC) Specialty Lending.

Samir Desai, co-founder of the Funding Circle platform, who sits on the investment trust’s board, has put £152,775 into the fund.

This is the highest among its board members, followed by £110,349 invested by non executive director Frederic Hervouet. The Funding Circle SME Income Fund board chairman Richard Boleat takes the highest annual fee on the board at £50,000 and has invested £5,157.

The trust’s board members Jonathan Bridel and Richard Burwood, both non-executive directors, have also invested £5,157 and their annual fee is £40,000 and £30,000 respectively.

Desai does not take a fee and Hervouet has an annual fee of £35,000.

European Union

Radial payments platform integrates with Klarna (Finextra), Rated: AAA

Klarna, one of Europe’s leading payments providers, and Radial, the leader in omnichannel commerce technology and operations, today announced a new partnership to further expand Radial’s payment options.

The integration of Klarna with Radial’s Payment platform enables clients and prospects to offer a financing option at checkout to give customers more choice and could give retailers a 58 percent higher order value.

Financing a purchase over time has historically been optimized for brick and mortar stores. The online equivalent, however, can often be an ordeal, with redirects, lengthy forms and unclear information. Klarna’s process only requires a few fields of information, and lets customers know instantly if they qualify for the financing solution.

International

Bitbond raises $ 1.2 million to grow SME lending platform (Finextra), Rated: AAA

Global SME lending platform Bitbond today announced the closing of an equity funding round of $1.2 million (€1.1 million).

This round brings Bitbond’s raised equity capital to a total of $2.3 million.

Led by mobilike founder Şekip Can Gökalp, a number of business angels contributed to the round. Among them were Fyber founders Janis Zech and Andreas Bodczek as well as Kreditech co-founder & CEO Alexander Graubner-Müller.

Bitbond will use the additional funds for further product development and to grow its user base in markets which are underserved by traditional lenders. Over 1,600 loans worth $1.2 million were originated on Bitbond since its launch. 76,000 users from 120 countries registered with the service to date.

Infographics – The Pulse of Fintech – Q4 2016 (KPMG), Rated: AAA

According to The Pulse of Fintech, after 2015’s record-setting $46.7 billion in global funding to fintech companies, 2016 brought reality back to the market with an almost 50 percent slide in fintech investment.

Australia

Australia weathers fintech slump (The Australian), Rated: A

Global investment in fintech companies almost halved last year as “froth” comes out of the burgeoning industry and investors wait to see if they can successfully disrupt incumbents such as banks and insurers, according to a new report.

Fintech investment funding declined to $US24.7 billion ($32.17bn) last year from a bumper $US46.7bn in 2015, driven by fewer merger and acquisitions, and private equity investments, KPMG found.

However, the less mature Australian fintech industry bucked the trend as investment soared to a record high of $626 million last year, up from $185m in 2015 and $461m in 2014.

In contrast, corporate venture capital arms — those owned by banks and other incumbents — played a bigger role in the market, expanding investment to $US8.5bn from $US4.9bn. Australia’s institutions, including National Australia Bank, are increasingly investing in fintech via internal VC arms.

Authors:

George Popescu
Allen Taylor