Friday January 26 2018, Daily News Digest

marketplace lending

News Comments Today’s main news: SoFi completes $960.2M student loan securitization. Robinhood adds zero-fee crypto trading, tracking. Goldman partners with Cadre. South Korea earmarks 11.2T won for midrange borrowers. Today’s main analysis: Buying overdue loans at discount on Mintos’ secondary market. Today’s thought-provoking articles: What RateSetter will look like without unsecured commercial loans. AltFi Data predicts strong U.S. MPL […]

marketplace lending

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United States

SoFi Completes $ 960.2 Million Student Loan Securitization (Crowdfund Insider), Rated: AAA

Online lender SoFi announced on Thursday the closing of its $960.2 million offering of SoFi Professional Loan Program 2018-A Notes (SoFi 2018-A). According to the lending platform, the offering reflects underlying collateral of more than $1billion in student loans and is SoFi’s largest ever securitization, as well as the first by any fintech lender to reach the billion-dollar collateral mark.

KBRA Assigns Preliminary Ratings to SoFi Consumer Loan Program 2018-1 (BusinessWire), Rated: A

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by SoFi Consumer Loan Program 2018-1 (“SCLP 2018-1”). This is a $591.5 million consumer loan ABS transaction.

Preliminary Ratings Assigned: SoFi Consumer Loan Program 2018-1

Class Preliminary Rating Class Principal
A-1 AA+ (sf) $320,000,000
A-2 AA+ (sf) $142,500,000
B A (sf) $81,000,000
C BBB (sf) $48,000,000

A Knife in Twitter’s Back Could Bring A Happy Ending to SoFi Investor’s Wild Ride (Inc.), Rated: A

And the reason that departure could make me better off is that I invested in SoFi in December 2014 when the company was valued at $1 billion. The last time SoFi raised money – in 2017 – it was valued at $4.3 billion.

There are five reasons I invested in SoFi  — of which these four are the most important.

1. It was targeting a huge market

SoFi started out targeting the $1.2 trillion student loan industry and in 2014 announced an expansion into the $12 trillion mortgage market.

 2. Its management team had excellent industry knowledge

 3. It knew what ailed stakeholders and provided a remedy

Of the 15,500 borrowers who had taken out about $1.3 billion worth of loans in 2014, SoFi estimated that it had saved the average borrower $11,783.

 4, It looked like it could reach $100 million in revenue

In November 2017, Bloomberg reported that in the third quarter of 2017 SoFi’s adjusted operating revenue rose 8.2% to $145.3 million in the third quarter while its adjusted earnings totaled $56.1 million.

Moreover, SoFi added 55,000 members in the quarter to a total of 400,000 – having completed “more than $3.52 billion in loans in the period and completed three securities offerings totaling more than $1.5 billion,” according to Bloomberg.

Scandal-rocked SoFi says it has foundation for full recovery (American Banker), Rated: A

He points to the $12.9 billion in loan originations SoFi did last year. The company sold more than $2 billion of those loans.

“All our investors are still buying, and we’ve added many new investors post Mike leaving,” Jain said. “All our lenders continue to lend to us and they’ve shown interest in lending us more. In the face of adversity, we did all we could.”

Source: American Banker

6 Awesome Benefits of SoFi Parent Student Loans (Student Loan Hero), Rated: A

If your child is a college student, you can borrow money to help offset their education costs with a SoFi Parent Loan. According to the company, borrowers can save $3,637 over the life of the loan compared to a federal Parent PLUS Loan, on average.

If you took out a federal Parent PLUS Loan, you could face interest rates as high as 7.00%.

  1. Low interest rates – Depending on your credit score and income, you could qualify for a much lower rate with SoFi than you would with a federal student loan. SoFi student loans have fixed interest rates as low as 3.25% and variable rates as low as 2.58%.
  2. No origination or application fees – For borrowers who received their loans after October 2017, that fee is 4.264 percent of your loan amount. On a $10,000 loan, that means you’ll have to pay a fee of $426.40, adding to the cost of your child’s education.
  3. Career support
  4. Wealth advisors
  5. Member discounts – If you have a SoFi parent student loan and go on to take out a personal loan, mortgage, or another student loan with the company, you’ll receive a 0.125 percent interest rate discount on the new debt.
  6. Customer support

Loan Program Plans to Offer Students Prepaid Bank Cards (The New York Times), Rated: A

The Department of Education plans to provide students with a prepaid card that would hold surplus loan money that is not needed for tuition, giving the government and financial services providers a firsthand look at how students are spending those dollars.

Robinhood adds zero-fee cryptocurrency trading and tracking (TechCrunch), Rated: AAA

No-commission stock trading app Robinhood will let you buy and sell Bitcoin and Ethereum without any added transaction fees starting in February, compared to Coinbase’s 1.5 to 4 percent fees in the US. And as of today Robinhood will let all users track the price, news, and set alerts on those and 14 other top crypto coins, including Litecoin and Ripple.

Former Ripple Exec Invests $ 57.5 Million in Uphold (CoinDesk), Rated: A

Digital money platform Uphold today announced it has received a $57.5 million investment from former Fed Reserve senior analyst and Ripple chief risk officer Greg Kidd.

Goldman Sachs Teams Up With This Silicon Valley Upstart in Commercial Real Estate (The Motley Fool), Rated: AAA

Goldman’s strategic investments group, which makes venture-capital-like investments, now owns 80 portfolio companies.  One such company is Cadre, a fintech company involved in online commercial real estate investing that Goldman funded in its Series B, C, and D funding rounds. The start-up, which happens to be led by some Goldman alumni, also just received a $250 million investment from Goldman’s private wealth clients.

Cadre also charges its LPs less than a typical private real estate fund. These funds usually charge a management fee, often around 1.5%, as well as a 20% cut of the profits above an 8% “preferred” return to LPs. On Cadre’s website, it advertises a 1% “transaction fee” (I assume that’s based on a per-deal fee, like a broker would get) and then a similar 1.5% management fee, but no incentive fee. Cadre claims this fee structure will increase investors’ invested rate of return by over 2% compared with a typical fund, all other factors being equal.

Instant cash out comes to Venmo (Business Insider), Rated: A

Venmo, the PayPal-owned digital peer-to-peer (P2P) transfer service, is within 30 minutes) cash out their Venmo balance for a flat $0.25 fee.

Trump administration prepares to roll back key financial protections for consumers (MarketWatch), Rated: A

The new leadership has taken over at a time when consumers are struggling with credit-card, auto loan and student loan debt. They’re also worried about their personal data, after a 2017 breach at the credit reporting agency EquifaxEFX, +0.81%   exposed personal information of more than 145 million U.S. adults, including their Social Security numbers and financial accounts.

Mulvaney requested zero dollars for his second-quarter budget

The bureau already had $177 million in reserves, enough to cover the $145 million the bureau projected it would need during the second quarter, he said.

USA consumer bureau delays prepaid card rules into 2019 (AliveForFootball), Rated: B

The Consumer Financial Protection Bureau today finalized changes to its final rule on prepaid products, including an overall delay of the rule’s effective date until April 1, 2019 – an extension long sought by the American Bankers Association. The bureau also made changes meant to boost compliance with the rule and loosen rules on linking credit cards to prepaid accounts or “virtual wallets”.

The rule requires companies to disclose fees on prepaid cards and cooperate with consumers who discover unauthorized charges or errors.

Mastercard eyes biometric totality by 2019 (Fintech Futures), Rated: A

Mastercard says all consumers will be able to identify themselves with biometrics such as fingerprints or facial recognition, when they shop and pay with Mastercard by April next year.

StreetShares lands $ 23M for expansion, will look for new office space (Washington Business Journal), Rated: A

The veteran-oriented online lender will beef up staff and look to expand its government contracting offerings.

REIT Industry Veteran Talks About What to Expect from the Sector in 2018 (NREI Online), Rated: A

NREI: More specifically, what’s your take on how publicly-traded REITs will perform this year? Will 2018 be better overall than 2017?

Aaron Halfacre: In 2017, publicly-traded REIT performance was anemic relative to the S&P 500. I think that can be largely attributed to a few factors: big demand for large-cap “infotech” names driving the broader market, a meaningful sell-off in retail REITs and general market hesitation on REITs in front of the tax bill and Fed decisions. On a relative basis, publicly-traded REITs are well-positioned in 2018, not only from the fundamentals picture, but from a value perspective.

NREI: What about non-traded REITs?

Aaron Halfacre: I think 2018 could be as strong, or stronger, than what we saw in 2017. Personally, I am excited about the industry changes in the non-traded REIT space. It is a good thing to see Blackstone and Starwood entering the space while some of the traditional fee-hungry shops have bowed out—a good advocacy trend for the individual retail investor. Institutional-grade real estate choices without the… fee structures of yesteryear, combined with greater valuation transparency and an investment that is not correlated to the broader equity market — that’s a positive story for all of us who aren’t part of the 1 percent.

‘AI isn’t just technology, it’s good judgment’: Cathy Bessant on why banks need humans (Tearsheet), Rated: A

Bessant is transforming B of A into a technology firm and leading it into a future that requires humans to apply immense computing power to immense amounts of data — an artificial intelligence future. But like any every other technology executive, she’s facing a shortage of talent with science, technology, engineering and math backgrounds. The result is often departments hiring from other departments.

Bank of America will spend $600 million this year on cyber defense alone. It employs 1,200 people whose jobs are dedicated to nothing else but information security, although the company makes that “the job of every single employee,” Bessant said. But the caliber of the talent the bank hires is just as important as the technology it invests in, since they’ll be the ones that determine how to work responsibly with AI.

Bank of America Enters Car Subscription Space With Volvo (Auto Finance News), Rated: A

All of Volvo Car Financial Services’ loan and lease originations end up on Bank of America’s balance sheet, Hollodick explained, including subscriptions to Care by Volvo, which starts at $600 a month for an XC40 compact crossover.

2,000+ bank branches closed in US in 2017 (Fintech Futures), Rated: B

US banks accelerated their pace of branch closures in 2017, shutting down 2,069 locations (an 18% increase compared to 2016), according to CoStar, a US-based commercial real estate news site.

3 Industries that can benefit from alternative credit data (MicroBilt), Rated: A

Although alternative credit remains a murky, unfamiliar concept to some, its adoption is slowly but steadily spreading. Some sectors may be particularly well-positioned to benefit from its use, and businesses under those umbrellas should consider adopting them if they haven’t yet done so.

Rally Rd collects $ 2.6 mln seed (PE Hub), Rated: A

Rally Rd., A marketplace for making investments in collector cars the same way you buy & sell stock, announced that it has raised a $2.6 million seed round investment from leading venture capital firms and individual investors.

The Unconventional Way This Man Paid Off $ 70,000 in Student Loans (Student Loan Hero), Rated: A

When Ray Laureano and his wife graduated from college, they left school with a staggering amount of student loans. Between the two of them, they were over $200,000 in debt.

Ray and his wife paid off over $70,000 in just one year.

A radical debt repayment strategy

Instead, he talked to each loan servicer and entered the lower-interest loans into forbearance; in other words, he paused payments on those loans.

With his other debt payments on hold, he put all of his extra money toward just one loan with the highest interest rate. When that loan was fully paid off, he tackled the next highest-interest debt, and so on.

Ray estimates that they will be debt-free by March 2020.

Enacomm Inks Reseller Agreement with Telvoyant (GlobeNewswire), Rated: B

Data intelligence and advancements in communications technologies are helping financial institutions dramatically improve the customer self-service experience. Enacomm, Inc., a leading provider of intelligent interactions and customer authentication technologies for banks, credit unions and credit card companies, today announced a new partnership with Telvoyant, a premier telecom consulting firm providing comprehensive telecom solutions for business, non-profit organizations and government institutions. Through a reseller agreement between the two companies, Telvoyant’s bank and credit union customers will be able to take advantage of Enacomm’s VPA (Virtual Personal Assistant) banking and the Enacomm Financial Suite (EFS), which includes a hosted, dynamic interactive voice response (IVR) system for personalized customer interactions.

United Kingdom

What will RateSetter look like without unsecured business lending? (P2P Finance News), Rated: AAA

Consumer loans still make up the lion’s share of RateSetter’s £2.2bn loan book, while its commercial arm – both secured and unsecured – makes up 9.8 per cent, equating to £223.4m.

Of 2,213 commercial loans in total, including those that have been paid and repaid, 1,622 were unsecured and 591 secured as of the end of last year.

But its secured loans tend to be larger. 42.5 per cent of the value of RateSetter’s commercial loan book are listed as unsecured. This represents £95.1m worth of unsecured business loans compared with £128.2m of secured business loans.

UK Federation Of Small Businesses Says AltFin Is Just Heating Up (PYMNTS), Rated: A

The not-for-profit Federation of Small Businesses (FSB) has been a vocal proponent of faster SMB payment times, greater access to more robust banking services and tighter regulation in support of small businesses across the U.K. Most recently, the FSB announced plans to join the alternative finance world and establish the FSB Funding Platform, a marketplace lending portal through which small businesses can access funding from more than 100 lenders.

The FSB’s own research on small business finance, outlined in its Q4 FSB Voice of Small Business Index, found that fewer SMBs were concerned about their access to finance in Q4 2017 than they were in the same quarter of 2016. For the first time since Q1 2012, the FSB’s credit availability index has surpassed its credit affordability index.

And yet, according to the report, small business confidence fell into negative territory, with 73 percent of SMBs reporting a rise in the cost of doing business.

Does cutting-edge technology require a new approach to insurance? (techworld), Rated: A

Digital Risks, an insurtech startup launched in 2014, focuses solely on providing insurance to startups working in the digital, media and tech space.

“We insure things like challenger banks, peer-to-peer lending, payments, medtech, teleadvice, fraud detection, cyber security software, and sharing economy businesses,” Rose adds. “The general focus is around technology.”

Digital Risks doesn’t provide insurance itself – rather, it acts as a broker between companies and a group of about 20 different underwriters.

Lendinvest backs £12m Leeds-based PRS scheme (Specialist Lending Solutions), Rated: B

The specialist property finance lender has completed a £12.5m financing deal with KMRE Group to build 111 new homes in Kirkstall, in a private rental sector (PRS) scheme.

The whole development will be managed as a PRS scheme, and was forward sold before construction commenced to a £300bn investment management group.

International

AltFiData Predicts Strong Growth for Marketplace Lending in the US in 2018 (Lend Academy), Rated: AAA

Today, leading data analytics provider for marketplace lending, AltFiData, released the total origination numbers for the UK, Europe and the USA. They are predicting solid growth for the industry in all three regions in 2018. The new loan volume for the USA in 2018 is expected be $38.9 billion, a year on year increase of 46%.

Still, I think 46% growth is a little on the high side for the four companies covered here but I expect we will get close to those numbers. Interestingly, AltFiData is expecting the UK industry to grow at 43%, slightlty slower than the USA, and Continental Europe to grow at 73% off a much smaller base.

Investing on the Mintos Secondary Market – Hint 2 – Buying overdue loans at discount (P2P-Banking), Rated: AAA

I get a result of 349 loans with various discounts and an YTM of up to 14%. Not surprising for me, many of the loans listed at the top are Mogo loans.

Source: P2P-Banking

If these loans do pay up and then run till regular maturity date, then he recieves a yield of 12.4% to 13.8%. Decent, but not very high compared to other Mintos loans.

However there is a chance of at least 50% that these loans will default and are bought back within the next 30 days. If that happens to a loan, that a buyer bought at 0.3% discount, it will boost his yield very roughly by more 3.6% (0.3% for 30 days multiplied by 12 to get annual effect). Likely it is more because the next payment date will be less than 30 days away. But even taking 3.6% the yield will be around 17%.

The loan with the 0.6% discount would mean a boost of very rougly 7.2% yield on top (0.6*12). So that could lead to about 20% yield.

Global Venture Capital Investment Market – Top 3 Trends by Technavio (BusinessWire), Rated: A

According to Technavio analysts, the global venture capital investment market will grow at a CAGR of more than 27% during the forecast period.

The three emerging market trends driving the global venture capital investment market according to Technavio research analysts are:

  • IPO market gains momentum
  • Growing portion of new investments in China and India
  • Increased participation from mutual funds, hedge funds, and banks in the VC market

In 2017, a lot of major startups such as Cloudera, China Rapid Finance, and Okta came up with IPOs. Most of the companies issuing IPOs were technology-focused and were software and cloud service providers.

During the forecast period, the Americas was the leading venture capital investment market with a market share of more than 56%, with the US being the leading country in the region.

Source: BusinessWire

Crowdfunding – Raising Billions (BW Disrupt), Rated: B

Equity crowdfunding has also become legal in countries like United Kingdom, France, Austria, Germany, Netherlands, Australia, Hong Kong and the U.S. with President Obama legalizing the equity crowdfunding by signing the JOBS Act into law.

Source: BW Disrupt

The Crowdfunding statistics for 2017 reports a global amount raised for $34 billion, broken into $25 billion through peer-to-peer lending, $5.5 billion through reward and donation and $2.5 billion through equity crowdfunding. The projection of the crowdfunding industry is expected to grow over $300 billion by 2025.

Australia/New Zealand

Big banks, biased financial advisers, and the three tricks to avoid them (The NewDaily), Rated: AAA

This week the big banks got more bad press when the corporate regulator ASIC declared that their huge networks of financial advisers were failing to operate in the best interests of their customers.

The report, which covered the financial advice arms of the Commonwealth Bank, Westpac, ANZ, NAB and AMP, found that an astonishing 75 per cent of advice provided was not in the best interests of customers.

And in 10 per cent of cases, consumers were actually worse off than they would have been if they hadn’t got advice.

PledgeMe announces new crowdlending-inspired platform in the works (bizEDGE), Rated: A

PledgeMe has jumpstarted the year with the announcement of the launch of a new lending platform they will be offering.

The Ta Koha platform will be based on a crowdlending model in partnership with the Māori Women Development Inc (MWDI).

India

Innovative products pay off for e-lending startups (ET Rise), Rated: A

After payments, digital lending as a space is at the vanguard of innovations, driven by a clutch of startups seeking to take formal lending to a customer segment that never got easy credit from banks.

From a digital EMI card to instant personal loans and a line-of-credit product, new-age disruptors such as Stashfin, Kissht, and Antworks, along with their established peers Paysense and Moneytap, are trying to generate traction through innovative lending products. Mumbai-based Kissht is financing consumption requirements of low-income households with a digital EMI card that can be used to make payments directly.
“There are around 40 online merchant partners and 2,000 points of presence accepting the Kissht EMI card across businesses like electronic stores, furniture shops and others,” said Krishnan Vishwanathan, chief executive of Kissht. Another Delhi-based startup, Stashfin, is also targeting consumers with income levels between ?20,000 and 1 lakh per month.
Asia

W11.2tr earmarked for midrange borrowers (The Korea Herald), Rated: AAA

South Korea’s Financial Services Commission said Thursday it plans to circulate a combined 11.2 trillion won ($10.6 billion) this year for local retail borrowers that hold midrange credit scores while having trouble finding corresponding loans.

The FSC pledged to pour a combined 8 trillion won into state-run loan products sold at banks, including those designed for refinancing. The remaining 3.2 trillion won will be spent to encourage private banking institutions to develop and sell midrange loan products this year, and the volume of support is expected to gradually increase, according to the plans.

By 2022, the government’s annual financial support for five commercial banking groups — Shinhan, KB, KEB Hana, NH and Woori — will increase by 2.5 times to 2.4 trillion won from 2017, according to the plans. Direct banks Kakao Bank and K Bank received 900 billion won in 2017, and the volume will increase by 3.5 times to 3.1 trillion won in 2022.

Africa

SelfKey Receives Regulatory Sandbox License in Mauritius (Crowdfund Insider), Rated: B

SelfKey, a blockchain-based digital identity firm, has obtained a Mauritius’ Regulatory Sandbox License (RSL), according to information provided by the company. This license will allow SelfKey to develop their self-sovereign digital identity wallet and financial services marketplace under supervision and scrutiny of the Board of Investment of Mauritius.

Authors:

George Popescu
Allen Taylor

Monday September 25 2017, Daily News Digest

Federal Reserve Balance Sheet

News Comments Today’s main news: Prosper closes on $50M funding round at $550M valuation. SmartBiz Loans hits $500M in SBA loans. Labour proposes debt cap that would force credit card companies to write off billions. European Central Bank considering requiring fintechs to hold more capital. RateSetter raises $10.5M. FinEX Asia’s private equity fund manager invests $50M in Prosper. Today’s main […]

Federal Reserve Balance Sheet

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United States

United Kingdom

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International

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United States

Prosper Closes on a $ 50 Million Funding Round at a $ 550 Million Valuation (Lend Academy), Rated: AAA

Earlier this week Prosper closed on a Series G transaction where they raised $50 million from an investment fund co-managed by FinEx Asia and LPG Capital based in Hong Kong. While Prosper would not confirm their new valuation sources said the post money valuation was $550 million. This represents a 70.5% drop in value from their high in 2015. So the rumors from last month are true.

On April 2, 2015 Lending Club was trading at $19.26 a share. Yesterday the shares closed at $6.10 which is a 68% decline in valuation. This is pretty much in line with the decrease in valuation at Prosper.

A spokesperson for Prosper told me that the money will not be used for operations but rather for new projects. Prosper is now cash flow positive with liquid assets of around $42 million as of Q2 2017. There was no dire need to get this funding round done but it will be helpful for them as they look to grow in a sustainable way.

FT Partners Advises Prosper on its $ 50,000,000 Financing Round (FT Partners Email), Rated: AAA

FT Partners is pleased to announce our role as sole strategic and financial advisor to leading marketplace lender 
Source: FT Partners

Download and read the full transaction announcement here.

Fed News, Prosper Financing, ABS East Highlights (PeerIQ), Rated: AAA

Source: PeerIQ
Source: PeerIQ

Fed Reducing Balance Sheet and Not Offering Regulatory SandBox

Source: PeerIQ

On heels of 70% plunge in valuation, Prosper CEO defends latest fundraisings (Biz Journals), Rated: A

After pocketing $50 million in a huge down round and another deal that could give an investor group a 30 percent stake in the marketplace lender, there’s really only one question for the CEO: Are you giving away the store?

SmartBiz Loans Hits $ 500 Million Mark in SBA Loans for Small Businesses (Small Biz Trends), Rated: AAA

Small business lending platform SmartBiz Loans has announced surpassing $500 million in funded Small Business Administration loans.

SmartBiz Loans says it ranked as the leading facilitator of traditional SBA 7(a) loans under $350,000 for the 2016 fiscal year. This means SmartBiz surpassed Wells Fargo and other major banks in relation to SBA lending.

Small Business Loans Are Still An Option For Struggling Business Owners (Inquisitr), Rated: A

Small business loans are helpful for business owners who have no other financial options. SmartBiz Loans has announced that it surpassed $500 million in funded Small Business Administration loans. A fifth bank has joined its software platform.

According to the Buffalo News, M&T Bank leads a federal small business lending program in the Buffalo-Rochester region. The program’s overall totals have decreased from a year ago. The Small Business Administration reported 806 of the SBA 7(a) loans were originated through August. That’s down 21 percent from the previous period a year ago. Its amount of dollars were down 7 percent from last year, down to $132 million.

M&T Bank used to lead the way until August. Its number of loans dropped down to 41 percent. Its total dollars declined 11 percent to $25 million. It’s still well ahead of Wells Fargo. However, Biz2Credit, Fundera, and others have been catching up.

Matic Insurance Services Debuts Integration with Roostify, Advances to Final Round of TechCrunch Startup Battlefield (PR Newswire), Rated: A

Matic Insurance Services (Matic), a digital insurance agency that enables borrowers to purchase homeowner’s insurance during the home-buying transaction, has forged a partnership with automated lending technology provider Roostify. The company announced the news Tuesday afternoon from the stage of TechCrunch’s Startup Battlefield, part of the TechCrunch Disrupt SF conference held in San Francisco this week. Matic was one of just six elite startups chosen to advance to the final round of the competition.

YC wants to let people invest in its startups through the blockchain  (TechCrunch), Rated: A

“We are interested in how companies like Y Combinator can use the blockchain to democratize access to investing,” said Sam Altman, who leads the accelerator, onstage at Disrupt yesterday. “We should try to figure that out.”

Our sources tell us YC is actually a little further along than that. Like a growing number of venture groups that are jumping into the digital currency world, the group is actively sussing out how it might use cryptocurrency to expand the investment pool.

Millennials still don’t like robo-advice (AltFi), Rated: B

A survey from online marketplace LendEDU found that 46 per cent of people between the ages of 18 and 34 who are saving for retirement use a financial adviser. In comparison, only 24 per cent of the 500 surveyed have used a robo-advice platform.

Around 75 per cent of respondents said they have never used an automated wealth management service, but 62 per cent of those said it was because they had never heard of robo-advice before.

Even so, millennials do not seem to trust automated wealth platforms. Of those surveyed, 51 per cent think a robo-adviser is more likely to make a mistake while managing money, while only 48 per cent think a traditional adviser is more likely to make an error.

Millennials Still Gravitate Toward Human Advisors over Robos: Survey (Advisor Hub), Rated: B

More than 46% of respondents in a survey of 502 millennial investors saving for retirement said they had sought advice from a human advisor, according to LendEDU, a student loan refinancing company. That is almost double the 24.3% who said they had used a robo-advisor either in addition to a human advisor or exclusively, according to the survey, which was released September 19.

AIC taps KKR’s Gopalan as CEO (PE Hub), Rated: B

Angel Island Capital (“AIC”), a San Francisco-based alternative investment advisor and credit manager, today announced the appointment of Dev Gopalan as Chief Executive Officer. A seasoned financial services executive, Mr. Gopalan joins Angel Island Capital from leading global investment firm Kohlberg Kravis Roberts (“KKR”), where he served as Head of US Private Credit and was a member of the Global Private Credit Investment Committee and KKR Credit Portfolio Management Committee.

United Kingdom

Concern at scale of peer-to-peer lender’s defaults (Telegraph), Rated: AAA

A rapidly growing peer-to-peer lender has exposed investors to a bankrupt for a second time, while a quarter of its loan book is considered to be in default, raising fresh concerns about regulation in the booming new finance market.

Sources close to Lendy Finance, which earlier this year became the title sponsor to the sailing regatta Cowes Week, spoke to The Sunday Telegraph after becoming concerned that the level of defaults revealed an ongoing weakness in underwriting checks, which is putting investors at risk to losses. The FCA is investigating how peer-to-peer lenders disclose default rates as part of a delayed consultation into the burgeoning industry.

A study of Lendy’s loan book reveals that almost 25pc of loans, worth £47.2m, are outside original terms, meaning repayments can be one day to 434 days overdue.

However, Lendy says that just 14.5pc of its loan book is “currently in default as defined by our agreements with lenders, and in line with the wider bridging and development finance market”.

Labour proposes debt cap that would see credit card companies forced to write off billions of pounds owed by customers (Telegraph), Rated: AAA

Credit card companies would be forced to write off billions of pounds in long-term customer debts if Labour got into power under a policy to be unveiled at the party’s conference.

John McDonnell, the shadow chancellor, will propose capping the amount of money lenders can charge in interest so that no one has to pay back more than double what they borrowed.

But with £14 billion owed by those classed as being in “persistent debt”, the policy raises questions over whether the cost of the policy would end up being passed onto other borrowers.

The average credit card debt owed by those in persistent debt – classed as people who have paid more interest charges and fees than their original borrowing – is £3,464 per person.

The Financial Conduct Authority has estimated that lenders would lose up to £1.3 billion per year as a result.

My Bondmason Result After Exit – Yield was Mediocre (P2P-Banking), Rated: AAA

Last year in September I signed up at UK platform Bondmason in order to test first-hand how an investment of 1,000 GBP would develop.

What was bad, was that it became clear to me, that the interest level in combination with the non-performing loans would make it very unlikely for Bondmason to reach the projected return – at least for my portfolio. Especially with the Invoice Discounting loans there were issues.

In April 2017 Bondmason announced it would require a larger minimum investment amount of 5K (previously 1K) and raise fees for small portfolios to 1.5% (previously 1%). Dang. I was in no way interested to deposit more money. So my portfolio did not even get to celebrate 1st anniversary. In July I gave them notice to liquidate my portfolio/account. Since then I withdrew 1,013.94 GBP – only slightly more than I deposited. My account still exists as there is 20 GBP stuck in two property loans in default and also 1.41 GBP in cash.

Source: P2P-Banking

Starling is looking to raise £40 million in a new funding round (Business Insider), Rated: A

Startup bank Starling is seeking to raise £40 million from investors in a new funding round to drive international expansion.

The bank, which opened to the public earlier this year, has appointed advisory firm Quayle Munro to oversee the fundraising, according to Sky News.

According to the report, Starling plans to use the money to expand into other European markets, with the first of these likely to be Ireland, where it recently gained a passport — which will allow it to access EU markets after Brexit.

Shadow Chancellor John McDonnell vows to cut interest payments on debt-laden Brits – but it could cost the City £13bn (The Sun), Rated: A

Mr McDonnell will today outline plans for a 100 per cent ceiling for three million owing on average £3,464 in a move that could cost the City £13billion.

The plan, in which someone borrowing £1,000 would pay back no more than £2,000 in total, would bring credit cards into line with current rules on payday loan firms.

It would also apply to in-store credit cards.

What Goldman Sachs Retail Banking Will Look Like (The Market Mogul), Rated: A

Goldman Sachs already has a mass-market offering in the US, after launching its online lender Marcus 18 months ago. Since its inception, Marcus has supervised over $1bn worth of loans to businesses.

Goldman Sachs will start taking deposits in the UK, but in the long run, the bank has plans to lend UK customers money through Marcus like in the US.

NatWest recently announced its plans to launch an online lender Esme Loans, allowing SMEs to quickly take unsecured loans of up to £150,000. Online lending is likely to become more crowded as Santander has also announced plans to incorporate digital banking in its services.

Can an app really change the way we buy houses by dragging lawyers into the tech age? (The is Money), Rated: A

Conveyancing – the legal process of transferring ownership of land and property from one party to another – has changed considerably over the past 10 years.

Technology has so far failed to make inroads to improve the process – and no matter how slick your online lender or mortgage broker tries to be, everyone’s held to ransom by the law.

What is When you Move ?

Simon: Frustrations we’ve seen our clients navigate, in addition to our personal experiences, triggered something of an obsession to develop a tech solution for an industry deep-rooted in some of the most archaic practices still in use  in modern-day business.

When You Move is an app that allows home buyers and sellers to see easily in real time where everyone is up to in the process – be that you, the lawyer, the mortgage broker, the valuer or the lender.

Adopting fintech is saving UK businesses £4.6bn, according to MarketInvoice (City A.M.), Rated: A

The survey found 65 per cent of 3,482 UK businesses have adopted at least one fintech solution, with 19 per cent making use of four services. These fintech products are helping the firms to save on average over £5,500 a year.

MarketInvoice estimates that 65 percent of 1.3m UK businesses are therefore making this average saving, meaning a total of £4.6bn is being saved thanks to fintech.

Ex-Goldman, Barclays and Lloyds MD has just jumped to a fintech firm after 30 years in banking (efinancialcareers.com), Rated: B

Adam Barrett, the head of institutional sales at Lloyd Banking Group has joined the exodus from banking to fintech. After more than 30 years in investment banking, at UBS, Goldman Sachs and Barclays, he’s just gone to peer to peer lending platform Invest & Fund.

Fintech “critically important” for future of UK financial services (P2P Finance News), Rated: B

MAINTAINING the UK’s position as a leading fintech and innovation hub is “critically important”, according to a survey of City firms.

The CBI/PWC financial services survey, released on Monday, questioned 94 companies, including banks, finance houses, securities traders, fund managers and the insurance industry.

Banks in particular saw a need to ensure that the UK remains a leading fintech and innovation hub.

European Union

European Central Bank could ask fintech banks to hold more capital (AltFi), Rated: AAA

The European Central Bank is considering requiring banks involved in financial technology to hold more capital buffers.

Cawley to chair peer-to-peer lender Linked Finance (Irish Times), Rated: A

Former Ryanair deputy chief executive Michael Cawley has been appointed chairman of peer-to-peer lending platform Linked Finance, which hooks up companies requiring capital with individuals and institutions looking to lend.

As of this month, it says it has 16,000 registered lenders on the site. Businesses to have availed of loans through the platform include Viking Splash Tours, the Irish Fairy Door Company and tech company Big Red Cloud.

Linked Finance has set a target to facilitate lending of up to €250 million in coming years. It says its lending was up by more than 240 per cent in the first half of this year. SMEs can borrow up to €250,000 on its platform.

How CrossLend is changing the game for European investors (LendIt), Rated: B

By November 2016, we were engaged in a strategic pivot, actively shifting our focus from B2C to B2B, so we could offer our single-loan securitisation solution to major players on Europe’s lending stage.

The good news is that investors also stand to benefit from the opportunities inherent in CrossLend’s single-loan backed notes, and here’s how:

  1. Simplified access
  2. Flexibility
  3. Ease of diversification
  4. Transparency
  5. Favourable regulatory treatment
  6. Liquidity
  7. State-of-the-art investment tools
International

ConsenSys And Tapscotts Are Warming Up To Global Ethereum-Based CarbonX Platform (ETHNews), Rated: A

On September 21, 2017, blockchain software company ConsenSys announced the launch of a peer-to-peer (P2P) trading company, CarbonX, which will employ the Ethereum blockchain to tokenize carbon credits.

CarbonX is backed by a co-founding group that includes co-authors of best-selling book Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the WorldDon and Alex Tapscott. The company intends to purchase Certified Emission Reduction Credits, also called carbon credits, to be tokenized with the Ethereum blockchain. CarbonX will also tokenize investments it makes in reduction projects.

Report: There are 214 Unicorns in the World. A Good Number of them are Fintech (Crowdfund Insider), Rated: A

CBInsights has just published an updated report, along with some accompanying slides, tallying the number of Unicorns globally and outside the US.

According to their numbers there are 214 Unicorns in the world. There are 24 countries with Unicorns and the US leads the way with 52% and China follows in second place with 23%.

E-commerce is number one and Internet Software & Services take second place. Fintech Unicorns are in 3rd place.

Fintech names like SoFi, Stripe, Credit Karma, Prosper, Kabbage, Avant, are on the list. Outside the US, Fintech names include Lu.com, ZhongAn, Saxo Bank, One 97 Communications, Klarna, Funding Circle, Transferwise are there.

Australia/New Zealand

Sydney fintech RateSetter just raised $ 10.5 million after blitzing peer-to-peer rivals (Business Insider), Rated: AAA

Peer-to-peer online lender RateSetter Australia has secured a $10.5 million capital raising round and has doubled its loan levels on 12 months ago.

Peer-to-peer online lender RateSetter Australia has secured a $10.5 million capital raising round and has doubled its loan levels on 12 months ago.

Australian banks drop ATM fees (Financial Times), Rated: A

Australian consumers will no longer face charges when using another bank’s cash point after the country’s four major banks dropped ATM withdrawal fees for domestic users amid greater regulatory scrutiny for the industry.

Wealth management still key for banks (The Sydney Morning Herald), Rated: A

Former Commonwealth Bank chief executive David Murray says there remains a strong case for bank involvement in wealth management, despite the recent trend of lenders offloading life insurance and funds management assets.

CBA last week became the latest bank to retreat from “manufacturing” wealth products, selling its life insurance arm for $3.8 billion and saying it may spin off the investment business of Colonial First State in an initial public offering.

PledgeMe founder Anna Guenther hopes to take crowdfunding to Australia (NZ Herald), Rated: B

Anna Guenther is planning to take PledgeMe across the Ditch with the Australian Government set to legalise equity crowdfunding next week.

Two new high-profile digital wallet partnerships and the Australian alternative finance market ranks second in the Asia Pacific (Finder), Rated: B

Commonwealth Bank has announced it will be giving its 4.4 million app users access to Android Pay. The bank will also be allowing its customers to make contactless payments with their Garmin smartwatches in early October, with Apple Pay becoming available by the end of the year.

Australian fintech lender Waddle has announced the expansion of its invoice financing and factoring services to New Zealand. The lender is looking to meet the “significant demand” from small businesses in the New Zealand market.

Woolworths customers will be able to use their iPhones to collect and redeem Woolworths Rewards points when shopping at the supermarket or its partners from next month. Find out how much you can collect and redeem here.

India

P2P lending: Direct selling agents may come under RBI regulatory ambit as NBFCs (The Hindu Business Line), Rated: AAA

The Reserve Bank of India’s recent move to regulate peer-to-peer (P2P) lending platforms as non-banking financial companies (NBFCs) has created a grey area of sorts, spelling trouble for thousands of direct selling agents (DSA) or direct marketing agents (DMAs).

The Finance Industry Development Council (FIDC) says it is “very much possible” that DSAs/DMAs who have been providing loan facilitation (offline) services to retail and corporate borrowers, from banks and NBFCs (with whom they have signed a written contract) for the past many years, may also fall under the ambit of RBI’s P2P regulatory framework as NBFCs.

Start-up funding crawls: 20 months, Rs 70 crore (The Indian Express), Rated: A

Since it was floated in January 2016, the government’s Rs 10,000-crore Fund-of-Funds for start-ups (FFS), launched in line with the Start-up India Action Plan of the Government, has made slow progress with only about Rs 70 crore having been disbursed to start-ups until the beginning of this month.

The 17 funds include Mumbai-based early-stage investor Kae Capital, which raised its second $30-million fund in February last year and is reported to have got a commitment of Rs 45 crore from the FFS. Kae Capital has investments in about 16 start-ups, including Truebil, a used-car marketplace owned by Paix Technology; peer-to-peer business loan marketplace startup Loanzen; second-hand products marketplace ListUp promoted by Gijutsu Solutions and shopping portal Fynd run by Shopsense Retail Technologies.

Asia

FinEX Asia’s Private Equity Fund Manager Announces US$ 50 Million Investment in Prosper Marketplace (ACN Newswire), Rated: AAA

FinEX Asia is pleased to announce that its private equity fund manager closed an investment of US$50 million in Prosper Marketplace, a U.S. online marketplace lending platform for consumer loans.

“FinEX Asia is excited to complete the Series G financing into Prosper, a leader in marketplace lending in the U.S.,” said Maggie Ng, CEO of FinEX Asia. “Our team’s expertise is in fintech and consumer lending. Our investment strategy starts with the U.S. because of our strong network with online marketplace lenders. In parallel we are considering investment opportunities in other verticals globally.”

Founded earlier this year by Maggie Ng, a former Consumer Lending Head and Chief Risk Officer at Citibank, FinEX Asia aims to help Asian investors look for quality investment opportunities, both in fixed income and equity investments, by using its fintech platform and know-how. The investment made into Prosper is a good illustration of how such opportunities are welcomed by Asian investors and that FinEX Asia’s investment strategies are well recognized by the capital it represents.

Singapore’s FinMomenta to lend to low-income employees (The Hindu Business Line), Rated: A

Singapore-based fin-tech start-up FinMomenta, which entered the Indian online P2P (peer to peer) lending market early this year with its product called Tachyloans, will soon be lending to salaried professionals working in small and mid-size firms.

Called Corporate HR loans, FinMomenta aims to make lending easier for the working class. The loan size ranges from ₹50,000 to ₹5 lakh.

Blockchain Fintech Firm, MicroMoney Starts a Private Presale for Early Birds (PR Newswire), Rated: A

MicroMoney, a global fintech blockchain company and lending services provider, announces a private presale for its token-generating event for the early birds among funds and big contributors. This presale started on September 15th, 2017.

MicroMoney is a fast-growing company founded in 2015 with the offices in five Asian countries – ThailandMyanmarIndonesia, Sri Lanka, and Cambodia. The company plans to expand its presence to 5 more countries by 2018. MicroMoney was established as a company focused on micro-financing in the money lending industry, providing customers with online loans without any collateral requirements using machine learning algorithms.

There are still more than 2 billion of the unbanked in the world, especially in the emerging market.

Japanese firm eyes expansion in PH (Sunstar), Rated: A

CROWDCREDIT, a Japanese cross-border marketplace lending company which promises to fill in lending gaps by providing funds for lending and financial institutions including banks, is currently studying the market and possibility of business expansion in the Philippines.

In other countries, such as the United Kingdom, for example, banks receive loan applications more than their existing deposit or more than the loans that they can cater to. The case is opposite with Japan’s banks with more excess deposits than loans. With this, the basic concept of Crowdcredit is to provide this excess fund for loan to other countries that would need them.

Crowdcredit has a vast network of global partners which includes Mfx, Kobranzas, Fellow Finance, Savy, Cream Finance, Ovamba, Bondora, Mogo, Mintos, and Prestiamoci.

New LendingCalc White Paper Examines Opportunities in SE Asian Marketplace Lending (LendingCalc Email), Rated: A

Author Terry Tse Provides Practical Advice About How to Select Best P2P Platforms

LendingCalc, Inc., a direct investment platform providing global access to digital specialty finance for institutional investors, has released a new white paper examining the investment opportunities within the growing marketplace lending sector in Asia. The paper was written by newly appointed strategic adviser, Terry Tse, who served as Chief Risk Officer at the China-based P2P giant, Dianrong, and is currently Senior VP of International Development at the largest B2B payment company in China, Lian Lian Pay.

In the paper, Tse contrasts U.S. and Asian regulations and explains how the regulatory regimes in Asia impact the lending opportunities abroad. He also describes the emerging P2P business environment in Asia, which appears to be extremely well positioned for growth. In addition, Tse explains the key structural incentives Asian P2P lenders have implemented to discourage borrowers from defaulting.

The paper concludes with a number of practical suggestions to help investors navigate the socalled “Wild East” that is marketplace loan investing in Asia.

Authors:

George Popescu
Allen Taylor

Monday September 11 2017, Daily News Digest

Zopa trailing 12-month net return

News Comments Today’s main news: Equifax cybersecurity breach. Goldman to take on UK retail banks. China cracks down on online lenders, cryptocurrency dealers. Klarna is testing credit cards with employeees. Today’s main analysis: CECL overview. Today’s thought-provoking articles: Consumers who go to Equifax for help after data breach may not be able to sue. The data behind Zopa’s lowered return […]

Zopa trailing 12-month net return

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

APAC

News Summary

United States

Equifax Cyber Incident (Equifax Email), Rated: AAA

At Equifax, we recognize that consumers and customers expect us to provide superior data security, and we work hard to do that every day. Unfortunately, on September 7th, 2017, we announced a cybersecurity incident involving consumer information.  This cybersecurity incident strikes at the heart of who we are and what we do.  Above all else, our first priority is to support consumers and you, our customers, by doing what we can to make this right.

What happened?

On July 29, 2017, Equifax identified a cybersecurity incident potentially impacting approximately 143 million U.S. consumers. Criminals exploited a U.S. website application vulnerability to gain access to certain files. Equifax discovered the unauthorized access and acted immediately to stop the intrusion. We promptly engaged a leading, independent cybersecurity firm that has been conducting a comprehensive forensic review to determine the scope of the intrusion, including the specific data impacted. We also reported the criminal access to law enforcement and continue to work with authorities.

What information may be impacted?

The information accessed primarily includes names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers. Criminals also accessed credit card numbers for approximately 209,000 U.S. consumers, and certain dispute documents with personal identifying information for approximately 182,000 U.S. consumers.

Additional Information:

We have found no evidence of unauthorized activity on Equifax’s core consumer or commercial credit reporting databases.  In addition, we have found no evidence that this cybersecurity incident impacted Equifax’s core consumer or commercial credit reporting databases, including,  ACRO, Workforce Solutions, including The Work Number payroll data, NCTUE, IXI and  CFN.

Where can I learn more?

We have set up a dedicated website at www.equifaxsecurity2017.com:

  • To see if you are potentially impacted, you can click on the Potential Impact Tab
  • To enroll in complimentary identity theft protection and credit file monitoring services and how to find out if your personal information may have been impacted, you can click on the Enroll Tab.
  • To learn more about the complimentary offering, you can click on TrustedID Premier Tab. TrustedID Premier provides you with copies of your Equifax credit report; the ability to lock your Equifax credit report; 3-Bureau credit monitoring of your Equifax, Experian and TransUnion credit reports; Internet scanning for your Social Security number; and identity theft insurance.

To speak to someone directly, we have also established a call center at 866-447-7559, available every day (including weekends) from 7 a.m. – 1 a.m. EST, for individuals to ask questions.

Consumers Who Go to Equifax for Help After Data Breach May Lose Their Right to Sue (Money), Rated: AAA

On Thursday credit bureau Equifax said a data breach put personal information of 143 million people at risk. Now its response is drawing more outrage, as lawmakers and others accuse it of encouraging consumers who come to it seeking answers to sign away their chance to seek recourse in the courts.

Following the breach, which compromised tens of millions of Social Security numbers and other valuable data, Equifax set up a website to help worried consumers determine whether or not their information was at risk. That website encouraged visitors to sign up for a program known as TrustedID Premier, the company’s credit monitoring service, which provides automated alerts to credit changes and up to $1 million in ID theft insurance. That’s where the trouble began.

TrustedID’s terms of service include an arbitration clause, insisting that customers agree “all claims, disputes, or controversies…shall be finally settled by arbitration” rather than a court of law. Such clauses aren’t unusual for credit monitoring services — or indeed many other consumer products. But in this circumstance, it created the impression that Equifax was asking consumers it had harmed to surrender their legal rights — including becoming part of a class-action law suit — before it would agree to help them.

One key legal avenue that arbitration clauses typically close off for consumers is the class-action lawsuit. That could be significant for Equifax — at least on one proposed class-action lawsuit was already filed against the company late Thursday, according to Bloomberg.

Equifax free credit monitoring service has some concerned (News Channel 6 Now), Rated: A

The 143 million Americans whose information was compromised by the Equifax data breach may still be on edge even with the free credit monitoring service being offered by the company.

Everything from names, addresses, social security numbers and credit card numbers were hacked in the Equifax data breach.

Kuehner said right now the company is sending out letters letting people know if they have been potentially affected. They can also check online at equifaxsecurity2017.com.

However, it is not only the breach that has consumers concerned, it is the company’s response.

“We’re taking unprecedent step of offering every U.S consumer in the country a comprehensive package of identity theft protection, ecredit file monitoring at no cost,” said Rick Smith, Equifax Chairman, and CEO, in a statement released online.

CECL Overview (PeerIQ), Rated: AAA

This past Wednesday, FASB released an update to the current expected credit losses methodology (CECL) for estimating credit loss allowances. This new accounting standard, which was initially published in June 2016 (in conjunction with regulators such as the FDIC, OCC, and NCUA), will apply to financial assets carried at amortized cost, including loans held for investment and held-to-maturity debt. Once in place, these assets must be held on the balance sheet net of an expected loss account. Changes are effective for fiscal years beginning after Dec 15, 2019, for all for-profit companies that file with the SEC.

Once firms adopt CECL, management will have increased discretion around forecasts and ultimately net asset carrying value. This represents a dichotomy for investors. Assets should be carried at more accurate levels and better reflect the organization’s financial position. However, management estimates will significantly affect the balance sheet and income statement.

The major change with the CECL methodology is that organizations are expected to include forward looking information when determining credit losses. Banks will need to calculate expected credit loss at the loan level for the entire life of the loan and then aggregate with similar instruments.

Since ECL is calculated for the life of the financial asset, rather than the annual rate, almost all held-to-maturity instruments that are not risk-free will have a credit loss allowance. These long-dated assets may appear more volatile than financial statement users are accustomed to because their impairment has large implications for the balance sheet and income statement. Under the new regulation it will be more important to have correct, auditable, and explainable expected credit losses.

Source: PeerIQ, FASB, FDIC

Overall, we applaud the coming changes to US GAAP and expect investors to respond favorably.

Square Becoming a Bank Is Brilliant. Here’s Why (Inc.), Rated: A

However, there is much more to this story. In fact, this strategic decision could be one of the best moves the company has made. Square’s decision could start a revolution and revamp the entire financial institution structure to address the changes in the transaction and lending environment.

Square essentially is proving how the traditional bank is no longer necessary. By becoming their own bank, they do not have to seek out a separate institution as a strategic partner. They don’t have to add specific business banking services to their portfolio.

Although the banking sector has tried, most banks still have too many fees and capital requirements to provide business accounts with their needs. Numerous freelancers or startups just can’t satisfy those requirements because banks are still designed with the larger business in mind.

More small businesses need smaller sized loans to tap into for their launches and expansion. Recognizing how peer-to-peer lending has grown together as an entire industry illustrates how ripe the financial industry is for more competition. Peer-to-peer lending is more personal, with a much needed boost to the financial sector in watching to find new ways to provide the much-needed financial support of smaller entities and businesses.

With these products, it makes sense that the company could become a one-stop shop for financial needs. To become a one-stop service requires obtaining a bank charter, which is what the company has now applied for under the moniker, Square Financial Services Inc.

King of fintech defined by optimism (San Francisco Business Times/Ron Suber Email), Rated: A

Source: San Francisco Business Times

PeerStreet – Real Estate Investing for Rich Millennials (Nanalyze), Rated: A

While your average American doesn’t have much in the way of savings, the younger “millennial generation” is actually saving at a higher rate than any other generation. More than 80% of those “investment professionals” will then go on to underperform the market and get paid anyway.

If all of this sounds too daunting already and you want the easy way out, use Betterment.

Founded in 2013, Los Angeles startup PeerStreet has taken in just over $21 million in funding from investors that include Andreessen Horowitz to build “a marketplace that provides unprecedented access to high quality real estate loan investments“. Before you start getting too excited, take note that you’re going to need some cash to bring to the table. PeerStreet shows you some dropdown boxes when you create your account and unless you choose the one that says you make $300,000 a year or the one that says you have $1 million in assets, you’re not going to be allowed in. Those of you who were smart enough to major in a STEM subject are more likely to be squared away here while those of you who majored in underwater basket weaving should probably just stop reading right now.

Right away we can see that this is a property that is out of reach for the majority of Americans with a hefty $3.78 million price tag.

This means that the amount of money we could get from selling our property falls to around $3 million which still makes it very easy to pay off a $2 million loan. In fact, the only point we would start to worry is if property prices fell more than -53% over an 18-month period. This would represent a “black swan” type of event which has a very low probability of occurring. Of course there’s always the risk of PeerStreet going under but then you still have the property as collateral for the loan and you are first in line to receive payback should their property portfolio be liquidated. For providing everyone with this great service, PeerStreet takes a reasonable .75% fee which is paid each month alongside the interest payments.

The first thing to note here is that the price of entry is an extremely attractive $1,000. You’d be joining the 295 other investors who have already plunked down an average amount of $6,169 which brings the loan up to 91% funded. If you then went out and found 9 other properties to invest in, you’d have a nice little diversified portfolio of 10 various property investments that are transparent and relatively simple to understand (provided you took the time to understand the risks as we have done with this example), all for just $10,000.

Source: Nanalyze

Lend360: Fintech is No longer a Boutique Financing Option, but a Key Component of Lending Market (Crowdfund Insider), Rated: A

The early days of peer to peer lending have morphed into a far more complex and data driven credit service that is competing against not just innovative Fintech startups but traditional lenders seeking to maintain relevance. Crowdfund Insider recently asked Lend360 organizers a few questions on their perspective of the online lending industry and what has changed – and what they expect going forward.

What has changed in the lending environment in the past 12 months?

The biggest change is that Fintech is no longer just viewed as a boutique financing option, but a key component of today’s lending market. For proof of this change one only needs to look at the push for a national Fintech charter.

Where do you see current opportunities?

As long as there is a demand for credit, there will be an opportunity for Fintechs to step up and fill the void.

 

Unexpected expenses hit non-prime Boomers hard (Banking Exchange), Rated: A

New research, “The unGolden Years: Non-prime Baby Boomers,” from the Elevate Center for the New Middle Class indicates that non-prime Boomers are borrowing against their 401k accounts three times as frequently as prime Boomers do. The survey found that 4% of prime Boomers have 401k loans, while 13% of non-prime Boomers have borrowed against these retirement plans.

Less than half—43%—of the non-prime Boomers in the company’s research feel comfortable with their ability to manage their day-to-day finances, let alone prepare for retirement. Not that prime Boomers all feel confident, either, with 76% saying they can manage daily financial needs.

Elevate’s study, based on a survey of over 1,000 prime and nonprime consumers, found that non-prime Boomers are 14 times as likely as prime Boomers to have difficulty predicting monthly income—and 4 in 10 say they live paycheck to paycheck. They also tend to have difficulty predicting monthly expenses and are therefore more likely to experience unexpected expenses, the research says.

Among non-prime boomers, 7 in 10 run out of money at least once a year, in spite of generally decent employment levels—frequently, in fact, with more than one job apiece.

The study asked respondents how they would meet an emergency need for $1,200. Among the non-prime Boomer respondents, nearly half had difficulty coming up with a source of funds—1 in 8 could think of no solution at all.

  • 22% of non-prime Boomers could cover the $1,200 surprise through savings—about half of the portion of prime Boomers who could do so.
  • 22% said they could use a credit card to cover the surprise, but less than a third said they could pay off that borrowing before it began to accrue interest.
  • 11% said they could tap family or friends for the money. Interestingly, only 2% of prime Boomers would go that way.
  • A small portion—4.4%—of non-prime Boomers would use payday lenders, deposit advances, or overdraft programs. Interestingly, in a separate question, 13% of non-prime Boomers said they’d used a payday loan in the previous 12 months.

HedgeCoVest Rebrands, Pivots Toward a TAMP (Wealth Management), Rated: A

HedgeCoVest is pivoting away from being a platform to help investors access hedge funds in favor of being a turnkey asset management platform. To reflect the change, the company is rebranding as SmartX Advisory Solutions.

And as part of the change, SmartX is bringing on 27 new investment strategies from firms like Blackrock, Morningstar Investment Management and Nasdaq Dorsey Wright. The models will cover strategies including ETFs, income portfolios, international equities, global/macro investing and U.S. equity strategies.

RIA in a Box Introduces Trade Monitoring

The technology company has a new employee trade-monitoring tool for its MyRIACompliance software platform that RIA in a Box says will help firms comply with Rule 204A-11, which requires the submission of securities holdings and transaction reports. The new tool digitizes the process, provides an interface for employees to electronically link applicable personal brokerage accounts, and provides chief compliance officers with supervision, administration and reporting capabilities.

Cryptocurrency IRAs

CoinIRA, a subsidiary of Goldco focused on digital currencies, is launching Digital IRA Bundles, new investment products that come prepackaged with combinations of popular cryptocurrencies such as Bitcoin, Litecoin and Ethereum.

Commonwealth Selects Quovo for Aggregation 

Commonwealth Financial Network announced the completion of an upgrade to the account-aggregation features within Investor360 using Quovo.

Don’t Fall for Loan Sharks Just Because They Have Hip Branding  (Lifehacker), Rated: A

We all know payday lenders, loan sharks, and credit cards profit when you go into debt and, therefore, they can be dangerous. But many of these companies conceal their danger with clever marketing. Beware: a debt trap by any other branding is just as dangerous.

Over at the Outline, writer Gaby Del Valle discusses one such company, Affirm. v

The difference between this service and a typical subprime loan seems to mostly lie in the marketing. Unlike other loans, Affirm is a bit more upfront about the terms you’re getting into.

Everyone is picking on Affirm here, but the issue is not unique to them. This reminds me of the recent fiasco with Navient, the student loan servicer that was sued by the Consumer Financial Protection Bureau (CFPB) over shady business practices like misapplying student loan payments. In the lawsuit, Navient said they have no obligation to act in their customers’ best interest. But that’s not exactly the message that comes across on their “Financial Tips Blog.” These companies use financial literacy to hook you into making bad financial moves.

How to Use a Peer-to-Peer Loan to Pay off High-Interest Debt (Forbes), Rated: A

High-interest debt, such as credit cards, sometimes seems impossible to pay off.

Peer-to-peer loans are unsecured — you don’t have to tie any collateral to them. They’re attractive to borrowers with high-interest rate debt because they provide concrete payoff dates and an option for a fixed — and potentially lower — interest rate.

In fact, according to peer-to-peer platform Lending Club, its borrowers — on average — secure a 24% lower interest rate when using its peer-to-peer loans to consolidate debt.

SS&C Announces Major New Release of Precision LM Loan Management Solution (Business Insider), Rated: A

SS&C Technologies Holdings, Inc. (Nasdaq:SSNC), a global provider of financial services software and software-enabled services, today announced the availability of Precision LM™ 3.0, the latest version of the company’s loan origination, servicing, accounting and asset management solution. The new version marks the culmination of significant input and engagement from Precision LM clients as well as SS&C’s proven ability to execute on its comprehensive development roadmap.

Pefin, a fintech start-up, is using A.I. to offer financial advice. Just don’t call it a ‘robo advisor.’ (CNBC), Rated: A

Automated financial advice is becoming more commonplace in the hunt for bigger returns, yet Pefin bills itself as “the world’s first [artificial intelligence] financial advisor.” The company aims to use machine learning to deliver a range of financial planning and investment advice via a chat interface.

“I started Pefin mainly because when you think about less affluent people, there’s really no access to financial advice aside from robos,” Joseph told CNBC in an interview recently.

“Robos are trying to execute a transaction, while we are trying to manage your finances. Investing is optional with us, and we’ll help you if we think it’s the right move for you” rather than generating fees for the company, she told CNBC.

Pefin Welcomes Catherine Flax as Chief Executive Officer (Benzinga), Rated: A

Pefin, the world’s first Artificial Intelligence (AI) financial advisor, welcomed Catherine Flax as Chief Executive Officer today.

Flax has had a multi-decade, distinguished career on Wall Street, as the Managing Director and Head of Commodity Derivatives, Americas at BNP Paribas and as Chief Marketing Officer of J.P. Morgan. She was named the Most Influential Woman in European Investment Banking in 2012 and one of the 100 most influential women in European Financial Markets in 2010 and 2011. Flax has been a leader in the FinTech space, as a Board Member of leading blockchain company, Digital Asset Holdings, and for the last two years, as an Advisor to Pefin in matters of Marketing, Regulation, Business Development and International Growth.

CoverWallet, Benzinga Fintech Award Winner, Appoints OnDeck’s Paul Rosen As COO (Benzinga), Rated: B

CoverWallet, the winner of Best Insurtech Solution at the 2017 Benzinga Global Fintech Awards, has hired Paul Rosen, formerly the chief sales officer at On Deck Capital Inc ONDK, as its chief operating officer.

Insurtech reminds Rosen of what fintech looked like five to six years ago, he told Benzinga.

Former OnDeck Director Joins Pearl Capital as Chief Revenue Officer (Monitor Daily), Rated: B

Pearl Capital Business Funding, a provider of direct financing to small and midsize businesses, announced Jared Kogan joined the company as chief revenue officer.

Kogan joined Pearl following a 10 year career in the fintech space, most recently serving as the director of OnDeck’s broker division where he funded 10,000 loans for over $650 million in volume and was able to grow production from $14 million to over $40 million per month. Prior to OnDeck, Kogan served as vice president at Newtek, the largest non-bank SBA lender in the country.

Bad Credit? Business Loan Options For Entrepreneurs (Business Computing World), Rated: B

Online Lending Platforms

Typically, these lenders operate only on the web and promise quick assessment and disbursal with less bureaucracy. Some specialist bad credit lenders are ready to structure loans according to your convenience. You can also look at peer-to-peer lending platforms that give you access to individuals who are looking to invest their money in different ventures. Again, these platforms can get cash relatively more quickly into the system.

United Kingdom

Goldman Sachs to take on UK retail banks (Financial Times), Rated: AAA

Goldman Sachs is looking to expand its retail banking business to the UK, replicating its mass-market offering in the US, as it continues a steady march from Wall Street to Main Street.

The New York-based investment bank began to pivot in the US about 18 months ago, offering high-interest online savings accounts for a deposit of as little as $1. Last October it took a step further by launching Marcus by Goldman, a digital consumer-lending platform that seeks to rival the San Francisco trio of Lending Club, Prosper and SoFi.

Now Goldman is taking it international, aiming to launch an online deposit business in the UK about the middle of next year. According to Stephen Scherr, the bank’s head of strategy, the lender plans a greenfield start in the UK under the Marcus brand, but could look to buy a book of deposits — as it did in the US — if the opportunity came its way.

The data behind Zopa’s lowered return projections (AltFi Data Email), Rated: AAA

Zopa has an enviable track record of delivering net returns as evidenced by a more than 10 year track record of delivering 4-7% returns  (after losses and fees).

Source: AltFi Data
Source: AltFi Data

Investors value projected returns over track record (P2P Finance News), Rated: A

INVESTORS rank the expected rate of return as the most important factor when choosing an investment provider, research shows.

Analysis by bond provider Minerva Lending, based on a poll of 1,000 adults with more than £50,000 to invest, found 61 per cent consider the rate of return as the most important factor when choosing who to trust their money with.

The research, released on Friday, does not refer to peer-to-peer lending but investors appear to be looking for many factors that P2P firms offer.

Zopa’s Andrews warns on post-Brexit skills shortage (P2P Finance News), Rated: A

THE UK is facing a technology skills shortage that may worsen because of Brexit, Zopa’s co-founder and chairman has warned.

Giles Andrews (pictured) said that the peer-to-peer consumer lender’s decision to open a hub in Barcelona was partly due to a concern that it would be harder to recruit top tech talent following the UK’s departure from the EU.

Assetz signs for Manchester Green office (North West Place), Rated: B

Assetz Capital, part of the Manchester-based Assetz Group, has relocated from Newby Road in Hazel Grove where it occupied 3,000 sq ft of a 6,000 building, to take the newly refurbished Building 3 on a 10-year lease.

China

Cryptocurrency dealers and online lenders feel heat in China (Nikkei), Rated: AAA

On Friday, Caixin, a Chinese business news outlet, reported that financial authorities have decided to shut down virtual currency exchanges.

Beijing appears eager to eliminate money laundering and choke off capital outflows by shutting down bitcoin exchanges and other virtual currency trading platforms. It is also tightening its grip on peer-to-peer lending, in which individuals privately contract to borrow and lend.

Some exchanges have temporarily halted trading in response to the report. Investors rushed to sell their digital currencies for cash, sending bitcoin about 20% lower versus the yuan at one point on Saturday, compared with the day before, to below 24,000 yuan ($3,703).

Report Casts Doubt on Future of China’s Bitcoin Exchanges (Coindesk), Rated: A

Regulators in China are said to be considering a move to close all domestic bitcoin and cryptocurrency exchanges.

As of now, no official announcements from regulators have been seen. However, there are reasons to believe the report may be authentic.

The work group was first launched by China’s State Department in 2016 to tackle market risks in the country’s financial technology industry such as p2p lending.

Emerging Digital Payments are Crowding out the Banking Market (Xing Ping She), Rated: A

According to report from the Central Bank, in the second quarter of 2017, banking financial institutions have handled 36.247 billion electronic payment services, amounting to 545.58 trillion RMB, which was down about 4.4% from the same period of last year.

Actually, non-bank payments including Alipay and wechat Pay are growing rapidly. The Central Bank’s data also shew that in the second quarter of 2017, the scale of non-bank payment market reached to 570.95 trillion RMB. Compared to the amount of 23.35 trillion in the same period last year, it has significantly increased 34.87 percent.

 

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

On September 6th, Zhao Jianjun, deputy director of the Department of Finance at Ministry of Education, announced at a press conference that online marketplace lenders are banned from lending to college students in China.

On September 6th, Zhao Jianjun, deputy director of the Department of Finance at Ministry of Education, announced at a press conference that online marketplace lenders are banned from lending to college students in China. According to WeChat Pay, users of the new product will be able to make payments and transfer, send Hongbao, pay back credit card debt and be awarded with interest on their digital wallet balances.

As response to the latest regulation, NEO Council announced it would offer refunds for NEO purchased through its ICO.

On September 4th, China’s leading digital payment service Alipay announced to expand its operation to Norway.

Early this week, Proptech BBT announced that the platform had managed to secure RMB 60 million Pre-A funding from Hongdao Capital at the beginning of August.

European Union

Klarna is reportedly testing its own credit cards among employees (Business Insider), Rated: AAA

Since Klarna received its full banking license this summer, there have been many questions as to how exactly it would be leveraged. One among many speculative scenarios includes launching the company’s very own credit- and bank cards.

Now there are some initial reports indicating that the credit card rumours are for real. Referring to internal documents it has been able to access, Breakit reports that the Swedish e-invoicing giant, valued at $2,5 bn, is testing credit cards in-house.

A memo sent through the company’s intranet has supposedly given Klarna’s Swedish employees the opportunity to test proprietary payment cards for a limited amount of time.

Knowledge is power in Grid Finance’s revolution (Independent.ie), Rated: A

SME lender Grid Finance is expanding its offering to include a digital pension product targeted at the owners of small businesses. The company has engaged Conexim to provide the back office infrastructure on the product – as well as the regulatory umbrella – while Grid will act as distributor.

It is the latest piece of innovation being undertaken by the company, which is looking to build what chief executive Derek F Butler calls “a small business bank in all but name”.

10 Swiss Fintech Startups to Watch (LinkedIn), Rated: A

The 10 selected entrepreneurs reflect the acceleration of the Swiss fintech scene in the recent years and the impressive quality of its startups. They will join the intense journey taking place from September 10 – 16 in New York.

  • Advanon, Phil Lojacono: Advanon in its basic version is an online platform that allows SMEs to pre-finance their open invoices directly through financial investors.
  • Algo Trader, Andy Flury: The startup provides an algorithmic trading software that allows automation of complex, quantitative trading strategies.
  • Creditgate24, Teddy Amberg: CreditGate24 is an independent Swiss company and a fully automated platform for lenders and borrowers which offers efficient, transparent and scalable credit processing at high quality.
  • KiWi (eBOP), Christian Sinobas: KiWi transforms merchant’s phone into a smart point of sale.
  • Monito (Global Impact Finance), François Briod: Sending money abroad? Monito is the Booking.com for money transfers, helping migrants and expatriates find, review and compare money transfer services.
  • OneVisage, Christophe Remillet: OneVisage is a leading cyber-security company developing biometric solutions to help financial services eliminating identity theft and increasing user’s digital experience.
  • SONECT, Sandipan Chakraborty: SONECT enables every shop in the neighborhood to act as a virtual ATM.

Should you let a ‘robot’ manage your retirement savings? (BBC.com), Rated: A

Consultancy firm Accenture found that 68% of global consumers would be happy to use robo-advice to plan for retirement, with many feeling it would be faster, cheaper, and more impartial than human advice.

Joe Ziemer, vice president of communications at Betterment, a US robo-adviser with more than $9bn under management, says: “The Betterment service takes your information and uses a series of algorithms to create an asset allocation plan, which might be, for example, 90% equities and 10% bonds for a retirement saver.”

Wealth Wizards, for example, typically charges £65 for investments up to £30,000, and 0.30%, or £300, on a £100,000 investment pot. Betterment charges 0.25% a year.

That’s peanuts compared to human advisers’ fees, which come in at about £580 for advice on a £200-a-month pension contribution, or £1,000-£2,000 for guidance on what to do with your £100,000 pot when your retire, according to UK adviser network Unbiased.

Robo.cash Reports Steady Growth in European P2P Lending (Crowdfund Insider), Rated: A

The young lender says the total amount of investments now exceed €1.8 million. Approximately €400,000 in loans were added in August. The average invested amount per investor gained 2.2% to the previous month at €3,270 in August. In regards to the number of investors using the platform, in August Robo.cash added 188 users. Currently, there are more than 900 investors in total who have joined the platform in the first six months of operation.

Source: Crowdfund Insider
International

Mitek Unveils Mobile Verify® for Lending (Globe Newswire), Rated: A

For the first time at FinovateFall, Mitek (NASDAQ:MITK) (www.miteksystems.com), a global leader in mobile capture and identity verification software solutions, will demonstrate Mobile Verify® for Lending. This new, five step digital lending experience enables lenders to verify identity and bank account information in real time for fast loan decisions with a simple process for borrowers.

When applying for a consumer loan from a desktop computer, the borrower will first log into their online bank account and agree to have their account information shared with the lender. A text message is then sent to the borrower’s smartphone directing them on how to take four photos: front and back of their driver’s license, a selfie and a photo of their pay stub or other trailing document, to complete the loan application process. This new digital experience is quick and easy for the borrower and provides the lender with real-time identity and bank account verification.

Moroku lands on the BNP Paribas Radar (Moroku Email), Rated: A

Dear friends

Last week Moroku was identified as one of the top 4 Fintech’s globally best positioned to take on the battle for Millennials 

Fintech has transformed payments but not savings, says BlackRock’s chief executive (SCMP), Rated: A

The financial technology boom has transformed the way over a billion people engage with financial services, particularly when it comes to making payments, but Larry Fink, chief executive of BlackRock, the world’s largest money manager, said that no company has yet managed to use technology successfully to get people investing for the long term.

Both in China, and in Europe and North America, a plethora of investment platforms and robo advisory services are evolving, but none has yet reached critical mass.

Memorandum of Understanding Signed with GoldMint (LSE), Rated: B

Eurasia, the platinum, palladium, iridium, rhodium and gold production company, is pleased to announce it has entered into a Memorandum of Understanding with GoldMint PTE (“GoldMint”), a Singapore based Limited Company.

Australia/New Zealand

Broker numbers to swell in SME space (AustralianBroker), Rated: A

More brokers will diversify into the SME loan space due to increased competition in traditional markets and growing demand from clients, the lender’s head of sales Michael Burke said.

“Brokers are not only looking to move into online lending because of the speed and ease of doing business it offers, but because their time-poor customers are demanding a more convenient solution involving faster turnaround times.”

As well as providing a digital platform to facilitate the loan process, OnDeck’s underwriting policy also helps ease the broker’s burden, Burke told Australian Broker.

PledgeMe joins Equitise in eyeing Australian market (Scoop), Rated: A

PledgeMe, the equity crowdfunding and peer-to-peer lending platform, has joined rival Equitise in signalling plans to enter the Australian market ahead of a law change coming into effect across the Tasman this month.

Co-founder Anna Guenther will relocate to Brisbane for six months to establish the Wellington-based company’s Australian arm, according to a PledgeMe blog post. PledgeMe will participate in the Queensland government’s HotDesQ programme, which provides networks, support, and funding for companies to relocate to the state.

India

SoftBank Vision Fund makes second bet in two months; fintech remains investors’ favourite baby (Yourstory), Rated: A

SoftBank Vision Fund, the world’s largest pool of private capital, placed its second major bet on an Indian startup in a span of two months with its investment in OYO Rooms. The $250-million funding has taken OYO’s valuation from $460 million in August last year to between $850 million and $900 million.

APAC

This Not-for-profit Fintech Hub Wants To Impact The Unbanked Population (BLLNR), Rated: A

Allow me to set the scene: in the wider region of Southeast Asia that surrounds Singapore, where Lattice80, our not-for-profit fintech hub that we launched last year is based, there is a huge unbanked population. KPMG estimates put the number at about 438 million. In poor countries like Cambodia, the population with a bank account falls to just 5 percent.

McKinsey did a similar study in 2010 on the world’s 2.5 billion unbanked. Asia’s emerging markets were identified as a hotbed of unbanked. The same study suggests that reaching the unbanked population in ASEAN could increase the economic contribution of the region from US$17 billion to US$52 billion by 2030.

Multi-asset funds offer ‘all-in-one solutions’ (Straits Times), Rated: A

Q WHAT IS THE ATTRACTION OF MULTI-ASSET INVESTING?

It is the ability to combine a range of asset classes with different and largely independent economic drivers in order to achieve consistent return and reduce downside risk.

Years of central bank intervention in markets have depressed interest rates and left investors hunting for reliable yield. More asset classes beyond traditional equities and bonds have become more accessible in the past decade.

Q WHAT IS THE COMPOSITION OF YOUR MULTI-ASSET PORTFOLIOS?

More recently, we added peer-to-peer lending, mortgage and corporate funds that offer excess return over corporate bonds for a similar level of risk, litigation financing and credit funds. The world’s largest institutional investors have already diversified into these assets. Now, smaller institutions and individual investors can too, through our multi-asset strategies.

Authors:

George Popescu
Allen Taylor

Monday August 7 2017, Daily News Digest

LendingClub

News Comments Today’s main news: SoFi Ventures to support financial services startups. Prosper’s valuation dives 70%. Fundrise drops minimum investment to $500 for New Starter Portfolio Offering. UK P2P lenders asked to reveal past defaults. Hargreaves Lansdown cancels special dividend. FinMason expands into Prague. PledgeMe close to profitability. Today’s main analysis: LendingClub is looking beleaguered. Australian fintech update. Today’s thought-provoking articles: Surge […]

LendingClub

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Africa

Barbados

News Summary

United States

SoFi Ventures to support financial services startups (Pitchbook), Rated: AAA

SoFi, a provider of online lending and wealth management services, has launched a strategic VC arm led by 

Surge in FinTech Financings; PeerIQ Closes Series A (PeerIQ), Rated: AAA

This past week featured a slate of fintech venture financings. Kabbage (Series F: $250M), Dianrong (Series D: $220M), Bread (Series B: $126M), and Juvo (Series B: $40M) all announced major financings.

And last, but not least, , led by TransUnion, Hearst Financial Venture Fund, and Macquarie Group.

For PeerIQ, it means continuing to execute upon the vision we shared at our seed financing just over two years ago. This fall, we will be launching our first products uniting TransUnion’s dataset with the PeerIQ analytics platform.

Along with its investment, Hearst brings several major holding companies, including auto data provider, BlackBook, and Fitch Ratings, the global ratings provider, which opens up many new value propositions for our customers. Finally, we are working hand in hand with Macquarie, a major provider of capital to the fintech space, to improve tools for warehouse lenders and their borrowers alike.

Lending Club Is Looking Beleaguered Heading Into Q2’s Do-Or-Die Earnings (Seeking Alpha), Rated: AAA

Source: Thomson Reuters Eikon, image made by James Brumley

Fast forward to Monday. That’s when Lending Club is expected to log another progressive quarter, cranking revenue up to $136.2 million, and whittle the per-share loss back to only one cent; the company lost nine cents per share on $103.4 million in sales for the same quarter a year earlier. Not only is revenue expected to keep growing beyond that, Lending Club is expected to swing back to a profit in Q3, of two cents per share.

Fintech lender Prosper’s valuation dives 70% in latest funding round (Biz Journals), Rated: AAA

San Francisco fintech Prosper is about to close on $50 million in funding, in a round that slashes its value 70 percent to $550 million, The Information reports .

That a steep decrease from the $1.9 billion valuation the second-largest online lender saw just last year.

Fundrise Drops Minimum Investment to $ 500 in New Starter Portfolio Offering (Crowdfund Insider), Rated: AAA

The Fundrise Starter Portfolio starts with a $500 minimum and includes a 9.25% annual dividend yield and zero advisory fees through the end of the year. If you want to try it out the Starter Portfolio comes with a 90 day guarantee. If you have a change of heart, Fundrise will purchase your investment back at the original investment amount. Not a bad deal to test the waters.

Online Lender Prosper in Talks on Deal That Would Slash Its Value (WSJ), Rated: AAA

Prosper Marketplace Inc. is in talks to sell a roughly 10% stake to a Chinese conglomerate in a deal that could reduce the online lender’s valuation by more than two-thirds, according to people familiar with the matter.

Under the terms of the proposed transaction, Linca would invest $50 million in Prosper at a valuation of about $550 million. No deal has been finalized, however, and there was no guarantee the parties would come to an agreement, the people said.

David Kimball, who took over as Prosper’s CEO last December, has been focused on making the company profitable. In February, to ensure a funding source for the company’s loans, Mr. Kimball agreed to sell $5 billion worth of Prosper’s loans to a consortium of investors over the next two years along with warrants to purchase shares representing 35% of the company, The Wall Street Journal previously reported.

Small Change Completes First Real Estate Crowdfunding Offer Under Reg CF (Crowdfund Insider), Rated: A

Real estate investment crowdfunding site Small Change has closed its first real estate offering available to everyone – not just accredited investors.

Small Change reports that investors have funded projects via their platform in cities including Pittsburgh, Los Angeles, New Orleans, and Washington D.C. These projects are as diverse as the cities in which they’ve been built. They include Pittsburgh’s first tiny house, a historic main street mixed-use conversion, and affordable housing in Washington, D.C. with the largest residential solar install in the country.

Small Change has now completed its first offering open to all investors — a Starter Home Two project by architect Jonathan Tate.

WSFS Introduces Private Student Lending Solutions (WSFS), Rated: A

WSFS Financial Corporation (Nasdaq:WSFS), the parent company of WSFS Bank, today announced that it is now offering Private Student Lending Solutions, expanding its consumer lending product line to bridge the funding gap that exists between the actual cost of higher education and the federal aid, grants and scholarships available.

WSFS is partnering with LendKey.

SoFi to finally file for IPO? (Housingwire), Rated: A

Social Finance, better known as SoFi, first teased it would file for an initial public offering nearly three years ago.

SoFi CEO Mike Cagney appears to be interested in filing for an IPO again.

If SoFi did file for an IPO, it would mark the second major IPO for a housing-related company after a dry spell the last few years.

According to an article in Reuters by Lisa Lambert, “Last year IPOs in the United States fell by more than a third from 2015, and many of those 102 share offerings ended up trading below their debut price.”

Renters Insurance: PolicyGenius vs. Lemonade (Coverager), Rated: A

Yesterday, NYC-based digital broker PolicyGenius announced its expansion to renters insurance. The product is delivered in collaboration with Stillwater.

Another thing happened yesterday. Lemonade announced its renters and homeowner’s insurance is now available to folks in NJ, joining those residing in CA, IL and NY.

The result: Stillwater was 40% more expensive than Lemonade, all else equal.

Fluid Strikes Strategic Partnership with Nomad Credit (LendIt), Rated: B

Fintech and adtech startup Fluid announced a strategic partnership with Nomad Credit, a financial marketplace for international students in the US; the partnership looks to offer better credit options to this underserved market; together the companies will deliver better financial literacy, credit building tools and more cost effective financial products.

Here’s how start-ups get funded before they’re ready for venture capital (CNBC), Rated: B

Fledgling businesses rarely command seed or venture funding right out of the gate. But they still need cash to get started.

In reality, there’s a big difference between securing a loan for your business and winning over backers on a site like Kickstarter. Meanwhile, equity crowdfunding, enabled by sites like AngelList, CircleUp and SeedInvest, is generally for businesses that are further along.

Here are the real ways that most entrepreneurs get money at the very start.

  • Personal savings
  • Wages
  • Credit cards
  • Loans
  • Crowdfunding

Countering West Coast Pull, by Helping Finance Start-Ups Sell in New York (The New York Times), Rated: A

Nine of the 15 United States financial technology “unicorns” — companies worth $1 billion or more, as tracked by CB Insights — are in the San Francisco area. These Bay Area companies, which are not public, include the online payments processor Stripe, the online lender Social Finance and the finance website Credit Karma.

For the last seven years, a New York business-backed program — the FinTech Innovation Lab — has been working to stem that West Coast tide by helping financial services start-ups sell their services in New York in an industry where the city clearly dominates: big banks and other finance companies.

Make Delaware the financial technology capital (Delaware Online), Rated: A

One such “industry of the future” that Delaware should be working to attract is the financial technology sector, or what some affectionately call “FinTech. Empowered by mobile computing, these companies use technology to bring better, cheaper, more efficient financial services to citizens. Mobile apps that allow you to send money quickly to friends or family are examples of FinTech products.

For a number of reasons, Delaware is well-suited to become the nation’s FinTech capital. First, the financial services industry has served as a core portion of Delaware’s economy for over 40 years. Individuals with skills and expertise are ready and waiting.

Second, banks, of which many call Delaware home, are leading the way in partnering with startups large and small to develop new solutions and businesses in the space.

Third, Delaware’s nimble government and business community make it a flexible, attractive place for innovation.

Is an Online Business Loan Your Best Option? (Nav), Rated: B

There should be no surprise that with the growth of the internet and online banking that online lending would be close to follow. Over time, banks began to accept loan applications online and eventually began to offer full-service lending through the web.

While online loans may be tempting, it is important to consider every option when borrowing a large sum. Comparison shopping is your friend. There are more than 44 different kinds of business financing — that’s a large ocean to navigate before finding the lowest-cost option that fits your business profile and approval chances.

Nonbank lenders typically lend from their own funds or look to the financial markets to raise millions or billions of dollars to lend in smaller increments.

Here are some questions to ask yourself to get started:

  • How much money do you need to borrow?
  • Do you need an in-person experience or are you comfortable online?
  • What are the best interest rates available today?
  • What origination fees are you willing to pay?
United Kingdom

UK’s peer-to-peer lenders to be asked to reveal past defaults (Financial Times), Rated: AAA

The FCA is expected to announce new measures later this year, including forcing P2P groups to give extra information on the past performance of loans and on how much due diligence they have done on the borrowers’ past performance.

P2P lenders — which had collectively facilitated loans of £7.3bn in the UK by the end of last year, according to research from the Peer-to-Peer Finance Association (P2PFA) — have had plenty of time to prepare for tighter regulation.

The FCA’s latest review is the second in two years, and any measures are unlikely to come in before mid-2018, since the industry will be given between three and six months to respond to the proposals the authority puts forward later this year.

Hargreaves Lansdown Cancels Special Dividend After Regulator Warns on Capital (The New York Times), Rated: AAA

Fund supermarket Hargreaves Lansdown cancelled a planned special dividend on Friday after Britain’s financial regulator said the company needed to shore up its capital base, sending its shares lower.

The company plans to launch its HL Savings product later in the year, a cash deposit service supported by marketplace lending, and this year also launched Lifetime ISAs, or individual savings accounts eligible for a government bonus.

Distribution still keeping the wheels of credit turning (Computer Weekly), Rated: A

A recent survey revealed a third of SMEs in the IT sector have missed out on business opportunities because of a lack of finance. Distributors have long been a major source of credit for SME resellers but with consolidation taking place in distribution through mergers and acquisitions, the sources of credit available to resellers are being reduced.

One distributor that has publicly taken the initiative on credit is Exertis. The company recently introduced a programme called Credit Xtra with the intention of doubling the credit limit for more than 1,650 of its SMB accounts. There is also the option to increase the limit further if resellers remain within the distributor’s credit terms.

Dow believes that it is especially important to offer extra credit at this time of year, when resellers are targeting the peak summertime buying period in education.

LendInvest closes retail bond offer early (P2P Finance News), Rated: A

LENDINVEST has closed its bond offer early, due to strong demand from both retail and institutional investors.

The online mortgage lender launched the five-year notes on 19 July and the offer was scheduled to close at noon on Friday. However, it closed the offer at 11.30am on Thursday.

It said estimated net proceeds from the offer would be just under £49m and confirmed that the issue date will be 10 August.

Kantox raises £4.6 million from investors as it targets profitability (Business Insider), Rated: A

Foreign exchange fintech company Kantox has raised £4.6 million from its existing investors as it aims for profitability.

Filings with Companies House show Kantox raised the sum at the end of July.

Kantox, founded in 2011, made an operating loss of £258,538 on revenues of £2.3 million in 2015, the most recent year accounts are available for.

LendingCrowd offers cashback incentive (P2P Finance News), Rated: A

LENDINGCROWD has launched a £150 cashback offer to investors when adding £2,500 or more amid surging demand from borrowers for business loans.

The offer, which runs until 31 August, is available to new and existing investors and can be used in its Innovative Finance ISA (IFISA.)

Competition regulator confirms P2P business lenders exempt from APR rules (P2P Finance News), Rated: A

NEW pricing rules on business loans will not apply to peer-to-peer lenders, the Competition and Markets Authority (CMA) has confirmed.

From today, all providers of unsecured loans and overdrafts worth up to £25,000 to small- and medium-sized enterprises (SMEs), will have to publish and clearly display the annual percentage rates (APRs.)

It had previously been unclear if this would apply to P2P and alternative finance lenders but the CMA confirmed to Peer2Peer Finance News this morning that it would not.

Can P2P Lending Kill NBFCs? (TechBullion), Rated: A

NBFCs, on the other hand, are the Non-Banking Financial Companies.

Does P2P lending offer such a serious threatto NBFCs and can P2P lending kill NBFCs? We write an informative review to let you know!

While NBFCs mostly deal with the unbanked population, P2P concentrate on the businesses that are usually locked out by traditional lenders and also on the tech-savvy individuals.

While P2P platforms have embraced the use of modern technology, NBFCs have failed in the use of technology. This has really affected their growth as they cannot really compete efficiently in the modern world.

Should you go with the crowd? (MoneyWeek), Rated: B

The returns available to investors aren’t as high as they used to be, but they’re still much, much more than you’d get putting your money in a deposit account. But there’s a very good reason for that. It’s an awful lot riskier too. You’re not covered by the financial services compensation scheme – which safeguards up to £85,000 of your savings if your bank goes bust. That means you cold lose everything.

China

Hexindai Partners with China UnionPay to Launch a Mobile Payment Function to Its App (PR Newswire), Rated: AAA

Hexindai Inc. (“Hexindai” or “the Company”), a fast-growing consumer lending marketplace in China, today announced that it has partnered with China UnionPay to launch its “Quick Pass” app on Hexindai’s mobile platform. The app will allow investors on the Company’s platform to use surplus funds that have not been lent out to pay for goods and services provided by stores partnered with China UnionPay by scanning a QR code created by the app.

Huge Internet finance firms to be assessed (Shanghai Daily), Rated: A

CHINA will explore methods to include large Internet financial businesses of systemic importance in its macro prudential assessment, said a central bank report issued late Friday.

The first peer-to-peer lending platform opened in 2007, and exploded in popularity, with the number of such platforms increasing 18-fold between 2012 and 2015 and the combined transaction volume jumping about 40 times over the period, said the State Information Center.

Inclusive finance to lift fintech firms (China Daily), Rated: A

Financial technology or fintech companies, particularly those focused on credit analysis, will greatly reduce cost of lending and also reduce credit risks. So, they are likely to experience fast growth on market demand as commercial banks are joining the inclusive finance market.

That market is currently dominated by smaller, private financial institutions, such as peer-to-peer or P2P lending platforms and consumer finance platforms.

In China, only 30 percent of citizens are covered by existing credit reporting system, while in mature markets the percentage could be 70 percent or higher.

By the end of July, the five biggest banks in China-Industrial & Commercial Bank of China, Agricultural Bank of China, China Construction Bank, Bank of Communications and Bank of China-had launched inclusive finance arms, just two months after the authorities concerned called for better financial services for a wider group of people across China.

European Union

FinMason Announces International Expansion: Opens Operations in Prague (Crowdfund Insider), Rated: AAA

Boston-based fintech and investment analytics firm, FinMason, announced its international expansion plans and the opening of a new operations center based in Prague. The company stated the initial expansion will include the hiring of twenty software engineers to keep pace with the rapid growth and development needs of the company.

The company shared that FinMason Europe, s.r.o., opened August 1st and the first employees have already started.

Vendorly Adds Three New Companies to Vendor Oversight Platform (Markets Insider), Rated: AAA

Vendorly, an innovative vendor oversight platform for financial institutions, today announced the continued expansion of its platform through the addition of three new third-party oversight integrations available on the Vendorly™ platform. These additions further enable our customers to enhance their compliance management framework and help them maintain the high oversight standards required in today’s marketplace.

Continuing this momentum, the new vendor oversight additions to the Vendorly platform include:

  • Dun & Bradstreet (NYSE: DNB)— Vendorly customers now have access to Dun & Bradstreet data to help make smarter decisions about their current and prospective vendor network.
  • The ID Co. — With DirectID, Vendorly customers now have the ability to conduct bank verification for current and prospective vendors in their network, to reduce fraud and misrepresentation prior to payment.
  • TINCheck — Vendorly customers now have the ability to validate the tax ID of all organizations in their current and prospective vendor network.

iFunded Tackles Large Project With Bond Issue (Crowdfund Insider), Rated: A

A new entrant in German online real estate lending, iFunded wants to address the market of larger property development projects that lie beyond the scope of real estate crowdfunding. Partnering with umbrella investment bank NFS Netfonds Financial Service, the platform is launching its first €10 million real estate bond issue, to be listed on the open market of the Frankfurt Stock Exchange. With this, iFunded leads, for the real estate online funding segment, the Fintech startup trend that consists in moving from exemption/sandbox status to a fully regulated financial environment.

According to Crowdfunding.de, in the first half of 2017, German online real estate crowdlending platforms raised €58 million, 45% more than in the entire year of 2016.

In July 2017, iFunded launched its first public bond offering, what motivated you as a company to add the classical fundraising channel to your online real estate platform?

Real estate crowdfunding in Germany has grown very significantly recently and will reach between €100 and €120 million by the end of 2017. However, it still is small.

Our first project Eisenzahnstrasse Berlin is a €10 million bond issue (ISIN: DE000A2E4FQ5) with a 3.5-year maturity and 5.5% interest rate. It is destined to transform an exi property into 281 flats, including a penthouse, and 2,400 sqm commercial space. The total estimated budget is €49.6 million and the expected income €67 million.

Robo-adviser Moneyfarm expects profitability by 2019 (Citywire), Rated: A

European robo-adviser Moneyfarm expects to become profitable by 2019 as it looks to bring to market new products in the coming months.

The Italian firm filed its 2016 financial statements this morning, announcing expansion to 10,000 customers in the UK and £260 million in global assets under management (AUM), which renders it the second largest robo-adviser in Europe.

The firm has reported total losses of £6.4 million in 2016, but claims this was in line with its agreed targets.

Kildare businesses raise over €1m through Linked Finance (Leinster Leader), Rated: B

Linked Finance, Ireland’s leading peer-to-peer (P2P) lending company has raised over €1m for Kildare-based businesses.

36 Kildare businesses including well-known businesses Kelly’s Mountain Brew, Celbridge Playzone, and The Academy Barber, have used the Linked Finance platform to raise funds and facilitate business growth.

International

Analog Regulations Built for the Traditional Banking Space are not Conducive to Fostering Innovation in Financial Services (Crowdfund Insider), Rated: AAA

Mueller notes that Singapore and the UK were the early leaders in Fintech innovation as the respective governments determined it was of strategic importance. With government backing, Fintech flourished.

But there are many challenges for this transformation that is occurring at a breakneck speed. And as Mueller says;

“analog regulations built for the traditional banking space are not conducive to fostering innovation in a financial services industry turned digital.”

Mueller bullets out intrinsic challenges to the existing regulatory ecosystem:

  • Fear of failure has resulted in some regulators taking a go slow approach instead of being proactive. When things go wrong – who gets the blame?
  • Complexity in Fintech requires new skills. Regulatory agencies are typically populated with people entrenched in well defined processes. There is a lack of proper skills and staffing.
  • Internal culture may not be willing to adapt. Changing processes is always a challenge. A cohesive policy strategy is missing.
  • Fintech innovators may struggle to engage and communicate with a regulator. Fear of engagement harms us all

Yes, some countries are blazing trails in Fintech and the list of countries pursuing a Fintech Hub status is growing. Without acknowledging the elephant in the room that the US is not at the top of this list (even though it is the leading global financial center) is telling about the regulatory morass elected officials have allowed to persist.

Read the full report here.

FinTech and the world of investment banking (Brave New Coin), Rated: A

Global banks and investment banks are far more complex creatures than their high street counterparts, which is why we’ve seen far less disruption in corporate, commercial and wholesale banking that we are seeing in retail, but don’t be complacent or closed here. There are things happening in the more complex areas too.

While fintech covers a diverse array of companies, business models, and technologies, companies generally fall into several key verticals, including:

Lending tech: Lending companies on the list include primarily peer-to-peer lending platforms as well as underwriter and lending platforms using machine learning technologies and algorithms to assess creditworthiness.

Payments/billing tech: Payments and billing tech companies span from solutions to facilitate payments processing to payment card developers to subscription billing software tools.

Personal finance/wealth management: Tech companies that help individuals manage their personal bills, accounts and/or credit, as well as manage their personal assets and investments.

Money transfer/remittance: Money transfer companies include primarily peer-to-peer platforms to transfer money between individuals across countries.

Blockchain/bitcoin: Companies here span key software or technology firms in the distributed ledger space, ranging from bitcoin wallets to security providers to sidechains.

Institutional/capital markets tech: Companies either providing tools to financial institutions such as banks, hedge funds, mutual funds, or other institutional investors. These range from alternative trading systems to financial modelling and analysis software.

Equity crowdfunding: Platforms that allow a collection of individuals to provide monetary contributions for projects or companies provisioned in the form of equity.

Insurance tech: Companies creating new underwriting, claims, distribution and brokerage platforms, enhanced customer experience offerings, and software-as-a-service to help insurers deal with legacy IT issues

Source: Brave New Coin

Meantime, rather than ignoring these changes, the biggest banks are investing in them. Since 2012, the ten largest US banks by assets participated in 72 rounds of investment totalling $3.6 billion in 56 FinTech companies whilst, in Europe, Banco Santander leads with the most number of unique investments to FinTech startups. The firm has made 13 investments to 12 unique fintech startups. The largest investment was a $135 million in Q3 2015 to small business lender Kabbage, that also included participation from ING among other investors.

Alt-Lending Enjoys Sudden Investment Revival (PYMNTS), Rated: A

This week alone saw two examples of those concerns in action: One U.S. lawmaker, Rep. Emanuel Cleaver II (D-Mo.) sent a letter to five alternative small business lenders operating in the country, inquiring about their business practices.

This week also saw one alternative lender in the U.K., DueCourse, fall into administration.

All of this makes it even more surprising that alternative lending startups, by far, secured the greatest amount of investment this week – pushing half a billion dollars, in fact.

PYMNTS breaks down the major AltFin investment rounds, plus covers the other B2B FinTechs that were able to secure new funding.

Australia/New Zealand

PledgeMe closes in on profitability in 2017, weighs up new product development (NZ Herald), Rated: AAA

PledgeMe came within cooee of turning a profit in the 2017 financial year, boosting revenue from fees to use its equity crowdfunding and peer-to-peer lending platform while also clamping down on costs, and is considering adding another string to its bow which that could need another capital injection.

The Wellington-based company narrowed its annual loss to $11,228 in the 12 months ended March 31 from $398,611 a year earlier as revenue climbed 55 per cent to $268,473 and operating costs were slashed 48 per cent to $288,502.

Fintech Australia Shares 2017 Australian Fintech Update (Infographic) (Crowdfund Insider), Rated: AAA

On Saturday, Fintech Australia released a new infographic that revealed more details about the Australian fintech industry’s successes so far this year.

 

Non-bank loans gain momentum in tough lending regime (The Sydney Morning Herald), Rated: A

We have seen demand for construction loans between $10 million and $30 million spike 20 per cent per cent over the last six months as Tier 1 banks are quickly tightening both pre-sales thresholds and loan-to-valuation ratios on new developments.

One area of the greatest demand for non-bank finance is coming from Chinese property developers, who do not have the track record or Australian assets to provide comfort to the major lenders.

Peer-to-peer lending models, like that of Chifley Securities, allow us to access investor funds to progress these developments, as we are applying different, more nuanced assessment of the risks associated with these loans.

Will property crowdfunding take off in Australia? (Your Investment Property), Rated: A

A new study conducted by the University of South Australia (UniSA) in partnership with DomaCom, suggests that crowdfunding could become a viable new vehicle for investors trying to make headway into the country’s increasingly challenging property market.

Braam Lowies, the study’s lead researcher, noted that while the concept was relatively new in Australia, it had been successful in the United States and United Kingdom for approximately seven years.

India

Wadhawan Global takes second UK bet, invests Rs 175 crore (India Times), Rated: A

Wadhawan Global Capital (WGC), which owns 38% of Dewan Housing FinanceBSE 0.07 %, has invested Rs 175 crore in London-based mortgage financer Neyber, marking it’s second investment through the newly set up UK arm as it seeks to expand its global footprint.

Why PPF is like a safety jacket for investors of P2P lending (India Times), Rated: A

Those who do not back the idea of PPF believe investors should carry the risk of loss as the principal idea of P2P Lending is to offer investors an “alternative investment route”. The P2P Lending platform, at best, can try to strengthen the risk-assessment processes by making the optimal use of technological innovations.

While the other camp which is in favour of PPF opines that it is not a luxury but a necessity at the moment as it will only instill confidence among the investors. And, it’s not about disbelieving one’s capabilities.

Asia

Consultation by MAS on the provision of robo-advisory services in Singapore (Lexology), Rated: AAA

A summary of the proposals put forward by MAS in the Consultation Paper is set out below.

  1. Expansion of licensing exemptions

    (a) Expansion of licensing exemption for dealings in securities other than CIS

    (b) Expansion of licensing exemption for provision of fund management services incidental to advisory activities

  2. Dispensation with prior client approval for each and every rebalancing transaction
  3. Case-by-case exemption from collecting full information on the financial circumstances of clients
  4. Relaxation of criteria for CMS licences in fund management for digital advisers
  5. Development, monitoring and testing of client-facing tools
  6. Provision of information on algorithms and conflicts of interest
  7. Responsibility of the board and senior management

MAS Establishes Payments Council (LATTICE80 Email), Rated: A

The Monetary Authority of Singapore (MAS) announced on 2 August that it will establish a Payments Council, comprising 20 leaders from banks, payment service providers, businesses,and trade  associations. Members are appointed for a two-year term and chaired by Mr Ravi Menon, Managing Director, MAS. The Payment Council marks the vision of an e-payments society, fostering collaboration between providers and users of payment services in Singapore.

Green Packet an emerging fintech play (The Star), Rated: A

Communication and technology services company Green Packet Bhd is eyeing an expansion into a new growth area – the mobile payment solutions segment, an area poised for disruptions through technology.

According to the 2016 Visa Consumer Payment Attitudes survey, 74% of Malaysians prefer to make electronic payments instead of cash, an increase of 8% compared with 2015. In fact, Visa indicated in a separate study that seven in ten Malaysians are willing to use mobile wallets.

Hyperintelligent banking in the fickle era of social media (Inquirer.net), Rated: A

Such is the case of American banking giant Citi, which sees itself as a technology company with a banking license, having introduced video banking recently in India.

Video banking is seen suitable especially in wealth management, which is part of the regional consumer business led by Selva. This is a segment where customers need trust and constant advice.

Citi receives 70 million calls a year, almost half of which are answered by a phone agent. The bank usually spends about 30 to 45 seconds validating the call, asking the client his or her mother’s maiden name, date of birth and details about the last transaction.

In the Philippines, Citi now implements voice-enabled biometrics for easier client verification. Citi is likewise moving toward facial recognition.

Fintech Buys Stake in Exchange (finews), Rated: B

GSX, which owns and operates the Gibraltar Stock Exchange, said on Friday that Cyberhub Fintech Holdings Limited is a new strategic shareholder. Cyberhub is a unit of Broctagon, a derivatives trading technology provider.

The stock exchange also wants to become the world’s first to fully integrate blockchain technology.

Africa

The role of financial advisers in raising national savings levels (Biz Community), Rated: A

According to the 2017 Old Mutual Savings & Investment Monitor, working South Africans allocate only 15% of their incometowards savings.

Naidoo explained that these statistics emphasise the extent of the national savings deficit and the large gap that exists between targeted economic growth of 5.4% per year, as per the NDP, and the ability of the South African economy to fund that growth.

Naidoo believes that financial services providers and advisers have a vital responsibility to promote a savings culture via collaborative advice and financial literacy efforts.

Barbados

Carilend seeing ‘phenomenal’ growth (Loop News Barbados), Rated: AAA

Just three months in and Barbados’ sole peer-to-peer lending company, Carilend, is seeing tremendous success with 100 percent of its loans.

With over 900 registered users on the site to date, the team at Carilend has been amazed at the response they have received.

Carilend reported their “average” Borrower is borrowing $8,617 for 43 months at an average interest rate of 11.34%. Whilst all applications receive an answer in one working day, Carilend recently approved a brand new Borrower in 2 hours; 22 minutes from receipt of their initial application.

Authors:

George Popescu
Allen Taylor

Tuesday May 2 2017, Daily News Digest

Morningstar average credit spreads

News Comments Today’s main news: CFPB sues 4 online Indian-tribe lenders. Sharestates launches real estate lending white label solution. China Rapid Finance announces IPO pricing. Yirendai files Form 20-F. Today’s main analysis: Corporate credit tightens amid sluggish Q1 growth. Avant’s first 2017 ABS. Today’s thought-provoking articles: Europe on pace to set new record for fintech deals. United States CFPB […]

Morningstar average credit spreads

News Comments

United States

  • CFPB sues four online lenders operated by Indian tribe. GP:”In general India-tribe lenders attract more lawsuits. It is unclear if it is because they tend to be sloppier on compliance or lenders who are more aggressive on terms tend to partner with Indian-tribes because no bank will partner with them. In all cases being associated with an Indian-tribe seems to bear stigmata at least recently.”AT: “The CFPB is attempting to do what it was set up to do, but with attacks coming from state regulators, who knows how long it will be able to continue to do so?”
  • Corporate credits spread amid Q1 economic growth sluggishness. GP:”An interesting data point in the overall economic cycle.”
  • Avant’s first 2017 ABS. GP:”A good test of market perception of the Avant underwriting and product quality. Securitization has seen favorable investor demand. Avant retained 5% of the deal per Dodd-Frank. “
  • Sharestates launches white label solution for real estate private lenders. GP:”A sign that the market is maturing. Also a sign that cost of customer acquisition is growing as real estate crowdfunding companies get into technology sales / white labels entrusting 3rd parties to finding customers and letting them focus on the platform.”AT: “This is brilliant, and I’m not just saying that because I write for this company. Real estate is inherently local. By establishing a white label solution for real estate private lenders, Sharestates could position itself as the leader in RECF for many years to come. As far as I know, this is the first white label solution specifically for the real estate lending market. If the solution is any good, they should get a lot of participation.”
  • Colorado moves to dismiss suits. GP:”A very standard move in any lawsuit. It is unlikely to suceed.”AT: “These are interesting arguments, but I don’t see it happening. There is too much at stake to allow states to railroad online lenders and relegate them to second-class status. There needs to be a real discussion about which level of government has the power to regulate and legislate online lending.”
  • Fundrise files new Reg A+ for Income eREIT. GP:”We haven’t seen many Reg A+ fund raises in our space. I do think it is a very interesting tool for early stage companies. “AT: “This should have been expected. Selling out of shares as quickly as they did on the first round, I wonder why they didn’t file a second Reg A+ sooner.”
  • Thrive to power small biz lending for Horizon Community Bank. AT: “Perhaps we’ll see a wave of community banks getting in on the online lending act.”
  • Online lending has reached a tipping point. GP:”I think they actually mean it has reached maturity.” AT: “GDR’s Charlie Moore lays good groundwork for his argument. He makes some great points.”
  • Lendio announces annual list of top 10 best states for small business lending. GP:”There is very little transparency and public data in the SME lending space (unlike in personal lending thanks to Lending Club for example). This data is a step in the good direction. We hope more will be made available.”AT: “This is based on their own data, so it’s not objective. Interesting nonetheless.”
  • The future of finance. AT: “What’s interesting about this is the unchanging talking points from SoFi’s Mike Cagney about how banks should adopt technology, and how it would affect their businesses if they did. Short story: They could lay off more employees and cut business expenses.”
  • How Goldman Sachs is trying to erase debt stigma. GP:””
  • Leverage digital tech to forge relationships with your clients’ children. AT: “For financial advisors.”
  • Justices affirm cities’ right to sue banks under housing law.
  • SoFi personal loans review. GP:”A good summary of SoFi’s approach, which has pushed them where they are today. Most notably: no origination fee. SoFi is probably the only major online lender that has no origination fee. Avant started without an origination fee and lately had to introduce one for profitability. “
  • Celent’s corporate banking appoints Alenka Grealish as senior analyst.

United Kingdom

  • TransferWise to set up office in Singapore. GP:”Singapore is a good compromise between pro-business environment, trained workforce with good skills and price. Hong Kong is extremely expensive. Mainland China is not a good base to do business outside China. However, in the past, I found that for South East Asia a good cost/quality/location compromie was Jakarta.”AT: “I can’t think of a better place to set up office if you want to tackle the Asian markets.”

European Union

Australia

China

India

News Summary

United States

CFPB Sues Four Online Lenders Operated by a California Indian Tribe (Crowdfund Insider), Rated: AAA

The Consumer Financial Protection Bureau (CFPB) has sued four online lenders for collecting debt from consumers they allegedly did not owe. The four lenders include: Golden Valley Lending, Inc., Silver Cloud Financial, Inc., Mountain Summit Financial, Inc., and Majestic Lake Financial, Inc.

The CFPB alleges that the lenders made deceptive demands and illegally took money from consumer bank accounts for debts that consumers did not legally owe. The CFPB filed to stop the practices, recoup relief for impacted consumers, and asses a penalty on the aforementioned lenders. Each of the four lenders operate out of a single address in Upper Lake, California and is owned and incorporated by the Habematolel Pomo of Upper Lake Indian Tribe (Habematolel Pomo Tribe or the Tribe), a federally recognized Indian tribe.

The CFPB states that since at least 2012, Golden Valley Lending and Silver Cloud Financial have offered online loans of between $300 and $1,200 with annual interest rates ranging from 440 percent up to 950 percent.

Read the actual complaint here.

Economic growth for the first quarter of 2017 slowed to a 0.7% annualized rate compared with a 2.1% rate in the fourth quarter of 2016. This represents the slowest rate of economic expansion over the past three years.

On a positive note, business investment picked up rapidly.

The average corporate credit spread of the Morningstar Corporate Bond Index (our proxy for the investment-grade bond market) tightened 2 basis points over the course of last week to +121. In the high-yield market, the Bank of America Merrill Lynch High Yield Master Index tightened 22 basis points to end the week at +375. In the equity markets last week, the Nasdaq index broke through 6000 to new highs and the S&P 500 rose 1.5%.

As an indication of how tight corporate credit spreads have become compared with their historical averages, since the beginning of 2000, the average spread of the Morningstar Corporate Bond Index has registered below the current level only 26% of the time. The preponderance of the time that the index was at a level tighter than the current credit spread occurred during the buildup to the 2008-09 credit crisis. In 2004-07, corporate credit spreads were pushed to historically tight levels as new structured investment vehicles were engineered to arbitrage the differentials in expected default risk. But once the credit crisis emerged, investors found that many of these vehicles did not perform as advertised.

Avant’s First 2017 ABS (PeerIQ), Rated: AAA

We see a bifurcation in credit performance trends between mass affluent credit card issuers, and issuers focused on mass market credit segments. Synchrony, the largest store credit card issuer, shares dropped 16% on Friday due to a 45% increase in its loan loss provision. Capital One and Discover also increased their provision by 33% and 14% respectively. By contrast, the credit card master trusts of large card issuers (AXP, BAC, JPM) exhibit delinquencies that are near all-time lows (as analyzed in prior PeerIQ newsletter) due to their focus on higher credit quality relationship customers.

On Friday, bond investors welcomed the first Avant ABS deal of the year. AVNT 2017-A was upsized to $247.8 Mn collateral and received significant interest from broader credit investors.

Avant Loans Funding Trust 2017-A (AVNT 2017-A)

Avant priced its first unsecured subprime consumer deal of 2017 on April 26th (AVNT 2017-A), its fourth rated securitization. The transaction was upsized from $192.6 Mn to $218.9 Mn due to favorable investor demand. The deal was led by JP Morgan who also structured the transaction, as well as Credit Suisse and Morgan Stanley. Avant retained 5% of the deal, consistent with risk retention requirements of Dodd-Frank Act.

Source: PeerIQ, Bloomberg, Kroll Rating

Strong Alignment of Interests

Avant’s business operating model allows for several important components that strengthen alignment of interests between Avant and institutional investors. According to Kroll Rating’s pre-sale report, as of March 31st Avant retained approximately $2.5 Bn (65%) of the $3.8 Bn in loans originated through the Avant Platform. For this transaction, Avant contributed 95% of the loans in the collateral pool.

Further, on the deal Closing Date, Avant or its majority-owned affiliate acquires and retains at least 5% of the fair value of total capital structure by Regulation Risk Retention.

Loss Assumptions

Kroll increased the weighted average cumulative net loss (CNL) rate when rating AVNT 2017-A. For loans with 36 months or less terms, the CNL was increased from 13.86% in AVNT 2016-C to 18.39% in AVNT 2017-A (“Run-off Portion”). Further, Kroll assumed 16.55% for the representative portion in its pre-sale report, suggesting an upward shift in loss assumptions for AVNT loan product.

Pricing Tighter

We observe a parallel shift in the credit curve: the A tranche was 100 basis points tighter and the B tranche was 185 basis points tighter than the corresponding tranches in AVNT 2016-C. The C tranche was priced at 450 basis points.  The C tranche (BB-rated) was fourteen times over-subscribed, reflecting credit investors’ “risk-on” mentality.

Source: PeerIQ

Trigger Talk

The exhibit conveys that trigger profiles can be very different even for similar collateral from the same shelf. AVNT 2017-A shows a much higher starting CNL profile (MOB=1) than AVNT 2016-B, starting at 1% and peaking at 25%. Although the changes in the underwriting standard is obvious, the loss trigger profile is slightly steeper, reflecting more up-front loss timing for AVNT 2017-A as compared to older deals, such as AVNT 2016-B.

Source: PeerIQ

Sharestates Launches White Label Lending Solution for Real Estate Private Lenders: Shareline Solution (Crowdfund Insider), Rated: AAA

Sharestates, an online real estate investment marketplace, has announced the launch of a new financing capability; Shareline Solution. The new service is a hybrid between lending and brokering a loan. Private lenders will have access to Sharestates lending capabilities to directly serve their clients all under their own brand. The new lending service is described as a white label, correspondent lending program that empowers private lenders to quickly launch a robust real estate crowdfunding and lending marketplace.

With this solution, Sharestates explains it will tap into more geographical regions by working directly with local, private lenders through strategic partnerships.

Colorado Moves to Dismiss Suits (Orrick), Rated: A

As we noted in a recent Alert, WebBank and Cross River Bank filed separate federal civil actions to enjoin the Administrator of Colorado’s Uniform Consumer Credit Code from enforcing state lending laws against Avant, Inc. and Marlette Funding LLC, online lending platforms that facilitate and service loans originated by the two Banks. The Banks assert that Colorado’s lending laws are preempted by federal banking statutes. On April 25, the Administrator moved to dismiss the Banks’ actions on several grounds.

First, the Administrator contends that the lawsuits do not present a federal question and thus fail to establish subject-matter jurisdiction.

Second, the Administrator argues that the Banks lack standing because their alleged injuries—including loss of revenue from the assignment or sale of their loans—are either inadequately pled or insufficiently related to the enforcement proceedings against Avant and Marlette.

Third, the Administrator argued that if the State’s enforcement actions against Avant and Marlette (which were removed to federal court) are remanded to state court, then the federal court should either dismiss or stay the action brought by WebBank and Cross River Bank’s cases based on the Younger abstention doctrine (which establishes rules against federal courts from interfering with ongoing state court or administrative proceedings).

Fourth, and perhaps most significantly, the Administrator asserts that the Banks’ preemption arguments fail as a matter of law because federal banking statutes—particularly the National Bank Act (“NBA”), 12 U.S.C. § 85, and the Depository Institutions Deregulation and Monetary Control Act (“DIDMCA”), 12 U.S.C. § 1831d—do not preempt the application of state lending laws to nonbank entities.

Fundrise Files New Reg A+ for Income eREIT (Crowdfund Insider), Rated: A

Fundrise, an online marketplace for investing in real estate, has filed a Reg A+ offer with the SEC to sell additional shares in their Income eREIT. This will be the second round for the Fundrise Income eREIT. The first round sold out raising the maximum amount allowable of $50 million. Fundrise is offering up to $41,189,280 in common shares which represents the value of shares available to be offered as of the date of the offering circular out of the rolling 12-month maximum offering amount of $50 million in the eREIT shares.

Thrive Platform to Power Small Business Lending for Horizon Community Bank (Thrive Email), Rated: A

Thrive Inc. (Thrive) is pleased to announce a multi-year technology licensing agreement with Horizon Community Bank (HCB), a leading Arizona-based FDIC insured bank and subsidiary of Horizon Bancorp, Inc.

Thrive’s proprietary cloud-based lending technology will power the complete, end-to-end small business lending process for HCB encompassing:

  • Digital applications, automated credit / financial analysis and background/verification checks, loan offers and declines, e-closings, integrated servicing, borrower interface and real-time risk management capabilities
  • Operationally, HCB will benefit significantly from improved loan processing efficiencies and reduced origination costs:
    • Loan processing time is expected to be reduced from weeks to days
    • Cost reductions of greater than 40% are expected for each loan application cycle
  • HCB will benefit extensively from new digital customer acquisition channels, while user experiences for existing and new customers will be modernized and improved

Online lending has reached a tipping point (Business Insider), Rated: A

Online lenders have been facing an uphill battle recently as investors question whether they are truly getting the loan transparency they need to confidently invest in this young industry. Investors, credit providers and ratings agencies are worried about loan data integrity as well as collateral and ownership rights behind the loans.

Phase One: Concept – The Early Days (2006-2010)

The concept of partner banks – like WebBank and Cross River – issuing loans on behalf of these platforms, quickly became an established model. These banks helped ensure the borrower regulations were met, including state licenses among others. Consumers are well protected and borrower fraud is tightly managed.

But in 2008, regulators took notice of this rapidly expanding market, and the SEC issued a statement requiring lending platforms to register and report loan financials to the Commission to protect investors. With this change, the SEC highlighted the need to treat fractional loans as securities that need to be reported.

Phase Two: Institutional Entry – Enter the Big Dogs (2011-2015)

In 2011, the landscape changed for online lenders with institutional investors, in search of yield in a near-zero interest rate environment, tossing their hats in the ring to enter this emerging industry. A $5 million investment from an anonymous institutional investor into LendingClub marked the first infusion of institutional investor capital into the online lending space.

And that was only the beginning as institutional investment continued to flow into the market, primarily from specialist hedge funds, often with lines of credit from well-known large investment banks. At this point, the industry evolved its name from Peer to Peer to Marketplace Lending and ultimately Online Lending to reflect the fact that large institutions were now funding a large portion of the loans.

Also in 2013, securitization changed the face of online lending, providing lending platforms more scalable access to capital to fund the needs of new lenders. Eaglewood Capital closed on a $53 million unrated securitization deal for loans originated by LendingClub, making it the very first securitization deal in the space.

Analytics and secondary markets began to emerge in 2015, with companies like PeerIQ, dv01 and Monja providing analytics and reporting tools to help investors better track their online lending investments. Secondary markets for these loans kicked off this same year, with the launch of both Orchard and Ldger, aiming to provide additional liquidity options for investors in the space.

Later in 2015, the first partnership between a bank and lender was forged with JP Morgan and On Deck leading the charge.

Phase Three: Maturity & Scale – The Future is Clear (and transparent!) (2016 – …)

And now we arrive at the present – a tipping point where the fate of the industry lies squarely in its ability to adopt effective risk control infrastructure for investors to bring certainty to this asset class and therefore attract new capital.

A modern fintech lending model has been using a thirty-year-old due diligence methodology, comparing loan tapes with loan agreements, both provided by the seller. It goes without saying that this method is far from modern or efficient, with no independent validation of data integrity against trusted data sources.

Today, transparency is being redefined. Online lending has undoubtedly provided greater loan data and performance reporting than investors are used to. However, loan transparency from the seller without independent data certainty has been proven dangerous.

A vital part of this infrastructure is for the industry to adopt a central loan information clearing house that focuses on ownership rights and asset certainty for each loan as well as serving as a collateral pledge registry to prevent the double pledging of assets. Increased asset certainty is helping to protect and attract capital from new larger, more risk averse investor segments. With the infrastructure changes we’re seeing emerge in the industry today, including the potential of Blockchain technology, this goal of new capital sources is closer to reality for online lenders than ever.

Lendio Announces Annual List of Top 10 Best States for Small Business Lending (PRWeb), Rated: A

In honor of National Small Business Week, Lendio, the nation’s leading marketplace for small business loans, today announced its second annual list of top 10 states for small business lending, based on lending data from the Lendio platform, which matches businesses with more than 75 lenders.

This year’s top states for small business lending are:

  1. Utah
  2. Washington
  3. California
  4. Virginia
  5. Texas
  6. Florida
  7. New York
  8. New Hampshire
  9. Pennsylvania
  10. Georgia

The ranking is based on a calculation of several key indicators, including approval rates and loan sizes, from among thousands of Lendio’s customers from April 2016 to March 2017.

1 – Utah
2016 Ranking: 3
No. SMBs: 268,872*
No. SMB Employees: 540,268*
Average Loan Size: $37,648

2 – Washington
2016 Ranking: 4
No. SMBs: 574,455*
No. SMB Employees: 1,300,000*
Average Loan Size: $24,746

3 – California
2016 Ranking: 2
No. SMBs: 3,800,000*
No. SMB Employees: 6,800,000*
Average Loan Size: $23,391

4 – Virginia
2016 Ranking: 13
No. SMBs: 706,626*
No. SMB Employees: 1,500,000*
Average Loan Size: $20,520

5 – Texas
2016 Ranking: 6
No. SMBs: 2,600,000*
No. SMB Employees: 4,600,000*
Average Loan Size: $21,003

6 – Florida
2016 Ranking: 7
No. SMBs: 2,400,000*
No. SMB Employees: 3,200,000*
Average Loan Size: $21,103

7 – New York
2016 Ranking: 18
No. SMBs: 2,100,000*
No. SMB Employees: 4,000,000*
Average Loan Size: $23,014

8 – New Hampshire
2016 Ranking: 5
No. SMBs: 132,432*
No. SMB Employees: 289,914*
Average Loan Size: $19,893

9 – Pennsylvania
2016 Ranking: 22
No. SMBs: 1,000,000*
No. SMB Employees: 2,500,000*
Average Loan Size: $17,561

10 – Georgia
2016 Ranking: 8
No. SMBs: 1,000,000*
No. SMB Employees: 1,600,000*
Average Loan Size: $16,348

*Source:

The Future of Finance: More Data, Fewer People (Institutional Investor), Rated: A

Credit Suisse is now piloting a robot named Reggie, a virtual assistant not unlike Amazon’s Alexa. Credit Suisse’s Reggie was programmed to answer regulatory questions, according to Brian Chin, CEO of global markets for the investment bank. Chin, who spoke on a panel at the Milken Institute Global Conference in Los Angeles on Tuesday, expects that the Swiss bank will be able to ultimately cut the number of calls to its call center by 50 percent. But at this point, Reggie is better at providing information for simple questions than appropriately addressing more complex inquiries.

The technology exists now to streamline labor-intensive processes such as loan underwriting. Mike Cagney, CEO and co-founder of SoFi, an online consumer lender, uses five pieces of data to provide instantaneous loan decisions. SoFi is now moving to use non-traditional information for underwriting, including data from cell phones, which it thinks will predict consumers’ future behavior. Cagney said banks could shed thousands of people if they used similar technology.

How a Goldman Sachs brand is trying to erase debt stigma (Tearsheet), Rated: A

“There’s a stigma around debt, people don’t like to talk about it,” Nicole Sbarra, a product manager for Marcus, said at an event in New York Thursday night. “It makes them very uncomfortable. And most people also don’t think of credit card debt as actual debt, they see it as a balance… [Marcus] is going to help you understand that there’s more to you than this extreme amount of debt on your shoulders.”

Keeping the brand separate, as much as possible, from Goldman is necessary, in some ways, considering the bank’s history. From 2005 to 2007, Goldman issued and underwrote mortgages and securities backed by residential loans that were borrowed by consumers with poor credit. This led to the housing bubble burst and economic recession. Last year Goldman paid out $5.1 billion for its role in the financial crisis.

Money is one of the most personal and sensitive topics for people, even people with lots of it, which is why empathy plays such an important role in building a financial product. The average American carries some $16,000 in credit card debt and about 70 percent of them don’t know there are alternative options to that credit card debt, said Michael Cerda, head of product.

Leverage Digital Technology To Forge Relationships With Your Clients’ Children (FA Magazine), Rated: A

According to various statistics, millennials and members of Generation X will inherit anywhere from $15 trillion to $40 trillion or more from their baby boomer parents by 2050. This will be the largest cross-generational transfer of wealth in history, but many financial advisors haven’t yet prepared for this opportunity.

As the relationship progresses, advisors can proactively invite a client’s children to meetings, and reach out to them to offer financial planning education at applicable stages of their lives. This education can have a big impact if it is taught using the state-of-the-art reporting, proposal and prospecting tools that come with today’s digital advice platforms. For example, when a client mentions that their teenage son or daughter just secured their first after-school job, the advisor can offer to meet with them to deliver an interactive digital presentation on how to save and invest their earnings.

Justices affirm cities’ right to sue banks under housing law (Arkansas Online), Rated: B

The Supreme Court ruled Monday that cities may sue banks under the federal law that bans discrimination in housing, but it said such lawsuits must tie claims about predatory lending practices directly to declines in property tax revenue.

The justices’ 5-3 ruling partly validated an approach by Miami and other cities to try to hold banks accountable under the federal Fair Housing Act for the wave of foreclosures during the housing crisis a decade ago.

SoFi personal loans: 2017 comprehensive review (Bankrate), Rated: B

Who is a SoFi personal loan good for?

  • Anyone with good to excellent credit. SoFi borrowers have an average credit score of 730, although credit scores range from 680 to 850, according to the company. Check your credit score for free before you apply.
  • High-income earners. SoFi borrowers have an average annual income of $114,000. Real median household income in the U.S. is about $56,500.
  • Someone who has a short credit history. SoFi has no minimum requirement for how long you’ve used credit, but rather looks at how responsible you’ve been at paying bills.
  • Someone who doesn’t need a co-borrower. SoFi, like many other online lenders, does not allow joint borrowers on a single loan. If your credit or income aren’t good enough to qualify on your own, you may want to consider using a different lender.
  • Someone who doesn’t mind an entirely online experience. The entire process takes place virtually — from applying for a loan to receiving approval to having the money deposited in your bank account if you are funded.

SoFi offers both fixed- and variable-rate personal loans that range from $5,000 to $100,000 and are repayable over three, five or seven years. Minimum loan amounts are higher in four states: Arizona, Kentucky, Massachusetts and New Hampshire.

Fees and penalties

  • SoFi doesn’t charge an origination fee.
  • Late payment fee is either 4% of the unpaid installment amount or $15, whichever is less.
  • You won’t be penalized for paying off your loan early.

Celent’s Corporate Banking Appoints Alenka Grealish as Senior Analyst (citybizlist), Rated: B

Celent is pleased to announce that Alenka Grealish will be joining the Banking practice as a Senior Analyst based in San Francisco. Her research will focus on innovation in treasury management services, trade finance, working capital finance, and the implications for customer journeys across segments, including small business. As part of her research, she will track the digitization of the financial supply chain, and the rise of fintechs and new business and revenue models.

United Kingdom

TransferWise Goes Big. Sets up Office in Singapore for Asian Expansion & Global Domination (Crowdfund Insider), Rated: AAA

I am not alone in using the service as Transferwise has grown rapidly around the world. In the UK, 10% of the people who transfer money utilize the service. A recent funding round gave Transferwise a billion dollar valuation so it has achieved Fintech Unicorn status.

Today, Transferwise is moving  around $ 1.2 billion monthly. They estimate they save consumers and businesses, around $2 million daily. Who loses out? The banks, of course.

Global remittance stands at around half a trillion dollars each year. According to the World Bank, remittances in East Asia and Pacific registered about $126 billion last year. If you add South Asia (India, Pakistan, Nepal and Bangladesh) you can add another $110 billion to that number. Transferwise setting up shop in Singapore just makes sense.

European Union

Europe On Pace for Record Year in Fintech Deals (Crowdfund Insider), Rated: AAA

CB Insights reported that European fintech firms raised over $667 million over the first three months of the year through a total of 73 deals. It’s important to note that CB Insights’ report is based only on VC-backed deals as opposed to KPMG’s Q1 report which was based on all types of deals, which is why the report released by KPMG last week showed over $880 million raised from 89 deals in Europe.

In just three months, European firms this year have already raised 60% of the total amount that was raised all of last year.

What’s also promising is the fact that early-stage investing has increased as well. Over $195 million of the amount raised in Q1 of this year was in seed and series A funding rounds. Q4 of 2016 only saw $54 million raised in those rounds.

Australia

PledgeMe Launches Lending Month of May: Seeks to Help Kiwis Learn More About Crowdlending (Crowdfund Insider), Rated: A

On Monday, New Zealand’s crowdfunding platform PledgeMe announced it was dedicating the month of May to lending related goodness.

As part of the program, the PledgeMe crew will be doing the following:

  • Explaining what it means in a super straight forward way; borrowing money doesn’t need to be as complicated as it’s been made out to be. 
  • Create case studies on how it has worked in the past.
  • Hosting a webinar to answer questions real time, and then blog about it.
  • Writing a weekly blog series showcasing how crowdlending can work for various company organizations 
  • Creating a podcast series
  • Putting together a mini-documentary on the company behind “the bubble”

Australian youth drive P2P revolution (AltFi), Rated: A

But its millennials that are driving the P2P revolution. They’re turning away from banks and property in droves and creating space for fintech disrupters, according to new research by RateSetter Australia.

The company has seen the number of millennial investors using its platform increased a startling 250 percent the past 12 months.

The average investment from millennials was only A$10,000, much smaller than the A$50,000-plus averaged by baby boomers and the ‘silent generation’.

China

China Rapid Finance Announces Pricing of Initial Public Offering (PR Newswire), Rated: AAA

China Rapid Finance Limited (“China Rapid Finance”) (NYSE: XRF) announced today that its initial public offering of 10,000,000 American depositary shares (“ADSs”) was priced at US$6.00 per ADS, with a total offering size of US$60 million. Each ADS represents one Class A ordinary share of China Rapid Finance. China Rapid Finance has granted the underwriters a 30-day option to purchase up to an additional 1,500,000 ADSs at the initial public offering price, less the underwriting discounts and commission. The ADSs have been approved for listing on the New York Stock Exchange and are expected to begin trading on April 28, 2017 under the symbol “XRF.”

Yirendai FORM 20-F (SEC), Rated: AAA

119,512,300 ordinary shares, par value US$0.0001 per share, as of December 31, 2016.

IFC and Ant Financial to enable digital financial inclusion in emerging markets (The Asset), Rated: A

IFC, a member of the World Bank Group, and Ant Financial Services Group, the parent company of Alipay, have signed a memorandum of understanding to make basic financial services more accessible in China and other emerging markets.

Under the new memorandum the two parties will strengthen their collaboration for inclusive digital finance, green digital finance, business-environment enhancement and credit-data analysis.

Ant has invested in payment and digital finance companies in India, Thailand and Indonesia.

P2P Industry News (Xing Ping She Email), Rated: A

Monthly Report of China’s P2P Lending Industry
On 1st May, Online Lending House released the monthly report of P2P lending industry. According to the report, the total business volume decreased in April due to the two minor long leaves(Qingming Festival holiday and May Day holiday). However, the trend of the industry is optimistic especially in the number of borrowers, cumulative trading volume and the development of lending platforms.

In April 2017, the loan volume is 224.92 billion RMB, and the cumulative volume reached to 4,330.12 billion RMB, however, the same figure of the corresponding period last year was 1,888.12 billion RMB. Over the past year, the volume in P2P lending industry has nearly increased by 2.5 trillion RMB. The loan balance mainly concentrates on Beijing(338.70B RMB), Shanghai(242.35B RMB) and Guangdong province(177.98B RMB) , jointly accounting for 79.26% of the country’s total balance.

Ant Financial:Alipay Model will be Replicated in B&R(Belt and Road) Countries
The globalization process of Ant Financial started since February 2015 and the business has spreaded to India, Thailand, Indonesia and the Philippines etc. “We look for local partners instead of running a branch abroad, and aim at developing countries with great demand for e-payment rather than developed countries. The immediate benefits from this mode will save 5-8 years’ research and development time.” Jia Hang, the general manager of international division, explained the company’s overall global strategy for the first time. Ant Financial also announced they would keep replicating the Alipay business to other B&R Countries.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

This week, China Banking Regulatory Commission released a documentation “Guidelines on risk prevention and control in banking industry” to regulate the small cash loans market by perfecting the in-out mechanisms, paying more attention to the supervision and decreasing operation risk.

Here are some recommendations for this round of regulatory reform:

  • At present, diverse interest rates should be permitted to coexist, but the existence of exorbitant usury must be prohibited. It is reported that the average interest rate of cash loans has reached 158%, which produces disastrous influence on the development of microfinance industry in China.
  • To reduce risk, government should make the relevant laws to conduct stricter regulation on different kinds of cash loans companies.
  • Training should be provided to microfinance organizations in order to improve operations and strengthen management capabilities.

The Beijing Municipal Administration Traffic Card, more commonly known as the Yikatong, is preparing to tap into demand for mobile payment devices, with the launch of a wristband capable of making contactless payments.

With the wearable tech industry on the rise, Yikatong believes engineering a variety of payment methods is essential to ensuring customer satisfaction. According to analysts at IDC, the wearable devices market is booming, with around 50 million units projected to be sold in 2017, which is expected to achieve a target of 78% average growth a year until 2018.

One of China’s largest online lending platform, CreditEase, has launched a private blockchain service based on ethereum.

Renren Inc., which operates a social networking service and internet finance business in China, announced to reach a strategic partnership with Ping An Bank to develop automobile finance in China.

This week, Chinese bike-sharing startup ofo announced a strategic investment from Ant Financial, but the total funding volume was not disclosed. In the future, ofo will work with Ant Financial on payments, credit and other international business expansion.

India

FinMomenta launches peer-to-peer online lending platform Tachyloans (The Hindu BusinessLine), Rated: AAA

Even as a final set of regulations is yet to be firmed up in the country’s burgeoning digital peer to peer (P2P) lending space, a Singapore-based fintech start-up FinMomenta has launched its operations to tap individuals and businesses that are considered ‘risky’ by the bigger NBFCs and banks.

The company uses a proprietary credit scoring model enabled by Artificial Intelligence and Big Data to assess the creditworthiness of applicants. It also uses e-KYC and Aadhaar for verification of the borrowers that helps lenders to automatically invest in the recommended list of borrowers, according to Khaderbad.

Tachyloans also analyses the social media profiles of its borrowers and uses psychometric analysis to understand their creditworthiness.

The platform is currently open for all resident individuals looking for loans in 50 cities across India.

Tachyloans Targets India’s Fintech Segment Which is About to Touch $ 2.4B By 2020 (BW Disrupt), Rated: A

Tachyloans has made its entry at a strategically important time in India’s burgeoning fintech sector that is forecasted to touch $2.4bn by 2020. Tachyloans uses a proprietary credit scoring model enabled by Artificial Intelligence and Big Data to assess the creditworthiness of applicants. The stronger the credit profile, lesser the credit or default risk. The company’s innovative platform electronically verifies the borrower information using the KYC (Know Your Customer) documentation provided, and qualifies them through their proprietary credit decision model.

At Tachyloans, the entire registration, application and documentation procedure is simplified for both borrowers and lenders, thereby offering complete transparency throughout the process. Unlike the traditional banks, in Tachyloans lenders can earn returns as high as 25% per annum and borrowers can avail loan at lower interest rates starting from 11.5% per annum. The background verification check of the borrowers is also done by various parameters at the backend before getting them on board.

Furthermore, FinMomenta will be looking at collaborating with banks and other financial institutions to ensure a straightforward process and faster disbursement of loans.

Authors:

George Popescu
Allen Taylor

Thursday December 15 2016, Daily News Digest

consumer confidence index

News Comments Today’s main news: Fitch says OCC charter could harm innovative firms. UK’s Govt. bank funds almost 10% of MarketInvoice’s loans. Rakuten invests EUR10M in Kreditech. Today’s main analysis: CCI highest since before great recession. Today’s thought-provoking articles: Bank SME lending surges, alt-lenders flop. Vaya, RateSetter launch online mobile shop. United States OCC FinTech charter could harm agility, […]

consumer confidence index

News Comments

United States

  • OCC FinTech charter could harm agility, cost of innovative firms. GP:” Absolutely everything has a good side and a bad side, including OCC’s new fintech charter. It goes without saying that getting an OCC charter is more onerous than no regulation at all. But is it more or less onerous than partnering with a FDIC Bank ? I think that only once a few fintech companies jumps the gun and get a charter will we be able to compare. In my eyes even if it is more onerous, the benefits of being independent and not at the merci of a life-or-death partner (the FDIC bank) is worth a lot and if I would advise fintechs to setup a separate structure and test the waters with an OCC charter while continuing to operate as they have been so far with their primary structure.”
  • Consumer confidence high. AT: “This is political commentary, but it’s not just political commentary. There is a great deal of insight here regarding the economy on the whole and consumer confidence in the economy specifically, especially regarding investments. If Halbert is correct and consumer confidence leads to increased investments in equities and stocks, how will that affect alternative investments? My guess is, there will be a negative correlation. Remember, part of the reason for the rise in alternative investing has been the decline in the stock markets. On the other hand, millennials are full of surprises, so continued distrust of banks may keep alternatives interesting to a segment of the investor class. Any way you look at it, the next four years should be an interesting run.”
  • Bank SME lending surges, alt-lenders flop. GP:” The interesting number here is the 23.7% approval rate for traditional bank’s SME loan approval rate in Nov 2016. It seems high to me but if it is true, and it could be, that is much higher than the single digits numbers we all had in mind I believe. “. AT: “It’s possible this renewed faith in bank lending is tied to consumer confidence in the economic outlook.”
  • Possible credit score changes for 2017. AT: “The initial comment on this Reddit thread has been redacted. Judging from some of the comments, it likely had something to do with medical bills being removed from credit scores if paid off.”
  • SmartBiz Loans to offer up to $5 million SBA 7(a) CRE loans.
  • InterNex Capital’s asset-based loans now available to small businesses through Bizfi.
  • RECF is here and thriving.

United Kingdom

European Union

Canada

China

News Summary

United States

Fitch: OCC Fintech Charter Could Harm Agility & Cost of Innovative Financial Firms (Crowdfund Insider), Rated: AAA

Fitch Ratings is out with a note on the recently announced Comptroller of the Currency (OCC) Fintech charter. The OCC has crafted a document to allow digital banks to become regulated entities by receiving federal bank charters. Fitch is of the opinion the Fintech charter could have significant impacts on the operating strategies and regulatory environments of these innovative firms. And the impact may not be all good.

As for benefits, some Fintech firms such as marketplace lending platforms may no longer have to partner with banks to facilitate loan origination.  This echoes a similar comment that Moody’s made just a few days back. A Fintech banking charter may also reduce uncertainty regarding state usury rate caps that have become a more prominent issue recently following the Madden versus Midland decision in June, which stated that agreed upon interest may not be enforceable in certain circumstances.

A special purpose digital bank charter may not allow for insured deposit-taking, which would require FDIC approval and regulation, but in Fitch’s opinion, it could be an initial, gradual step in that direction.

Consumer Confidence Highest Since Before Great Recession (ValueWalk), Rated: AAA

The US Consumer Confidence Index has been soaring since the end of the Great Recession, and it hit another recent new high last month. The Conference Board reported Friday that its Consumer Confidence Index rose to a surprising 107.1 in November, versus the pre-report consensus of 101.1, the highest reading since 2008.

On the other hand, the Commerce Department reported that 3Q GDP rose by 3.2% in the 3Q as reported on November 29. That surprising estimate will be revised again on December 22. But if the next GDP estimate confirms that GDP growth is above 3%, we will need to upgrade our outlook for the US economy going forward.

The post-election surge in the major stock market indexes also has buoyed feelings about equities, with 40% saying now is a good time to invest, up 10 points from before the election. Here again, Democrats became somewhat more negative on stocks while Republicans grew significantly more optimistic.

Those differences are also clear in the choice for what Americans believe are the best investments right now. While real estate remains the top choice for the third straight year, stocks gained the most ground at the expense of gold, real estate and Treasuries. For now, the shine is off of gold for Republicans and they, along with Independents, have grown more favorable toward equities.

Virtually everyone expects the Fed Open Market Committee to raise its short-term interest rate by 0.25% at the meeting today and tomorrow. Fed Funds futures put the odds at 97%. While the first rate hike last December sent stocks sharply lower, stocks are today at yet another new record high.

Investors are aggressively seeking alternative investments to generate income in today’s continued low interest rate world. While the US equity markets have soared to new highs since the election, many are wary of an overdue downward correction. That’s understandable.

Bank SME Lending Surges, Alt-Lenders Flop (PYMNTS.com), Rated: AAA

Reports Tuesday (Dec. 13) said Biz2Credit’s latest index showed surges in traditional banks’ SME loan approval rates in November, hitting 23.7 percent. According to researchers, eight out of the past nine months have seen loan approval rates for small business applicants increase among traditional, large banks.

Even small banks have seen their loan approval rates tick up to 48.8 percent.

At the same time, Biz2Credit found continuing declines in alternative lending activity for SME borrowers. November saw a decline in SME loan approval rates among alt-lenders, down to 59.2 percent in November, according to the report.

Growth of consumer borrowing slows a bit (News Journal), Rated: A

Total borrowing rose $16 billion, the Federal Reserve reported Wednesday. The October increase was the smallest since June.

Revolving credit, which covers credit cards, increased $2.3 billion in October. The non-revolving category, which covers auto loans and student loans, rose $13.7 billion in October.

Possible Credit Score Changes for 2017 (Reddit), Rated: A

I had over 12 collections on my credit as of a year ago and about 8 of them were hospital bills. What I did was write each creditor a letter saying essentially: “I dispute this debt. I don’t not recall this debt in anyway and it was not me. However, I am willing to pay the debt in full if you will agree to remove the debt from all credit bureaus. If you agree to these terms please send me on company letterhead the terms. Once I receive the agreement I will send payment by certified mail the same day I received your letter. If you do not accept these terms I am asking you to send me all proof that this debt is mine and I will dispute it further. You and I both know that paying this debt without you agree g to remove it from my credit report will not benefit me at all and I may as well wait until it falls off naturally.”

I now have 3 collections left, the rest were removed and

I’m working on the last few. You don’t even have to offer to pay 100% I’ve seen others offer 50% for a pay for delete and it went through. I offered 100% because I have the funds and I really wanted it off my credit report.

Edit 2: one of the collections was for capital one. They sent me a letter saying they denied my pay for delete request. Then about a month later they sent me another letter saying since I requested proof of the debt and they couldn’t provide it they are removing the debt from my credit report and my balance is $0. So they denied the request then started to assemble the proof and couldn’t find it. Was pretty funny.

SmartBiz Loans Announces New Online SBA Commercial Real Estate Loan Offering up to million (BusinessWire), Rated: A

SmartBiz Loans, the first online SBA marketplace and bank-enabling technology platform, has announced that they will now offer SBA 7(a) Commercial Real Estate (CRE) Loans up to $5 million to eligible business owners based in the U.S.

The CRE loans are now available through SmartBiz for purchase or refinance through an automated, mobile-optimized online flow that allows eligible businesses to pre-qualify online (even on their mobile phones) in less than five minutes without impacting their credit score. Loans are available for amounts between $350,000 to $5 million with 25-year repayment terms, variable rates as low as 5%, no balloon payments and no prepayment penalty after the first three years. Unlike traditional bank commercial real estate loans, SmartBiz SBA 7(a) CRE loans do not require re-qualifying every three to five years.

The loans are available to small-business owners based in the U.S. with a personal credit score of 675, a minimum of three years in business and $250,000 or more in annual revenue.

InterNex Capital’s Asset-Based Loans Now Available to Small Businesses through the Bizfi Marketplace (BusinessWire), Rated: A

Today, Bizfi (www.bizfi.com), the premier fintech company with a platform that combines aggregation, funding and a marketplace on a single platform for small businesses, expands its business lending capabilities through a funding partnership with InterNex Capital, an asset-based digital lender. The partnership will allow small to mid-sized businesses in manufacturing, wholesale, trucking, business and consulting services to apply for and access an asset-based revolving line of credit from $250,000 to $5 million through the Bizfi marketplace at www.bizfi.com.

Along with short-term financing, equipment financing, SBA loans, and many other products, small businesses that require $250,000 or more can easily and quickly apply for the revolving line of credit online. In addition to InterNex, the Bizfi platform features 45 lenders providing financial options to small businesses in the United States. Bizfi also acts as a direct lender on the platform.

Real Estate Crowdfunding is Here and Thriving For Investors (Realty Biz News), Rated: B

As a real estate investor, are you staying current with the latest investing technology? Just like all modern industry, the real estate industry continues to evolve and how investments are made has a new technology that is on the cutting edge for real estate investors, welcome to real estate crowdfunding.

Both dealmakers and lenders found a strong interest in private financing following the Great Recession. Dealmakers needed access to capital that the banks quit providing. Qualified investors and individuals with 401k funds to invest quickly became attractive. For money investors, more reliable and more secure investments (real estate) outside of the stock and bond markets also became attractive. Now, with crowdfunding, this match becomes even more powerful as more investors (beyond qualified investors) are able to participate in the market.

United Kingdom

Government cash funds almost 10% of peer-to-peer MarketInvoice’s loans (Business Insider), Rated: AAA

The taxpayer-backed British Business Bank is providing a major boost to fintech MarketInvoice, new figures show.

9% of loans by value made over MarketInvoice’s platform to date have been financed by money from the government-backed British Business Bank, according to a Freedom of Information request seen by Business Insider.

The bank has provided the cash for £93.2 million-worth of loans on the platform, out of a total of just over £1 billion made by the platform.

New crowdfunding platforms following peer-to-peer lending are riskier than many realise (Express.co.uk), Rated: AAA

The new breed of crowdfunding platforms that have followed in the wake of P2P are far riskier than many realise.

City regulator the Financial Conduct Authority (FCA) is looking to crack down on these crowdfunding platforms to protect savers who do not understand the dangers.

It is lining up tough new regulations after warning that some platforms fall short of its demands to be “clear, fair and not misleading”.

The best-known platforms are Zopa.com, which has taken £1.89billion from savers since 2005, and RateSetter.com, which has taken almost £1.6billion since 2010.

Their interest rates have dipped lately, but Zopa still pays a variable 3.1 per cent and RateSetter pays 2.9 per cent.

Hannah Maundrell, editor-in-chief of , says P2P platforms need a robust fallback plan so people do not lose money if the company goes bust: “They will also have to carry out more thorough checks on borrowers.

“Some do, but the FCA’s rules could make it compulsory.”

Vaya, RateSetter get together to launch online mobile shop (ITWire), Rated: AAA

Mobile service provider Vaya has teamed up with peer-to-peer lending platform RateSetter to launch an online mobile phone shop.

Vaya says it has worked with RateSetter to provide fair financing terms and an easy online sign-up process for mobile phone customers – combining “some of the sharpest handsets on the market with the choice of outright purchase or wallet-friendly payment terms over 12 or 24 months”.

The two companies say they are bucking the trend of telcos locking people’s mobile plans up with their handset repayments.

Taplend: Viktor Ihnatiuk (Startups.co.uk), Rated: A

Taplend is a financial help service. With our app, people can get up to £2,500 in a few minutes, provided by friends or lending companies.

The problem we are solving is a fairly common one for all of us – situations when you need money urgently, but cannot get it immediately. The mechanism of Taplend is a very simple one: after the user downloads the application, he sets the desired amount of money and return terms, submits detailed information and sends a request via the service to his friends or credit companies.

After the request is accepted, it takes a couple of minutes for the money to come to the user’s bank account or mobile wallet.

While working in the p2p lending area, we noticed that the average time to get a loan through such a platform is around three days, under affordable rates. It is clear that millions of people have the urgent need for money.

Our business model can be split into two parts:

  1. We let friends help each other with money under a 0% interest rate. Taplend would be useful for these people, who might face the strong need for the financial assistance to be provided as soon as possible. In other words, Taplend is a p2p money transfer tool for friends to help each other. In this case, we charge a small split fee from transactions between the users.
  1. Besides asking from friends, Taplend lets the user request the loan from our partners – financial institutions. In this case, we let the user to choose the lender among the list of companies, after this we provide him with specific loan application form (depends on the lender).

When the user finishes filling the application form, we send this data to the lender. If everything is ok with this data, the user gets his request approved, receives the money and the lender pays Taplend a lead generation fee.

Denheath Desserts Closes PledgeMe Crowdlending Campaign With Nearly 0,000 in Funds (Crowdfund Insider), Rated: A

Denheath Desserts, a custard square brand from South Canterbury, has officially closed its crowdlending campaign, which raised nearly $369,001 from 161 investors, on PledgeMe. Denheath Desserts currently produces 10,000 custard squares per day from its Timaru factor.

The UK alternative finance industry is still not transparent enough (City A.M.), Rated: A

One of the most important risks when it comes to crowdfunding and online lending, which will be fairly obvious to anyone with investment experience, is asset risk.

Then there is the risk in the instrument. What do you get for your money? Share, bonds, a loan contract? Are there other lenders? Are you senior or junior? Is the investment secured?

Crowdfunding should not say it is transparent, but be transparent. You don’t think people are funny because they tell you they are comedians. You think they are funny when they tell you a joke that makes you fall off your seat.

That means being transparent about fees for starters. How does that platform get paid? By the lender, the borrower or a bit of both? When does it get paid, and do they take a spread?

Platforms should earn their fees – and yes, those should be completely and clearly set out too.

Appropriateness tests and caps on the amount of investment are just some of the other methods that platforms can implement to help manage risk. Each of these are worth an article in their own right, but the most important thing for investors to be aware of, for now, is that not all platforms offer the same levels of disclosure and protection.

European Union

Rakuten invests EUR10m in Kreditech (Finextra), Rated: AAA

This is another landmark investment in fintech by Rakuten, a leader in internet services and global innovation headquartered in Japan. Rakuten joins Kreditech’s outstanding group of backers, including J.C. Flowers and the World Bank’s International Finance Corporation. Michael Piechalak of the Rakuten FinTech Fund will join the Board as an observer.

Kreditech aims to invest the new funding into further developing its partnership business. The company has launched its Lending-as-a-service in spring 2016. Renowned partners such as PayU (Naspers) are making use of Kreditech’s POS financing integration.

Firm seals biggest-ever Irish P2P loan (Independent), Rated: A

Irish peer-to-peer (P2P) lending firm Linked Finance has completed the country’s largest ever P2P loan, raising €150,000 for serviced workspace provider Iconic Offices.

The loan, which is double the size of the previous biggest amount raised by Linked Finance, will be used to fit out Iconic Offices’ location at Herbert House, Dublin 2.

Linked Finance, which targets the non-bank SME-lending sector, said the loan was fully subscribed in less than 20 hours.

EstateGuru’s average historic return highest in the market! (EstateGuru Email), Rated: B

In December, EstateGuru’s average historic return reached the level 13.4% (since December 2014), which is the highest return among crowdfunding platforms for secured property loans.

Within two operational years, EstateGuru has offered its investors the chance to invest in 95 secured property loans with a record high annual average historic return 13.4%,“ said EstateGuru’s founder and CEO Marek Pärtel.

In comparison, some of Europe’s most popular and most established crowdfunding platforms like LendInvest, PropLend and Saving Stream have an annual average return of respectively 7.06%, 9.39% and 12%.

EstateGuru has managed to offer its investors the best returns due to high-quality projects and additional bonuses (e.g when the loan is repaid earlier, the borrower is obligated to pay the minimum 3-4 months interest). Our platform allows both professional and still experimenting investors earn equally great returns. Moreover, our more eager investors can take advantage of our affiliate program,“ Marek Pärtel added.

EstateGuru’s more than 5600 investors from 34 countries have earned a cumulative interest revenue €648,421 and more than €15 million worth of loans have been funded. Largest investment portfolios on the platform exceed €700,000 and the investors have not lost a single euro on the EstateGuru platform throughout its entire history. EstateGuru’s priority is to offer its investors secured and high-quality investment opportunities in Estonia and abroad.

Canada

NCFA Publishes Research on Alternative Finance in Canada (Crowdfund Insider), Rated: AAA

The National Crowdfunding Association of Canada (NCFA) has published a report on the status of crowdfunding and other forms of alternative finance including online lending.

The report tallied numbers for 2015, tracking 100 online platforms including both rewards and investment, stating that Canada reached $133 million in total volume. This amount is predicted to increase to $190 million during 2016.

The NCFA is not totally complimentary of the current crowdfunding ecosystem. Earlier this year, one industry insider labeled the regulatory approach as a “mess”. Another called it “dead in the water.”

China

eToro Announces Key Strategic Partnership for China with Lufax Holding (Finance Magnates), Rated: A

One of the leading social trading networks in the foreign exchange and CFDs space, eToro has announced that it has signed a strategic partnership with Lufax Holding Ltd. The cooperation agreement between the firms is aiming to boost eToro’s profile with Chinese clients.

Authors:

George Popescu
Allen Taylor

Thursday September 22nd 2016, Daily News Digest

Thursday September 22nd 2016, Daily News Digest

News Comments Today’s main news: Zopa’s securitization ; SoFi’s new life insurance product; New true lender decision in California. Today’s main analysis: 4 charts about emerging markets; Today’s thought-provoking : Ant Financial is worth more than Goldman Sachs. Are you paying attention yet ? ; Lemonade’s charity model to reduce fraud. United States SoFi is about to […]

Thursday September 22nd 2016, Daily News Digest

News Comments

United States

United Kingdom

New Zealand

Australia

China

News Summary

 

United States

SoFi Plans to Offer Life Insurance by End of Year, (Bloomberg Technology), Rated: AAA

The San Francisco company will soon start selling term life insurance to its base of mostly millennial customers, said people familiar with the matter. SoFi expects to roll out the product, which pays out a benefit if a customer dies during the period of time covered by the plan, before the end of the year or as soon as next month.

SoftBank Group Corp. led a $1 billion investment in the startup last year, valuing it at $4 billion, and it’s now seeking to sell an equity stake of about $500 million to help fund its rapid growth, people familiar with the matter said this month. Last year, the company issued $5 billion in loans and is on pace to double that this year, two of the people said.

SoFi could take a slice of the $159 billion in U.S. life insurance premium revenue generated last year, according to data from the National Association of Insurance Commissioners, a trade group.

People are more likely to purchase policies around certain life events, such as getting married, having children or buying a home, according to a study published last year by Deloitte LLP. SoFi may be well positioned to capitalize on that demographic thanks to its already sizable base of young customers.

Mike Cagney, SoFi’s chief executive officer, chairman, and co-founder, has said his goal is to eventually render banks obsolete.

New true lender case provides support for the bank partnership model, (Pepper Hamilton), Rated: AAA

On September 20, the U.S. District Court for the Central District of California dismissed a class action suit alleging illegally charged usurious interest rates on private student loans in violation of California law. Beechum v. Navient Solutions, Inc.

In doing so, the court rejected the plaintiff’s arguments that the defendants were the de facto “true lenders” of loans made by a national bank under a bank partnership with a non-bank partner.

The plaintiffs, in this case, obtained private student loans using loan applications that identified Stillwater National Bank and Trust Company, a national bank, as the “lender.”

The plaintiffs alleged that the “actual lenders” of the loans were the Student Loan Marketing Association (SLMA) or subsidiaries of the SML Corporation.

Under the agreement, SLMA would originate, underwrite, market and fund loans on which Stillwater would be identified as the lender and which SLMA would then purchase from Stillwater.

The court relied on two California appellate decisions in holding that courts “must look only at the face of a transaction when assessing whether it falls under a statutory exemption from the usury prohibition and not look to the intent of the parties.”

In looking “solely to the face of a transaction” in determining whether the subject loans were exempt from California’s usury prohibition, the court applied an objective standard that, unlike the highly subjective and fact-sensitive “true lender” line of reasoning, would result in consistent outcomes from one case to the next.

While this recent decision does not address the question of whether the claims were preempted by the National Bank Act, the case represents the latest “true lender” case, with a reasoned and measured approach to bank partnerships. In dismissing this case, the court rejected the idea of looking beyond the face of the transaction and into the intentions of the parties.

The Central District of California is the same court that, just three weeks prior, provided the decision in Consumer Financial Protection Bureau v. CashCall, Inc.Unlike the CashCall decision, the court did not use the “predominant economic interest” test for determining “true lender” status and acknowledged the negative effect on the secondary market of looking to the intentions of the parties instead of the transaction on its face.

Lendio and Supplier Success Partner to Improve Access to Capital for Minorities, (PR Web), Rated: A

Lendio, a marketplace for small business loans, today announced a partnership with Supplier Success, LLC, a Detroit-based company focused on providing working capital solutions, and on improving minority and women business owners’ access to capital.

Through this strategic partnership, Lendio and Supplier Success will provide minority and women business owners access to transparent lending rates and respectful business practices. Lendio recently reported facilitating more than $250 million in funding to more than 10,000 small businesses.

By joining forces with Supplier Success, we’re able to expand our capabilities to provide minority business owners easier access to financing,” said Brock Blake, CEO, and co-founder of Lendio.

P2P insurance startup Lemonade launches with charity pledge, (FinExtra), Rated: A

Lemonade raised $13 million in the biggest seed round of 2015 and, having secured a license as a full-stack insurance carrier by New York State, the firm is now inviting homeowners and renters to sign up online and through its app. Under the peer-to-peer model, Lemonade will ask customers to nominate a charity when they buy a policy.

Claims are paid out of these pools and any funds that are left at the end of the year go to the chosen charity. Policies start at $35 a month for homeowners and $5 for renters, with the entire process digitized, “replacing brokers and bureaucracy with bots and machine learning”. Lemonade takes a flat 20% fee and says that its model not only benefits charities but also customers and the company itself by reducing the incentive for fraud.

American Express Adds Its Bot to the Party, (Bank Innovation), Rated: A

When Facebook Messenger launched five (!) years ago this month, it was not immediately clear why or what it might do — messages already existed within Facebook, everyone was texting madly already, so why launch a whole new app?

A Forrester report in August warned banks off bots. Today’s bots are not ready for regulated industries that demand a certain level of user experience.

But the warning came too late — banks embraced bots, and a whole host of bots was wheeled out at Finovate. Perhaps most significantly, Kore (from the guys that brought you Kony) introduced its Smart Bot platform for banks to build their own bots. (In response to Kore’s demo a few fintech watchers at the show tweeted various versions of, “Uh oh.”)

DOL fiduciary rule to cost the securities industry $ 11 B by 2020: study, (Investment News), Rated: A

Implementing the Department of Labor’s new fiduciary rule for retirement accounts will cost the brokerage industry $11 billion in revenue over the next four years.

Hardest hit will be independent broker-dealers, who stand to lose $4 billion in revenue, or 22%, of the industry’s total, according to the study, which was released in August. IBDs are also expected to see a decline of $350 billion in client assets, or 11% of the industry’s total.

Personal Finance App MoneyLion Launches in Malaysia, (Business Wire), Rated: A

MoneyLion is headquartered in New York with offices in San Francisco and Kuala Lumpur, Malaysia.

MoneyLion’s free mobile app will help Malaysian consumers gain a 360-degree view of their finances through a suite of analytics tools that track spending and saving activity across multiple bank accounts.

RealtyMogul.com Closes $ 8.2 Million in Multifamily and Retail Transactions, (Business Wire), Rated: A

Following last month’s launch of MogulREIT I, RealtyMogul.com’s first crowdfunded real estate investment trust, the company announced today that it had closed five transactions in markets across the country. Four of the five deals were equity investments into multifamily properties, while the fifth marked the commercial real estate platform’s largest 1031-qualified transaction to date.

4 charts on banks, mobile money and financial inclusion in emerging markets, (Tradestreaming), Rated: AAA

Africa has long been touted as the continent whose specific geographical challenges and the widespread poverty of many of its inhabitants have enabled it to skip over traditional banking infrastructures into the waiting arms of cost-efficient fintech solutions.

The statistics, for those who are rooting for a cashless, bankless Africa, are encouraging. The following charts, sourced from a recent report on financial inclusion in emerging markets published by the institute of international finance, demonstrate that the economy is Africa is starting to pick up, along with mobile phone ownership.

Mobile money accounts aren’t exactly threatening the banks, even in developing countries.

According to an analysis from the Global Findex, 2.2 billion, or 95 percent, of the total 2.3 billion adults in low- and middle-income countries with a financial account held the account at a financial institution in 2014.

Moreover, contrary to popular belief, financial incumbents are major drivers of economic inclusion in developing countries.

Banks have a number of reasons aside from profitability to expand their activities in emerging markets, such as CSR and investment. Whatever the cause, the way forward for banks in developing countries will probably start with cellphones, smart or otherwise.

United Kingdom

Zopa readies £ 138 m debut securitisation, receives Aa3 rating, (AltFi News), Rated: AAA

The first securitisation of loans issued by leading consumer lending platform Zopa – “Marketplace Originated Consumer Assets 2016-1 plc” (“Moca 2016-1”) – has been provisionally rated by Moody’s. The loans that make up the £138m portfolio were funded in the first instance by P2P Global Investments, the £870m investment trust.

Deutsche Bank was heavily involved in Funding Circle‘s inaugural securitisation and is now acting as the sole arranger and lead manager for the Zopa deal.

Moody’s has assigned a rating of (P)Aa3 to the £114m senior tranche of Class A Notes. The Class B Notes, of which there are £7.5m, were rated (P)A2. The £7.5m of Class C Notes were assigned a rating of (P)Baa2. The £9m of Class D notes were rated (P)Ba3. There are also £12m of Class Z Notes which will not be rated. All Notes are due October 2024. Target Servicing Limited has been appointed as the back-up servicer of the portfolio.

We now learn that Fitch has conferred a landmark rating on the Zopa deal. Fitch rated the Class A Notes “AA-(EXP)”. This is the highest rating to have ever been assigned to a marketplace lending transaction by Fitch. There has been over $10bn in global securitisation issuance by the marketplace lending sector to date. Fitch declined to rate Funding Circle‘s SBOLT 2016-1 earlier this year.

This will be the UK marketplace lending sector’s second securitisation to date. Funding Circle’s SBOLT 2016-1, a £130m transaction, received an Aa3 rating from Moody’s in April. The Class A Notes, which were sold to KfW, came with a guarantee from the European Investment Fund attached.

Moody’s assigns provisional ratings to Marketplace Lending ABS to be issued by Marketplace Originated Consumer Assets 2016-1, (Moody’s Investor Service), Rated: AAA

The securitised portfolio as of 31 August 2016 consists of unsecured consumer loans to UK private borrowers. According to the borrower but not verified by the platform provider these loans are mainly used to finance cars (36.2%), for debt consolidation (34.0%) and for home improvements (22.3%). The portfolio consists of 27,137 contracts with a weighted average seasoning of 10 months and a maximum loan term of five years. Most borrowers are employed full-time (89.9%) and their average outstanding loan balance with Zopa is GBP 5,500.

According to Moody’s, the transaction benefits from: (i) a granular portfolio originated through the Zopa marketplace lending platform, (ii) a static structure that does not allow to buy additional receivables after closing, (iii) continuous portfolio amortization from day one, (iv) an independent cash manager and liquidity provided through two reserve funds, (v) an appointed back-up servicer at closing, and (vi) credit enhancement provided through subordination of the notes, reserve funds, and excess spread.

Moody’s notes that the transaction may be negatively impacted by: (i) misalignment of interest between the platform provider Zopa and investors who finance the loans, (ii) the fact that Zopa does not retain a direct economic interest in the securitized portfolio, (iii) the limited historical data that does not cover a full economic cycle, (iv) a higher fraud risk due to the online origination process, (v) an unrated servicer with limited financial strength, and (vi) the regulatory uncertainty due to the still developing regulation for the marketplace lending segment.

Moody’s determined the portfolio lifetime expected defaults of 7.0%, expected recoveries of 5% and Aaa portfolio credit enhancement (“PCE”) of 35.0% related to the loan portfolio. The expected defaults and recoveries capture our expectations of performance considering the current economic outlook, while the PCE captures the loss we expect the portfolio to suffer in the event of a severe recession scenario. Expected defaults and PCE are parameters used by Moody’s to calibrate its lognormal portfolio default distribution curve and to associate a probability with each potential future default scenario in the ABSROM cash flow model to rate Consumer ABS.

The principal methodology used in these ratings was “Moody’s Approach to Rating Consumer Loan-Backed ABS” published in September 2015. Please see the Ratings Methodologies page on www.moodys.com for a copy of this methodology.

In rating consumer loan ABS, default rate and recovery rate are two key inputs that determine the transaction cash flows in the cash flow model. Parameter sensitivities for this transaction have been tested in the following manner: Moody’s tested six scenarios derived from a combination of mean default rate: 7.0% (base case), 7.5% (base case + 0.5%), 8.0% (base case + 1.0%) and recovery rate: 5.0% (base case), 0% (base case – 5%).

Bar Chain BurningNight Group Secures Over £ 500,000 Within First Week on Crowdstacker, ( Crowdfund Insider), Rated: A

BurningNight Group, a city center bar chain, successfully raised over £500,000 within the first week of its crowdfunding campaign on UK’s peer-to-peer lending platform, Crowdstacker. The company is currently offering 7% p.a. interest to those investing in the £3.5 million raise.

According to Crowdstacker, approximately half the funds raised so far have been invested through the Innovative Finance ISA.

Lendinvest announces industry first auction finance partnership is now live, ( Property Reporter), Rated: A

Last month, the two firms announced their partnership as an industry first and will see LendInvest pre-qualify lots at LOT11 auctions which fall within the lender’s criteria.  Lendinvest, the world’s first online lending business for the property, has announced today that details of the properties it has pre-qualified ahead of the next LOT11 auction are now live.

The partnership begins with LOT11’s quarterly auction on 27 September.

NeEw Zealand

New Zealand’s top five P2P lending platforms, (SMN Weekly), Rated: A

HarmoneyCorp Ltd. (www.harmoney.co.nz) – Harmoney became the first FMA-licensed P2P lending platform in mid-2014. The platform has helped match borrowers and lenders for more than $307 million in loans.

Lending Crowd Ltd. (www.lendingcrowd.co.nz) – The platform can be used by either individuals or businesses. It was the fourth P2P lending platform to obtain a license in New Zealand.

Lendme Ltd. (www.lendme.co.nz) – LendMe, New Zealand’s second authorized P2P lender, got licensed in April 2015 and commenced operations just five months later.

Pledgeme Ltd. (www.pledgeme.co.nz) –PledgeMe is a platform that combines three different crowdfunding models in one place – project (aka reward), equity, and lending (aka P2P lending) crowdfunding.

Squirrel Money Ltd. (www.squirrelmoney.co.nz) – Squirrel Money is part of the Squirrel Group, which also provides mortgage brokerage services. The platform helps people borrow funds to finance everyday needs such as renovations or buying a car, or events such as marriage or starting a family. In August 2016, the platform launched New Zealand’s first P2P secondary market, which allows loans to be on-sold to other investors.

Australia

Fintech lender aims to break $ 200 m barrier, (Australian Broker), Rated: AAA

Marketplace lender SocietyOne believes 2016 will be a breakthrough year as it aims to push past $200m in lending.

According to the lender’s latest financial update, the first week of September saw it reach the $150m lending milestone, one year after it hit the $50m mark.

The lender has also announced a significant increase in its funding available for lending, up to $75m after sitting at $20 million on 30 June.

China

Jack Ma’s Finance Business May Be Worth More Than Goldman Sachs, (Bloomberg), Rated: AAA

Leung estimates that most of Ant Financial’s value is in Alipay, China’s most popular online payment service, with a projected worth of $50 billion. Its micro loans service is probably worth another $8 billion, while Ant’s wealth management unit is given a valuation of $7 billion. The rest of Ant Financial’s valuation comes from investments and cash on hand, outstripping Goldman’s roughly $70 billion market value as of Monday.

The company could grow to $100 billion in two years, as the current valuation doesn’t include growth brought in by insurance, credit scoring, and cloud computing, Leung said.

Ant Financial is considering an initial public offering in Hong Kong in the first half of next year, people familiar with the matter said last month.

China big P2P lenders shrug off crackdown, (Morgans), Rated: A

Regulators have unveiled a series of measures to head off signs of rising risks in its fast-growing P2P market, including borrowing limits and forcing P2P platforms to use third-party banks as custodians of investor funds. The regulator’s announcement knocked 22 per cent off the New York-listed shares of Chinese P2P lender Yirendai Ltd, while Chinese stocks fell to a two-week low, weighed by banking shares on concerns over the crackdown on riskier lending practices.

But many larger P2P companies including Lufax, Yirendai, PPDAI and Dianrong.com say they already comply with many of the new requirements, so could benefit from the restrictions.

The volume of P2P loans surged more than 20 times to 656.8 billion yuan ($US98.7 billion) at the end of July from just 30.9 billion yuan in January 2014, according to industry data provider Wangdaizhijia.

Nomura estimates that could reach 880 billion yuan by the end of 2016 and 1.5 trillion yuan by the end of 2018.

Several lenders already segregate investors’ funds into custodial accounts with banks to prevent fraud, while for companies like Lufax, a typical unsecured loan would be in the 100,000 yuan to 200,000 yuan range, below the government cap.

Author:

George Popescu