Thursday April 19 2018, Daily News Digest

Personal Loan providers

News Comments Today’s main news: Tala raises $65M for international expansion. The House Crowd hits 1M GBP in one day. Silicon Valley investment into UK hits $1B. 100Credit gets $159M from state-owned fund in China. Mintos adds ID Finance loans issued in Kazakhstan. Today’s main analysis: The 5 best personal loans for good credit. Today’s thought-provoking articles: LendIt Fintech […]

Personal Loan providers

News Comments

United States

United Kingdom

China

European Union

Other

News Summary

United States

Fintech lender raises $ 65M to expand in developing nations (American Banker) Rated: AAA

A U.S.-based lender that targets borrowers in developing nations where credit scores are often hard to come by has raised $50 million in new equity funding.

Tala, based in Santa Monica, Calif., plans to use the latest round of funding to develop new products for its customers in Kenya, Tanzania, the Philippines, India and Mexico.

It also raised $15 million in debt capital that it will use to fund loans.

Wrap-Up of LendIt Fintech USA 2018 (Lend Academy) Rated: AAA

Last week the sixth annual LendIt USA conference took place in San Francisco. Officially known as LendIt Fintech USA 2018 this event was, in my opinion, the best we have ever produced.

The opening keynote, for the second year in a row, was delivered by Scott Sanborn, the CEO of LendingClub. He gave a different kind of presentation this year. He didn’t talk much about LendingClub at all, instead choosing to focus his keynote on financial health and the looming crisis that maybe coming. He gave us all something to consider beyond just disruption, he said we should think about three key areas: financial inclusion, regulatory innovation and customer alignment. He ended with a call to action for the industry. He wanted everyone to focus on what problem you are solving and what you can do to help restore financial health to all Americans.

The 5 Best Personal Loans for Good Credit (Student Loan Hero) Rated: AAA

The average credit score of Americans is 700, based on April 2017 data from Fair Isaac Corp., an analytics company that issues the FICO credit score.

If your score meets or beats that average, it’s enough to put you in the good credit score range, which goes from 670 to 739. As a result, you should have a good chance of getting approved for some of the best personal loans for good credit.

Source: Student Loan Hero

Your Best Options If You Need a Personal Loan With a Cosigner (Student Loan Hero) Rated: A

As you compare, you’ll find LendingClubCitizens Bank, and FreedomPlus— all online lenders that accept cosigners. They all accept FICO scores under 700, with LendingClub accepting FICO scores as low as 600.

Here’s a list of some online lenders that accept cosigners for personal loans:

  • LendingClub
  • Citizens Bank
  • FreedomPlus
  • Backed
  • OneMain Financial
  • LightStream

Avant vs. LendUp: Which Is Right for You? (Student Loan Hero) Rated: A

Not only will Avant consider your application even if you have a low credit score, but working with this lender has other benefits.

  • You can get your money after one business day.
  • There are no prepayment fees.
  • Although the average customer has a credit score between 600 and 700, those with poor credit are also considered.
  • The company has a 95% customer satisfaction rate.
  • The lender offers self-service tools and live support seven days a week.

The biggest benefit of LendUp is the ability to get money fast. In certain states, you could even have your funds in 15 minutes. But there are some other positives as well.

  • There are multiple options if you’re having trouble paying back the loan.
  • Repeat customers can borrow more and at lower rates.
  • There’s an education platform with free videos and articles breaking down complex financial matters. It also teaches you how to make better money decisions.

Wunder Capital Raises $ 112 Million in Financing To Fuel Commercial Solar Growth in the U.S. (Crowdfunder Insider) Rated: A

Wunder Capital, a firm that develops and manages solar investment funds through partnerships, test processes, underwriting framework and its investment portal, announced on Wednesday it secured $112 million in equity and debt financing to accelerate the growth of the company.

9 Ways To Invest In Real Estate Without Buying Property (Forbes) Rated: A

Goldman Sachs Has Big Plans for Marcus and the Future of Retail Banking (Crowdfund Insider) Rated: AAA

Blankfein commented on the other obvious strategic advantage. Their cost of capital is super low.  Unlike many of the early entrants into the online lending sector, Marcus has access to deposits via their acquisition of GE Capital Bank several years back – something no other US based online lender can claim. Even with their industry leading interest rate for current accounts (now 1.6% when most banks pay a fraction of that), Marcus can crush the competition in loan originations.

Goldman Sachs’ hot new business is lending to subprime consumers, and Wall Street’s starting to ask questions (Business Insider) Rated: B

Marcus has originated more than $3bn of loans since inception, recently it has become know that more than 10 percent of the loans were sub prime; they have said this is a natural evolution of the loan business and they are being very selective in approving of applications.

GreenSky Personal Loans Review: Low-Interest Loans for Home Improvement (Student Loan Hero) Rated: A

As an online loan servicer, GreenSky works with borrowers and merchants to provide low-cost personal loans for home improvement, specialty retail, and healthcare expenses. It’s funded more than $10 billion in loans to over 1.3 million customers, according to the lender.

Individual borrowers can apply for home improvement loans, which can be used for flooring, windows, landscaping, or other projects. Home improvement loans come with fixed APRs between 3.99% and 23.99%, as of April 18, 2018. You can choose terms of 42, 66, or 90 months. For the most up-to-date rates, check GreenSky’s website.

Real estate crowdfunding: What you need to know (Bankless Times) Rated: A

Right now, real estate crowdfunding companies are becoming very popular because they allow you to pool your resources in order to buy property or to finance real estate companies who are looking to build properties.

48 Million Detailed Psychometric Records on Individuals Leaked (InfoSecurity Magazine) Rated: B

About 48 million records of detailed personal information on tens of millions of individuals have been leaked, containing Cambridge Analytica–style information gathered and scraped from multiple sources.

The culprit, as is the case all too often, is a misconfigured cloud storage repository, in this case belonging to a company called LocalBlox. LocalBlox bills itself as a personal and business data search service, but it’s bread and butter is data-harvesting and the creation of psychometric profiles of individuals.

Point Initiates Forward Flow Purchase Program with Atalaya: Unlocking Home Equity Wealth (Crowdfund Insider) Rated: B

Point, a fintech platform that allows homeowners to unlock home equity wealth without taking on new debt, has agreed to a forward flow purchase program with investment firm Atalaya Capital Management to purchase up to $150 million of Point’s structured home equity investment instruments.

StreetShares Appoints Mohan A. Rao New Chief Product & Technology Officer (Crowdfund Insider) Rated: B

Financing military veteran-owned small businesses lender StreetShares announced on Wednesday it has appointed Mohan A. Rao as Chief Product and Technology Officer. According to the online lender,  Rao is the former Chief Technology Officer of Hobsons, Inc., and brings more than 25 years of experience with building software products, R&D, and management consulting to the StreetShares team.

Millennium Trust Recognized as “Professional Services Company of the Year” at LendIt Fintech USA 2018 (PR Newswire) Rated: B

Millennium Trust Company, LLC, was honored at LendIt Fintech USA 2018 as the “Professional Services Company of the Year,” which is awarded to the service provider that has demonstrated deep expertise, unique value, strong ROI, commitment to clients, and the fostering of a deeper understanding of fintech. Organizations such as Cloud Lending Solutions, Deloitte, First Associates, Manatt and Salesforce also received nominations for the award.

Capsilon Expands Digital Mortgage Platform, Automating up to 80% of Manual Data Auditing & Processing Across Back Office (Capsilon) Rated: B

Capsilon, an enterprise SaaS digital mortgage solution partner to the mortgage industry, today announced the expansion of its digital mortgage platform through the addition of big data capabilities and a new set of smart tools designed to radically improve back office workflows and accelerate loan production. With this new data audit functionality, Capsilon can reduce manual data entry and speed up data auditing across the loan process, enabling companies to automate up to 80% of manual processing functions.

 

United Kingdom

Crowdfunding platform hits £1 million in a day (Growth Business) Rated: AAA

Property crowdfunding platform The House Crowd have raised just over £1.3 million over a 24-hour period to support housing developments in Greater Manchester. This is the first time the business has broken the £1 million mark in a day.

Most of the money – £1.2 million – was for its Egyptian Mill Development of 42 house and 15 apartments in Lees, just outside of Manchester. Attracted by a typical return of 10 per cent each year over a 15 month investment term, investors have clambered to raise funds and support new build houses and flats as the UK housing crisis continues.

Silicon Valley investment into the UK breaks $ 1BN for the first time (Information Age) Rated: AAA

UK law firm Pennington Manches has today revealed that British companies are enjoying an unprecedented period of investment from West Coast-based US firms, with 74 deals contributing to a total value of £1.08 billion in 2017 – the first time Silicon Valley investment into the UK has broken the billion-dollar mark.

​The new report found that software companies take the lion’s share of this investment, benefiting from £2.2 billion in funds since 2011. The number of deals from Silicon Valley into UK firms has increased by 252% over that period.

P2P lending set to pass £9bn milestone (Peer2Peer Finance) Rated: AAA

LENDING at the UK’s largest peer-to-peer finance platforms is fast approaching £9bn.

Data from the industry’s trade body the Peer-to-Peer Finance Association (P2PFA), released on Thursday, showed its eight members – Crowdstacker, Folk2Folk, Funding Circle, Landbay, LendingWorks, MarketInvoice, ThinCats and Zopa – reached cumulative lending of £8.96bn at the end of the first quarter of 2017.

The figure is up 11.5 per cent on the fourth quarter and 57 per cent higher year on year.

Transferwise becomes first non-bank to join BoE payments system (AltFi News) Rated: A

TransferWise has become the first non-bank payment services provider to hold a settlement account in the Bank of England’s Real Time Gross Settlement (RTGS) system.

The new access should lower costs for Transferwise, one of the UK’s largest fintech start-ups, as TransferWise joins the Faster Payments Scheme (FPS also).

 

Alternative funding for SMEs demystified (Business Matters) Rated: A

However, as Business Matters reported back in December, over 40 per cent of companies say they would have to put their expansion plans on hold if they could not attain funding.

Research shows that most SMEs turn to traditional sources of funding – such as overdrafts, credit cards and bank loans – when they need a cash injection. What’s more, many are unaware of – or are unclear about – the recent expansion in alternative forms of business financing such as crowdfunding or P2P lending. That’s a shame, because many of these new funding options are very well suited to the needs of SMEs and start-ups.

Crowd2Fund prepares to cross fintech bridge to Australia (Finextra) Rated: B

Leading P2P lending platform Crowd2Fund are launching an Australian office by becoming one the first UK-based companies to utilise the new ‘FinTech Bridge’ between the UK and Australia.

Mechanics Cooperative Bank chooses Finastra for core banking system (Real Wire) Rated: B

Mechanics Cooperative Bank has selected the Fusion Phoenix core banking system from Finastra, as well as a full suite of ancillary offerings, to provide its new technology foundation. The solution will bring together a wide-range of proven, specialized software into a single environment that is more easily managed in the back-office, providing greater workflow and interface efficiencies for the bank’s staff, and ultimately customers.

China

CreditEase Wins Major Awards at LendIt Fintech USA 2018 (PR Newswire) Rated: AAA

As the exclusive “Global Leader” partner of LendIt Fintech USA 2018, Yirendai was awarded “Top Consumer Lending Platform” and was the only Chinese enterprise to receive a LendIt Fintech industry award, which demonstrates high recognition of its outstanding contributions to the innovation of the financial services industry. In addition, Ms. Yihan Fang, CEO of Yirendai was nominated for “Executive of the Year” and CEFIF was nominated for “Top Fintech Equity Investor”. Both nominations are strong recognition of the great achievements CreditEase has made in both wealth management and Fintech investment fields.

Fintech Start-up 100Credit Gets $ 159M From State-owned China Reform Fund (China Money Network) Rated: AAA

China Reform Fund Management Co.,Ltd, a private equity firm backed by China Reform Holdings Corporation Ltd and other central state-owned enterprises, has led a RMB1 billion (US$159 million) series C round in 100Credit, a fintech start-up that uses big data to provide credit services.

Existing investor Sequoia Capital China also participated in the round, according to 100Credit’s announcement on its official WeChat account.

Softbank leads $ 25m Modalku round, while 500 Startups backs HelloGold (TechinAsia) Rated: B

Alipay pilots digitized national ID cards (China). The digital payments app run by Alibaba affiliate Ant Financial is testing out integration of the Chinese government’s pilot digital ID card scheme, which could one day replace physical ID cards.

European Union

Orange’s entry into digital banking forces old guard to react (Financial Times) Rated: AAA

Orange Bank has already onboarded more than 100,000 customers since launch, only Revolut and Boursorama, Société Générale’s digital banking arm have made more progress in the same timeframe; this continues the wider trend across Europe as digital banking becomes a bigger part of the financial services ecosystem.

Swedish startup Tink just smashed open the floodgates to 300 banks’ data – and it’s a game-changer for Nordic fintech (Business Insider Nordic) Rated: A

Last year, after raising €14 million in funding from a consortium of traditional and online banks, Tink pivoted to licensing its technology to banks so they can build their own apps and fintech services.

The startup is now doubling down on its B2B business by launching a third-party developer platform. This means that the same technology that Tink has provided to banks like Nordea and SEB, will now be open to any company that wants to gain access to a given consumer’s account data (with the consumer’s permission).

The Crowdfunding Trend – Threat or Opportunity? (Eureka) Rated: A

There are some concerns that the rise of crowdfunding will cause major disruption across industries. According to the world bank, 2016 saw more money raised from crowdfunding than from venture capital.

In Finland, for example, there is no requirement for crowdfunders to have an MiFID licence, which means that companies who have obtained a licence are more strictly regulated than their unlicensed competitors. Other nations have been quicker to adapt – in France and the UK existing legislation has been brought smoothly up to date to be compatible with crowdfunding.

GDPR and financial advice: Special categories of personal data (Professional Adviser) Rated: A

The difference between ‘data’ and ‘sensitive data’ – that is, between Article 6, which we considered in more detail here, and Article 9 – is that the individual must give explicit consent to the processing of each type of special category of data.

If, for example, a firm will be asking someone whether they are a smoker and will also be recording they are a member of a specific trade union, then the firm would to need capture explicit consent from the individual that they are happy for the firm to collect and process this data about their health and their trade union membership.

For financial advisers, this consent will need to be gathered early in the customer engagement process, with it being made clear the data will be processed and what it will be processed for.

International

Mintos Marketplace Adds ID Finance Loans Issued in Kazakhstan (Crowdfund Insider) Rated: AAA

Mintos, an online marketplace that provides individuals with a simplified way to invest in loans originated by a variety of alternative lending companies, announced on Wednesday that fintech firm ID Finance has further diversified investment opportunities on the Mintos marketplace by launching personal loans listed in Euro (EUR) and Kazakhstani tenge (KZT) under its Solva brand in Kazakhstan.

According to the companies, Solva uses a scoring system built around machine learning, advanced risk assessment techniques, multiple search technologies, big data and text mining. The system also evaluates the device on which the loan application is being filled out and the user’s behaviour when filling out the application.

Mo money, mo cash (Financial Times) Rated: AAA

But according to a new report published by G4S, the massive 117-year-old global security firm, we’re actually still moving in the other direction — at least in most countries.

Poor old cheques. And cryptocurrencies don’t fare too well either.

India

US-based fintech firm announces its expansion in India’s lending space (Medianama) Rated: AAA

California-based fintech company Tala said that it is bringing its lending app to India. This expansion was announced along with a new $50 million Series C funding led by Revolution Growth its operations in the country which is already in progress. In addition to Revolution Growth, Tala’s Series C round includes existing investors IVP, Data Collective, Lowercase Capital, Ribbit Capital, and Female Founders Fund. Steve Murray, managing partner at Revolution Growth, will join Tala’s board of directors.

Asia

 

Singapore Fintech Association established Marketplace Lending Committee (Finextra) Rated: AAA

The Singapore Fintech Association (SFA) today announces the launch of the Marketplace Lending committee and website, in response to the rapid growth in the sector.

In 2016, Southeast Asia’s alternative finance market reached a record US$215.94 million, a growth of 362% compared with 2015. Data for 2016 showed that Singapore’s alternative finance market size was valued at US$163.75 million, more than double the entire value from 2013-2015. This upward trend is reflected internationally. The global lending market valued at US$3.5 billion in 2013, expecting to reach US$1 trillion by 2050, according to Statista, a market research company.

Revolut empire-builder seeking to tame “the Asian dragon” (AltFi News) Rated: A

Rishi Stocker, head of partnerships at Revolut, is currently focused on coordinating the banking challenger’s entry into Japan. Speaking to AltFi, Stocker said that the Japanese market, unlike others in Asia, is a tough nut to crack.

He said that regulators are “very keen on local presence and very concerned about international companies entering and then suddenly changing their strategy and leaving”.

To allow Revolut to set up shop in Japan, regulators have insisted that the fintech firm appoint an experienced local Japanese expert as a director of the entity. “That’s quite an interesting nuance of Japan whereas a lot of other markets are a lot more open – so long as there’s a strong compliance team based in our head office in London,” explained Stocker.

Authors:

George Popescu
Allen Taylor

Wednesday June 21 2017, Daily News Digest

Mountain View

News Comments Today’s main news: DBRS takes rating actions on SoFi consumer loans. Relendex secondary trading platform tops 1M GBP. Xeenho closes new round of financing. Today’s main analysis: The current state of MPL in Japan. Today’s thought-provoking articles: Vanguard takes robo-advice to $65B. Female entrepreneurs more cagey about post-Brexit. 5 ways financial apps are changing banking. United States […]

Mountain View

News Comments

United States

United Kingdom

China

European Union

Australia/New Zealand

Asia

Africa

News Summary

United States

DBRS Takes Rating Actions on SoFi Consumer Loan Programs (DBRS), Rated: AAA

DBRS, Inc. (DBRS) has today reviewed seven ratings from four SoFi Consumer Loan Program U.S. structured finance asset-backed securities transactions. Of the seven outstanding publicly rated classes reviewed, six were confirmed and one was upgraded. For the ratings that were confirmed, performance trends are such that credit enhancement levels are sufficient to cover DBRS’s expected losses at their current respective rating levels. For the rating that was upgraded, performance trends are such that credit enhancement levels are sufficient to cover DBRS’s expected losses at their new rating level.

RATINGS

Issuer Debt Rated Rating Action Rating Trend Notes Published Issued
SoFi Consumer Loan Program 2016-1 LLC Class A Notes Upgraded AA (sf) Jun 20, 2017 US
SoFi Consumer Loan Program 2016-2 LLC Class A Notes Confirmed A (sf) Jun 20, 2017 US
SoFi Consumer Loan Program 2016-3 LLC Class A Notes Confirmed A (sf) Jun 20, 2017 US
SoFi Consumer Loan Program 2016-5 LLC Class A Notes Confirmed A (sf) Jun 20, 2017 US
SoFi Consumer Loan Program 2016-2 LLC Class B Notes Confirmed BBB (sf) Jun 20, 2017 US
SoFi Consumer Loan Program 2016-3 LLC Class B Notes Confirmed BBB (sf) Jun 20, 2017 US
SoFi Consumer Loan Program 2016-5 LLC Class B Notes Confirmed BBB (sf) Jun 20, 2017 US

Vanguard rides robo-advice wave to $ 65B in assets (InvestmentNews), Rated: AAA

While much of the financial services industry has been fretting for the past few years over how to compete in the age of digital-advice platforms, The Vanguard Group Inc. appears to have cracked the code in a steady climb to more than $65 billion under management on its two-year-old robo.

Vanguard’s Personal Advisor Services, which is four times the size of the next-largest robo-platform, is a hybrid that incorporates human advisers and is starting to look like the blueprint for the way to leverage digital advice.

CleanCapital Closes Investment Round Led by FinTech Leaders and Pioneers (CleanCapital Email), Rated: A

CleanCapital, an online marketplace for clean energy investing, announced today the closing of the first round in Series A funding, as part of an ongoing capital raise. The new capital will allow CleanCapital to implement their technology roadmap and continue scaling operations, growing its team, and expanding opportunities for clean energy investing. CleanCapital’s proprietary platform has benefits that are two-fold, by creating opportunity for investment and increasing ease for project owners to exit their current portfolios. By reducing barriers both for the flow of capital and access to investments, CleanCapital is accelerating clean energy deployment.

To date, the team has financed over $40M of solar projects and more than 20 MW in operating solar assets. They have also received funding from industry leader John Hancock Life Insurance to finance numerous assets. CleanCapital has created a unique algorithm to efficiently scrub and value projects so that only the best investment opportunities are included in investment portfolios.

Investors include FinTech leaders and pioneers such as Ron Suber, President of Prosper Marketplace, Jon Barlow, Founder of Eaglewood Capital Management, and Bradley Pattelli, Former Chief Investment Officer of LendingClub. In addition, the company was recently selected to be featured on leading startup fundraising platform SeedInvest which historically has accepted just 1% of startups applicants.

Transparency A Growing Concern for Alternative Investing (Plan Sponsor), Rated: A

The study shows transparency continues to lead all investment considerations and has significantly grown in importance following the financial crisis of 2008.

“Degree of transparency” was cited as very important by 63% for alternative and 62% for traditional investments. It was also cited as the most important post-investment consideration by 21% for traditional assets and 17% for alternatives, compared to 9% and 3%, respectively in pre-crisis.

Tech Gap Widens Between Haves, Have-Nots (Financial Advisor IQ), Rated: A

The gap between independent RIAs who are keeping up with evolving technologies and those who aren’t is widening. And that’s stunting growth for advisors who aren’t acting proactively to keep on top of a rapidly evolving marketplace.

At least that’s what Fidelity finds in a new study published Tuesday looking at industry trends in high-tech adoption. As part of its research into firms using the latest electronic tools – including everything from interactive website software to advanced CRM programs and integrated back-office systems – the custodian has developed a list of tech-savvy “eAdvisors.”

Fintech Brings Residential Real Estate To The Web (NASDAQ), Rated: A

However, there are a number of limitations that come with completing the mortgage application process entirely online. You likely won’t be able to complete the process online if you’re applying for a jumbo mortgage (for which the limit is $417,000 in most of the United States); if you’re self-employed with various sources of income; if you or a tax advisor manually prepared your taxes; or if you don’t have online accounts with all of your financial institutions.

Still, the option to purchase real estate quickly and easily online is very attractive for foreign buyers, investors, and modern, web-savvy homebuyers. Although completely online real estate transactions only represent a small fraction of the more than $2 trillion in annual real estate transactions worldwide today, the demand is growing, and it seems likely that a substantial percentage of homes will be purchased completely online within just a few years.

Selling a home online offers a number of notable advantages. Perhaps most importantly, you avoid using a real estate agent so you don’t have to pay the usual 3% to 6% commission.

The key disadvantage of a fully online transaction, of course, is the possibility of making some kind of mistake during the process that could cost you a chunk of money, or even the chance to purchase your dream home.

Suretly Brings Crowdvouching to the Lending Market, Announces ICO (Inside Bitcoins), Rated: A

New York-based financing startup Suretly has announced that its crowdfunding campaign is set for July 2017 launch. Suretly offers a safe new way to obtain a personal loan, through its unique ‘Crowdvouching’ platform.

Unlike traditional P2P lending platforms which require investors to co-sign for a percentage of the loan, Suretly’s crowdvouching system requires a much larger number of backers to secure the loan and in doing so, substantially reducing the individual risk of all parties. Suretly is currently focused on short-term loans, and the platform has already been called the “Tinder for Microloans.”

The company’s ICO will give all investors an opportunity to purchase the platform’s SUR tokens and contribute towards the growth of the crowdvouching project.

GDS Link Joins Marketplace Lending Association (PRWeb), Rated: B

GDS Link, a global provider of risk management solutions and consulting for multiple verticals within the financial services industry including marketplace lending, retail finance, alternative financial services, credit card, auto, and business leasing, today announced that it has joined the Marketplace Lending Association (MLA) as an associate member.

Lending Club’s Dolan Joins Metromile in California as Chief Financial Officer (Insurance Journal), Rated: B

San Francisco, Calif.-based Metromile has named Carrie Dolan chief financial officer.

Dolan most recently served as CFO of Lending Club, an online credit marketplace connecting borrowers and investors. Prior to Lending Club, Dolan was with Charles Schwab & Co, where she was senior vice president and treasurer and CFO of Schwab Bank. Early in her career, Dolan held various financial positions at Chevron.

Eight Fledgling Fintech Providers Win Capital with CFSI Awards (Paybefore.com), Rated: B

Eight fledgling fintech companies have won $250,000 each from the Center for Financial Services Innovation.

  • Blueprint Income, which offers a pension anchored on “a simple, pre-determined income stream backed by insurance companies.”
  • Dave, whose product “alerts consumers ahead of an upcoming overdraft and can instantly advance up to $75 at 0 percent interest to prevent overdraft fees.”
  • EverSafe, which monitors bank and investment accounts, credit cards and credit reports, and then alerts older consumers and their relatives to irregular activity.
  • Grove, which offers personalized financial advice and comprehensive financial plans that are “within reach for everyone.”
  • Nova, a firm that “has built the world’s first cross-border credit reporting agency by building data partnerships across the globe,” a product that can help immigrants gain credit.
  • Point, described as “an alternative to traditional home equity loans and home equity lines of credit.” The company buys into a fraction of a consumer’s property, paying today for a share of the home’s future appreciation.
  • Token Transit, a mobile app that “enables low-income riders to have convenient access to the transit passes they need. Riders are able to pay using a credit, debit or a prepaid debit card.”
  • Tomorrow, which provides “long-term financial security to busy millennials and working families.”
United Kingdom

Relendex’s Secondary Trading Platform Tops £1 Million (Crowdfund Insider), Rated: AAA

Relendex, a secured peer to peer lending platform, has announced that its secondary market trading has surpassed the £1 million mark.

Relendex says this indicates that lenders have embraced the secondary platform. On the Relendex Resale Marketplace investors are able to buy and sell Loan Parts at par with no fees charged.

Female entrepreneurs more cagey about post-Brexit prospects (P2P Finance News), Rated: AAA

A poll by the peer-to-peer lender shows that less than half as many female business owners are confident about the success of their businesses post-Brexit, compared to their male counterparts.

The research, conducted by RateSetter Business Finance, has revealed that only 10 per cent of women business leaders believe that leaving the EU will be positive for their business.

This contrasts with 21 per cent of male business owners who have an optimistic outlook about their ventures after Brexit.

Additionally, 32.7 per cent of female business owners want to find a lender that understands their business and business model, compared with just 19 per cent of men.

TrueLayer raises $ 3M Series A to provide fintech companies with easy access to bank APIs (TechCrunch), Rated: A

TrueLayer, a London startup that’s built a developer platform to make it easy for fintech companies to access bank APIs — and ride the PSD2 gravy train — has raised $3 million in Series A funding. The round was led by Anthemis Group, with participation from existing investor Connect Ventures, and will be used by TrueLayer to expand its team and increase coverage of supported banks before opening up beyond beta testers later this year.

Launched in private beta in February, the TrueLayer developer platform currently supports things like account verification, KYC processes, and accessing transactional data for account aggregation, credit scoring, and risk assessment. It is available in the U.K. and Simoneschi says TrueLayer will expand to other EU countries later in 2018.

Soldo, a London fintech startup that offers a multi-user spending account, raises M led by Accel (TechCrunch), Rated: A

Soldo, the London-based fintech startup that offers a multi-user spending account, first launched for consumers and since tailored to businesses too, has raised $11 million in Series A funding. Venture Capital firm Accel led the round, with participation from Connect Ventures, InReach Ventures, U-Start and R204 Partners.

Creathor Venture and private investors invest CHF 2.5 million in PropTech company Allthings (IT Business Net), Rated: A

Creathor Venture, a pan-European venture capital firm, together with a circle of experienced private investors from the real estate industry invest CHF 2.5 million in German-Swiss property tech company Allthings Technologies AG. Allthings connects tenants, owners, property managers and developers of living and commercial property through a modular communication and service platform.

Zorin hires ex-Funding Circle underwriter (Bridging & Commercial), Rated: B

Colin Chung (pictured above) has been recruited as an associate director in the credit risk team, while Katy Katani (pictured below) has joined as head of business development.

Colin was previously at Funding Circle, where he was a senior property underwriter, and has over 10 years of experience in real estate finance.

China

Xeenho Closed a New Round of Financing for its Business Transformation (Xing Ping She Email), Rated: AAA

On Jun 20th, Xeenho announced to have finished their third round of financing. This round of financing was led by Hongshang Capital, with Jade Value and Hunan Culture & Art Industry Group participated. The financing amount was again reached to tens of millions of yuan. All the funds have been in place, and they are in the process of handling business changes.

Started as one of the first P2P loan funds in China, Xeenho has an accumulated volume of nearly 3 billion RMB to date. The excellent risk control and the big data application in fintech constitute the core value of Xeenho. Based on its self-developed IFRM risk control and big data system, Xeenho keeps the record of Zero Bad Debt, which makes the company developed as a guidance for due diligence, P2P rating, research report, P2P asset portfolio allocation for clients and investors.

In 2016, Xeenho launched a new Robo-Adivisor product – Xeenho Zhi Tou, attracting capital for different P2P platforms, and Xeenho provides guarantee in this process. In the late of the same year, Xeenho set up self-media platform – Xing Ping She, aiming at building an industrial ecosphere and providing services which is specially designed for specific fintech companies.

This A round of financing would be a fresh start to Xeenho. Dr. Yang Li, the co-founder and CEO of Xeenho said, “After A round of funding, we will continue to focus on business in big data mining, equity investment and information consultation, and explore to develop new business at the same time. We hope to realize the development of collectivization in the next three years, so as to build a complete system of financial ecology and become one of the leading fintech companies.”

European Union

Bank to the future: five ways financial apps are changing banking (Banking Technology), Rated: AAA

  1. Banks will face stiff competition from new wave of fintech start-ups – In the UK it is firms like Bean, Ernst, Moneybox, Pariti and Plum, to name just a handful, and this picture is repeated across Europe.
  2. New open data initiatives will mean unparalleled access to consumer data – In the UK, PSD2 is being delivered by the Open Banking project. Alongside this the Treasury is running the Pensions Dashboard project, which will liberate customer data on long-term retirement savings in the same way.
  3. New services will revolutionise who people trust for financial advice
  4. Personal finance dashboards (PFDs) will open the way for long-term savings as well as short-term financial management – Pensions dashboards already exist in many other European states including Denmark, the Netherlands and Sweden.
  5. The workplace will be key to the new market – In practice, the workplace is likely to be a highly successful channel for such services complementing employers’ pensions and employee benefits delivery. In the UK, auto-enrolment means nearly all employees will soon be members of a workplace pension scheme.
Australia/New Zealand

Robots closer to getting go-ahead to give financial advice to humans (Stuff), Rated: AAA

Getting personalised financial advice from a “robot” may be a step closer to becoming reality.

The Financial Markets Authority has asked for feedback on whether it should use its powers to allow personalised financial advice generated by a computer programme or algorithm.

Under current law, personalised advice, which takes into account an individual client’s financial situation and goals, can only be delivered by a human being.

Asia

The Current State of Marketplace Lending in Japan (Lend Academy), Rated: AAA

Marketplace lending growth in Japan has been slow compared to the U.S., Europe and China but that has started to change in the past three years. The market has been almost doubling each year and we expect this trend to continue through 2017. Investment volume was $140 million in 2014, $310 million in 2015 and $530 million in 2016. We estimate it to reach $1 billion this year.

Marketplace lending, also commonly referred as “social lending” in Japan, started as p2p lending around 2008 but struggled due to high default rates, which sometimes reached 30%. Since Japanese lending law prohibits interest rates above 15% in most cases, a 30% default rate was not sustainable for those businesses.

The industry average APR increased to 8.4% from 5.7% in two years, mainly due to newer entrants that were charging higher APRs. Default rates in the past three years have been close to zero due to platforms being more selective on who they lend money to.

Based on our research, average spread (i.e. margin) for crowdfunding platforms in Japan is 4%-5% annually. Typically crowdfunding platforms are lending at 13% and funding at 8%. Based on this margin, a crowdfunding platform needs to service portfolio of between $50 – $100 million to be break-even. Only a few crowdfunding platforms have reached this scale, however given the current market growth, many players will achieve this volume after 1-3 years of being in business.

Africa

Consumer lending has dropped to ‘almost zero’ under new regulations – Rainfin CEO (Ventureburn), Rated: AAA

Consumer lending on marketplace lending platform RainFin has ground to a halt since the new National Credit Regulations threshold came into effect on 11 November, the company’s chief executive Sean Emery said yesterday.

Under the new threshold, lenders who lend even one cent to consumers have be registered with the National Credit Regulator to do so.

Authors:

George Popescu
Allen Taylor

Tuesday April 25 2017, Daily News Digest

UK digital lending

News Comments Today’s main news: VantageScore to include trending data or excessive credit capacity. Patch Homes exits beta, raises $1.5M. Chinese industry news. Today’s main analysis: The debate over U.S. fintech regulation. UK digital lenders can grow with more tech innovation. Today’s thought-provoking articles: FC lending impact, borrower stories. United States VantageScore to include trending data or excessive […]

UK digital lending

News Comments

United States

United Kingdom

International

China

India

Asia

News Summary

United States

Major changes coming to how your credit score is calculated (CNBC), Rated: AAA

The math behind your credit score is getting an overhaul, with changes big enough that they might alter the behavior of both cautious spenders as well as riskier borrowers.

The new method is being implemented later this year by VantageScore, a company created by the credit bureaus Experian, TransUnion and Equifax. VantageScore handled 8 billion account applications last year, so if you applied for a credit card, that score was likely used to approve or deny you.

Using what’s known as trended data is the biggest change. The phrase means credit scores will take into account the trajectory of a borrower’s debts on a month-to-month basis. So a person who is paying down debt is now likely to be scored better than a person who is making minimum monthly payments but has been slowly accumulating credit card debt.

An important metric in calculating credit scores has been the portion of their available credit people are actually using. A person with $5,000 in credit card debt with a $50,000 limit across several cards could score better than someone with $2,000 in debt on a $10,000 limit because of that ratio.

But VantageScore will now mark a borrower negatively for having excessively large credit card limits, on the theory that the person could run up a high credit card debt quickly.

Taking civil judgments, medical debts and tax liens out of the equation comes after a 2015 agreement between the three credit bureaus and 31 state attorneys general.

People with those items on their credit reports now could see a bump of as much as 20 points. But it won’t help much if they also have negative marks like delinquencies and debts that have gone to collection.

Mortgages, though, won’t be affected.

An obscure regulatory debate has put the entire U.S. fintech community on edge (TechCrunch), Rated: AAA

An obscure request for comments on regulatory standards, released by the Office of the Comptroller of the Currency (OCC) last March, has since evolved into a complex turf war between the states and Washington, DC.

The debate centers around a proposal made in December by Thomas J. Curry, the Comptroller of the Currency, in which the OCC details a program for fintech companies to apply for charters as “special purpose national banks.”

Though fintech can still be thought of as a relatively young industry, it is growing quickly enough that it may soon determine how most people save, exchange and invest their money. This proposal comes at a time when the world — from the U.K. to Germany to India to Korea — is evaluating what kind of guard rails the fintech sector needs.

With this in mind, the OCC wants to take the first step to create a uniform, nationwide set of standards for fintechs. But what should have been an uncontroversial first step instead unearthed a slew of objections from a complex web of stakeholders. These parties quickly raised concerns about stifling innovation, overstepping the limits of federal authority and understanding the nuances of fintech, among many others. At the very heart of this battle is the question of what fintech really is. And as evidenced by the debate, that question is much harder to answer than it may seem.

Financial malpractice is just as pernicious today. In its first five years, from 2011 to 2016, the new Consumer Financial Protection Bureau (CFPB) received more than 900,000 consumer complaints about financial services providers.

Fintechs themselves have not been free from fraud and scandal. The publicly traded TrustBuddy, based in Sweden, was forced into bankruptcy for massive misappropriations of investor funds. Cincinnati-based SoMoLend came under similar fire for misleading investors. And China’s peer-to-peer lending sector has spent years battling its way out of the shadow of massive fraud that has tainted the industry.

Weirdly enough, fintech companies, which will arguably be the most impacted by the charter, have been relatively quiet. The strongly vocal opponents of the charter have been an alphabet soup of state regulators, who view this move as a broad overreach of federal authority:

  • New York: DFS Superintendent Maria T. Vullo in January released a stern public comment letter to the OCC. In it, she argued that banks with national charters don’t have to abide by some state lending rules, and this charter could allow payday lenders to sign up for protections meant for tech companies.
  • Florida: OFRC Commissioner Drew Breakspear called the charter a “solution to a problem that does not exist.”
  • Ohio and Oregon: Senators wrote in to the OCC saying this would complicate existing state fintech laws and initiatives.
  • California: Jan Lynn Owen, the commissioner of the CA DBO, argued that the proposal would complicate the DBO’s efforts to compile data on online marketplace lenders — such as fintech firms SoFi, Lending Club, Funding Circle and Prosper — in order to separate them from payday lenders.

Even so, to give some credit to regulators, there are still very real reasons this charter could easily hurt the not-nascent-but-not-yet-matured fintech sector in many ways:

  1. Bureaucracy: The OCC has granted only one national bank charter in the last six years. Would it move quicker to enable fintechs? It’s difficult to see how it would.

  2. One-size-fits-all: Fintechs are too diverse to be included in a charter generally drafted to legitimize deposit-holding institutions. As The Hill notes, this charter could lump together “payday lenders, marketplace lenders, and peer-to-peer payment companies” with robo-advisers, bank service providers, insurance tech, stock market apps, etc… Should they all be treated as banks?
  3. A competitive moat: Though the charter could narrow the gap between fintechs and banks, allowing fintechs to compete nationally instead of applying for state-by-state licenses, it could also lead to a “thinning of the herd” by being too cumbersome or expensive for young companies. This could easily stifle innovation.
  4. More compliance risks: Fintechs could find themselves written into a narrower and narrower regulatory box, increasing the chances they’re shut down for benign compliance missteps.
  5. Balkanized regulators: Similar to the CFPB’s “no action letter,” which promises the bureau won’t take action against companies that meet its standards, gaining a charter from the OCC still won’t shield fintechs from other regulators who may have different rules.

Predictably, it seems national regulatory agencies such as Moody’s are in favor of the charter. Credit unions, which see the charter as a way to level the playing field with fintechs, are also in favor. The Conference of State Bank Supervisors is against it. It seems everyone but fintechs themselves has an opinion on the charter.

Despite the heated pushback against the OCC’s charter plan, there are still very good reasons for centralized, consistent and national oversight of the fintech industry. As ex-Treasury Secretary Tim Geithner notes in Stress Test, his excellent memoir of the financial crisis, one of the reasons the Great Recession was so bad was that the “safeguards for traditional banks weren’t tough enough […] but what made our storm into a perfect storm was nonbanks behaving like banks without bank supervision or bank protections.”

Then what would a good set of national fintech regulations look like?

  1. It would set basic underlying consumer protections. For instance, no fintech firm should be allowed to misrepresent its fees — and this is something that shouldn’t vary by state.

  2. It would preserve state sovereignty.

  3. It would recognize the heterogeneity of fintech. Most fintechs disintermediate banking services, each tackling only one of a wide range of services. On top of that, some fintechs (Zopa, SoFi) are themselves starting to build banks, while others (Moven, Monzo, Atom) want to be “bank-lites.” A banking charter runs the risk of being too broad (and weak) or too narrow (and inflexible). Regulation should be flexible enough to encompass new fintech models as they develop, without risking losing its teeth.

  4. It would promote innovation while following the Hippocratic Oath of first doing no harm.

Like many black markets, alternative finance and shadow banking would be safer if it were brought into the light and monitored.

Patch Homes Exits Private Beta and Raises $ 1M to Revolutionize Home Equity (Patch Homes Email), Rated: AAA

Patch Homes, a home equity financing platform that creates a way for existing homeowners to cash out equity at 0% interest with no monthly payments, today announced it is coming out of private beta in California. The company recently secured $1.0 million in seed funding, led by prominent venture capital firms and fintech angel investors, including Techstars Ventures, KIMA Ventures, Eric DiBenedetto and Airbnb co-founder Nathan Blecharczyk, among others.

“There’s a problem with the current home financing market, in that 67% of homeowner wealth is trapped in home equity,” said Sahil Gupta, Co-founder of Patch Homes. “Most homeowners are asset-rich but cash-poor, and we want to help bridge that gap and solve their cash flow problems. Our model offers home equity financing without any monthly payments, allowing homeowners to tap into their home equity and use their money the way they choose, whether to pay down debt, invest in their future, or make needed home improvements. Each Patch Homes’ product should be a step toward making homeownership a more affordable, accessible and liquid investment.”

In exchange for 0% interest, Patch Homes shares in future appreciation or depreciation of the home value. The model allows customers to receive capital from investors to finance their home equity, without interest rates or monthly payments, in exchange for a fraction of future home value change. Both the homeowner and investor will see a profit when the home appreciates in value and Patch Homes will share in downside loss with homeowners, should the house decrease in value.

Each contract has a 10-year term, although homeowners have the option to exit the contract by selling or refinancing their home at any time before that, without any penalty or exit fees. In the meantime, homeowners can use the cash newly freed up from home equity however they choose.

“What’s unique about Patch Homes is that it’s solving a problem for more than 40% of US homeowner population,” said Eric DiBenedetto, an investor in Patch Homes, an early backer of Lending Club and an active real estate investor.

The company has reached several key milestones in the past year, including launching a digital financing portal for homeowners and bringing investor capital to the company platform.

“Throughout our beta program, we saw homeowners engage deeply with the product and debt-payoff was among the top reasons for cashing out equity” said Sundeep Ambati, Co-founder of Patch Homes. “We’re excited about bringing a new approach to the way Americans look at financing their homes. There is over $4.5 trillion in untapped home equity across millions of homeowners in the US. They want something that is suited to their needs and financial circumstances.”

The seed funding will enable Patch Homes to expand its team and geographical footprint, and continue to develop its innovative solution and assist with marketing efforts. Patch Homes currently serves homeowners in California, with plans to expand to additional states before the conclusion of the year.

KBRA Upgrades and Affirms Ratings on Avant Loans Funding Trust 2016-B (KBRA Email), Rated: A

Kroll Bond Rating Agency (KBRA) upgrades the rating on two classes and affirms the rating on one class of notes issued under the Avant Loans Funding Trust 2016-A (AVNT 2016-A), a consumer loan ABS transaction which closed on April 28, 2016.

The current credit enhancement levels are 86.62% for the Class A notes, 47.01% for the Class B notes, and 23.86% for the Class C notes. Credit enhancement consists of overcollateralization, subordination of junior notes, cash reserves, and excess spread. While losses are above KBRA’s base case loss expectation to date, the continued deleveraging and build in credit enhancement outweighs an increase in loss levels. The transaction has breakeven loss multiples which are sufficient for an upgrade of the rating on the Class A and Class B notes and an affirmation of the rating on the Class C notes.

Read the report here.

CommonBond Launches Student Loans for Undergraduate, Graduate Students (Yahoo! Finance), Rated: A

CommonBond, a leading financial technology company that helps students and graduates pay for higher education, today announces the launch of student loans for undergraduate and graduate students. This launch makes CommonBond the first and only company in the country to offer a full suite of student loan solutions, including loans for current students, refinance loans for graduates, and employer student loan benefits for employees.

“Since CommonBond first helped pioneer student loan refinancing nationwide, we’ve seen very little innovation in the student loan industry,” said David Klein, CEO and co-founder of CommonBond.

CommonBond’s new in-school loans provide:

  • Competitive interest rates: CommonBond’s rates are among the most competitive in the industry, with variable rates starting at 2.87% APR with autopay discount and fixed rates starting at 5.50% APR with autopay discount.
  • Flexible repayment options: CommonBond offers four different repayment options for students in school: deferment, fixed monthly payment, interest-only payment, and full monthly payment.
  • Award-winning customer service: CommonBond knows that paying for college is the first major financial decision that many students make, and provides best-in-class care for prospective and current members.
  • An industry-first social mission: CommonBond enables its members to drive social good when taking out a student loan. For every student loan funded by CommonBond, the company also funds the education of a child in need through a partnership with Pencils of Promise.

CommonBond is also introducing an interactive tool that helps students understand the financial impact over time of different student loan options, enabling them to make informed financial choices.

CommonBond has funded more than $1 billion in loans to date.

LendKey Releases State Of Student Loan Refinancing Report (PR Newswire), Rated: A

LendKey, the lending-as-a-service provider for banks and credit unions, today released its Student Loan Refinance Report, its second in a series that highlights borrower trends across banks and credit unions. This latest report focuses on the state of student refinancing including the borrower demographic, their lending preferences and loan performance. Key findings show that the student refi market is healthy for banks and credit unions, as well as borrowers, who save an average of 2.2% in annual interest expense after refinancing.

“The LendKey report found that students who refinance significantly reduced their student loan debt over the life of the loan, a substantial amount considering the average student debt is $37,000 for the class of 2016,” said Salil Mehta, SVP of Credit Risk & Analytics, LendKey. “The overall health of the student refi industry proves how beneficial such products are to financial institutions and their millennial customers.

The report leverages data from LendKey’s network of 275 bank and credit union partners nationwide, and examines a seven-year span of borrower data from 2011 – 2017. Key highlights of the report include:

  • Loan originations: LendKey’s clients totaled $770+ million in originations; outstanding loan balance was close to $620 million.
  • Borrower savings increased: Borrowers saved an average of 2.2% in annual interest expense over the life of each loan.
  • Borrower age increased: Average age of a borrower has increased slightly over the years; in 2016 the average age at the time of refinance was 28.7 years for a borrower with an undergraduate degree and 34.3 years for a borrower with a graduate degree.
  • More graduate students are refinancing: In 2016, borrowers with a graduate degree represented close to 30% of originations compared to 20% in 2011.
  • Delinquency rates have dropped: Loan performance has improved over the past seven years as delinquency and default rates have dropped. The report found that 30-89 and 90+ day delinquencies are currently 2.2% and 0.5%, respectively.

Student loan debt now exceeds $1.3 trillion and is the largest non-real estate debt among US consumers.

LendKey partners with banks and credit unions to offer a complete online lending solution, including a customized refinancing product. LendKey’s services include loan acquisition, loan origination and loan servicing through a white-labeled platform hosted by the financial institution.

To access the full report, visit: 

SmartBiz Loans Adds Five Star Bank to Technology Ecosystem (SmartBiz Loans Email), Rated: A

SmartBiz Loans, the first SBA loan marketplace and bank-enabling technology platform, today announced the addition of Five Star Bank (www.fivestarbank.com) to the Company’s unique technology ecosystem. SmartBiz Loans’ intelligent technology platform will match Northern California-based Five Star Bank to the right customers in a fraction of the time, allowing the bank to originate SBA loans more efficiently while increasing the likelihood that small business owners using SmartBiz® will receive funding.

The partnership underscores the ability for banks and fintech companies to work together in more creative and collaborative ways to better meet customer needs by combining the speed and agility of new technology with the security and infrastructure of traditional banks. SmartBiz Loans’ focus on regulatory compliance along with their deep knowledge of banks’ unique business requirements, make it an attractive partner for banks looking to expand their reach and ability to underwrite SBA loans.

SmartBiz’s full-stack, intelligent technology platform creates an environment of data stewardship in which banks’ data is protected and analyzed to the highest standard. It incorporates elements of artificial intelligence, machine learning and big data analytics to bring agility and efficiency to underwriting and originating government-backed SBA loans. By automating each bank’s underwriting criteria, SmartBiz eliminates weeks of work for banks, and allows banks to originate more loans to customers they may not have previously served while cutting banks’ processing costs by up to 70 percent. On average, 90 percent of the loan applications SmartBiz refers to its bank partners are approved.

PeerRealty Founders Shift Energy to Secondary Market Platform CFX Markets (Crowdfund Insider), Rated: A

Following the announcement that real estate crowdfunding platform PeerRealty had been sold to Brelion, founders Jordan Fishfeld and Juan Hernandez are shifting their energy to solving a pressing issue in the alternative finance space: creating a secondary market for alternative assets including securities sold on real estate crowdfunding platforms.

CFX Markets is described as an end-to-end digital marketplace that is directly integrated with alternative asset issuers, broker-dealers and transfer agents to streamline the process of secondary market trading of alternative assets.

CFX Markets is not alone in targeting this emerging opportunity. Traditional marketplaces such as OTC Markets, NASDAQ and NYSE have each expressed a certain amount of interest in providing liquidity for new asset classes.

Andy Rachleff, Co-founder and CEO, Wealthfront (Stitcher), Rated: A

Christophe Williams (MBA ’18) chats with Andy Rachleff, co-founder and CEO of Wealthfront. Andy discusses a wide range of topics in FinTech, investing, and how to grow tech companies. He goes in-depth on Wealthfront’s competitive advantages in automated investing and how he approaches product/marketing strategy to grow sustainably. Also covered are Andy’s background in venture capital, the process of founding Wealthfront, and how he sees disruptive innovation affecting financial service incumbents.

The Five Key Elements for New Lending Club and Prosper Investors (Lend Academy), Rated: A

April is officially Financial Literacy Month here in the United States so with that in mind I am providing this resource for new investors in Lending Club and Prosper.

  1. Diversify Your Investment
  2. Expect Defaults
  3. Keep Your Cash Balance Low
  4. Automate Your Investing
  5. Avoid Taxes by Investing Through an IRA

Why the future of credit could lie in ‘social vouching’ (Tearsheet), Rated: A

For Kundu and others working in the space, ‘inclusion’ is more about creating a another kind of credit system that’s based on social vouching and support. Inspirave’s platform, Kundu said, brings in the notion of a social network of friends and family that can help an individual reach their financial goals and in turn, help vouch for the individual. Instead of a formal credit score, the idea of using a social network of referees acts as a powerful counterpoint to traditional credit assessment systems that exclude millions of Americans who don’t have bank accounts or credit cards.

“We don’t think of traditional due diligence of loan underwriting, a formal business plan or technical due diligence,” said Kelly Chan of Kiva U.S., a nonprofit that’s the U.S. arm of a global online marketplace for crowd-funded small-scale loans. “We’re looking to a social community knowing you have a group of supporters to back you or vouch; for example, ‘Sally is a wonderful mother worthy of Kiva loan.’”

The notion of ‘social underwriting,’ Chan said, can create economic opportunities for Kiva’s 3,700-strong community, many of whom are small-business owners.

GAO’s Fintech Report Highlights Data Security, Lack of Clarity on Regulatory Oversight (National Law Journal), Rated: B

Other risks aside from data security cited by the GAO in fintech include:

Marketplace lending: The GAO said payment terms presented by fintech companies in this area must be transparent because “it can be difficult for small businesses to understand and compare loan terms such as the total cost of capital or the annual percentage rate.”  The study also suggests there is a risk that small business borrower protections could be overlooked.

Mobile payments: The GAO study indicates that potential risks associated with mobile payments are similar to those found with traditional payment products. The report states that if a smartphone is hacked, lost or stolen or “if a company does not sufficiently protect mobile transactions,” that could be problematic. Another concern is that consumers could deposit or send money to the wrong person with P2P payments.

Digital wealth platforms: Insufficient or incomplete information from customers could cause trouble for digital wealth platforms.

Distributed ledger technology: “The Financial Stability Oversight Council noted that market participants have limited experience working with distributed ledger systems, and it is possible that operational vulnerabilities associated with such systems may not become apparent until they are deployed at scale,” the report said.

Find out how startups are transforming real estate investing at Disrupt NY (TechCrunch), Rated: B

First up is Ryan Williams, CEO of Cadre, a company that provides a marketplace of investment opportunities for real estate investors. Founded in 2014, Cadre does all the sourcing, due diligence, decision-making and management of investments it makes available, providing a greater level of transparency and oversight to potential investors than was previously available.

Also joining us is Eddie Lim, CEO of home equity platform Point. His company enables homeowners to unlock the value of real estate they own by selling equity to investors rather than accruing debt by refinancing their homes.

Bankruptcy Atty Bruce Feinstein Speaks About The Risks of Online Lending Services (PRWeb), Rated: B

A sudden need for money, like an unexpected medical expense, can lead people to seek a quick source of cash. Online lending services have been eager to fulfill this need, offering fast loans without a credit check. But these loans often come with a slew of consequences, such as high interest rates, hidden fees, and contracts that drag out payments.

“Predatory loans like these can have APRs of over 300%,” explains Mr. Feinstein. “People end up paying several times the cost of the original loan without knowing it, leaving them with no choice but to file for bankruptcy.”

There are some protective laws in effect – for example, the Military Lending Act protects active duty members from being charged interest rates higher than 36% on most consumer loans, including payday loans.

United Kingdom

UK digital lenders can harness growth opportunities with more tech innovation (S&P Global), Rated: AAA

While the U.K. government regulates and champions these lenders, their loan origination growth has trailed that of their U.S. peers. Lower amounts of equity funding to build out technology and continued use of more human processes compared to U.S. digital lenders are some of the reasons for this divergence. Now is the time for U.K. platforms to embrace technological innovation in order to capture future growth opportunities.

A new report by S&P Global Market Intelligence estimates that as of the end of 2016, nine key digital lenders in the U.K. had originated £6.69 billion in loans since their respective inceptions. The nine largest platforms covered in our 2016 U.S. Digital Lending Landscape had originated the equivalent of £53.69 billion from their respective inceptions through the end of 2016.

Using data from venture capital database Crunchbase, we see that as of the end of 2016, nine major U.S. digital lenders, excluding Square Inc.’s digital lending platform, had received $3.49 billion in equity funding. This allowed them to invest more in costly technological build-ups, while their U.K. peers had received only $470.6 million in equity funding through the same date.

In the fourth quarter of 2011, only four of the nine lenders in our report were originating loans. Total originations for that quarter came in at just £27.2 million. Quarterly originations for these nine lenders grew 33.79% year over year to £803.6 million in the fourth quarter of 2016. During the second quarter of 2016, originations dropped due to uncertainty related to Brexit but rebounded in the third quarter and continued to grow.

Meanwhile digital lenders saw SME loan originations increase 23.9% year over year in the third quarter of 2016, followed by an 81.8% year-over-year jump to £357.5 million in the fourth quarter.

Digital lenders in the U.K. could enjoy significant growth as new account options and continued political and regulatory support boost awareness of and participation in the industry. With these prospects on the horizon, digital lenders will need to invest in technology and automate some processes that humans currently handle.

Your April Impact – Lending Impact and Borrower Stories (Funding Circle), Rated: AAA

This month we hit more than 60,000 investors, big and small, lending to businesses through Funding Circle. Together your lending is having a real impact on the UK economy. Already in 2017 you’ve helped more than 5,000 businesses access much needed finance to grow and prosper.

Firstnet create 100 new jobs in Leeds

To facilitate the launch of their new data centre, Firstnet Solutions Ltd borrowed £74,480 in October 2016.

Paralympian goes for gold with a Funding Circle loan

Husband-and-wife team Peter and Linda Norfolk are well-experienced in achieving excellence. Nicknamed ‘The Quadfather’, Peter Norfolk OBE is a double paralympic gold medal and multiple Grand Slam winning wheelchair-tennis player, while Linda was Head of Physio for the Paralympic GB team at the Athens Games.

To hire two new members of staff, Equipment for the Physically Challenged (EPC) borrowed £30,000 in 2016.

Flux wants to make paper receipts obsolete (TechCrunch), Rated: A

Flux, a London-based fintech startup founded by three early employees of foreign exchange and banking app Revolut, is on a mission to make store receipts truly digital.

The company, which is de-cloaking this week with a pilot in East London, has built a software platform that bridges the gap between the itemised receipt data captured by a merchant’s point-of-sale (POS) system and what little information typically shows up on your bank statement or mobile banking app.

To be clear, this isn’t digitising paper receipts with OCR, but — by partnering with merchants, their payment processor/POS systems, and banks — making item level receipts digital in the first place. Flux’s first live integration is with EAT and Bel-Air on the merchant side, and digital-only bank Monzo.

“We are… building a software layer that is agnostic to the financial institution or retailer that it plugs into,” Cusden-Ross says. “We connect retailers via a software plug-in to their point of sale and to the consumer via an integration to their mobile banking app. Flux automagically links receipts to your bank card as you pay. Receipts are stored in the same place your transactions live today, your bank statement. Just open up your bank app and you’ll find all the receipts as well as any loyalty right there, it’s seamless and intuitive”.

LendInvest completes its first Scottish refurbishment loan (Development Finance Today), Rated: A

Launched in February, the new product is lent against a borrower’s gross development value (GDV) to provide more leverage for the developer and reduce the capital needed up front.

Upon completion of the refurbishment, the property will be a two-storey house with three bedrooms and is expected to be sold for around £375,000.

The loan was based on 70% GDV over nine months at a rate of 1.1% per month.

International

Alternative Finance And The Rise Of The Fintech Unicorn (Forbes), Rated: A

China’s fintech sector certainly boomed last year especially after Alibaba’s payments company Ant Financial set records with a $4.5 billion funding round. The impact of Brexit is yet to be seen on the UK and Europe as a whole, but investors are still seeing the potential for financial technology  in the region, according to the report. G.P. Bullhound highlights that the UK could  be described as a standout leader because of three fintech unicorns, or companies that are valued at over $1 billion: Funding Circle, Paysafe and Transferwise.

Despite Asia’s leadership and growth in the alternative finance space, the same could be said about the European market.

Statistics revealed in the report that alternative finance is currently the most successful fintech vertical, ahead of digital payments, digital banking, insurtech and asset management. While in China eight of the 13 fintech unicorns are operating in the alternative finance field, the term ‘alternative’ is somewhat less relevant in the UK and G. P. Bullhound claim that this is because these regions are held back by traditional systems. Perhaps this is why China is forging ahead in the financial technology race?

China

Industry News-China (Xeenho Email), Rated: AAA

In China, 55 P2P lending platforms cooperating with insurance companies, accounting for 1/6 of all the platforms. Currently, the types of insurance applied in P2P are mainly surety insurance and safety insurance for personal account. However, the insurance is not unlimited. According to a drafted document from China Insurance Regulatory Commission: if the policy holder is a natural person, the maximum coverage is 1 million RMB.

China launched special rectification action on Cash Loan business

To implement the special rectification of risks of P2P Lending required by P2P Remediation Office, the first tier cities including Beijing, Shanghai, Guangzhou and Shenzhen have been starting an all-round investigation of Cash Loan. Last Thursday, the Association of Internet Finance of Shenzhen promulgated documents to asks platforms submit details of Cash Loan business monthly.

On April 18th, a Cashless Alliance led by Alipay launched in Hangzhou, China. UN Environment and Ant Financial advocate a low-carbon business together with other 15 alliance members. As one of the sponsors, the parent company of Alipay, Ant Financial announced that they will provide 6 billion RMB to help the process of cashless in two years. The efficiency of business will be promoted by 60% by using the cashless pay and data sharing. Every 3580 payment equals to the plant of a bell hammer. The existing Alliance members including: Alipay, Carrefour(China), CAH, HUAQIANG Group, OFO Inc., BESTORE etc. Now, the alliance is open for all the global businesses and organizations.

The Challenges China’s Fintech Sector Will Need To Tackle For Longterm Growth (Forbes), Rated: A

Venture capital investment in Chinese financial technology firms surpassed $6.7 billion in 2016. The reason for this is simple: China is home to the largest markets for digital payments and online lending. About 40% of consumers use new payment methods. As a result, China boasts the world’s four largest fintech “unicorns,” or startups valued at over $1 billion, including Ant Financial, Lufax, JD Finance and Qufenqi. These firms received large amounts of funding in 2016, with Ant Financial alone receiving $4.5 billion.

China Rapid Finance, a peer to peer lending company, has been approved for listing on the New York Stock Exchange and is planning to raise $100 million for its IPO. Chinese fintech firm CreditEase signed an agreement to provide up to $1.4 billion in funding to American real estate firm Tishman Speyer through sales of its wealth management products.

China’s fintech industry faces some major challenges, however. First is a shortage of skilled workers, and second are increased regulations, particularly in the digital loan sector.

Companies face difficulties in filling positions for software developers and product managers.

The China Banking Regulatory Commission published the Guidelines on Depositing and Managing Online Lending Capital in February, requiring user funds be deposited into commercial banks, transactions be approved by both borrower and lender, and clear records of transactions be recorded. This will help to curb the risky behavior of industry firms, about 60% of the roughly 5,000 which fail to comply with regulations.

Sailing Capital Leads $ 60M Round In Chinese AI Firm SenseTime (China Money Network), Rated: A

Sailing Capital International (Shanghai) Co., Ltd., a RMB-denominated investment and loan fund created under the support of the Shanghai Municipal Government, has led a US$60 million series funding round in SenseTime, a Beijing-based artificial intelligence start-up.

Founded in 2014, SenseTime says its face recognition technology has an error rate below one in 100,000. It also provides text, vehicle and image recognition to mobile Internet companies, financial services and security companies.

India

‘Fintech Disruption In Lending Space Is Very Slow Now’ (Entrepreneur India), Rated: A

The peer-to-peer (P2P) lending space is fast becoming popular in India and abroad as a viable option for borrowers and lenders. The model’s success lies in its ability to connect borrowers, who are in dire need of money with lenders, who are ready to provide for higher returns.

According to Rajat, the disruption by the fintech sector is very slow right now.

“It would be false to state that the fintech companies are eating into the role of banks and NBFC. The sector can really grow very fast. In the next five to 10 years, we will observe a lateral shift in the trend with more and more customers moving to the digital mode, especially for financial services that lend itself to the digital platform like music industry,” he added.

Asia

Visa’s new partnership to develop FinTech talent in Singapore (Human Resources Online), Rated: A

With an increased prominence of fintech in Singapore, demand for locals with the relevant knowledge and skills have gone up. In order to nurture future talent in the industry, Visa today announced a partnership with local polytechnics and Singapore FinTech Association.

According to a press statement, as part of this partnership, students from the five polytechnics in Singapore will have the opportunity to engage with payment experts from the global payments technology company.

“Through this initiative, students will attend learning sessions conducted by Visa representatives and be involved in business case challenges. We hope to inspire our young talent to join this exciting community,” she added.

Authors:

George Popescu
Allen Taylor

Buy or sell shares in a single-family house

Buy or sell shares in a single-family house

Point Digital Finance allows individuals to sell portions of equity in their house as if it was a company. Point buys a fraction of the house and pays lump sum ranging from $40,000- $250,000 in return. This arrangement even gives the buyer an option to buy back the share. This unique product of Point is carving its […]

Buy or sell shares in a single-family house

Point Digital Finance allows individuals to sell portions of equity in their house as if it was a company. Point buys a fraction of the house and pays lump sum ranging from $40,000- $250,000 in return. This arrangement even gives the buyer an option to buy back the share. This unique product of Point is carving its own niche in the lending industry. Through this, it has created a new asset class in which owner gets to live in the residential property without having to worry about monthly payments and enabling the investors to earn a sizeable return in one of the most lucrative asset classes. The deal can be structured for as long as a decade.

Most importantly, no monthly payments have to be made.

The story

Two years back, when Eddie wanted a loan for his new venture, the bank refused his application because he did not have a steady flow of income. This helped him appreciate the pain point of homeowners and hence Point was born.   This means that the home owner needs to either sell the house or pay back the investor within 10 years. Real estate is the largest asset class in the world and worth $14 trillion in the US.

Point was founded in the beginning of 2015 and is headquartered in Palo Alto, California. Point boasts of a high-profile list of investors which includes Andreessen Horowitz, Ribbit Capital, Bloomberg Capital, Vikram Pandit (Former CEO of Citigroup). PDF is the brainchild of Eddie Lim, Eoin Mathews, and Alex Rampell. Eddie Lim (co-founder) is a Harvard alumnus and has many successful start-ups to his name like TXN, Yub Inc, and Trial pay. Eoin Mathews (co-founder) was a board member at VietHope Inc and also the founder of Popt.com. Alex Rampell (co-founder) has experience in starting and building profitable products and companies.

HELOC vs Point

Before the real estate crash happened, individuals bought houses via easy funding which in reality they couldn’t afford and borrowed further against their equity as property prices rose. The collapse in home values ripped through banks and financial institutions that bought mortgage securities, which triggered the U.S. recession. Funding to house owners has only recently loosened up after an average 30% increase in property values across the nation since 2012. Ever since the real estate crisis of 2012, banks have reduced the amount of cash one can take out after refinancing their home and tightened credit standards for home-equity lines of credit, HELOCs, requiring higher FICO scores and proper documentation. The question is whether debt is the only product available on a home? Why not take the risk out for the “borrower” by having no monthly installments. Point Digital Finance (PDF) was established to fill this void by providing equity to homeowners with an option to buy a small fraction of their homes.

Traction

Point started their business in a few counties in California at the end of last year and after tasting success and rave reviews from both the homeowners and investors, it is ready to expand its wings by adding accredited investors and institutional partners. Expanding geographically is also in its plans, in order to make Point available to millions of homeowners across the country. HELOC’s, companies providing home equity loans and mortgage refinancing provide tough competition to Point. It is able to fend off the competition because of the uniqueness of its product where both parties (investors and homeowners) want the property to appreciate so that they both can make money, very few companies operate in a similar space. Depending upon the size of the loan, cost of acquisition can range from $800 to $2500. Unlike HELOC and home equity who only provide loans to people with good credit score and a steady flow of income, Point targets people who are in need of cash and don’t have a good credit score or steady income flow. In its constant effort to make the product more affordable for the masses, Point is working on a different combination to protect its exposure to risk, so that it can provide money at 8% APR rather than 18% which is available right now in the market.

Business model

Point business model is simple; it works on 3:1 ratio. For buying 10% of the home, it takes on an average 30% of the appreciation in the house and it also shares the losses, if the property value depreciates. To protect the investors from this downside, Point appraises the house at 90% of the market value. In case, homeowners exit the contract early and to ensure a win-win, it has capped an effective interest rate of 16%-18% compounded per year. The funding is usually covered within 4 years of the contract and 30% of the homeowners’ buy back the equity in the first year of the contract itself. Point charges 3% processing and escrow fees for the services it provides to its clients.

Customer profile

Homeowners use Point to sell their houses for various reasons like to settle a large debt, to improve their finances or renovation. Now, whether it is a financial constraint or investment opportunity, they can always arrange the cash flow by utilizing their biggest asset. After getting an overwhelming response from the public for its products, it did 20 deals in last quarter and plans on making it to 50 in the next few weeks. On average $1 million- $2 million worth loans are done by Point every month, in its endeavor to grow, it wants to find institutional investors and originate loans worth $10 million per month. It is focussing on MBS buyers, real estate exposure funds, and investors who want to invest for the long term and are comfortable in holding an illiquid asset in anticipation of a superior return. Point is now in the process of expanding and growing. It will start its operations in 5 more states by the end of 2016 and also brought Ryan Randall onboard as the head of its Capital Market. Ryan was previously CFO of Upstart. All this activity, a pedigreed investor base, and a seasoned team suggests Point will be very busy in the next few years.

Author: Heena Dhir and

George Popescu

 

Tuesday September 13th 2016, Daily News Digest

Tuesday September 13th 2016, Daily News Digest

News Comments Today’s top news : Klarna is taking over the online retail (credit?) market; Point raised $15.4 mil ; Lending Club hired new CFO ; and Facebook is enabling payments in their 30,000 chat bots. Analysis : A great summary of the P2P market economics ; US SME’s optimism survey and retail credit card […]

Tuesday September 13th 2016, Daily News Digest

News Comments

United States

United Kingdom

China

 

United States

Facebook Messenger now allows payments in its 30,000 chat bots, (TechCrunch), Rated: AAA

Messenger bots can accept payments natively without sending users to an external website, Facebook’s head of Messenger David Marcus announced today onstage at TechCrunch Disrupt SF 2016.

Finally, the credit card info people already have stored in Facebook or Messenger can be used to instantly make purchases in bots that are part of the new closed beta the developers can apply for. Marcus also revealed that 34,000 devs have joined the platform and built 30,000 bots in the April launch, up from over 10,000 devs in May and 11,000 bots in July.

To support payments in Messenger, Marcus says that the company is working with all the major players in the industry including Stripe, PayPal, Braintree, Visa, MasterCard and American Express — not just Stripe and PayPal which the Facebook developer blog post mentioned.

During the talk, Marcus discussed Messenger’s rise to 1 billion users thanks to a forced migration from Facebook’s main app, his relationship with Mark Zuckerberg, and the early stumbles with chatbots that have been used by millions of people across 200 countries.

Optimism of America’s Small Businesses at Record High, (Business Wire), Rated: AAA

The survey found that 87.5 percent of small business owners are investing more in their business in 2016 than 2015. Of those business owners who said they will be investing, the vast majority (91.4 percent) plan to borrow funds to do so. More than a third (38.3 percent) plan to borrow between $10,000 and $40,000, and 37.5 percent plan on borrowing more than $40,000.

When it comes to assessing growth or working capital, the majority (67.6 percent) of small business owners prefer alternative financing over other available options, including traditional bank loans. 20.7 percent plan to access short-term financing, less than a third (31.53 percent) plan to borrow funds from a local bank, and 27.9 percent plan to use a credit card or line of credit. In addition, 28.7 percent of respondents said they were affected by the Federal Reserve’s interest rate hike earlier this year, which impacted their willingness to spend and invest in their businesses.

More than half of respondents (61.7 percent) are borrowing funds for working capital, and of those 38.3 percent will use the money for marketing purposes. More than a third (38.3 percent) are borrowing to invest in inventory, and 30.9 percent are doing so to hire employees.

In total, 63.1 percent of all respondents are increasing their staff. Of those, 48.8 percent are hiring full-time employees and 32.5 percent are hiring a mix of full-time and part-time staff.

In addition, 42.9 percent of business owners plan to expand locations this year, and of those borrowing money, 22.3 percent are doing so to add locations.

The Small Business Growth Survey, which surveyed small businesses from around the country, was conducted by Bizfi, the platform that combines aggregation, funding and a marketplace for small businesses. Bizfi surveyed more than 100 small business owners in 33 states. The companies ranged from restaurants, retailers, healthcare providers and transportation to real estate. More than half of the businesses have four employees or less and 38% have between 5 and 50 employees. The revenue of the companies range widely from less than $100,000 to more than $5 million.

Bizfi surveyed more than 100 small business owners in 33 states. The companies ranged from restaurants, retailers, healthcare providers and transportation to real estate. More than half of the businesses have four employees or less and 38% have between 5 and 50 employees. The revenue of the companies range widely from less than $100,000 to more than $5 million.

Study Says US Credit Card Debt Jumped in Q2 as Average Household Indebtedness Moved Up, (Crowdfund Insider), Rated: AAA

WalletHub has published their Credit Card Debt Study that shows a dramatic increase in household indebtedness – specifically in credit card debt. According to the report, US consumers cranked up on credit during Q2 of 2016 generating $34.4 billion in debt. This is the largest Q2 accumulation since 1986, according to the report. Credit card debt is now on track to hurdle $1 trillion in outstanding balances by the end of 2016 with average debt balances moving up to $8500 per household.  The authors called the situation “perilous” and stated;

“Q2 2016 also appears strikingly similar to Q2 2007, which ended less than six months prior to the start of the Great Recession.”

The report said “we are flirting with financial disaster” coming on the heels of last year’s record increase in credit card debt of $71 billion and last quarter’s record-low first-quarter pay down of $27.5 billion. Consumers may be reverting to bad habits.

Lending Club Hires Former Chase, Citi Exec as CFO, (American Banker), Rated: A

Lending Club, which has been rebuilding its executive ranks in the wake of a recent scandal, is hiring Thomas Casey as its chief financial officer.

Casey worked most recently as executive vice president and CFO at the medical device company Acelity. He previously spent more than two decades in senior leadership roles at GE Capital, Washington Mutual, JPMorgan Chase and Citigroup, Lending Club said in a press release.

In an interview, Sanborn said that Lending Club’s search for a new CFO began before Dolan’s resignation, since she had signaled her intent to leave the company.

Yirendai Limited (NYSE:YRD) Sellers Covered 31.46% of Their Shorts, (Press Telegraph), Rated: A

The stock of Yirendai Limited (NYSE:YRD) registered a decrease of 31.46% in short interest. YRD’s total short interest was 725,200 shares in September as published by FINRA. Its down 31.46% from 1.06M shares, reported previously. With 1.04 million shares average volume, it will take short sellers 1 days to cover their YRD’s short positions. The short interest to Yirendai Limited’s float is 8.53%. The stock decreased 3.48% or $0.74 on September 9, hitting $20.51. About 512,373 shares traded hands. Yirendai Ltd – ADR (NYSE:YRD) has risen 370.41% since February 5, 2016 and is uptrending. It has outperformed by 357.23% the S&P500.

HERO Funding securitization, (Kroll Bond Rating Agency, Email), Rated: A

Kroll Bond Rating Agency (KBRA) assigns a preliminary rating of AA(sf) to HERO Funding 2016-3 (“HERO 2016-3) Class A1 Notes and Class A2 Notes (together, the “Class A Notes”). The notes are newly issued asset-backed securities backed by a portfolio of Property Assessed Clean Energy (PACE) bonds.

The notes are secured by an Initial PACE Bond Portfolio and a Subsequent PACE Bond Portfolio (together, the “PACE Bond Portfolio”), each consisting of limited obligation improvement bonds (each, a “PACE Bond”) issued by the Western Riverside Council of Governments (“WRCOG”), San Bernardino Associated Governments (“SANBAG”) and the County of Los Angeles, California. The Initial PACE Bond Portfolio comprises 180 PACE Bonds with an aggregate principal balance of approximately $264.1 million and is secured by 12,394 PACE assessments levied against 12,394 residential properties (“PACE Assessments”) in 34 California counties. The average PACE Assessment is approximately $21,310 with an average annual payment of approximately $2,916. The Subsequent PACE Bond Portfolio is expected to consist of PACE Bonds with an aggregate principal balance of $66.0 million. The transaction benefits from credit enhancement in the form of excess spread, over collateralization, and a liquidity reserve.

Point Raises $ 15.4 Million In Total Funding, Led By Andreessen Horowitz, To Help Homeowners Unlock Home Equity Wealth Without Borrowing, (PR Newswire), Rated: A

Point, the first financial technology platform that allows homeowners to unlock their home equity wealth without taking on new debt, announced today that it has raised $8.4 million in Series A funding led by Andreessen Horowitz which also led the company’s seed round in 2015, bringing the total funding to $15.4 million (including venture debt financing). Alex Rampell, general partner at Andreessen Horowitz, has taken a board seat at Point. Andreessen Horowitz was joined by the company’s earlier backers Ribbit Capital and Bloomberg Beta. Individual angel investors include Orogen Group CEO Vikram S. Pandit, Airbnb CFO Laurence Tosi, LendingHome founder/CEO Matt Humphrey, and Invitation Home’s co-founder Brad Greiwe.

Point reached several key milestones including building a proprietary pricing engine that unifies property risk and homeowner risk, investing in over 50 properties across California, and bringing investor capital to its platform.

Point is the first financial technology platform that allows homeowners to unlock their home equity wealth without taking on new debt and gives investors access to a new asset class — owner-occupied residential real estate.

Weekly Orchard Lending Snapshot, (Orchard Platform), Rated: A

Self-driving cars to cut U.S. insurance premiums 40%, Aon says, (Property Casualty), Rated: A

Comment: Not really in our field , but I find interesting to talk about how financial sectors are being disrupted by technology.

(Bloomberg) — Premiums for U.S. auto insurers may drop more than 40 percent once the use of automated vehicles has been fully adopted by 2050 and driving becomes safer, according to insurance broker Aon Plc.

United Kingdom

Alternative finance lending market booming on the back of low rates, (Consultancy.uk), Rated: AAA

 

The report also sought to identify what the main drivers for the use of MPLs are for borrowing money among consumers. Ease and quick turnaround are the most cited reasons by respondents, 81% say that one of the main drivers is an easy/quick application process, with 72% saying that it is the fast decision-making that makes the use of MPLs attractive. Additionally, MPL services offer competitive rates, and repayment flexibility – attracting a wide range of price conscious customers.

The consultancy firm further explores whether the MPL business model is really of sufficient improvement on that of the traditional banking proposition, to give rise to a ‘disruptive’ shakeup of the SME and consumer lending market. As it stands – within the current banking environment – the cost of an unsecured personal loan comes in at around 815 bps at banks, while at MPLs total costs stand at around 800 bps. For retail buy-to-let mortgages the bps for loans comes in at 460 for MPL and 500 for banks, while for SME loans, MPL can offer solutions at around 720 bps while banks offer loans at around 715 bps.

The current market conditions are, in many ways, abnormal. Interest rates remain at historic lows, while QE and other measures continue to operate across Europe. The researchers consider whether the current financial environment, rather than a disruptive new business model, is the main driver for the rise of MPL.

As part of the research the Big Four firm considers the total cost of attracting the required funds for the respective loans. For banks, a large portion of the loan is not sensitive to changes in rates, at around 270 bps, while for MPLs around 90 bps is not sensitive to changes in rates. This means that, as a proportion of the total bps of the loan, the credit environment disproportionately affects MPL loans – mainly in terms of return to lenders whose money is on the line. When, and if, the UK, European and US rates again begin to see relatively significant increases, the higher proportion of interest sensitive loan costs will disproportionately affect MPLs, seeing an unsecured loan increase from 470 bps to 530 bps for banks, while for MPLs the increase is from 635 bps to 795 bps.

Neil Tomlinson, Deloitte UK head of banking, says that MPLs are unlikely to become a disruptive force in the long-term, “More broadly, our research shows that total funding costs for banks are lower than for MPLs, and the interest rate-sensitive component of an MPL’s funding profile is higher than that of banks. On that basis, MPLs’ costs could rise by more than banks as the credit environment normalises and interest rates increase. Despite the challenges, MPLs do have an opportunity to carve out a niche market and can do so by exploiting their market-leading user experience and boosting word-of-mouth recommendations. These benefits could decrease customer acquisition costs, making MPLs a more viable option. As more MPLs become fully authorised by the FCA, issues surrounding trust and security could lessen. In turn, we may well see banks become more open to partnering with them to enhance their overall customer proposition.”

Study identifies uptick in P2P interest since Brexit vote, (Professional Adviser), Rated: AAA

Among the findings of the study by P2P lender ThinCats was that almost a third (30%) of those surveyed said they had been put off investing in more traditional asset classes following the EU referendum.

ThinCats Caley concluded: “In the last two months alone, our research tells us, thousands of investors have started looking at P2P lending as a way of earning meaningful returns while avoiding the rollercoaster ride of volatile markets.”

According to Caley, “a major attraction of P2P lending is it sits apart from market volatility, providing high and predictable returns, whichever way the market winds are blowing” although he also recognised continuing misgivings from the wider financial services sector.

“Another obstacle preventing advisers from suggesting P2P to their clients is the FCA classification of it as a ‘non-standard’ investment’. Change is in the air, however, with the Innovative Finance ISA in the pipeline. When it arrives, this will allow people to invest their full ISA allowance in P2P without paying tax on the interest they earn.”

Fintech unicorn Klarna just signed a big deal with Sir Philip Green’s Topshop and Miss Selfridge, (Business Insider), Rated: AAA

Comment: Klarna in the US has very recently ” launched a real-time consumer financing solution for the US commerce market. They are launching together with Shopify, BigCommerce, Magento, Cybersource, Demandware and OpenCart. Financing will be available via core integrations and plugins.”

To separate buying a product from paying for it online, Klarna effectively offers credit to buyers although they do not go through lengthy application processes. Credit is a highly regulated space.

Swedish fintech unicorn Klarna has signed a deal with Sir Philip Green’s huge retail conglomerate Arcadia, marking the first major partnership for the online consumer credit company in the UK.

The deal will see Klarna launch its “Buy now pay later” online payment option on the websites of Topshop and Miss Selfridge, two of Arcadia’s biggest brands. It will then be rolled out to Arcadia’s other five brands, which include Burton and Dorothy Perkins.

While Arcadia does not breakout online sales numbers, the conglomerate had revenues of just over £2 billion last year and digital sales surged 24%.

Siemiatkowski says Klarna has been working on the Arcadia deal for almost a year.

Klarna uses non-traditional credit measures to assess whether to approve buyers, but Siemiatkowski stresses that the company looks at a range of different factors rather than simply eye-catching examples such as browsing habits.

Sir Philip Green, the retail tycoon behind Arcadia, has been in the headlines for all the wrong reasons lately, caught up in the row over the collapse of BHS and its pensions black hole. Siemiatkowski didn’t express an opinion on the furore, saying he has not met Sir Philip and Klarna dealt with Arcadia’s e-commerce team.

Fintech start-ups put banks under pressure, (Financial Times), Rated: A

Some established companies have drawn inspiration and are creating their own fintech projects. Clydesdale and Yorkshire Bank, for example, recently launched a mobile banking app called ‘B’. Similar to the new mobile banks, B aims to help customers manage their money, for example by sending prompts when customers fall into an overdraft.

Other traditional companies have dedicated funds that invest in external fintech firms

Santander UK recently teamed up with Kabbage, a US company in which it invests, to allow it to provide small businesses with funding in a matter of hours. [Comment: old news for our readers.]

For financial services companies, often weighed down by old IT systems, partnerships with fintech firms can be a more efficient way of plugging gaps in their business models.

Royal Bank of Scotland, for example, has joined forces with a number of online lenders to small business, including Iwoca.

Warren Mead, global co-head of fintech at KPMG, said: “Getting access to customers is very hard and expensive, so more fintech companies are turning to banks to have partnerships. I don’t see them dominating the space in banking; I think they’ll end up being acquired. One or two could merge.

Some incumbents have already taken large stakes in a number of fintech firms. Spanish Bank BBVA, for example, acquired a 30 per cent stake in Atom Bank last year.

LendInvest calls on Government to lift barriers on small-scale housebuilding, (Dash.com), Rated: A

Recent decades have seen the numbers of SME housebuilders plummet. In 1988, the number of small builders – defined as those building 100 units or fewer – stood at 12,200 in the UK.

This fell to 5,700 by 2006 and then 2,400 by 2014.

Land

  • The Government should take action to ensure that land is not unnecessarily banked and that larger developers who do not develop land in their stock sell it on to SMEs who will develop the land swiftly.
  • Place increased scrutiny on the land market, including requiring the publication of data on land pricing, option agreements and ownership.
  • Prioritise SMEs over major housebuilders in bids to develop land released from public ownership.

Finance

  • The Government should explore state-backed funding schemes to provide businesses like LendInvest with more capital to lend to SMEs.
  • Put SME property development at the heart of the industrial strategy. Commit to and act upon the funding understood by industry to have been earmarked by government for SME development projects.
  • Build on the Government’s support for alternative finance as a route for SME growth by promoting cross-fertilisation between small scale developers and alternative finance companies.

Skills

  • The Government should support industry initiatives to develop skills for property developers.
  • The Industrial Strategy should go further in incentivising development activity to position property development as an attractive entrepreneurial opportunity.
  • Government at all levels must work with SME developers to make it easy to plan and develop property.
China

Protesters Wrongly Target Ernst & Young in Shanghai, (Caixin Online), Rated: A

Dozens of peer-to-peer online financing investors lodged an hours-long protest in front of Ernst & Young in Shanghai last Friday — only to learn they had targeted the wrong business.

At about noon, dozens of P2P investors gathered in front of the EY office in the bustling financial district of Lujiazui in Shanghai. They complained they lost money after investing in Uprosper Asset, an online lender that boasted of a “strategic cooperation” with EY, one of the “big four” audit firms. Some protestors refused to leave until 6 p.m.

However, the London-based EY dismissed any strategic cooperation with the P2P lender and told Caixin it has never audited or commented on that company’s financial reports.

EY demanded the online lending company remove all “relevant falsified information.” Since then, the names of all companies with whom the P2P site claimed to have a partnership have been deleted.

In June, Usprosper Asset owner Wang Mian disappeared, causing investor panic and a cash crunch at the P2P platform. Since then, 2,216 investors have been unable to get back a combined estimated 436 million yuan ($65.2 million).

Author:

George Popescu