The Technology Edge: How Non-Banks are Seeking to Dominate Point of Sale Lending

The Technology Edge: How Non-Banks are Seeking to Dominate Point of Sale Lending

LendIt Fintech USA 2018, April 9-11 in San Francisco, was a huge success. One of the more interesting panels was on how the non-banking sector is taking over point-of-sale (POS) lending. Kim Gerhardt, director at the San Francisco office of Edgar, Dunn and Company, moderated the panel. Other panelists included Peter Kalen, Michael Garrity, Mark […]

The Technology Edge: How Non-Banks are Seeking to Dominate Point of Sale Lending

LendIt Fintech USA 2018, April 9-11 in San Francisco, was a huge success. One of the more interesting panels was on how the non-banking sector is taking over point-of-sale (POS) lending. Kim Gerhardt, director at the San Francisco office of Edgar, Dunn and Company, moderated the panel. Other panelists included Peter Kalen, Michael Garrity, Mark Lorimer, and Camilo Concha.

Kalen is founder and CEO of Flexiti Financial, a Canadian company founded in 2013 that specializes in providing easy, instant POS financing through its award-winning mobile application process.

Garrity is co-founder, CEO, and president of a platform that has enabled merchants to facilitate consumer lending since November 2010. Financeit has processed over $2.5 billion in loan applications from thousands of merchants.

Lorimer represents LendingPoint, a lending company founded in 2014 that focuses on personal loans and debt consolidation. He is chief marketing officer. LendingPoint recently acquired LoanHero, which is in the POS lending business.

Finally, Concha is founder and CEO of LendingUSA, a company that provides innovative financing solutions with a specialization in POS lending. LendingUSA was launched in 2013 and caters to consumer finance in a variety of sectors from medical, pet care, consumer goods and services, etc.

Over the years, the POS lending industry has gained scale and seen a radical change. A convergence can be witnessed in the way payments are made and fintech lending is facilitated. The opportunity in POS financing is massive, and banks seemed to have missed the ball. Traditional banks strive to serve everyone, but when it comes to POS lending, merchants have to filter their prospective customers through a narrow funnel extending loans to a comparatively small customer base.

Flexiti Financial’s Entry in POS Lending

When Peter Kalen was asked about what brought Flexiti Financial into the business, the product that it is offering, and the level of traction it has been able to create in the market among other merchants, he articulated that Flexiti’s product is somewhat similar to what Synchrony or Alliance Data System is offering. Flexiti differs in the way transactions take place and aims to reduce the time consumed in the loan application process.

Many organizations issue private label credit cards, but application processes are long and approval rates low. With its experience and vision, Flexiti Financial has successfully introduced a 100% paperless process to offer instant POS financing. Its virtual credit card application can be downloaded from the Google Play store and the Apple store.

These private label cards speed up the loan application process, bringing the process down to three minutes. This is a win-win for retailers and customers. The platform improves the online retailer’s UX by removing the friction at the front-end.

Financeit and Point of Sale Lending

Garrity also shared his views on point of sale lending. He put emphasis on the fact that personal lending is more about new transactions and focuses less on lending. Everything in POS lending, from the technology to APIs is obsessed with enabling easy sales for merchants, improving their experience, and supporting them as they try to close more business. Merchants and customers want financing options, but they do not want to indulge in complicated programs.

Another area that Financeit targets is debt consolidation. The company has delivered a platform that makes it easy for businesses to offer powerful financing options to their customers from any device.

When asked about how they excel at delivering services to customers, Garrity said they have acquired Centah Inc, a company operating in home improvement work-flow and lead management software with joint partner and investor Goldman Sachs. The company redesigned its website to create a platform that manages the process, helps businesses connect with customers, provide dispatch scheduling systems, and represent financing options to customers throughout the process. He warnes other players that if they only focus on financing and not on the transaction, they will be missing out on an important aspect of dominating this space.

LendingUSA’s Role in POS Lending

Gerhardt asked Concha about his journey into this industry. Concha shared that LendingUSA focuses on point-of-need financing, which sits at the intersection of point of sale and fintech. He believes that businesses in today’s era are not required to be good but great if they want to be successful, and they are required to be great in all aspects, namely, marketing, technology, underwriting, and risk mitigation.

Concha started with a company called 1800mysurgeon that matched cosmetic surgeons with consumers. After starting the company, he realized the need for financing as an important part of the business. He decided to create a platform to interact with both surgery and finance to enhance the merchant’s experience.

LendingPoint’s Emergence In POS Lending

LendingPoint started as a direct consumer online lender specializing in 600-700 FICO score customers. Lorimer emphasized that the company understood very early that customer experience is crucial to POS transactions. Although the players in the market now are very good at generating products that banks like to own, they do not necessarily focus on the merchandise. LendingPoint simplifies the lending process by sharing risk and administering payment plans. LendingPoint also offers merchants risk programs to extend in-house, end-to-end services.

Marketing With Established Merchants

All the banks playing in the market are working to deliver better services to customers in different ways. The biggest players historically are Wells Fargo, Citigroup, and Synchrony Financial. They all have significant relationships.

The question is whether these big banks can be a part of this game. Concha believes that banks are an important part of the ecosystem. These banks are good for purchasing loans but are constrained by reputational risks, marketing, and other issues. Lorimer added that LendingPoint also works with some established banks. Talking of the role of hard pull and soft pull in availing credit, he shared that because a hard pull impacts the credit report of the customer, it is a cause for low approval rates. Soft pulls, on the other hand, do not affect the credit score of the credit seeker leading to a higher approval rate for loans.

Garrity shared his point of view on the tie-ups with established banks and financial institutions that become balance sheet lenders. He said they are participants in securitization, originations, and selling. He believes there is clearly an opportunity for all the stakeholder businesses to grow. Online POS lending usually operates separately considering the fact that it is complicated and technology-driven. Banks are, therefore, slow followers of fintech companies.

The Technology Edge Leads to Domination

The next important aspect analyzed was whether it is the technology that enables online POS lending businesses to dominate the lending space.

Kalen believes technology is the most important element of this space. Concha believes this space is all about keeping merchants and customers happy and building long-lasting relationships with them in the process. Lorimer questions the integration of technology among banks and whether banks will be able to adapt to complex technologies. He believes banks aren’t set up to do that, but to deliver a mass homogenous customer service. Garrity, on the other hand, believes the less you see the technology, the more attractive it is; he also thinks it is better for the merchant to focus on increasing the business close rates.

Talking about data management, Lorimer believes technology definitely provides an edge to the business on the back end. The data is the source for everything and it is analyzed and configured to improve the experience. As technology enables automation and brings security, users can access everything at one place and find it already stored in the system.

Kalen agrees that technology is a boon for backend data management. He added to the discussion saying that the more established players have an edge as they have been in business for many years. They have been able to hone their skills over a period of time.

Concha also believes that technology will work for the POS lending as it is different from other businesses. There is a major role of risk, debt, and strong relationships in POS lending, and none of these can be managed properly without technology.

The Challenges of POS Lending

Technology, scale, and partnerships:
Kalen from Flexiti views POS lending as a very different business than retail lending. Getting customers and coping with technology are major challenges. Other challenges that non-bank businesses face are focusing on the scale. It is important for the business to look at the credit cycle and beware of fraudulent practices as it increases the scale of operations.

Credit cycle:
Being on the right side of the credit cycle is crucial to every lending business. The access to credit in the credit cycle determines the risk and therefore the value of the business. Businesses must prepare their strategies, keeping the future in mind.

Regulation:
Lorimer believes this space requires more regulation since the Consumer Financial Protection Bureau (CFPB) is not very active. Poor regulation and lack of control pose a major risk to the players in the market.

Availability of capital and credit risk:
Another challenge is the availability of capital to extend lending facilities. The fear of credit facilities drying up in a day also bothers businesses.

The Takeaway

Kalen has realized that success does not come easy. The companies in this space need to understand that a lot of lending capital is required along with an understanding of the tricks of the trade.

Concha believes it is a 3-step learning process where the business is required to go through a testing phase, an education phase, and an adoption phase.

With LendingPoint’s recent acquisition of LoanHero, it is comparatively a new entrant in the market.

The crux of the entire discussion is that POS lenders must be specialized to survive in the market. The business has to endeavor to offer value added merchant services instead of being a one-stop shop to be successful. There is a lot of room for growth provided one understands the complexities of the trade.

Author:

Stephanie Vaughan is vice president at  Allen TaylorPosted on Categories Alliance Data System, alternative lending, Analysis, balance sheet lending, Banks, CFPB, Citigroup, consumer lending, Credit, credit risk, Featured, FICO, Financeit, Flexiti Financial, instant financing, LendingPoint, LendingUSA, LendIt 2018, Online Lending, point of sale financing, point of sale lending, POS financing, POS lending, Regulation, Synchrony Financial, Wells Fargo

Friday February 9 2018, Daily News Digest

personal loans

News Comments Today’s main news: SoFi brightens startup scene in Helena, Montana. LendingTree rates Upgrade #1 personal loan. UK P2PFA gets a new head. India considering digital payments tax rebate for P2P lenders. Today’s main analysis: Why point-of-sale lending is hot. Today’s thought-provoking articles: Industrial loan company (ILC) applications may soon be seen in a positive light. P2P lending […]

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News Comments

United States

United Kingdom

European Union

International

India

Canada

Africa

News Summary

United States

Startup Fever is Catching on Everywhere (Even in this Little Montana Town) (Inc.), Rated: AAA

There is a new millennial-friendly mixed-use development with a high-end steakhouse, movie theater, and hotel. And yes, even a town of 30,000 located more than 500 miles from the closest major metropolitan areas (Salt Lake and Seattle) has an entrepreneurial ecosystem. In fact, in some ways Helena has a startup scene larger cities would be jealous of. A few years ago, SoFi, the online student loan servicer that also provides personal loans and mortgages, contracted with two local programmers to help build their platform.

One of those programmers, David Thompson, is a graduate of the University of Montana-Western, Montana Tech, and the University of Montana. David had no interest in moving to the Bay Area, and successfully convinced SoFi to locate a substantial portion of its engineering team in Helena. Today SoFi is multi-billion-dollar startup, and David is the VP of Engineering, managing more than 100 programmers and engineers out of two locations in Helena.

For the last several decades–and especially over the last few years–we’ve heard a lot about the death of small towns and middle America. However, the success of SoFi and the emerging startup scene in Helena shows the potential for tech companies to be agents of economic revitalization in small towns and cities outside of the coasts.

LendingClub Schedules Fourth Quarter 2017 Earnings Release and Conference Call (PR Newswire), Rated: AAA

LendingClub (NYSE: LC), America’s largest online marketplace connecting borrowers and investors, announced that it will report earnings for the fourth quarter of 2017 on Tuesday, February 20, 2018, after market hours. LendingClub will host a conference call to discuss the fourth quarter financial results at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) on the same day.

A live webcast of the call will be available at  under the Events & Presentations menu. To access the call please dial +1 (888) 317-6003 or outside the U.S. +1 (412) 317-6061 with conference ID 8062913 ten minutes prior to 2:00 p.m. Pacific Time (or 5:00 p.m. Eastern Time).

Elevate Credit Fourth Quarter and Full Year 2017 Earnings Release Available on Its Investor Relations Website (BusinessWire), Rated: B

Elevate Credit, Inc. (“Elevate”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced financial results for the fourth quarter and full year 2017. Elevate has posted its fourth quarter and full year earnings release to its Investor Relations webpage at 

The Company will host a conference call to discuss its fourth quarter and full year financial results on Thursday, February 8th at 4:00 p.m. Central Time / 5:00 p.m. Eastern Time. Interested parties may access the conference call live over the phone by dialing 1-877-407-0792 (domestic) or 1-201-689-8263 (international) and requesting the Elevate Fourth Quarter and Full Year 2018 Earnings Conference Call. Participants are asked to dial in a few minutes prior to the call to register for the event. The conference call will also be webcast live through Elevate’s website at 

Upgrade, Inc. Rated #1 Personal Loan by LendingTree (PR Newswire), Rated: AAA

Upgrade, Inc. (), a consumer credit platform that combines personal loans with tools that help consumers understand and monitor their credit, announced that it has been named #1 in the personal loans category for the fourth quarter of 2017 by LendingTree.

Why point-of-sale lending is hot right now (American Banker), Rated: AAA

But research conducted by banks and fintechs has found that many younger Americans are uncomfortable carrying credit card balances, partly because they saw their parents struggle with debt during the financial crisis and prefer the more certain repayment terms of installment loans.

Personal loans issued by banks — these exclude credit cards and auto and home equity loans — hit a record $807 billion at Sept. 30, according to data from the Federal Deposit Insurance Corp., up 9% from two years earlier and nearly 30% since 2012. That’s not even including the many billions of dollars of loans made by upstart online lenders that don’t end up on banks’ balance sheets.

San Francisco-based Affirm originated more than $1 billion in point-of-sale loans last year — and, increasingly, regional banks that are funding the loans, either directly or behind the scenes.

Source: American Banker

Inside Overstock.com’s financial services strategy (Tearsheet), Rated: A

For the past few months, the 19-year-old e-commerce company has been quietly building out FinanceHub, a sort of marketplace for financial services that includes existing Overstock credit cards and insurance products; loans by LendingTree, Prosper and Sofi; a robo-adviser for automated investing, as of last week — and as of Tuesday morning, a discounted trading platform.

Fintech Firms Look to Enter Banking Via Century-Old Tactic (WSJ), Rated: AAA

Financial-technology firms eager to offer banking products are eyeing a century-old model that fell out of favor during the financial crisis but could see a revival under the Trump administration.

The industrial loan company charter, available in a handful of states and particularly popular in Utah, allows nonfinancial companies to enter the banking sector without being subject to many of its restrictions, including oversight by the Federal Reserve. Companies seeking the charters must still obtain deposit insurance from the Federal Deposit Insurance Corp., which last approved insurance for an industrial loan company in 2008.

That could soon change. President Donald Trump’s pick to head the FDIC, Jelena McWilliams, suggested during Senate testimony last month that she would look favorably on new applications.

Source: The Wall Street Journal

Who Is Chris Larsen? Founder Of Ripple Tops Forbes Cryptocurrency List (International Business Times), Rated: A

According to Forbes, Larsen’s net worth is between $7.5 billion and $8 billion in cryptocurrency, in large part thanks to his massive holding of Ripple—the cryptocurrency he co-founded in 2012.

Larsen, a Stanford M.B.A. and veteran Silicon Valley player, is no stranger to the world of digital finance. Prior to his involvement in cryptocurrency, he co-founded the online mortgage lender E-Loan. The company was valued at $1 billion in 2000. In 2006, he co-founded Prosper Marketplace—the first peer-to-peer lending marketplace in the United States.

Goldman Sachs is trying to build the ultimate financial destination for the masses (Business Insider), Rated: A

Individuals looking to saddle up with the prestigious bank needed to fork over a minimum investment of $10 million for wealth management services. The typical client had more than $50 million in investable assets.

Personal Capital Launches Socially Responsible Investing (Finovate), Rated: A

Wealth tech company Personal Capital is making it easier for investors to put their money in causes that are important to them with the launch of its Socially Responsible Personal Strategy today.

Autobooks Raises $ 10M in Series A1 Funding Round (Finsmes), Rated: A

Autobooks, a Detroit, MI-based fintech startup, raised $10M in Series A1 funding.

Toyota partners with AI firm Aire to spot finance delinquency (Motor Finance), Rated: A

Toyota Financial Services (TFS) has launched an evaluation of AI software from Aire to spot customers with higher risks of delinquency.

Aire’s machine learning technology will identify which lessees have entered customer delinquency by skipping a payment, and will give TFS an estimate on how likely they are to default on further instalments.

Aire’s software has already been used by lenders, including p2p lender Zopa, in the initial credit application phase.

Confluent Continues Momentum in 2017 with 4X Subscription Growth (Digital Journal), Rated: A

Confluent, provider of the streaming platform based on Apache Kafka, today announced 2017 results, which include 4X subscription growth year over year and 98 percent customer satisfaction.

In the 2017 Apache Kafka Report, many companies reported using the distributed streaming platform for more accurate and faster decision making, reduced operating costs, improved customer experiences and reduced risk. 1 in 4 respondents work for organizations with more than $1 billion in annual sales, illustrating how quickly this technology has gained traction across large enterprises. In addition, more than 15% of respondents are processing more than a billion messages a day.

Other 2017 highlights include:

  • Raised $30 million from Sequoia, Index Ventures and Benchmark to meet global demand for streaming platforms.
  • Expanded employee base by 120 percent, added numerous offices throughout the US and extended its footprint to six additional countries.
  • Added new customers around the globe, including Alight Solutions, Capital One, Funding Circle, HomeAway and Nordea Bank.
  • Announced the general availability of Confluent Cloud, an Apache Kafka as a Service offering that empowers enterprises and developers to move faster with streaming data.
  • Surpassed 200 partners, including some of the largest Systems Integrators and Platform partners in the industry.

Fintech partnerships can work (American Banker), Rated: A

That Radius Bank in Boston would strike another fintech partnership — it announced one Wednesday with the startup Mantl, which is trying to cut down online-account openings to four minutes — is less revealing than its part in Radius’ evolving MO.

When Nathaniel Harley, CEO of Mantl, first visited Radius, he was seeking feedback on a personal financial management technology the company was working on. But he was quickly talked into changing the direction of his company.

The two companies started building an account-opening system for all digital channels in March 2017. They worked to reduce manual entry and other hassles from the account-opening process. Mantl brought in one of its own fintech partners, Alloy, to handle much of the decisions, including anti-money-laundering checks, identity verification and fraud detection. Radius and Mantl used Alloy’s workflow management tool to configure the decision-making process.

Source: The American Banker

Mulvaney can’t just kill CFPB payday rule, but here’s what he can do (American Banker), Rated: A

Banking rules cannot be rewritten overnight, and so acting Consumer Financial Protection Bureau Director Mick Mulvaney has a tall order remaking the payday loan regulation crafted under his predecessor. But observers say Mulvaney has options for altering the rule to the industry’s favor.

One option would be to refocus the rule on disclosure requirements, which would be several steps short of a repeal but more amenable to lenders than the current CFPB regulation.

Democratic senators demand answers on CFPB’s stalled Equifax data breach investigation (Housingwire), Rated: A

Did the Consumer Financial Protection Bureau kill its investigation into Equifax’s data breach that exposed the personal information of 145.5 million U.S. consumers to hackers?

On Thursday, a group of 32 Democratic senators sent a letter to the CFPB, demanding answers on the state of the bureau’s investigation into the Equifax breach.

CFPB Seeks Comment on its Enforcement Processes (The National Law Review), Rated: A

The CFPB has issued a request for information that seeks comment on how the agency can best achieve meaningful burden reduction or other improvement in the processes it uses to enforce federal consumer financial law while continuing to meet the CFPB’s statutory objectives and ensuring a fair and transparent process.  Comments on the RFI must be received no later than 60 days after the date it is published in the Federal Register, which the CFPB expects to be February 12, 2018.

In the new RFI, the CFPB now seek comment on all aspects of its enforcement processes but lists the following seven topics:

  • Communication between the CFPB and subjects of investigations, including timing and frequency of such communications and information provided by the CFPB on the status of an investigation
  • Length of CFPB investigations
  • Notice and Opportunity to Respond and Advise (NORA) process, including whether the NORA process should be mandatory rather than discretionary and the information contained in letters the CFPB may send to potential subjects of investigations pursuant to the NORA process
  • Whether subjects of potential enforcement actions should have the right to make an in-person presentation to the CFPB before the CFPB decides whether to initiate legal proceedings
  • Calculation of civil money penalties, including whether the CFPB should adopt a civil penalty matrix
  • Standard provisions in CFPB consent orders
  • Manner and extent to which the CFPB can and should coordinate enforcement activity with other federal and/or state agencies with overlapping jurisdiction

Altegris To Merge With Artivest (PR Newswire), Rated: A

Altegris, an alternative investment research and management firm, and Artivest, an alternative investment technology firm, announced today that they plan to merge under the name Artivest, pending customary corporate and regulatory conditions to closing. The joint 100-person team will service over $3 billion in client capital—immediately becoming the largest independent alternative investment technology and solutions firm for wealth managers, fund managers, and independent advisors.

SharesPost Launches Unit Focused On Initial Coin Offerings; Hedge Fund Executive John Wu To Lead Group (BusinessWire), Rated: A

Taking a next step in its mission to provide liquidity to private growth companies,SharesPost today announced the launch of its Digital Securities Group.

The Digital Securities Group will bring security token issuers and investors into the SharesPost private marketplace. Token issuers and investors will use SharesPost’s existing Alternative Trading System to invest in ICO’s and trade in digital securities in compliance with U.S. securities laws.

Lenders to allow Airbnb income on mortgage forms (MarketWatch), Rated: A

Homeowners soon will be able to count income they earn from Airbnb Inc. rentals on applications for refinance loans.

A new program — expected to be announced on Thursday by Airbnb, mortgage giant Fannie Mae and three big lenders — will allow anyone who has rented out property on Airbnb for a year or longer to count some or all of that money as income.

SEC Exams to Focus on Disclosures, Robos, Cryptocurrencies (Financial Advisor IQ), Rated: B

In 2018 the SEC’s Office of Compliance Inspections and Examinations plans to pay closer attention to matters involving retail investors, particularly when it comes to disclosures, and zero in on cryptocurrencies, initial coin offerings and secondary market trading, the regulator says in a press release.

The regulator will also continue monitoring digital advice platforms, with a special focus on their compliance programs, including algorithm oversight, investor data protection and disclosures of conflicts of interest, according to the exam priorities. The SEC has made progress in the ratio of investment advisors it examines each year, from just 8% five years ago to 15% in fiscal year 2017, the regulator says. In 2018, the SEC plans to target those advisors it has never examined before, according to the regulator.

Former Keller Williams CEO Chris Heller joins loanDepot brand family as CEO of mello Home (loanDepot), Rated: B

LD Holdings Group, LLC, parent company of loanDepot, the nation’s fifth largest retail lender, today appointed top real estate executive Chris Heller to head its recently-launched mello Home business. Combining digital simplicity and smart local advice, mello Home seamlessly connects home buying, financing, and improvement services into a single consumer experience.

Fintech looks to the future of financial advice at T3 (InvestmentNews), Rated: B

If the theme of the 2017 T3 Conference was the fiduciary rule, 2018 was all about the future of financial advice.

Quovo launched Cue, a new alerts engine that leverages Quovo’s aggregation technology to notify financial advisers about account activity and client milestones.

MoneyGuidePro announced a new partnership with MX, a data aggregation provider, that lets advisers bring held-away assets into the financial planning software.

 

United Kingdom

UK P2P Finance Association Announces a New Leader (Lend Academy), Rated: AAA

It was through the work of the P2PFA, led by Christine Farnish, that these regulations were sensible and promoted the growth of the industry there. And while this initial regulatory framework is currently being reviewed by the FCA, today, the UK is one of the most competitive markets in the world in no small part because of these initial regulations.

Paul Smee brings more than 17 years experience in leading trade bodies in the UK. Previously, he was Director General of the Council of Mortgage Lenders for six years so he comes with experience leading finance trade bodies. He looks like a great choice to take over from Christine.

City Moves for 9 February 2018 – who’s switching jobs at Lendy, RegTek.Solutions and M&G? (City A.M.), Rated: B

Lendy, one of Europe’s leading P2P secured property platforms, is pleased to announce the appointment of Andrew Wawrzyniak as its new head of finance. Andrew was previously head of finance at Fund Partners, a leading fund manager, which specialises in the operation of collective investment schemes.

RegTek.Solutions, the market-leading control and compliance software provider for global trade and transaction reporting, has appointed Rob Bernstein as chief financial officer (CFO).

Rebuildingsociety partners with Leeds Council to support local businesses (P2P Finance News), Rated: A

PEER-TO-PEER business lender Rebuildingsociety has secured an agreement with Leeds City Council whereby the local authority funds loans through its platform.

The council will review business loan requests from companies with an LS postcode prefix, consider the industry and location of the company, and contribute to the loan amounts required by suitable applicants.

European Union

P2P Lending Is Becoming A Significant Income Source For Young Investors (Crowdfund Insider), Rated: AAA

According to Robo.cash, P2P lending is turning to a significant source of additional income for the growing number of the European investors.

The online lending platform also confirmed:

“The majority of investors are in the age groups: 25-34 years — 40%, 35-44 years — 31%, 45-60 years — 20%. The less number is the age of 18-24 years (6%) and 61 plus (3%). These figures are supported by the employment of investors: employees — 72%, entrepreneurs — 15%, students — 6%, retiree — 2%. At the same time, the most investors are just getting acquainted with P2P-services (52%) and the comparable number already has at least one-year practice: 1-3 years — 34% and over 4 years — 13%.”

Is Lithuania the most fintech-friendly destination in Europe? (Finextra), Rated: A

The country has been actively promoting itself as gateway destination to the European marketplace for non-EU firms and British startups fleeing Brexit. Registering a company takes merely three days, while getting a Payment Institution or Electronic Money Institution license takes only three months, two-to-three times faster than in other EU jurisdictions. Other perks include remote Know Your Customer (KYC) procedures, low profit tax, startup visa options and a sandbox regime for fintech startups in their first year.

The country also boasts a growing talent pool of up to 31,000 trained IT professionals with a further 8000 in the pipeline.

Lithuania Registered 35 New Fintech Companies in 2017 (Crowdfund Insider), Rated: B

This week, Invest Lithuania released the Lithuania Fintech Report 2017, which revealed that a total of 117 fintech companies were operating in the country in 2017, with 35 of them being registered last year.

International

IOU financial partners with goEBT to offer funding to network of 25,000 convenience store owners (Business Insider), Rated: AAA

IOU FINANCIAL INC. (“IOU” or “the Company”; TSX-V:IOU), an online lender to small businesses (IOUFinancial.com), is pleased to announce a strategic partnership with Marietta, GA-based c-store solutions provider goEBT (goEBT.com).  Through this strategic partnership, goEBT’s network of 25,000 convenience store owners nationwide will be able to access IOU’s fast, convenient, non-collateral funding solutions.

LENDDO AND EFL TEAM UP FOR FINANCIAL INCLUSION (#Include1Billion), Rated: A

Our companies come together united by the common vision of providing financial inclusion for more than one billion new and underserved individuals across the globe. We will together provide a suite of credit scoring and identity verification products to more than 20 emerging markets.

Our companies have individually facilitated over 5 million credit assessments since inception, allowing more than 50 financial institutions to disburse over $2 billion USD in credit to people with limited information.

The first joint product offering is already live in Asia and Latin America, with additional products and features scheduled for release in the coming months.

From #Include1Billion

Fuse Business Loans from Mynt began working with LenddoEFL to assess credit risk for its clients that were 80% unbanked.

Foxconn’s Gou said to invest in US crypto merchant bank venture (EJ Insight), Rated: A

Terry Gou, the billionaire chief of Taiwanese electronics giant Foxconn, is said to have invested in a cryptocurrency merchant bank being set up by Mike Novogratz, a former Wall Street macro hedge fund manager.

Citing a source familiar with the matter, Bloomberg reported that Novogratz has raised about US$250 million for his cryptocurrency merchant bank venture through a private placement.

India

Google search bias fine, Swiggy funding, Digital payments tax rebate & more (ET Tech), Rated: AAA

The government might consider giving tax rebates to merchants accepting payments digitally in order to promote the overall fintech sector, which is at its infancy at present but growing at a rapid pace, suggested the Reserve Bank of India.

Talking about the fintech sector the RBI has identified tech startups working in the space of peer-to-peer lending, blockchain, big data, smart contracts, robo advisors and online aggregators.

Read more.

HOW TO FUND YOUR HIGHER STUDIES (Money Today), Rated: AAA

Traditionally, one’s option was limited to getting an education loan from a public sector bank. Now that the demographics are favourable and the education loan market has the potential to grow, non-banking finance companies (NBFCs), fintech players and peer-to-peer (P2P) lenders are jockeying for a piece of the market.

Seek more funding: Education loans are part of the priority lending category, but unlike the US, there is no provision for student loan waiver in India. It means your loan will not go away until you pay it off. Try and find out if there is any other source of funding available, including financial aid, bursary and scholarship or upfront savings, which will bring down the loan amount.

What Banks Offer

Most of them offer education loans for studying medicine, engineering or management at graduate and post-graduate levels or for pursuing further studies in India and abroad. Some also provide categorised loans. For instance, State Bank of India (SBI) offers Scholar Loan for students who get admitted to premier institutions like IITs, IIMs, NITs and AIIMS, and a Global Ed-Vantage loan for studying in global counterparts. Bank of Baroda offers Baroda Scholar loan for studying abroad and Baroda Gyan loan for higher studies in India while separate schemes are available for courses conducted by the country’s top institutions.

Source: Money Today

Fintech/P2P Players

Landing an education loan may not be easy anymore, given the spurt in defaults. And that is where the new-age fintech firms and P2P lenders see a lucrative opportunity. “For those who fail to qualify for education loans from banks and NBFCs, P2P lending platforms can be an alternative way to borrow,” says Gaurav Aggarwal, Associate Director, Unsecured Loans, at Paisabazaar. In other words, aspiring students can raise personal loans from banks or fintech players like MoneyTap and LoanTap, or P2P lenders like Faircent and CreditMantri to cover their educational expenses.

What Lies Ahead For India’s Fintech Sector? (CXO Today), Rated: A

To understand what lies ahead for India’s fintech sector, it makes sense to understand the fintech growth is expected to boom in the Asia Pacific region. A Frost & Sullivan report predicts that the region is expected to grow at a CAGR of 72.5% from 2015 to 2020, reaching US$72 billion.

According to Quah Mei Lee, Industry Principal, ICT, Asia-Pacific, the mobile payments market in Singapore was estimated to be worth US$1.4 billion in 2017. The market is still small but is growing fast.

Indian digital payments industry is expected to reach $700 billion by 2022 in terms of value of transactions.

It is expected that more than 80% of the urban population in India will adopt digital payments as a part of their routine by 2022, and 70% of the retail chains will adopt the same.

Canada

A Canadian Way to Access US Small Business Lending (Stockhouse), Rated: AAA

Enter IOU Financial.  As “online lending” has become a 21st century reality, a financial niche has sprung up with online lending institutions that are prepared to cater to small businesses and provide badly needed capital, efficiently and affordably.

Compared to the above, IOU Financial provides easily manageable, working capital term loans for small business, and does so:

  • Quickly
  • Efficiently
  • Affordably

The speed of IOU’s loan application process is a big draw for small business owners.  IOU’s application generally takes roughly three to five minutes to complete.

Source: Stockhouse

 

Grounded Kitchen & Coffeehouse is OnDeck’s Small Business of the Month (PR Newswire), Rated: A

OnDeck (NYSE: ONDK), the online lender to small businesses, today announced that Grounded Kitchen & Coffeehouse, owned by Amir Rahim, has been selected as the OnDeck Small Business of the Month for February, 2018. The Ottawa-based restaurant is the first small business in Canada to earn the OnDeck spotlight award.

Africa

Glaring Ponzi Schemes In Ghana Now (Modern Ghana), Rated: A

So assuming I have $1000.00 I have no use for and would want to make a little interest on, All I have to do is go unto one of these platforms to match me with someone in need of $1000.00. These platforms because of the high risk they take (borrowers don’t provide tangible collaterals) usually charge higher interest and in return given higher interest to lenders than Treasury Bills will normally do. This idea is supposed to be easy and help people financially as there is gap between loans needed and financial institutions willing to give (“The two largest peer-to-peer (P2P) lending platforms, Prosper and LendingClub founded in 2005 and 2006 respectively, have originated over $6 Billion in loans to date. Although they have only begun to scratch the surface of the $3 trillion consumer debt market” Nav Athwal Cofounder and CEO of RealtyShares, a crowdfunding for real estate platform). Yet like most good things miscreants, hooligans and hoodlums find a way to make the system corrupt.

These swindlers promise up to a 100% interest rates within 5 working days. So they lure greedy but naïve people to roll in cash through mobile money. With a Minimal amount of GHC100.00 you get registered and paired with another person. You’re required to send the money to this person who they claim registered 5 days ago and the said day is the day of maturity.

Ways to spot financial scams and Ponzi schemes
1. If your interest is too good to be true, then its probably a lie. When you’re being offered an interest bigger than the T Bills in lending you should be wary and do due diligence.

2. They usually don’t tell the project in which your money will be invested.

3. Pressurised to respond quickly? 4. Are the contact details vague?

Authors:

George Popescu
Allen Taylor

Financing Life’s Most Important Moments

LendingUSA

Camilo Concha’s experiences in building specialized online platforms taught him that there was a need to place potential clients and patients with the right professional for their situation, but there was also the need to help them finance their legal and medical bills. That’s when he started the two specialty companies mylegalloan.com and medicalfinancing.com. His […]

LendingUSA

Camilo Concha’s experiences in building specialized online platforms taught him that there was a need to place potential clients and patients with the right professional for their situation, but there was also the need to help them finance their legal and medical bills. That’s when he started the two specialty companies mylegalloan.com and medicalfinancing.com.

His ability to diagnose market needs and find viable, simple solutions brought about his latest, largest, and boldest venture yet, LendingUSA.

Prior to the 2015 founding LendingUSA, Concha attended a LendIt conference where he learned how to build a better platform. He connected with Cross River Bank, which now does all of the company’s loan licensing, and First Associates, who services the loans. He also connected with Howard Freedland. Freedland, in turn, brought Brandon Ross, CEO and founder of Direct Lending Investments, and the two partnered with online lenders to add $55M USD in debt capital to the $5M Concha had raised in equity funding. That $60M is the only funding the company has seen to date, and Concha says that it was possible to raise that amount due to the company’s $1B in loan application flows.

LendingUSA Continues Concha’s Successful Run

Simplicity is evident when we look at how LendingUSA got off the ground. “We basically built an underwriting model and started lending,” Concha said. Working with doctors and merchants at the point of sale (POS), the company has developed a strong vantage point, being able to offer their product to consumers who can’t or don’t want to do longer term financing.

Much of the client base is comprised of people who want to get elective medical procedures, such as liposuction, which are not covered by insurance. LendingUSA makes a loan to the customer but pays the amount straight to the doctor.

Loan pricing is set into the business model, and it is based on a credit profile, which includes credit score, debt-to-income ratio, and credit sought in the last six months. FICO scores are also a factor, but just one of the important things, with the company also assessing whether customers are maxed out on their credit and if they’re paying their bills. Risk assessment is measured by an algorithm, a process that allows the customer to be approved or declined on the spot.

Being a POS lender provides many benefits to the LendingUSA business model. Beginning the process with the provider, rather than the borrower, referrals come from the providers themselves, whether through an advisory role or by way of brochures available in providers’ offices. Providing loans at this point allows LendingUSA to offer financing in installment loans where other companies tend to deal in lines of credit. This allows the company to go higher on the credit scale than would be possible with lines of credit and to also go a little lower on the credit spectrum, as far as 620. Installment loans also prove more beneficial to the borrower as risk goes down every month.

The company charges a fee at the POS depending on their risk evaluation, and the merchant fee for these services usually runs about five to six percent.

LendingUSA’s Performance

During LendingUSA’s growth, the company has also acquired 30 branded websites including bridalloans.com, surgeryloans.com, petloans.com, and dentalloans.com. In all, the company currently does business with 3,700 different medical providers.

Working with customers who have an average credit rating of 682, the company currently has a loan volume in the neighborhood $225M. The average loan is $6K with an average interest rate of 22% and an annualized charge off rate of about 8-10%.

Choosing to focus on “life’s important moments,” LendingUSA focuses on “niche markets we think we can win in,” counting elective medical, dental, cosmetic surgery, chiropractic, pet loans, and funeral loans among the diverse group of industries it works in.

Competition and Customers

Concerning the competition, Concha shows another reason why he has proven successful in that he doesn’t worry himself with concerns about what other companies are doing, choosing to focus on what his is doing. “I don’t like to call it competition,” he said. “There are great companies like Care Credit, Affirm, and Green Sky that do similar things, but they work in other niche markets or do it differently by providing revolving lines of credit. We have our little niche and are a better fit for some people, [especially in that] installment loans are better for large amounts of revenue, and lines of credit better for smaller amounts.”

The typical LendingUSA customer is someone in their 40s and 50s who makes $60K to $80K a year. “We believe that a lot of people want to improve their lives,” Concha said. “Our customers are gainfully employed, but they don’t have the means to get the product they want. We make it available to them.” In doing so, the company provides a great service for their merchant partners by helping them to capture more clients and generate more revenue.

LendingUSA’s Goals and the Direction of the Industry

“Our initial goal was to reach $1B in sales in the next three to four years,” Concha said. “We’re looking to price loans better, securitize loans, and find new capital partners.”

Concha is positive about these goals as the cosmetic surgery and elective medical fields are growing every year. The growth is underscored by the fact that men are now gravitating toward cosmetic surgery, when the thought was taboo in the past. These procedures are now more generally accepted for men. He also says that fears of economic downturns, which might stunt growth in other industries, are less of a concern. “People still want to feel good about themselves; they might not buy a new house or car, but they want to look good,” Concha said.

LendingUSA’s Team and The Future

Concha considers himself fortunate enough to have built a strong team. This includes Mike Testa, the company president and the former president of Care Credit, who built a POS business in the medical industry from $80M to $6B; Sharad Shankar, the former chief risk officer of Lending Point, who now holds that title with LendingUSA; and
Jenann Shemisa, LendingUSA’s chief compliance officer, who served as a senior attorney for the enforcement division of the FDIC.

Understandably pleased with what he has built in less than three years since founding LendingUSA, Concha says the company is now focused on loan performance. “Because we’re at the POS, we’re able to compete more on service than on price. This means we can charge a little more, which allows our portfolio to perform at 500 basis points better on yield than most marketplace lenders. Everybody that advertises on LendingTree and online comparison sites is competing on price, which doesn’t help portfolio performance. By working at the POS, we get better yields because we’re not competing on price.” With this focus, the company has a goal of being number one in the markets it services.

Concha’s Past Comes Back to Reward Him

Concha came to the U.S. from Colombia with his family when he was 14. It only took him seven years to go from being a school boy who spoke little English to starting his first business, which he ran while he studied at California State University, Northridge and worked as a Spanish interpreter at the San Fernando Bar Association.

Seeing the desperate need for an attorney referral service, he founded the Attorney Search Network (ASN), which he ran out of his apartment until he could afford to pay for his first office space, a converted janitor’s closet that was so small he had to speak with clients in the hallway.

Concha then saw that he could create other companies to fulfill similar voids in different fields. This brought about the founding of 1800mysurgeon.com, created to help assist individuals who are looking for a board-certified and reputable cosmetic surgeon.

Concha now works out of one of the tallest buildings in the San Fernando Valley, employs dozens, and the two companies together have extensive databases with hundreds of doctors and lawyers from every legal and medical field. Add to that the lending businesses he has founded and he has quite the legacy. All of them are still growing strong. There’s nothing her to suggest that LendingUSA won’t maintain a similar trajectory.

Author:

Written by Paul Keenan.