Thursday October 10 2019, Weekly News Digest

Lend Academy

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

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

Lend Academy

News Comments

United States

United Kingdom

European Union

International

Other

News Summary

United States

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

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

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

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

The point-of-sale (POS) financing provider 

Source: Business Insider

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

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

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

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

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

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

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

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

Source: PeerIQ, The Daily Shot, Conference Board

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

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

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

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

Source: Lend Academy

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source: Bloomberg

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

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

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

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

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

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

United Kingdom

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

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

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

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

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

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

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

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

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

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

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

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

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

WHY DID YOU START BLEND NETWORK?

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

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

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

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

These are:

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

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

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

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

China

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

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

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

European Union

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

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

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

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

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

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

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

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

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

International

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

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

Source: Bloomberg

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

Source: Bloomberg

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

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

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

Source FT Research and Future of Finance

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

Source: ARK Invest and Future of Finance

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

Source: Future of Finance

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

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

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

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

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

Australia

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

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

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

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

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

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

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

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

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

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

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

Asia

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

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

MENA

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

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

Canada

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

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

Authors:

George Popescu
Allen Taylor

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

Thursday July 11 2019, Weekly News Digest

Asset-backed securities

News Comments Today’s main news: Morningstar completes DBRS purchase. Figure issues $85M in loans per month. Zopa chief says banks are trying to put fintech lenders in a box. DBRS praises Funding Circle. Yirendai’s Q1 results. Octopus expands into Germany. Today’s main analysis: Over 60% of purchase borrowers received mortgage rates under 4.5% last week (A […]

The post Thursday July 11 2019, Weekly News Digest appeared first on Lending Times.

Asset-backed securities

News Comments

United States

United Kingdom

China/Hong Kong

European Union

International

Other

News Summary

United States

Former SoFi CEO Mike Cagney’s New Blockchain Startup Is Issuing $ 85 Million In Loans A Month (Forbes), Rated: AAA

Since the streamlined HELOC Mike Cagney, the co-founder and former CEO of fintech unicorn Social Finance (SoFi), knows that it is essential to focus on customer experience to build a loyal client base. Today, he is using that knowledge to create a platform aimed at driving mainstream adoption of blockchain technology in the financial sector.

Over 60% of Purchase Borrowers Received Mortgage Rates Under 4.25% Last Week (LendingTree), Rated: AAA

Mortgage Rate Distribution

  • For 30-year, fixed-rate mortgages, approximately 60.1% of purchase borrowers received offers of 4.25% or less. That is up from 57% of borrowers the previous week. A year ago, 0.06% of offers were under 4.25%.
  • Across all 30-year, fixed-rate mortgage purchase applications on LendingTree, 4.125% was the most common interest rate. This rate was offered to 14.3% of borrowers.
  • Of 30-year, fixed-rate mortgage refinance borrowers, 72.8% received offers of 4.25% or less, which is up from 70.4% the previous week. A year ago, no refinance offers were under 4.25%.
  • Across all 30-year, fixed-rate mortgage refinance applications, the most common interest rate was 3.875%, offered to 18.9% of borrowers.

Mortgage Rate Competition Index

  • Across all 30-year, fixed-rate mortgage purchase applications on LendingTree, the index was 1.19, down from 1.22 the previous week.
  • How big of a deal is it to get a mortgage APR that’s 1.19 percentage points lower than the competition? Over 30 years, that could translate to $56,826 in savings on a $300,000 loan (see Mortgage Savings Tracker graphic below).
  • The index was wider in the refinance market at 1.35, up from 1.34 the previous week. Refinance borrowers could have saved $65,108 by shopping for the lowest rate.
Source: LendingTree

It’s Taking Less Time to Close on a Mortgage in 2019 (LendingTree), Rated: AAA

  • The time to close in new purchase transactions has been steadily declining, from 74 days in 2017 to 51 days in 2018 and just 40 days thus far in 2019.
  • For refinances, the decline has been less dramatic: from 55 days in 2017 to 43 days in 2018 and just 38 days so far in 2019.
  • Some of the decline can be attributed to lower mortgage volumes, as refinancings have been on a downward trend. But increased digitization is also playing a major role.
  • Closing times vary based on the characteristics of the mortgage type and borrower. Having a higher credit score can knock a few days off: Purchase borrowers with scores above 760 averaged 38 days in 2019 compared with 45 days for those below 720. Refinancings did not show much variation by credit score.
  • Loan-to-value ratios below 80% had shorter closing times for refinances, at 37 days compared with 42 days on mortgages with a ratio above 95% in 2019.
  • Loan amounts also affect closing times, with lower amounts, perhaps surprisingly, taking the most time. Loans under $150,000 averaged 47 days compared with 39 days for those above the conforming limit ($484,350 in 2019). Why? Higher loan amounts are typically being made to more credit-worthy borrowers. Lower-priced homes may be in some form of distress or have some type of damage; lenders thus may require more extensive appraisals to better estimate the home’s value and this adds time to the process.

Mortgage Fintech Innovation (PeerIQ), Rated: AAA

In broad-brush strokes, mortgage innovation centers on:

  • Customer experience (Better, Roostify, Blend, HomeCaptain) solutions are re-inventing the onerous mortgage with a digital experience, speeding decision times and opening up the lending buy box in the process.
  • Intermediation (OpenDoor, HomeLight, Zillow) – Some platforms are stepping in between buyers and sellers to provide liquidity, capturing transaction fees in the process
  • Data (House Canary, Zillow, Atom Data) – are amassing large data sets to providing accurate, standardized pricing models for investment decisioning
  • Banking 2.0 (SoFi, ZeroDown) – seek to provide a range of banking or investing services to consumers
Source: PeerIQ

Guaranteed Rate Companies Breaks 15 Company Records with Exceptional June Production Volume (Yahoo! Finance), Rated: A

Guaranteed Rate Companies, one of the largest retail mortgage lenders in the nation, announces 15 new company milestones—breaking its monthly total locked volume for the fourth consecutive month in June.

Breaks its record of total locked volume with $5.31 Billion earned across more than 15,000 units

Can Commercial Real Estate Investment Truly Be Democratized? (Commercial Observer), Rated: AAA

Most real estate crowdfunding sites continue to highlight the equalizing benefits of the model. Fundrise provides “access to a once-unattainable investment class,” and Rich Uncles, which has a minimum of $5, wants to “level the playing field” for the average investor. The sites offer investments in funds that focus on income-producing assets, like single-tenant office, multifamily housing and convenience centers nationwide.

Jeff Holzmann, the former COO of crowdfunding site iintoo, says the definition of an accredited investor is very divisive: “You can have an economics degree, and if you make $199,000 a year, you can’t invest, but Kim Kardashian can walk right on up and buy a multifamily building for $200 million. Should our bar be set by how much money you make?”

Ryan Williams Is Bringing the ‘Proptech’ Revolution to Real Estate Investing (Fortune), Rated: A

Real estate is an industry notoriously stuck in its ways and slow to change. Cash-generating, bricks-and-mortar assets are at the very heart of the enterprise, and in many ways, business is conducted the same way it was 100 years ago. Until recently, real estate owners, investors and brokers had little patience for the kinds of technological advances that have swept through myriad other industries.

But that’s all changing now. Just as there’s fintech, medtech, edtech and regtech, so is there proptech—and there are few companies in the realm of real estate technology as closely watched as Cadre, led by a 31-year-old Blackstone Group and Goldman Sachs alum named Ryan Williams.

7 Reasons Why Long Distance Investing Isn’t As Risky As You Think (Forbes), Rated: A

In 2019 we have many ways we can verify the information we are provided when we invest outside of our own market. These methods will be the focus of this article. By the time you’re done with this, I think you’ll have a much better understanding of how to conduct due diligence, why out out state investing isn’t as risky as you thought, and why I’m such a big proponent of it

1.The Internet

There is very little you can’t find out with a little online searching.

2. You Can Find Rent Estimates Easily

Websites like Rentometer and Craigslist make a preliminary rent search fast and easy.

7. You Can Find Comps Yourself Online

BlueVine Reaches $ 2 Billion In Total Funded Volume (Bluevine), Rated: A

This past month, BlueVine achieved a major milestone, having provided access to more than $2 billion in total working capital to businesses across the nation.

Finitive Announces $ 100 Million Credit Facility For Platinum Auto (Crowdfund Insider), Rated: A

Finitive announced on Monday its client Platinum Auto of Tampa Bay secured a $100 million credit facility through its platform. Platinum notably purchases auto loan contracts from a network of over 300 auto dealers in the southeast region of the U.S.

Affirm lets you pay off a large online purchase over time — here are 35 stores that accept it (Business Insider), Rated: A

You can apply for a loan as you’re shopping at one of many Affirm’s partner stores, which include women’s and men’s fashion, furniture, sports and fitness, electronics, jewelry, and watch brands.

You can see which online retailers accept Affirm below.

They’re divided by category and we’ve also designated which ones offer loans starting at 0% APR with an asterisk.

Will Abercrombie & Fitch’s “Buy Now, Pay Later” Plan Lock in Gen Z Shoppers? (The Motley Fool), Rated: AAA

Abercrombie & Fitch (NYSE:ANF) recently partnered with payment solutions provider Klarna to let U.S. shoppers split purchases into up to four interest-free payments over two months. A&F is aiming this “buy now, pay later” system — which its rival Urban Outfitters (NASDAQ:URBN) has also adopted — at younger shoppers with less spending power.

But will “buy now, pay later” work?

Only a third of millennials have credit cards according to Bankrate. The average millennial in the U.S. also has a net worth of just $8,000 according to Deloitte, which gives them significantly less spending power than previous generations. Most Gen Z shoppers don’t have credit cards yet. They mostly use debit cards or linked payment apps, which restrict purchases to the amount of cash in their bank accounts.

rue21 is Totally on Trend with the Addition of Klarna (Yahoo! Finance), Rated: A

Klarna, the global alternative payments provider, is getting trendy with the Millennial favorite fashion brand rue21. Customers can choose to pay with four equal payments collected bi-weekly – with no interest or fees. With Klarna, these cool customers get the ability to stay ahead of trends even faster with a smooth checkout and a payment option that boosts flexibility and purchase power.

The necessity for businesses to keep up with the customer is increasingly important considering that U.S. shoppers admit to buying clothes and accessories online an average of 10 times a year. For Gen Z shoppers, aged 16-24, this number increases to 18 times per year, with nearly a quarter (23%) of them admitting to shopping online 1-3 times per month. Millennials are shown to shop online 14 times per year and the 55+ age group, 8 times per year. Considering these Millennial and Gen Z demographics are credit card averse and debt conscious, Klarna delivers an appealing and accessible method for shoppers to take control of their finances in a manageable way.

Metro Denver businesses mostly seeing green, not red (Denver Post), Rated: A

Of 42,610 businesses in metro Denver, 29,560 or 69.4 percent reported turning a profit, according to an analysis from online lender LendingTree.

That placed fifth out of the 50 metro areas that LendingTree ranked based on Census Bureau data. Seattle had a business profitability rate of 70.9 percent, making it the leader nationally. The only other cities ahead of Denver were Louisville, Ky.; Indianapolis and Portland, Ore.

U.S. Consumer Borrowing Climbs on Bigger Credit Card Balances (Bloomberg), Rated: A

U.S. consumer debt climbed in May at about the same pace as a month earlier, led by the largest advance in revolving debt outstanding since October, suggesting Americans’ favorable economic outlook is underpinning continued spending.

Total credit rose $17.1 billion from the prior month, in line with the median estimate of economists, following a $17.5 billion gain in April, Federal Reserve figures showed Monday. While credit card and other revolving debt outstanding increased at a faster rate, non-revolving credit posted the smallest increase in almost a year.

Small Business Loan Approvals at Big Banks Hit Record Highs (Yahoo! Finance), Rated: A

Approval rates for small business loan applications inched up to yet another record high of 27.6% at big banks ($10 billion+ in assets) in June, while the approval percentage also climbed at small banks, hitting 50% for the first time in 2019, according to the Biz2Credit Small Business Lending Indexreleased today.

Small bank approvals of small business loan applications climbed one-tenth of a percent from 49.9% in May to 50% in June.

Small business loan approval rates among alternative lenders dropped one-tenth of a percent to 57.0% in June, down a notch from 57.1% in May.

LendingTree Survey Finds 45% of Newlyweds Went into Debt for Their Wedding (PR Newswire), Rated: A

Approximately 45% of newlyweds between the ages of 18 and 53 went into debt to pay for their wedding. And once married, nearly half of the newlyweds who obtained wedding-related debt said money has caused them to consider divorce. On the flip side, only 9% of couples without wedding-related debt contemplate divorce.

LendingTree released its study on newlyweds and wedding expenses.

How Using Fintech Can Help Pay Off Student Loans (Yahoo! Finance), Rated: A

Companies like SoFi, Laurel Road and Splash Financial are just a few of the fintech industry names that have made their way into the student lending world.

Credible. This is a platform that allows you to compare student loan refinance rates from eight different lenders.

LendKey. Similar to Credible, Lendkey is a platform that allows the borrower to compare refinance rates side by side.

CommonBond. CommonBond for Business offers a flex contribution program that includes an option to directly contribute to paying down employee student loans, or to work with employees on financial literacy techniques for reducing their debt.

Gradifi. Gradifi is another fintech offering refinance options, bundled with employee benefits packages called SLP, or “student loan paydown”.

Earnest. This fintech offers refinance options to individuals with a more limited credit history that may not qualify for other traditional options.

FutureFuel. FutureFuel uses behavioral economics, which is the study of human behavior to explain economic decisions people make.

3 Alternative Financing Options for Small Businesses in 2019 (Digital Journal), Rated: B

Online finance is a very popular option to emerge of late. A few click on the website can bring about quick processing and loan approval.

Another alternative financing option is that of merchant cash advance.

Crowdfunding is an innovative and extremely popular way to raise money for new ideas, concepts, prototypes and creative products.

New Study on Digital Identity Shows Changing Consumer Behaviors (Lend Academy), Rated: A

Today, according to Pew Research Center more than 50 million American adults are mobile-only consumers.

Each year, IDology publishes a Consumer Digital Identity Study aimed at giving businesses visibility into how consumer preferences and opinions related to identity and fraud are shifting. This year’s study confirms the continued movement toward mobile, finding that in the last 12 months, for the first time, consumers opened more new accounts online with their mobile devices than on computers. A closer look at the data shows that 50 million American consumers (20% of all online adults) registered for new accounts exclusively on a mobile phone, up 10% from last year. This growing number has implications for financial service providers as they strive to keep fraud out while giving consumers a seamless digital experience.

Online Lending Startup Tries To Push Usury Suit To Arbitration (Law360), Rated: B

Online lending startup MoneyLion told a North Carolina federal court Tuesday that a suit over alleged unlicensed payday lending belongs in arbitration, arguing the proposed class of borrowers had signed valid arbitration agreements when taking out their loans.

United Kingdom

Zopa boss Jaidev Janardana: big banks are trying to ‘put fintech lenders in a box’ (The Telegraph), Rated: AAA

In just a few months, a string of Zopa’s rivals in peer-to-peer lending have collapsed. Others have exited the sector altogether.

The latest company to fall into administration, Lendy, resulted in £165m of customer cash being put on the line and affected more than 20,000 investors.

Zopa survey finds Brits are more open about bank balance than Netflix password (P2P Finance News), Rated: A

A survey of 2,000 adults by the peer-to-peer lender found that 47 per cent of respondents felt more comfortable revealing details about their bank accounts with their partner than their most intimate secret, while the same percentage would prefer to give an insight into their finances over their Netflix password.

Zopa looks to grow secured car finance offering (P2P Finance News), Rated: B

ZOPA is readying to launch its secured car finance product as a direct offer on its website, as it looks to expand this segment of the business.

Ratings agency backs Funding Circle strategy to tighten lending (AltFi), Rated: AAA

SME focused peer-to-peer lender Funding Circle was correct to proactively take the decision to tighten its lending criteria in pulling back from higher-yielding lower-quality loans, according to ratings agency DBRS.

Investor fintech demand drives record six months for Crowdcube (AltFi), Rated: A

Crowdcube saw revenues soar 39 per cent to £3.72m in the first half of 2019, compared to the same period in 2018, with £103.4m pledged to companies through the platform.

NatWest-backed Esme hits £60m lending milestone (AltFi), Rated: A

Esme Loans said it has hit over £60m of lending to UK small businesses just two years after its launch.

The small business lender unit said its loans have leapt 20 per cent since the end of April.

Habito launches buy-to-let mortgages (Which), Rated: A

Online mortgage broker Habito has launched a comprehensive range of buy-to-let mortgages, as it makes its first foray into lending.

The brokers offers a range of two and five-year loans for landlords, as well as more niche three, seven and 10-year fixed terms.

FCA misconduct probes into retail financial services firms increase by a third (P2P Finance News), Rated: A

THE NUMBER of Financial Conduct Authority (FCA) cases opened into misconduct in retail financial services has increased by 29 per cent in the past year.

The number of cases has increased to 101 for the 12 months ended 31 March, up from 78 the previous year, the FCA said in its annual report on Tuesday.

The regulator also said that the overall number of enforcement cases it is undertaking is up by 31 per cent over the past year – rising to 650 from 496 at the beginning of the year.

OakNorth lends £19.5m to Care Concern Group (Fintech Finance), Rated: B

Klarna teams up with UK festival We Out Here (Retail Tech Innovation Hub), Rated: B

PayTech venture Klarna has announced a partnership with new jazz and electric festival We Out Here.

It will unveil a ‘Smoooth Sanctuary’ at the event, which will be held in Cambridgeshire in August.

China/Hong Kong

Yirendai Reports First Quarter 2019 Financial Results, Closing of Business Realignment Transactions with CreditEase (GlobeNewswire), Rated: AAA

First Quarter 2019 Operational Highlights

Consumer Credit—Yiren Credit

  • Total loan originations in the first quarter of 2019 reached RMB 10.9 billion (US$1.6 billion), representing a decrease of 45% from RMB 19.8 billion in the first quarter of 2018.
  • Cumulative number of borrowers served reached 4,404,812, representing an increase of 15% from 3,824,341 in the first quarter of 2018.
  • Number of borrowers in the first quarter of 2019 was 149,715, representing a decrease of 48% from 287,166 in the first quarter of 2018.
  • The percentage of loan volume generated by repeat borrowers was 38.8% in the first quarter of 2019.
  • Total outstanding principal balance of loans reached RMB 63,213.8 million (US$9,419.2 million) as of March 31, 2019, representing a decrease of 16% from RMB 75,271.5 million March 31, 2018.

Reviewing China Rapid Finance Limited (XRF)’s and X Financial (NYSE:XYF)’s results (NBO News), Rated: A

This is a contrast between China Rapid Finance Limited (NYSE:XRF) and X Financial (NYSE:XYF) based on their analyst recommendations, profitability, institutional ownership, risk, dividends, earnings and valuation. The two companies are Credit Services and they also compete with each other.

Earnings & Valuation

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
China Rapid Finance Limited 1 0.27 N/A -0.85 0.00
X Financial 5 0.00 N/A 0.85 6.34

Table 1 shows the top-line revenue, earnings per share (EPS) and valuation for China Rapid Finance Limited and X Financial.

Court Upholds Ruling That Sent Two Peer-to-Peer Lending Executives to Prison for Life (Caixin Global), Rated: AAA

Shanghai Kuailu Investment Group Co. Ltd., along with two affiliated companies, and 15 defendants were convicted of fraudulent fundraising or illegal fundraising or both, according to the final ruling (link in Chinese) made by the Shanghai High People’s Court on Tuesday.

Kuailu, along with its affiliates, illegally raised more than 43.4 billion yuan ($6.3 billion) from the public, causing 40,000 people to take financial losses, the court said.

Foreign Investment Restrictions in P2P Lending Intermediaries (Lexology), Rated: A

The Interim Administrative Measures for the Business Activities of Peer-to-Peer Lending Information Intermediaries define “peer-to-peer lending” as direct lending/borrowing realized between peers on an internet platform. Peers include natural persons, legal persons and other organizations.

Bitmain’s Affluent Co-Founder Establishes the New Crypto Startup Matrixport (All Stocks), Rated: A

With the hope of capitalizing on the recent rise of the Bitcoin price, the co-founder of the mining giant Bitmain, Wu Jihan, has organized a group to develop “Matrixport,” a financial services startup for cryptocurrencies. According to its CEO Ge Yuesheng, Matrixport will function as a one-stop-shop for not just safekeeping of digital assets but also for crypto lending and over-the-counter trading.

European Union

Online Lender October Pushes into Germany as it Continues Expansion (Crowdfund Insider), Rated: AAA

Marketplace lending platform October, which is based in France, has expanded in Germany, according to a blog post by CEO and founder Oliver Goy.

October has selected Thorsten Seeger, a Funding Circle veteran, as CEO of October Deutschland as its plots its ongoing expansion across Europe. October currently operates in France, Spain, Italy, and the Netherlands.

Investors are putting £9bn to work in P2P Lending across Europe, UK still dominating (AltFi), Rated: A

The peer-to-peer lending market is now funding more than £9bn of loans across Europe each year with two thirds (67 per cent) of this funding coming through UK platforms.

Revolut brings the fintech battle to Berlin with a new hub (Yahoo! Finance), Rated: A

British fintech startup Revolut is opening a new European tech centre in Berlin, the home turf of its online-banking rival N26.

Lagan Investments takes 10% stake in Property Bridges (Irish Times), Rated: A

Lagan Investments, a fund founded by the North’s biggest house-builder, Kevin Lagan, has taken a 10 per cent stake in peer-to-peer lender Property Bridges and is to supply it with €5 million in lending capital.

International

Morningstar Names Detlef Scholz President of Expanded Credit Ratings Organization (Morningstar), Rated: AAA

Morningstar, Inc. (Nasdaq: MORN) has named Detlef Scholz as president of its expanded, global ratings organization. The leadership announcement comes as Morningstar today completes its previously announced acquisition of DBRS, the world’s fourth largest credit ratings agency, for a purchase price of US$669 million.

Scholz will assume his new role Aug. 1, 2019 and report to Morningstar Chief Executive Officer Kunal Kapoor.

Source: Morningstar

View the Morningstar/DBRS overlapping ratings.

Deutsche Bank in partnership talks with SoftBank-backed OakNorth (Reuters), Rated: A

Deutsche Bank (DBKGn.DE) is in talks with SoftBank-backed (9984.T) British fintech firm OakNorth to use the latter’s credit analysis and monitoring platform, a source with knowledge of the discussions told Reuters.

CoVEX Exchange — A Single Platform to Complete the Entire Crypto Lifecycle (Coinfomania), Rated: B

P2P loan: The CoVEX platform also implementing a decentralized p2p lending service. This allows users across the world to receive loans in lesser time and even reduces the repayment fee while at the same time protecting the interests of the lender.

Australia/New Zealand

An alternative loan scheme could help 2.1 million Australians in financial distress (UNSW Sydney), Rated: AAA

A social lending scheme could help bridge the gap between traditional lenders and government welfare for the 2.1 million Australians under high levels of financial stress.

Alexa Chung partners with Klarna challenger Laybuy (AltFi), Rated: A

Payments platform Laybuy has struck a new retail partnership with fashion brand of Alex Chung  – called ALEXACHUNG – allowing customers to spread the cost of purchases over six equal weekly payments.

New Zealand’s largest digital buy now, pay later app launched in March with its first partnership with Footasylum.

The true role of the SME broker (Australian Broker), Rated: A

Yet SMEs are being stiffed by traditional lending practices: 44% of small businesses have been knocked back for finance in the last 12 months. Put simply, SMEs are being underserved and ignored by the banks.

India

‘NiYO’ Raises US$ 35 Mn in Series B Round led by Horizons Ventures & Tencent (Yahoo! Finance), Rated: AAA

Indian new-age digital banking start-up NiYO Solutions has raised US$ 35 million in Series B funding round from Horizons Ventures, Tencent and existing investor, JS Capital. NiYO is founded by banking veteran Vinay Bagri and technology veteran Virender Bisht. NiYO had previously raised US$ 14 million in funding rounds led by Prime Venture Partners. With the current round the total fund raised by NiYO is US$ 49 million.
Authors:

George Popescu
Allen Taylor

The post Thursday July 11 2019, Weekly News Digest appeared first on Lending Times.

Thursday January 17 2019, Weekly News Digest

marketplace securitizations

News Comments Today’s main news: RateSetter surpasses 3B GBP in lending. SoFi Money bank-like offerings. LendingClub land on 2019 Bloomberg Gender-Equality Index. HeZhong International to list on Nasdaq. Robo.cash doubles investors in 2018. Kabbage to provide point-of-sale loans to Alibaba shoppers. Today’s main analysis: Marketplace lending securitization slowed in Q4 2018. Today’s thought-provoking articles: Consumer credit continues to grow. Loan default […]

The post Thursday January 17 2019, Weekly News Digest appeared first on Lending Times.

marketplace securitizations

News Comments

United States

United Kingdom

International

Other

News Summary

United States

SoFi Offering Bank Like Services, But it is Still Not a Bank (Crowdfund Insider), Rated: AAA

Today, SoFi is distributing more invites to their bank-like services – SoFi Money, a service announced last summer. SoFi is offering consumers the following:

  • No “freakin” fees, including annual, transactional, overdraft, or any other account fees.
  • Higher interest rates, a “whopping” 2.25% APY on your money.
  • Free ATM usage as SoFi will reimburse the fees.
  • Mobile first as your phone is your [bank] branch.
  • Secure – Accounts are FDIC insured up to $1.5 million.³

More MDs, fewer residents in SoFi’s next student loan securitization (Asset Securitization Report), Rated: A

Social Finance’s next student loan securitization features higher exposure to physicians, and fewer of them are still in a residency program, according to rating agency reports.

Borrowers with medical and dental degrees are considered to be good credits in part because they have some of best employment prospects. They account for 28.8% of borrowers in the pool of collateral who have medical degrees, up from 22% for SoFi’s previous student loan securitization, according to Moody’s Investors Service.

LendingClub Selected for 2019 Bloomberg Gender-Equality Index (LendingClub), Rated: AAA

LendingClub Corporation (NYSE: LC), today announced that it is one of 230 companies selected for the 2019 Bloomberg Gender-Equality Index (GEI), which distinguishes companies committed to transparency in gender reporting and advancing women’s equality. The index doubled in size from 2018 and includes firms from 10 sectors, headquartered across 36 countries and regions. Collectively, these firms have a combined market capitalization of USD 9 trillion and globally employ more than 15 million people, of which 7 million are women. Thirteen markets are represented for the first time this year, including Argentina, China, Israel, and South Africa.

Securitization in Marketplace Lending Slowed in Q4 2018 (Lend Academy), Rated: AAA

Issuance totaled $2.6 billion, which is the slowest pace of issuance in 5 quarters and was related to market volatility according to PeerIQ. Volume decreased 44% from the prior year period and dropped 25% quarter over quarter. Total issuance in 2018 was $15.3 billion and included newer issuers Upgrade and Enova. PeerIQ expects that Upgrade and Enova will continue to participate in the securitization market going forward. While Q4 represented a drop in deals, cumulative issuance still stands at $44.5 billion across 142 deals which is a significant amount.

Source: Bloomberg, PeerIQ

We should also point out that LendingClub sold more than $1 billion in CLUB certficates in 2018 which likely reduced their securitization volume in 2018.

Source: Lend Academy

Fed Affirms Flexibility on Rate Hikes (PeerIQ), Rated: AAA

Consumer credit continues to grow. The Fed reported that consumer credit outstanding grew at an annualized rate of 6.7% in November to $3.98 Tn. This is the third month out of the past four that consumer credit grew more than $20 Bn, for the first time in four years.

Source: Federal Reserve, PeerIQ

Experian: Loan Default Rates Rose In Dec (PYMNTS), Rated: AAA

According to the S&P/Experian Consumer Credit Default Indices, which the companies said in a press release represent a comprehensive measure of changes in consumer credit defaults, the composite rate rose six basis points from December to 0.89 percent. The bank card default rate rose 25 basis points to 3.34 percent, while the auto loan default rate jumped 10 basis points to 1.03 percent. The default rate on first mortgages was three basis points higher at 0.67 percent.

What’s more, S&P Dow Jones Indices and Experian said that all five of the metropolitan statistical areas showed a higher default rate in December of 2018. In Miami, it increased 41 basis points to 1.93 percent, while New York saw a 13 basis-point increase to 0.96 percent and the Chicago default rate was up four basis points to 0.88 percent. In Dallas, the default rate ticked up three basis points to 0.85 percent, while in Los Angeles it was up two basis points to 0.52 percent.

Source: PRNewsfoto/S&P Dow Jones Indices

Fiserv to acquire First Data for $ 22bn (Fintech Futures), Rated: A

A giant will roam the fintech land as Fiserv will acquire First Data in an all-stock transaction of $22 billion.

LendingTree Ranks Most Competitive Housing Markets (LendingTree), Rated: AAA

Key Findings:

Denver, Los Angeles, and Portland, Ore., have the most competitive buyers in the country. Buyers in these areas have higher than average credit and the ability to put down a larger down payment.

Birmingham, Ala., Virginia Beach, Va., and Pittsburgh have the least competitive buyers in the country.Living in a less competitive market can be beneficial for buyers as it means that the path to homeownership is less challenging than it is in other parts of the country. For example, in these three areas, only 43% of mortgage shoppers had prime credit, compared to an average of 49% across the 50 largest metros in the U.S.

Roostify Enables Digital Mortgage Solution for Glacier Bancorp (BusinessWire), Rated: A

Roostify today announced that Glacier Bancorp, Inc. has launched a digital mortgage solution powered by Roostify. Glacier Bancorp, Inc. is a regional bank holding company providing commercial banking services in 104 communities through 164 banking offices in Montana, Idaho, Colorado, Utah, Washington, Wyoming and Arizona. The company holds total assets of $11.9 billion and shareholder equity of $1.5 billion.

Joust launches a digital bank for gig-economy workers (American Banker), Rated: A

The fintech startup Joust is launching a mobile banking app Tuesday designed for the 56.7 million Americans who rely on freelance income.

The product comes with a bank account, a merchant account, and a way to get quick credit. Behind it is a network of community banks that will gather the deposits the app brings in.

Snoop Dogg Invests In Klarna, Sweden’s $ 2.5 Billion Unicorn (Forbes), Rated: A

Klarna, the Swedish financial technology giant valued at $2.5 billion last year, has a new addition to its shareholder register from the most unlikely source.

Millionaire American rapper Snoop Dogg, aka Calvin Broadus, has today become a minority shareholder in the company which offers buy-now-pay-later services at 100,000 retailers in Europe and across the U.S.

2019 business: 5 trends that will dominate 2019 (Business Report), Rated: A

1. Consumers demand data control:  a Deloitte report shows 71% of purchased data is … inaccurate.

2. Alternative lending will surge: It makes sense that non-bank lending will continue to grow, not only was 2018 a big year for the industry but, more importantly, 80% of small business loans are rejected.

6 Personal Loan Lenders That Accept Cosigners (Credible), Rated: A

Not all personal loan lenders allow you to add a cosigner to your physical or online application, but there are some that do. Here are six lenders that allow cosigners on their applications.

  1. Freedom Plus
  2. Laurel Road
  3. Lending Club
  4. Lightstream
  5. OneMain Financial

What happens to robos in a downturn? (Financial Planning), Rated: A

As stocks soared to record highs over the past decade, robo advisors amassed billions of dollars in investable assets. But now with the onset of ominous market indicators and volatility, advisors say they are worried about how automated investment platforms will perform during a major market downturn and what that might mean for their bottom lines.

“It is a wild unknown,” says Josh Pace, president of the custodian TCA by E-Trade.

SMB BANKING: THE NEXT WAVE OF INNOVATION (LendIt), Rated: A

Key findings address:
  • How the largest banks, regional banks and community banks differ in their approaches to blending hi-tech and hi-touch customer interactions
  • Who are emerging SMB-focused fintech companies and partnerships to watch
  • What banking functions and features are most sought after by SMBs
  • How mobile apps are being designed specifically with SMB customers in mind
  • Why big data and artificial intelligence are key to integrated financial dashboard and advisory applications
White Oak Healthcare Finance, LLC (“White Oak”) today announced it acted as sole lender and administrative agent on the funding of a senior credit facility for GMF Capital (“GMF”) and Meridian Senior Living (“Meridian”). The funds were used to acquire assisted living/skilled nursing facilities located near Providence, Rhode Island.

FundThrough Engages 919 Marketing to Fuel U.S. Expansion (PRWeb), Rated: B

FundThrough, North America’s fastest growing automated, tech enabled invoice factoring company and a power player in the fintech SMB (small and midsized businesses) working capital space, has engaged 919 Marketing, a leading national franchise marketing agency offering content marketing and public relations services to all companies (franchise or non-franchise), to generate consistent brand awareness and accelerate expansion in the U.S. markets.

Fed not an impediment to fintechs’ charter ambitions (American Banker), Rated: B

Comptroller of the Currency Joseph Otting on Wednesday downplayed concerns that applicants for the agency’s new fintech charter may face resistance from the Federal Reserve Board.

Some in the fintech industry are raising alarm that the Fed may balk at allowing holders of the new special-purpose charter into the payments system, which could reduce the overall value of the charter.

United Kingdom

RateSetter Milestone: Online Lender Surpasses £3 Billion in Lending (Crowdfund Insider), Rated: AAA

UK based peer-to-peer lender RateSetter announced on Tuesday it has surpassed £3 billion in online lending. RateSetter reported that the milestone follows a successful year, with the lender originating more than £700 million of new lending and active loans under management grew to £820 million.

RateSetter also revealed that more than 600,000 customers have used its lending platform to invest or borrow. To date, investors have lent £1.9 billion to individuals and £1.1 billion to businesses. A total of £2.2 billion has been repaid by borrowers, generating returns of £120 million for RateSetter investors, who have enjoyed an average annual interest rate of 4.4% per year since RateSetter’s launch in 2010.

Rapper Big Narstie named among celebrities joining Zopa hotline for a day (P2P Finance News), Rated: AAA

PEER-TO-PEER lender Zopa is making four celebrities honorary ‘Zopians’ for a day next week.

It has launched a “FeelGood Hotline” to banish the January blues that will be staffed by pop star and TV host Frankie Bridge, broadcaster Lauren Laverne and rapper Big Narstie (pictured) on 23 January.

Boxing icon Frank Bruno will also be on the hotline.

UK challenger bank Tandem eyes IPO (Fintech Futures), Rated: A

UK digital challenger bank Tandem has got its young beating heart set on an IPO within the next few years.

In a brief written and video update, it looks to the future and the past. For example, it cites its recent $15 million investment from Hong Kong for Asian market expansion plans.

Tide Collaborates With ClearBank to Transform UK SME Banking Market (Crowdfund Insider), Rated: B

Tide, a UK-based SME challenger banking, announced on Monday it has formed a new partnership with ClearBank to help transform the UK SME banking market.

Tide reported that through its support, ClearBank has applied for a grant from Pool A of the Capability and Innovation Fund that forms part of the £775 million RBS Alternative Remedies Package, a government-backed competition. 

A quarter of UK consumers will have a neobank account within five years (Business Insider), Rated: A

Currently, 9% of Brits, equating to 4.5 million people, have opened an account with a digital-only bank, according to the study. By 2024, a further 16% of the population, or 8.5 million people, intend to do the same.

Source: Business Insider

ARBUTHNOT COMMERCIAL ASSET BASED LENDING LTD. SUPPORTS MBO OF PLUMBWORLD WITH £3.5M STOCK ONLY FACILITY (Arbuthnot Latham), Rated: A

Arbuthnot Commercial Asset Based Lending Ltd. (Arbuthnot Commercial ABL) is pleased to announce the completion of a bespoke £3.5m transaction to support the management buy-out of Online Home Retail Limited (trading as www.plumbworld.co.uk), one of the UK’s leading e-commerce retailer of bathroom related products, from Grafton Group PLC, an international distributor of building materials.

BBVA name dropped in Atom Bank takeover talks (Fintech Futures), Rated: B

BBVA is one of the names coming up in a potential takeover of the UK digital challenger Atom Bank.

Sky News has learnt that Atom is in talks to appoint Citi to advise its board on options for the business.

Accountants Look Out (Fintech Finance), Rated: B

Two thirds (66%) of accountants surveyed said that they do recommend external finance providers to their clients. Whilst these recommendations will be based on the need of any given business, they also indicated their preferred source of funding. Half (50.8%) indicated that they would recommend their clients speak with a bank about their finance needs. Interestingly, more than a third (36.3%) are recommending an invoice finance provider ahead of a business loan provider (33.66%).

China

HeZhong International, Chinese P2P Lender, Seeks $ 5.8 Million Nasdaq Listing (Capital Watch), Rated: AAA

The Shenzhen company hopes to raise up to $5.8 million in New York under the symbol “HZ,” according to its prospectus filed with the U.S. Securities and Exchange Commission.

On its online platform, HeZhong matches borrowers and investors, facilitating mostly consumer loans ranging from $437 to $2,200. It also issues car loans in the amounts ranging between $2,900 and $29,200.

HeZhong IPO: Tempting But Risky With 3,330% Revenue Growth (Seeking Alpha), Rated: A

  • Based in Shenzhen, China, HeZhong offers an online peer-to-peer lending marketplace, providing consumer and automobile loans to the Chinese borrowers and risk-adjusted returns to the investors.
  • Certain investors will believe that the interest rates seem quite appealing. Annual interest rates are between 8% and 15%, and usual tenures are from 7 days to 360 days.
  • The year 2018 was also great in terms of profitability. The company went from reporting losses from operations of -$1.1 million to report operating profit of $5.6 million.
European Union

Robo.cash doubles new investors in 2018 (P2P Finance News), Rated: AAA

LATVIAN peer-to-peer lending platform Robo.cash has reported that it doubled its investor base in 2018 as it expanded its product range and scaled up its lending.

The P2P payday lender said the total volume of investments on its platform hit €5m (£4.45m) after a strong year, representing 93 per cent growth. Meanwhile, it attracted 3,200 new investors, twice the number in 2017, with the majority coming from Germany.

Investment in European Companies Remains Steady but Deal Flow Dives (Crowdfund Insider), Rated: A

Dow Jones has published their Q4 VentureSource report today and while investment in European companies “held steady” deal flow dropped.

The report indicates that the number of deals in Q4 stood at 729. In comparison to the prior quarter, it dipped slightly from 738. When you compare year over year quarters the discrepancy is greater as Q4 2017 delivered 865 separate deals.

In total amount raised, Q4 2018 came in at € 5.19 billion. This is a decline from Q3 at €4.98 billion. But year over year the amount was down as well as Q4 2017 saw € 5.6 billion raised.

Better systems can aid business of giving money to tackle poverty (Breaking News), Rated: A

On a visit to Ethiopia last week, the Taoiseach chose to visit one of the most impoverished areas of the world and witness, first hand, profound poverty.

While there, he was introduced to a woman who had bought four potentially life-saving sheep with a micro-loan provided by Irish Aid.

Irish Aid is operated by the Department of Foreign Affairs. It is, effectively, managed on behalf of us citizens.

International

Kabbage to provide point-of-sale loans to Alibaba shoppers (American Banker), Rated: AAA

Kabbage, an online lender to small businesses, is now providing point-of-sale loans to small businesses that buy things on Alibaba’s online shopping site, the two companies announced Monday.

Under the program, which is called Pay Later, small-business owners can get credit lines of up to $150,000 for their orders on the site.

White Oak Global Advisors Surpasses $ 2.5 Billion of Loan Originations (AP News), Rated: A

White Oak Global Advisors, LLC (“White Oak”), today announced it funded over $2.5 billion in loans in 2018.

Klarna links up with Daniel Wellington to allow shoppers to slice their purchase and pay over time (Klarna), Rated: B

Today, global payments provider, Klarna announced a new collaboration with Daniel Wellington, maker of classic and timeless watches. Loyal shoppers of Daniel Wellington will now benefit from Klarna’s newest payment option, which allows customers to pay for their watches and accessories in 4 equal interest-free installments collected bi-weekly from the shopper’s chosen debit or credit card.

India

Blockchain, AI providing traction to India’s crowdfunding platforms (Financial Express), Rated: AAA

Although crowdfunding in India is at a nascent stage, with only 15 notable crowdfunding platforms (CFPs), the concept holds immense potential for the country’s startup ecosystem.

A World Bank report states crowdfunding has emerged as a multi-billion dollar global industry, and is expected have a volume of $300 billion by 2030.

Authors:

George Popescu
Allen Taylor

The post Thursday January 17 2019, Weekly News Digest appeared first on Lending Times.

Tuesday October 9 2018, Daily News Digest

LendingClub

News Comments Today’s main news: China Rapid Finance issues regulatory report, board change. H&M invests in Klarna. Tencent drops $180M into Nubank. KKR, Tencent lead $175M investment into Voyager. Today’s main analysis: Gen Z is more optimistic than millennials about home ownership. Today’s thought-provoking articles: The cities in America with the biggest houses. Inside Ameritrade’s integration with WeChat. Unemployment rate […]

LendingClub

News Comments

United States

United Kingdom

China

European Union

International

Other

News Summary

United States

Startup Credit Kit; 48-year Low Unemployment Rate (PeerIQ), Rated: AAA

The US economy added 134k jobs in September and the unemployment rate dropped to a low of 3.7%  – a level not seeing since the Beatles broke up in 1970. Wage growth came in strong at 2.8%, and raises the specter of inflation down the road.

Point-of-Sale lending continues to grow, with Square now providing instalment loans of up to $10,000 to shoppers who purchase big-ticket items from Square’s merchants. Borrowers can repay in fixed monthly payments over a period of 3, 6, and 12 months with interest rates ranging from0% to 24%. The move puts Square in direct competition with other POS lending services – Affirm, Klarna, Greensky and more.

In regulatory news, the FDIC has received 21 banking applications this year, over twice the number for last year. The FDIC however has approved only 4 of these applications to date.

PeerIQ’s Learning of the Week

This week we look at the performance of LendingClub’s 36-month loans. Over the life of the loans, borrowers with verified income have 140 bps higher losses. This is due to a “selection effect” – namely, LendingClub applies an extra layer of income verification high credit risk borrowers.

Source: PeerIQ

LendingTree Reveals the Cities with the Biggest Houses in America (LendingTree), Rated: AAA

LendingTree compared home sizes across the country, but first, let’s look at some national data. The Census Bureau reports that the median size of new homes completed in the second quarter was 2,412 square feet. Home sizes have leveled off the past few years from a peak of 2,488 square feet in the third quarter of 2015, though homes sizes are generally larger today than they were for previous generations.  Because only a small proportion of the housing stock is new each year, the median size of all homes is lower given a median house age of 37 years.

Key findings

  • Everything is bigger in Texas. Whoever coined this phrase must have been thinking about real estate. Houston leads the list, with Austin and Dallas also in the top five. Besides having a lot of space, Texas has been adding new residents at a steady pace, with the nation’s largest annual population growth between 2010 and 2016. More new homes means larger homes.
  • South equals size. Other Southern cities dominate the top 10, with Atlanta, known for its sprawl, at No. 2.
  • Money talks. The Washington, D.C., area, whose suburbs includes the three wealthiest counties in the country, comes in third. Boston, another wealthy city, shows up at ninth.
  • Show me? The Midwest lives up to its unpretentious reputation by having the most cities with the smallest houses. Missouri’s Show Me State nickname clearly does not refer to houses, with its two largest cities both in the bottom 10.
  • Older is smaller. Cities with older housing stock have smaller houses, including Detroit at  No. 45 on our list.
Source: LendingTree
Source: LendingTree

More Optimistic Than Millennials, Gen Z Is Here to Revolutionize the Housing Market (Property Shark), Rated: AAA

Key takeaways:

  • Gen Z has its eye on homeownership, with 83% planning on buying a home within the next 5 years
  • College debt is the #1 obstacle towards homeownership for Millennials and Gen Z
  • Gen X chooses intergenerational living to care for relatives more often than any other generation
  • Gen Z is willing to compromise on almost anything to keep costs down – but dreams of lots of space and amenities
  • Gen Z to pose serious competition to Millennials on the real estate market
  • Millennials are more realistic about their means, and the most pessimistic about the prospect of homeownership
Source: PropertyShark

Whatever they may see as the most significant hurdle towards homeownership, more than 80% of respondents from all three generations expect to buy a home in the next 5 years. Part of more established family units and with stabilized careers, Gen Xers are the least likely to buy homes in the near future, while Millennials are the most likely – 87% of Millennial respondents expect to enter homeownership within 5 years.

Considering that the oldest of Gen Z are barely 23, it is noteworthy that a whopping 83% see themselves entering the real estate market within 5 years.

Source: PropertyShark

B+E announces sale of Darien TD Bank property for $ 6.9 million (Patch), Rated: A

B+E (Brokers+Engineers), the first brokerage firm and trading platform for net lease (NNN) real estate, today announced the sale of property that is leased long-term to TD Bank in Darien, Connecticut.

Located at 55 Boston Post Road, the +/- 4,380SF location was sold for $6,900,000 at a 5.1% cap rate. The property has +/- 7 years remaining on the lease and was sold to a 1031 exchanger. B+E represented the seller, Chimblo Family Real Estate, LLC.

Real Estate Startup Landis Raises $ 2M in Funding (Finsmes), Rated: A

Landis, a NYC-based marketplace for institutional real estate investing, raised $2M in funding.

The round was led by Signia Venture Partners with participation from Red Swan Ventures, Graph Ventures, and Kima Ventures, as well as the founders of RealtyShares (Nav Athwal), Compass, Floored, Tango, Rypple, and Stanford professor and JetBlue Chairman Joel Peterson.

Fintech firm Curve looking to raise $ 50 million to become the ‘Amazon of banking’ (CNBC), Rated: A

Fintech firm Curve is aiming to raise $50 million in funding, its CEO told CNBC in an exclusive interview, as it looks to get some cash to boost its aim to become the “Amazon of banking.”

Smartphone brand can reflect creditworthiness: FDIC study (American Banker), Rated: A

A new study released Thursday bolsters the case for lenders to use borrowers’ digital footprints in assessing their creditworthiness.

The paper, released by the Federal Deposit Insurance Corp.’s Center for Financial Research, said the data trails people leave online — even down to what brand of smartphone they use — are useful at predicting default rates.

Fed studies rural branch closings (American Banker), Rated: A

For a regulator grappling with what is the right balance in big-bank supervision, the Federal Reserve is also trying to drill down on industry trends at the most micro levels.

The Fed’s top regulatory official, Vice Chairman of Supervision Randal Quarles, gave wide-ranging remarks Thursday on the central bank’s efforts to gather and understand data about the community banking sector.

AFR Promotes Brandao to President and Packer to COO (Business Insider), Rated: B

American Financial Resources, Inc. (AFR) is pleased to announce two key executive promotions. Laura Brandao has been promoted to President and Bill Packer is now Chief Operating Officer of the NJ-based leading niche lender.

United Kingdom

Are there too many property investment platforms? (Development Finance Today), Rated: A

A recent poll conducted by Development Finance Today revealed that 65% of industry professionals believed that there were too many property investment platforms in the market.
Source: Development Finance Today

I’m Stephen Moss, the founder and managing director of Sourced (Property Investor Today), Rated: A

Established to match UK and overseas investors with hand-selected investment opportunities, we offer UK-wide investment advice and property sourcing through our 34-strong network of franchises.  This guarantees the same level of local knowledge and off-market opportunities, anywhere in the country.

Since we started in October 2017 our network has grown from one to 34 offices, we have launched a new peer-to-peer (P2P) lending platform and we’re building on our current position as the country’s largest property investment platform and network of property sourcers.  We’re also the first company to provide a free online training platform that gives investors of all levels of experience, the skills, knowledge and support they need to grow their portfolios.

Multiply: the new app that wants to put a financial adviser in everyone’s pocket (Evening Standard), Rated: B

Multiply is the latest fintech app launching on the Apple App Store, which wants to be your own personalised financial adviser so you can understand your money and the best things to do with it.

How Manchester entrepreneurs should begin investing (About Manchester), Rated: B

  • Peer to peer lending – you may have heard of popular companies in this investment sector such as Funding Circle. With peer to peer lending, you lend money to business start-ups to help them become established. When they are profitable you get your money back with any agreed interest.
China

China Rapid Finance Announces Regulatory Report & Board Change (Crowdfund Insider), Rated: AAA

China Rapid Finance Limited (NYSE: XRF) announced last week that it submitted its P2P Compliance Self-Inspection Report to its local P2P regulatory office. According to the online lender, this new report is considered the first of three steps mandated in the inspection process, a key element in demonstrating compliance with industry reforms being promulgated by the National P2P Rectification Office.

China Rapid Finance then explained it is focused on the next two process steps:

  • A self-disciplinary inspection conducted by NIFA and regional regulatory authorities
  • verification of inspection results by the regional P2P Rectification Office to conduct on field inspections

China Looks to Foreign Investors and Pensioners as Distressed-Debt Saviors (The Epoch Times), Rated: A

According to data from Bloomberg, China’s total balance of non-performing loans (NPLs) reached 1.96 trillion yuan ($285 billion) at the end of June 2018. To help lower this figure, China has been pawning off toxic loans onto foreign investors and unsuspecting pensioners.

Oaktree Capital Management in September acquired 115 NPLs for 2.4 billion yuan ($350 million) from one of China’s “bad banks” China Huarong Asset Management Co., according to Bloomberg.

The digital divide: inclusion must not create exclusion (The Finanser), Rated: A

There’s a legitimate concern that the change that’s happened in Chinese society since 2014 with regard to rapid conversion from cash and cards to mobile payments has been too fast for some. What happens to those left behind in the digital economy?

European Union

H&M buys $ 20 million stake in Swedish fintech firm Klarna (Reuters), Rated: AAA

Fashion chain H&M (HMb.ST) is acquiring a small stake in Klarna in what will be the Swedish online payments services firm’s largest partnership so far.

H&M is paying around $20 million for a stake of less than 1 percent, a Klarna spokeswoman said, confirming a Financial Times report on Monday.

Mintos partners with Trustly to offer real-time transfers (P2P Finance News), Rated: A

MINTOS, Europe’s largest peer-to-peer marketplace, has partnered with payments company Trustly to offer its customers the option to transfer funds in real-time from bank accounts across Europe.

Mintos said the collaboration with Swedish e-payments company Trustly will allow investors using its platform to transfer money in real-time from bank accounts across 29 European countries. This strips out the usual waiting time that is associated with conventional clearing systems.

Money laundering and backlogs dent ING’s image as tech leader (American Banker), Rated: A

Since taking charge of ING Group in 2013, Chief Executive Officer Ralph Hamers has labored to make it the most digitally advanced lender in Europe. His motto: disrupt yourself before a competitor does it first.

It’s safe to say the tumult at ING during the last few weeks isn’t what Hamers had in mind.

Equity Crowdfunding Platform Anaxago Launches Asset Management Firm Anaxago Capital (Crowdfund Insider), Rated: B

Anaxago is launching an asset management firm, Anaxago Capital, to attract more institutional investors and ready itself to fund larger projects. With this, Anaxago expects to double its outstanding investments by 2020.

International

China’s Tencent invests $ 180 million in Brazil fintech Nubank (Reuters), Rated: AAA

Chinese gaming and social media firm Tencent Holdings Ltd (0700.HK) paid $180 million for an undisclosed minority stake in Brazilian financial technology company Nu Pagamentos SA, both companies said on Monday.

Inside TD Ameritrade’s integration with WeChat (Tearsheet), Rated: AAA

TD Ameritrade continues to explore how to connect with its clients over different platforms.

The company, which has already launched experiences on Messenger, Twitter DM, Amazon Alexa devices and Apple Business Chat, has launched a chatbot for WeChat.

TD Ameritrade’s chatbot allows retail investors in Hong Kong to do their research, access market information, and get support through one of the most popular social and messaging platforms in Asia.

Celsius, Pays Interest To Crypto Depositors (CoinTrust), Rated: A

Celsius, a recently established cryptocurrency lending firm, has announced that it offers interest to thousands of users who deposit Bitcoin and Ether with its wallet application. Celsius claims to have won over 10,000 users since its mobile app was launched on June 29, with an average deposit of 0.5 BTC or 5.50 Ether earning as much as 6.7% per annum. Celsius generates the interest income by lending the crypto to hedge funds which open short position in the crypto market.

APAC

KKR and Tencent lead $ 175m investment in Philippines’ Voyager Innovations (Banking Tech), Rated: AAA

Telco PLDT, investment firm KKR and Tencent are part of a $175 million investment in Philippine digital tech company Voyager Innovations.

MENA

UAE-based startup Smart Crowd just got funded by Shorooq Investments (Startup MGZN), Rated: AAA

Smart Crowd, a new real estate crowd investing platform is just closed a Seed Funding round with $600,000 from Shorooq Investments, followed by Abaxx Technologies500 Startups, and other high-level strategic individual investors.

Authors:

George Popescu
Allen Taylor

Securing Digital Payments on a Mobile Phone

MagicCube

Digital payments have crossed the Rubicon and are now not only an acceptable form of payment but soon expected to become the dominant form. But the problem is small businesses are still hampered in leveraging digital payments for the convenience of their customer base. The below graph indicates the share of small business owners in […]

MagicCube

Digital payments have crossed the Rubicon and are now not only an acceptable form of payment but soon expected to become the dominant form. But the problem is small businesses are still hampered in leveraging digital payments for the convenience of their customer base. The below graph indicates the share of small business owners in the United States who accept digital and mobile payment methods as of October 2017.

Source: Statista

Similarly, IoT is no longer the future. Autonomous cars and voice-controlled assistants like Amazon’s Echo and Google’s Home are already in our lives. All of these technology developments represent a new challenge in how to manage and secure our digital payment and IoT devices and infrastructure.

The MagicCube Business Model

The MagicCube solution helps in securing digital transactions on different devices, with the same level of security as device hardware solutions without the complexity and cost associated with hardware deployments.

While working with VISA, founder and Chief Executive Officer Sam Shawki witnessed that companies had to use Apple Pay to access chips while securing credit cards. This required an extensive hardware set up. This led him to embark on a project to create virtual chips.

MagicCube’s patented technology provides an embedded software solution in the existing hardware set up. Now, Visa users will not have to go to Apple to get tokenized cards. Rather, they can use the hardware of MagicCube on their regular devices via cloud by just entering a pin. Now the phone can be used to access payments and there is no need for a separate external device. A lot of companies used to give these devices to merchants for free to capture payments and lending business. But now, with MagicCube, the onboarding process does not require expensive hardware. This allows for faster and cheaper penetration of the market, and merchants don’t have to interact with bulky hardware for managing transactions. Now, consumers will not require credit cards to make payments and merchants will not need any hardware device for accepting payments.

The company charges a setup fee depending on the geography, specific requirements, and volume of the client. There is a fee for active merchants on a monthly basis and a software license fee for every user.

MagicCube Products

    • Mobile Payments: According to research reports, digital payments will overtake cash transactions by 2023. All stakeholders in the payments ecosystem need to conform to the latest technologies as well as ensure that these payments are as secure as those executed through chip-based credit cards. The company’s MC Token Shield will offer a device-independent, hardware-grade security for mobile payments without the complications of hardware. It will also render the excessive middlemen fees associated with current digital payments redundant. The company has achieved PC-DSS Level 1 SP Certification and needs just a single API for integration with any App.
    • Connected Cars: Device security in connected cars is extremely important. According to research, by 2020, one in five vehicles on the road will have some form of wireless network connection. The company’s MC Vehicle Shield offers hardware-grade security to autonomous vehicles for their most critical parts. It will not only reduce the hardware bill for the car manufacturers, but any updates in security standards can be handled like a normal software update instead of having to recall the vehicles.
    • Pin on Glass: Only 45% of US Small Businesses accept credit cards. The point-of-sale hardware costs and the complexity attached with operating them has made it too expensive for millions of small merchants. Pin on Glass technology allows for a regular smartphone to safely accept payment card PINs, thus transforming the humble phone into a POS terminal. The tech has the power to change the entire payments paradigm. MagicCube’s MC Screen Shield works on delivering hardware-grade security and cloud monitoring services for such “PIN on Glass” payments.

Who Are MagicCube?

Founded in 2014, the Silicon Valley- and Brisbane, Australia-based MagicCube is the creator of the world’s only Software Trusted Execution Environment (sTEE) platform, a technology that enables large-scale deployment and management of IoT and mobile-secure solutions for consumers. The company has raised over $10.5 million in funding from Bold Capital, Epic Ventures, Silicon Valley Bank, and others. The company’s seed round saw participation by payments giant Visa.

Before launching the startup, Shawki was the head of Visa’s Global Remote Payments business unit. He was the driving force behind the company’s global push in mobile and remote payments. He also served as the chief innovation officer of VimpelCom, the sixth largest telecom player in the world with over 214 million customers in 18 countries.

Nancy Zayed is the cofounder and chief technical officer. She was head of engineering and operations at InnoPath, a founding member of OMA (Open Mobile Alliance), head of platform development at Cisco Systems, and also spent 10 years at Apple in various leadership roles.

Partnerships and Competitors

The company has entered into a partnership with Visa-funded Yellowpepper to secure token-based payments and is launching the solution in the Latin American market. The company has also partnered with ID Tech, a POS solutions provider for launching a product that will securely allow any mobile device to be converted into a POS terminal.

The young startup is competing with heavyweights like Qualcomm and Infineon, who provide security chips powering and securing payments today. But the CEO is confident that their software will soon make any hardware solutions obsolete. The company is also looking to partner with other players for launching new products and is in the process of attaining critical industrial certifications which will make the sales process much easier. The company seems to be in the pole position to change how digital payments and IoT devices will be secured in the future.

Author:

Written by Heena Dhir.

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

Thursday November 30 2017, Daily News Digest

Lending Club

News Comments Today’s main news: Lending Club rolls out its next-generation small business credit policy. Elevate’s RISE surpasses $300M in outstanding loans. Upgrade, Corridor collaborate on big data, credit analytics. Assetz Capital completes Seedrs funding round with 1.6M GBP. Alibaba seeks majority stake in SenseTime. Revolut banks on cryptocurrency. Comunitae suspends activities due to fraud. Today’s main analysis: The hidden relationship between […]

Lending Club

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

MENA

News Summary

United States

Next Generation Small Business Credit Policy (Lending Club), Rated: AAA

We are excited to announce the next generation small business credit policy on our platform which allows us to power the vision of even more small business owners.

Minimum qualifications have been reduced from 24 months in business to 12 months in business and from $75,000 to $50,000 in annual sales.

Since 2014 we’ve facilitated over $500 million in loans to thousands of small businesses across the nation.

Elevate’s RISE Product Surpasses $ 300 Million in Outstanding Loans (BusinessWire), Rated: AAA

Elevate Credit, Inc., a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced its RISE product has surpassed $300 million in total outstandings, with more than 130,000 open accounts.

Will Lending Club Turn a Corner? (GuruFocus), Rated: AAA

Lending Club arguably pioneered peer-to-peer lending, which has been one of the most vibrant segments of the credit market. Some analysts, however, have questioned the company’s ability to continue growing without adopting some traditional banking practices, like taking deposits.

Lending Club has failed to manage costs well over the past two years, leading to its inability to net profits. As illustrated in the chart below, the company’s trailing 12-month revenue now stands at about $551 million, but it has managed to reduce the net loss from about $175 million in the first quarter to about $94 million in the third quarter.

Source: GuruFocus

Lending Club’s first-half 2017 loan originations figure, however, declined from the prior-year period, dropping to approximately $4.1 billion versus $4.7 billion last year.

Would You Take Out a Loan for a Pair of Jeans? (Racked), Rated: AAA

Jocelyn Vera Zorn is not eager to talk about the loan she took out to buy the pants. “It’s kind of embarrassing,” she grimaces.

For merchants, Affirm provides exceptional benefits, increasing average order values across the board; perhaps not surprisingly, people will shop more, and more often, when they don’t immediately feel the costs. And for many customers, including Jocelyn, the predictable, convenient payments are worth the higher interest rates.

Affirm claims to be a more transparent and honest, if not cheaper, line of credit for the underserved. Using internal, proprietary data science and artificial intelligence, the company says it approves 126 percent more borrowers than traditional lenders, based on soft credit pullsand an opaque mosaic of consumer information.

Source: Racked

While more than two-thirds of Americans own at least one credit card, 20 percent are considered subprime, with a FICO score of 600 or below. Another 10 percent are on the bubble.

Source: Racked

Upgrade and Corridor Collaborate on Big Data and Credit Analytics (PR Newswire), Rated: AAA

Upgrade, Inc. (), a consumer credit platform that combines personal loans with tools that help consumers understand and monitor their credit, today announced a strategic partnership with Corridor Funds (), a new credit analytics and portfolio management platform founded by Manish Gupta. Mr. Gupta was recently EVP, Global Head of Information Management and Advanced Decisioning at American Express and prior to that spent many years as Chief Credit Officer of the Amex US consumer lending business. Under the terms of the partnership, Corridor will provide independent analytical review and validation to investors in Upgrade’s personal loan products, and will collaborate with Upgrade on new product design.

TechCrunch Founder Arrington Raising 0 Million XRP Fund (Coindesk), Rated: A

Announced today at CoinDesk’s Consensus: Invest in New York, TechCrunch founder Michael Arringtonrevealed he’s raising $100 million for a hedge fund that will buy and hold crypto assets while making investments in token sales and (some) equities and debt.

Launched under a new entity called Arrington XRP Capital, the fund claims to be the first that will require all limited partners (LPs) to make investments in XRP, the cryptocurrency that powers San Francisco startup Ripple’s RippleNet software.

Why Social Impact Matters in Tech: How LendUp Saved our Customers More Than $ 150 Million Dollars (Huffington Post), Rated: A

Five years later, LendUp customers are improving their credit scores, and now I’m proud to say that LendUp Loan customers have saved $150 million versus what they would have spent with traditional small dollar lenders, all while improving their credit score to open up more financial options in the future.

Two-thirds of LendUp Loan customers report having income swings of $100 or more a month. And since our newest customers lack short-term savings — 83% aren’t confident they can cover a $400 emergency — 77% report that they often miss bill payments.

Fintech Can Help Fast-Track Puerto Rico’s Recovery (Forbes), Rated: A

Agile, customer-experience-focused financial technology businesses continue to drive innovation, modernization and access to credit in America’s financial services marketplace when banks and other traditional providers can’t meet consumers’ needs. For example, fintech lenders help consumers and small businesses alike find financial products and services that meet their credit needs, whether it’s a short-term loan for an emergency expense or capital to help grow a small business — even when these applicants have been denied by their banks.

OnDeck monthly series highlights successful small businesses (Bankless Times), Rated: A

Online small business lender OnDeck today launched a new monthly series spotlighting the achievements of its small business customers and how they are thriving as a result of receiving capital from OnDeck.

For December, the customer success spotlight is on Dana Donofree, the owner of AnaOno, a lingerie and loungewear company for women with a unique mission.

“Applying for a loan can be incredibly stressful but fortunately, OnDeck had quick questions and quick responses.  Right away, I could see how much financing I was approved for and what that meant regarding payback. I had the opportunity to review everything before I took the loan.”

New Survey Finds Relationship Tension and Anxiety are Hidden Costs of Debt (BusinessWire), Rated: AAA

The old saying goes, ‘money can’t buy happiness.’ It should also say ‘and debt can make you anxious, keep you up at night and cause problems in relationships.’ That’s according to a new telephone survey of 1,004 U.S. adults conducted by Harris Poll on behalf of the American Institute of CPAs (AICPA). The survey found nearly three-quarters of Americans (73 percent) are living with debt driven by factors such as everyday expenses, a lack of income, mortgage costs and student loans, reflecting the far-reaching potential impact of debt upon society.

Recent data shows outstanding household debt reached a record high of $12.84 trillion, making this survey timely. With U.S. consumer spending growing at its fastest pace since 2009, it appears the frugal habits many Americans adopted directly after the Great Recession are a thing of the past.

More than half of Americans with debt (56 percent) say it has negatively impacted their life.

Of those, one-in-five (21 percent) say debt is causing relationship tension with a spouse or partner and one-in-ten (11 percent) have misled family or friends about their financial situation. Debt is not just impacting life at home, it has found ways to creep into all aspects of the day. Nearly a third (31 percent) admit to worrying about their debt in general while nearly one-in-five (18 percent) say they worry while at work and one-in-four (25 percent) worry at bedtime.

Living with debt has become a financial and mental burden for nearly three-in-ten Americans with debt (28 percent) who stress about everyday financial decisions because of their debt. Nearly one-fifth of Americans with debt (19 percent) have received letters and calls from collection agencies. While the low interest rate environment has the potential to keep payments lower, one-in-four (25 percent) say that they’re worried a rate hike could change that.

Nearly seven-in-ten Millennials with debt (68 percent) admit it has had a negative impact on their everyday life compared with roughly half of Baby Boomers (48 percent) and three-fifths of GenXers (59 percent) with debt. Most concerning, the survey found that of those with debt, Millennials are twice as likely to worry about debt compared to Baby Boomers (M: 43 percent, BB: 19 percent) and more than a third (37 percent) admit that their debt causes them to stress about everyday financial decisions.

Source: BusinessWire

World’s largest bitcoin exchange, bitFlyer, enters the US (CNBC), Rated: A

The world’s largest bitcoin exchange by trading volume is launching in the U.S.

BitFlyer, based in Tokyo, announced Tuesday it became the fourth digital currency exchange to receive a “BitLicense” to operate in New York. The exchange said it also has licenses to operate in 40 other states.

Former U.S. Comptroller Thomas Curry, Now At Boston Firm, Is Still Fintech Advocate (The National Law Journal), Rated: A

Curry, who was integral in leading the federal banking regulator’s efforts in advancing financial technology, including through the proposal of a special purpose national bank charter for fintechs, joined Nutter McClennen & Fish this week. He is a partner and will co-lead Nutter’s Banking and Financial Services practice group.

How involved with fintech do you plan to be?

That will be a key area and something I’m excited about working with the other members of the firm on. Fintech is interesting, especially if you’re talking about online lending and marketplace lending.

Do you expect the fintech charter will, in fact, move forward?

From my standpoint, I would not have pursued the charter without being very comfortable with the legal foundation for it.

How will you advise clients in the meantime until any special purpose charter is finalized?

Today institutions, banks as well, need to be making strategic decisions about which direction they’re going in. Well before you decide whether to apply to a fintech charter, you should be thinking through the process, so I think the time is now.

Here’s How Andreessen Horowitz & Union Square Ventures Are Betting On Blockchain (CB Insights), Rated: A

This year’s blockchain craze has pushed a huge amount of new money into cryptocurrencies, private blockchain projects, and companies holding initial coin offerings (ICOs). As of now, the total market capitalization of cryptocurrencies stands at more than $340B — a huge leap from where it started the year at $18B.

Source: CB Insights

Blockchain startup AlphaPoint names Nasdaq EVP Salil Donde CEO (Finextra), Rated: B

As it gears up for the launch of a public blockchain network promising to democratise asset digitisation, AlphaPoint has poached Nasdaq EVP Salil Donde and installed him as CEO.

Should I Refinance My Student Loans? (Credible), Rated: B

But you shouldn’t make the decision to refinance your loans lightly. Refinancing can help some borrowers save money, but what refinancing can do for you depends on a number of factors, including the repayment term and repayment options that you choose for your new loan.

Source: Credible
United Kingdom

Assetz Capital Completes Latest Seedrs Round With More Than £1.6 Million in Funding (Crowdfund Insider), Rated: AAA

Peer-to-peer lending platform Assetz Capital completed its latest equity crowdfunding round on Seedrs. The online lender launched the funding round last month and raised a total of £1,665,892.

Thistle and lender rescue developer (Development Finance Today), Rated: A

LendInvest has teamed up with specialist packager Thistle Finance to provide a developer with a £1.3m development exit finance loan.

The developer was set to move from his standard development finance rate on to a more punitive default rate on 1st December, which could have added 0.75% to his monthly interest payments.

However, the development exit finance loan provided by LendInvest – at around 70% LTV – will save the borrower 0.5% on the standard rate he had been paying.

Finance a vital resource as billing delays hit building industry (Asset Finance International), Rated: A

Businesses in the UK construction sector have been hit by a leap in payment delays, with invoices taking an average of 69 days to be settled.

Analysis of more than 13,000 companies by Funding Options, the online business finance supermarket, shows that delays have risen 8% in the past two years.

Yours Clothing in payments tie-up with Klarna (Retail-Systems), Rated: A

Yours Clothing, a UK independent retailer of plus size ladies clothing, has announced a partnership with Klarna which will allow its customers to use the Pay later and Slice it payment options.

Klarna’s Pay later allows customers to try goods first. When checking out online or on mobile, Yours Clothing customers who use Klarna’s Pay later will receive their products and then have 14 days to pay Klarna back interest-free.

Klarna’s second payment option – Slice it – gives shoppers the ability to spread the cost of any purchases over £60 into equal monthly instalments.

Proplend Joins the NACFB (Crowdfund Insider), Rated: B

On Wednesday, Proplend, a UK based peer to peer lender in the property space, announced it has joined the NACFB.

3 smart New Year’s resolutions for business owners (Funding Circle), Rated: B

  • Manage your stress level
  • Make smart money decisions – 
    • Improve your personal credit. Yes, this has everything to do with money. You see, the higher your credit score, the more likely you’ll be able to score lower interest rates on the money you borrow. This can save you hundreds of thousands of dollars over your lifetime, so it’s definitely a resolution worth making.
    • Compare financing offers. Some options just aren’t good for your business. Before you sign on the dotted line, make sure you know the APR you’ll be paying, and compare multiple loans to pick the best deal.
  • Continue to learn
China

China fintech lending boom fuels risks of data theft (Financial Times), Rated: AAA

The rise of online consumer loans in China has spawned a thriving black market in stolen user data.

Virtually non-existent in the country five years ago, consumer lending through websites and mobile apps has expanded rapidly over the past 18 months amid a proliferation of fintech start-ups that use big data to assess credit risk.

In a chatroom devoted to consumer lending on Tencent’s QQ social-media platform, the Financial Times contacted a person claiming to be an employee of an online lender who was offering user data for sale.

For Rmb4 ($0.61) per user, he offered to provide the full name, national ID number, phone number and loan limit. He added that for some borrowers, the data would also include a credit score from Sesame Credit, the unit of Alibaba’s financial affiliate Ant Financial that sells credit scores to banks and consumer lenders with users’ consent.

Alibaba Seeking Biggest Stake in AI Startup SenseTime (Bloomberg), Rated: AAA

Alibaba Group Holding Ltd. is in discussions to invest about 1.5 billion yuan ($227 million) and become the largest backer of Chinese facial recognition startup SenseTime, according to a person familiar with the matter.

SenseTime, which says it’s valued at more than $2 billion, is backed by Qualcomm Inc. and considered one of the more advanced players in machine vision technology.

Uncertainties of overseas markets may transmit P2P risks back to China (Global Times), Rated: A

A number of Chinese peer-to-peer (P2P) lending companies went public in the US this year. Those P2P firms have been growing quickly, with some venturing into high-risk segments such as campus loans and cash advances. As they go public overseas, it creates potential risks that may eventually affect China’s financial stability. Supervision is needed to bring the P2P lending sector in order.

That these companies listed in the US reflects several factors. One main reason is the companies are expanding. Most are underperforming, and some are in the red. US stock exchanges do not have strict requirements for indicators such as net profit and cash flow. Also, the US market attracts investors from all over the world, easily raising more funds.

China’s Lending Crackdown Is Notable for Three Reasons (Bloomberg), Rated: A

Policy makers from the People’s Bank of China and the China Banking Regulatory Commission convened in Beijing on Nov. 23 to discuss new measures to crackdown on online consumer loan platforms, including those for payday loans and peer-to-peer lending. On the same day, Alibaba Group affiliate Ant Financial said it will enforce a cap of 24 percent on interest rates charged by lenders on its website, or 12 percentage points lower than current rates.

Although the measures haven’t been made public, our industry checks suggest three notable changes. First, the issuance of new licenses to online micro-loan platforms is being suspended, suggesting that regulators are scrutinizing online lending practices. Second, banks and bank-holding companies are being told not to buy loans underwritten by online platforms because such assets are deemed too risky. Third, turning the loans into securities will be forbidden because regulators believe securitization amplifies risks and gives investors less of an incentive to perform due diligence on the underlying assets.

So-called P2P online lending platforms have mushroomed from fewer than 10 to more than 2,000 in just over seven years, but only a few hundred operate with government-issued permits.

European Union

Digital Bank Revolut Prepares to Launch Cryptocurrency Features (Crowdfund Insider), Rated: AAA

Digital only challenger bank Revolut is preparing to enter the cryptocurrency world with new features on their bank app to allow users to exchange and use Bitcoin and other digital currencies.

While no official announcement has been made yet, Edward Cooper, Head of Mobile at Revolut, recently tweeted out Revolut’s intent to offer digital currency solutions.

Spanish Peer to Peer Lender Comunitae Suspends Activity Due to Fraud (Crowdfund Insider), Rated: AAA

According to a report in El Español, peer to peer lender Comunitae has ceased all operations indefinitely due to fraud detected on the platform this past October. The Comunitae web site is still live but certain portions are not functional.

Swedish Chamber Export Prize 2017 to Klarna and Daloc (Sweden Abroad), Rated: B

The Swedish Chamber of Commerce for the Netherlands, The Embassy of Sweden and Business Sweden are very proud to announce the winner of the Swedish Chamber Export Prize 2017; Klarna.The prize aims to strengthen the Swedish-Dutch business relations and has been awarded since 2012 to Swedish related companies in the Netherlands.

International

Alibaba-Backed Paytm Aims to Become World’s Largest Digital Bank (Bloomberg), Rated: AAA

Paytm Payments Bank aims to create the world’s largest digital bank with 500 million accounts, envisioning an online financial services provider of everything from wealth management to credit cards and stock market trading.

The bank, backed by the country’s largest digital wallet of the same name, launched formally Tuesday and is targeting people who don’t have access to professional financial services. That aligns with Prime Minister Narendra Modi’s ambition to broaden access for the under-banked in the nation of 1.3 billion people.

Paytm was one of fewer than a dozen entities that secured permits to start payments banks, which can accept deposits and remittances but cannot lend.

It said it will operate a mobile-first bank with zero fees on online transactions and no minimum balance.

Cryptocurrencies and the ‘crowd’ are small businesses’ bank alternative (PaymentsSource), Rated: AAA

A major trend shaping the small-business landscape is the rise in cryptocurrency, which can provide alternative means for a variety of cross-border financial transactions.

Cryptocurrency is ideal for cross-border transactions in several ways. In addition to being secure and permanent, cryptocurrency transactions allow borrowers and lenders to sidestep time spent working through a bank, as well as converting from one currency to another. For many investors, the speed and convenience of cryptocurrency-based transactions presents an opportunity to magnify gains.

Along with crowdfunding and peer-to-peer lending, cryptocurrency can improve access to both payments and credit for SMEs.

International Fintech companies with > 5M funding (Crunchbase), Rated: A

TransferWise is an money transfer service allowing private individuals and businesses to send money abroad without hidden charges.
Funding Circle is a lending platform focused exclusively on small businesses operating in in the U.S., the U.K. and Continental Europe.
Blockchain is a web-based bitcoin platform that makes using bitcoin safe, easy, and secure for all consumers and businesses worldwide.
Building a bank as smart as your phone. Intelligent notifications, instant balance updates and financial management.
WeLab analyzes unstructured mobile big data within seconds to make credit decisions for individual borrowers.

Independent Asset Managers need to become polygamous (Finextra), Rated: A

Independent asset managers shall maintain relationships not only to custodians. Due to disintermediation and distributed ledger technology they will be able to profit from a much broader range of financial assets.

Source: Finextra

SWIFT warns banks on cyber heists as hack sophistication grows (Reuters), Rated: A

Brussels-based SWIFT has been urging banks to bolster security of computers used to transfer money since Bangladesh Bank lost $81 million in a February 2016 cyber heist that targeted central bank computers used to move funds.

Taiwan’s Central News Agency last month reported that Far Eastern International Bank (2845.TW) lost $500,000 in a cyber heist. BAE later said that attack was launched by a North Korean hacking group known as Lazarus, which many cyber-security firms believe was behind the Bangladesh case.

Nepal’s NIC Asia Bank lost $580,000 in a cyber heist, two Nepali officials told Reuters earlier this month.

Australia

FACEBOOK LIVE: Treasurer Scott Morrison on fintech and the banking royal commission (Business Insider), Rated: A

He’s now in Sydney at fintech business Prospa, the nation’s leading online lender to small business, where’s he talking to Business Insider about the sector as well as the 12-month investigation into misconduct by the banks.

See the video interview here.

India

Want a loan? Make sure you’re tweeting the right things (Quartz), Rated: AAA

The article that someone tweeted about, posts that they liked on Facebook, and a new phone just bought on an e-commerce site—all these events now play a crucial role in determining if an individual is eligible for a loan or not.

Online lending firms have seen rapid growth in the last two years, despite the presence of a wide network of banks and non-banking financial companies (NBFCs) in India. That’s because, till 2015, about 70% of Indians remained under-served by banks and other financial institutions, an opportunity that these firms are trying to cash in on. Now, even banks and NBFCs are tying up with online lending firms to reach out to more customers.

The 166 million households that make up middle-income India—with annual earnings of between Rs2.2 lakh ($3,414) to Rs3.59 lakh ($5,572)—typically apply for personal loans to buy consumer durables, for weddings, to meet medical expenses, set up a new business, and the likes.

“We have about 80-90 parameters that are used to check a consumer’s credit worthiness. And that’s where technology comes into play to ensure that it can be done swiftly and efficiently,” said Satyam Kumar, co-founder, LoanTap, an online fintech platform that provides retail loans to salaried individuals.

Delhi start-up wins GIST pitch (The Hindu), Rated: B

GyanDhan, a Delhi-based start-up working in the space of education loans, emerged winner of a GIST pitch competition for enterprises in the Fintech and Digital Economy, one of the four focus sectors at the Global Entrepreneurship Summit, here on Wednesday.

Lupiya Circle, an online market place created by women in Zambia to financially empower women in the African nation through a branchless banking model was declared the runners-up.

MENA

Saudi Arabia puts buzz back into Mideast startup scene (Arab News), Rated: A

Since 2005, the top 200 funded startups in the MENA region have attracted more than $2 billion in capital, according to a report issued by MAGNiTT, which tracks the development of startups across the region.

To date, the majority of top funded startups in the region were established in the UAE, and the primary financial backers have also tended to be UAE-based.

But a recent uptick in funding from Saudi investment firms points to a developing ecosystem for startups in the Kingdom, according to MAGNiTT founder Philip Bahoshy.

Bahoshy said that startups providing solutions for broader regional challenges such as sticky logistics and cross-border banking frictions stand the best chance of attracting meaningful investment.

2018 will be the year African fintech takes off (Global Trade Review), Rated: AAA

Next year will be a good year for Sub-Saharan Africa. After a challenging 2017 for many of its nations, 2018 will see economic growth return across the continent, gas activity boom and fintech innovation pick up in speed.

So says Ecobank Research as it recently launched the newest version of its yearly Fixed Income, Currency and Commodities Guidebook, which provides analysis on African markets for investors and businesses.

The research department of the Pan-African bank forecasts three key trends that will take hold across Africa during the next 12 months. GTR takes a closer look at them.

3. Africa’s evolving role in fintech leadership

But 2018, he emphasises, will see African fintech firms increasingly driving this innovation. “There will still be international investors, but the actual leadership of fintech development is going to start coming increasingly from the Africans. It’s not going to be the Europeans and Americans going in, saying, ‘you should do this’.”

Ecobank’s research highlights South Africa, Kenya, Rwanda, Nigeria, Ghana and Côte d’Ivoire as tech hubs that will nurture the next wave of African startups and help connect them with investors.

One fintech that has caught Ecobank’s attention in particular is IroFit, a firm that uses the mobile network to enable real-time financial payments without the need for an internet connection.

Other emerging innovations in Africa include digital tools to build credit profiles for the previously ‘unbankable’ or using blockchain technology for digital identity and KYC solutions.

Authors:

George Popescu
Allen Taylor