Thursday October 25 2018, Daily News Digest

Funding Circle Holdings PLC

News Comments Today’s main news: SoFi CEO explains how market volatility, rising interest rates create opportunities. Amazon debuts no-fee AmEx card for small businesses. Funding Circle broker channel hits 1B GBP lending. China Rapid Finance is expected to break even. Today’s main analysis: Funding Circle’s short-lived rally. Today’s thought-provoking articles: Is student loan debt creating a millennial class […]

Funding Circle Holdings PLC

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United States

SoFi CEO Anthony Noto: Market volatility, rising rates create ‘opportunity for us’ (CNBC) Rated: A

Rising interest rates and market volatility, while feared on the Street, create an opportunity for online lending platform SoFi to gain new customers, according to CEO Anthony Noto.

“When the markets pull back, people evaluate: ‘Where am I putting my money from an investment standpoint?'” Noto said on CNBC’s “Closing Bell” on Tuesday.

Made conscious decision to focus on quality, not quantity of loans: SoFi CEO Anthony Noto from CNBC.

Amazon Debuts No-Fee AmEx Card to Lure Small-Business Spending (Bloomberg) Rated: AAA

Amazon.com Inc. and American Express Co. are upping the ante in their bid for small-business spending.

The two companies unveiled a new co-branded card for small businesses on Tuesday. Cardholders with an Amazon Prime membership will be able to choose between an interest-free loan for 90 days or 5 percent back on purchases made at Amazon.com, Amazon Business, Amazon Web Services and Whole Foods Market, the companies said in a statement. The no-fee metal card will also offer 2 percent back on purchases at U.S. restaurants and gas stations and on mobile-phone services.

Student-Loan Debt Is Bringing on Millennial Class War (Vice) Rated: AAA

MagnifyMoney, an independent service that compares financial products and is affiliated with the loan marketplace LendingTree, recently analyzed 2016 data from the Federal Reserve and estimated the average millennial with student debt had 75 percent less net worth than their debt-free peers. Though many of the stats they calculated might have been skewed by extremes—think people with debt loads of $200,000 and trust-fund kids worth seven figures—they were able to reach some pretty startling conclusions. For instance, the median net bank account balance (checking and savings) of all grads under 35 who had loans, they found, was $5,500, while it was some $10,180 for those who didn’t.

So what’s the most meaningful difference between those with loans and without?
The one that’s really most costly is when you look at the retirement savings. On that side, the average grad under 35 with debt has around $21,000 in retirement savings. Someone who doesn’t have student loans has an average of almost $40,000.

Credit Card Stats & Studies (Hub Wallet) Rated: AAA

Source: Hub Wallet

Building Loyalty with Gen Z and Millennials Starts with a Better Experience (Globe Newswire) Rated: AAA

In particular, changes in the credit card market have been heavily influenced by the youngest generations. While TransUnion studies have found that consumers generally have a much higher propensity of opening their next credit product with a lender with whom they already have multiple relationships, this doesn’t appear to hold true for Gen Z. Younger consumers are engaging with new lenders rather than going to existing lenders for new products. In the report, Gen Z respondents indicated that they were the least likely to open a new credit product with a financial institution as a result of an existing relationship with that lender.

While consumers are carrying more credit cards in their wallets today than in 2010, the industry has seen five straight quarters of declining year-over-year origination growth. The study also found that the average duration for which a credit card remains open has shortened across the majority of age groups, which would indicate shifting loyalty.

Source: Trans Union

The Fintech 250: The Top Fintech Startups Of 2018 (CB Insights) Rated: AAA

The financial services industry is being transformed by insurgent startups. From capital markets to insurance and digital banking to wealth management, the Fintech 250 are among the most promising of these companies globally.

The entire 

Lendio Named to the 2018 CB Insights Fintech 250 List of Fastest-Growing Fintech Startups (PR Newswire) Rated: A

CB Insights today named Lendio to the second annual Fintech 250 list, a prestigious group of emerging private companies working on groundbreaking financial technology.

“It’s an honor for Lendio to be listed among the innovative companies driving the fintech industry forward,” said Brock Blake, Lendio CEO and founder. “Lendio is doing its part to power the economy by bridging the financing gap for small businesses. We are committed to shaping the future of marketplace lending to help business owners unlock their financial potential.”

Lendio, the nation’s leading marketplace for small business loans, recently announced it has facilitated over $1 billion in financing to more than 51,000 small businesses across the U.S. Through access to this growth capital, Lendio’s small business customers have generated an estimated $3.8 billion in gross economic output and created more than 25,000 jobs nationwide. Lendio’s milestone comes after an 80 percent increase in loans funded through its platform in the last year.

As Rates Rise and Recession Threatens, Alternative Lenders Batten Down the Hatches (Bank Innovation) Rated: A

The CEOs of Prosper Marketplace, Lending Club, and Social Finance Inc. all spoke to a common theme – preparing for the coming storm and choosing loans for quality, not quantity. JPMorgan Chase has predicted a 60% chance of recession by 2020, and it’s not clear how traumatic an event it will be.

JPMorgan signed a deal with Plaid for customer data sharing (Business Insider) Rated: A

JPMorgan on Monday signed an agreement with Plaid, a technology company that connects bank accounts with fintech apps like Robinhood, Venmo, and Acorns, that will give its customers better control over their personal data.

Plaid will access JPMorgan’s customer data through a secure application programming interface or API, allowing customers to share their financial information more easily and safely. Banks including JPMorgan have pushed back against so-called screen scraping, another way for fintech apps to companies to access customer data that generally is viewed as less secure.

Goldman shifts Marcus digital bank to its wealth unit (American Banker) Rated: A

Goldman Sachs Group is shifting a heavily touted business line into its wealth management unit as the bank eyes expansion through products that can be pitched to the division’s customers.

The firm is handing oversight of the Marcus business — its retail-banking effort, which offers personal loans online — to its $1.5 trillion investment management division, according to a memo seen by Bloomberg. The move is aimed at starting new business offerings under the Marcus brand that can be sold to the unit’s expanding roster of clients.

A spokesman for Goldman Sachs confirmed the contents of the memo.

U.S. ‘Unbanked’ Population Continues to Fall (Wall Street Journal) Rated: A

The number of U.S. households without a bank account fell to 6.5% in 2017, according to a federal government survey, as the improved economy helped bring mainstream banking services to more people.

The Federal Deposit Insurance Corp. said Tuesday the number of ”unbanked” households reached its lowest level last year since the regulator began the biennial survey in 2009. The share of households without an account at a federally insured financial institution was down half a percentage point from 7% in 2015.

We’re Closer Than you Think to Autonomous Finance (Lend Academy) Rated: A

Autonomous finance isn’t a well known term within fintech, but it may be the biggest innovation in the consumer finance space in recent years. Ken Lin, the CEO and Co-Founder of Credit Karma talked with us recently on the Lend Academy podcast about this concept of autonomous finance, a concept that is slowly turning into reality.

Credit Karma is in the unique position to capitalize on this idea, particularly when it comes to the lending business, which still relies heavily on credit scores. The company has built a platform in which users can track their credit score over time and get suggestions on products based on their financial life. From my perspective Credit Karma has a monopoly of sorts on this business with no other serious competitors at scale. Due to their sheer size and the engagement with their members, Credit Karma is a significant lead generator for the major online lenders that exist today.

New UltraFICO score stokes concerns about data privacy (American Banker) Rated: A

A new credit score that includes a consumer’s cash flow alongside their credit score — dubbed UltraFICO — is winning praise for its potential to help expand access to credit but also stoking concerns about its data privacy implications.

FICO announced this week that it is testing a new credit score with Experian and data aggregator Finicity that draws on several months’ worth of data from consumers’ bank accounts. The idea, according to FICO, is to create a “second chance” score that could allow consumers who’ve been denied credit due to the traditional model another shot at obtaining it.

Short on Cash? Use Your Employer as a ‘Payday Lender’ (Nerd Wallet) Rated: A

In recent years, startups from Silicon Valley and beyond have stepped up to offer payday alternatives through the workplace. Some, including Earnin and PayActiv, have put a new twist on the two-week pay cycle to give people access to their wages as soon as they’ve earned them. Others, such as HoneyBee, SalaryFinance and TrueConnect, allow employers to offer low-cost emergency loans as an employee benefit.

Paycheck advances in the modern workplace

What technology companies like Earnin and PayActiv say they offer is a streamlined approach for employees that retains the employer’s traditional two-week pay cycle.

Navient eyes end of non-compete with Sallie Mae in January (Asset Securitization Report) Rated: A

Navient Corp. has been ramping up origination of refinance student loans even as rising interest rates reduce the potential savings for borrowers. Earnest, the online lender it acquired late in 2017, originated $903 million of refinance loans in the third quarter, bringing year-to-date originations $2 billion. But so far, the servicing giant’s ability to expand has been limited because of a non-compete agreement with the largest private student-lender, SLM Corp., better known as Sallie Mae.

Under the terms of their split in 2014, Navient is unable to refinance either private student loans made by Sallie Mae or any federally guaranteed student loans held by Sallie Mae.

The non-compete clause expires in January, and Navient CEO Jack Remondi doesn’t plan to waste any time. On a third quarter conference call Wednesday, Remondi made it clear that he sees plenty of potential to refinance loans made or held by Sallie Mae.

Kabbage Extends Access Of Small Business Lending (Benzinga) Rated: A

Kabbage is now lending over $10 million per day to small businesses, in congruence with the company’s recent addition of 30,000 customers in 2018. The company reported its first $500 million quarter this year, according to the press release.

The lender serves up to 1,400 businesses daily and has demonstrated a 68 percent increase of working capital accessed by Kabbage on mobile devices, as well as a 283 percent growth in use of the Kabbage Card since 2017.

“It was a great growth quarter for the company, and is a direct result of developing flexible and convenient solutions that simplify accessing capital for small businesses,” Kabbage CFO Scott Rosenberg told Benzinga.

Beyond Kickstarter: 10 Niche Crowdfunding Platforms for Startups (Entrepreneur) Rated: A

1. CrowdStreet

If you’re building a real-estate investment business — or developing real-estate projects — check out the online crowdfunding opportunities on CrowdStreet.

4. FundThatFlip

If your business is remodeling and reselling homes, FundThatFlip offers a place to get quick cash to fix up and resell. Investors put in a minimum of $5,000.

Guaranteed Rate Ranks as the Best Mortgage Lender for Online Mortgage Service by U.S. News & World Report (Bankless Times) Rated: A

Guaranteed Rate, an industry leader in technological innovation, tops the list of the Best Mortgage Lenders of 2018, according to U.S. News and World Report. The Chicago-based retail mortgage lender was named the Best Lender for Online Service with its groundbreaking advances to make the mortgage experience fast, simple and secure with its digital platform.

US News & World Report recommended the Guaranteed Rate mortgage process as best for borrowers who:

  • Want to complete most of the mortgage process online
  • Want help figuring out the right product for their situation
  • Want access to a variety of home loan options

Bought Mega Millions Tickets? Here’s What You Could Have Made If You Invested That Money Instead (Time) Rated: A

Americans spend a lot of money playing the lottery. Approximately 370 million lottery tickets were sold between Saturday and Tuesday before the Mega Millions drawing, according to a lottery official. The U.S. generated nearly $73 billion in lottery sales in 2016 and CNN reports that in 2017, U.S. residents spent about $73.5 billion on tickets. The average American spends about $223.04 per year on lottery tickets, loan marketplace LendEDU found in a report that calculated its average by dividing the 2016 lottery revenue by the U.S. population (325.7 million).

Milwaukee, Cincinnati and Minneapolis Are the Most Promising Places to Open a Restaurant (PR Newswire) Rated: A

LendingTree, the nation’s leading online loan marketplace, today released its study on the best cities to open a restaurant. The study found that while traditional foodie destinations like New York and San Francisco are saturated with restaurants, up-and-comers have room to grow. The restaurant population in cities like MilwaukeeCincinnati and Minneapolis cities is less dense than in other areas, and labor costs are lower.

LendingTree analyzed the 50 largest U.S. cities to see which offer prospective restaurateurs the best shot at success. Many top spots are in once-overlooked Midwestern cities now experiencing urban renewal. The least promising cities have historically been the restaurant industry’s most competitive.

Nav and Clover Partnership Streamlines Access to Business Credit Scores & Financing (PR Newswire) Rated: A

Today, Nav and Clover, a subsidiary of First Data, formally announced an integrated, multi-year partnership to deliver U.S.-based Clover users access to their free business credit scores, as well as custom-tailored business financing and credit card options.

The Federal Reserve Bank and other surveys consistently report around 70 percent of small business loan applicants are denied by their bank. As credit data is a primary way that banks and other financial institutions evaluate business loan applicants, the integration of business credit scores and insights directly into Clover’s dashboard enables these merchants to manage this important data.

Memorial Healthcare System Taps ezCarePoint to Provide Instant Online Financing for Patients’ Out-of-Pocket Medical Costs (AP News) Rated: A

Patients at facilities run by South Florida’s Memorial Healthcare System (MHS), one of the nation’s largest public healthcare systems, can now easily and quickly finance their out-of-pocket medical fees online, thanks to a new program powered by ezCarePoint, a next generation medical financing technology platform created by ezVerify, a Sunrise, Fla. based company and LendingPoint, a Kennesaw, Ga. based company.

RealtyFolio Updates Its Platform for a Big 2019 (PR Newswire) Rated: B

RealtyFolio, the online real estate investing platform has updated its interface, including a redesign, rebrand, and upgraded features. The upgrade was meant to “make it even more comfortable for clients to navigate the platform and for clients to be able to invest in real estate projects, quickly and easily,” according to the company’s CEO, Jonathan Klein. He went on to say that they “expect a very big year in 2019, with many projects in the works, and a lot of demand from clients.”

RealtyFolio is ushering in the future of real estate investing by allowing you to build a real estate portfolio online. With over 30 years of real estate investing and management experience on its team and a vast network of strategic partners across the United States, in cities such as New YorkMiami and Los AngelesRealtyFolio gives everyone a chance to swim with the sharks.

Tamarack Hires Seven and Expands Headquarters (ELFA) Rated: B

Tamarack, a leader in providing independent software solutions in the equipment finance and commercial lending industry, has moved to a new headquarters in the North Loop, doubling their space, and added seven new positions over the past three months to meet the growing demand.

With over 25 years of Leasing and Lending experience and an expert in InfoLease®, Tamarack hires on George Burke. Burke adds extensive experience to Tamarack’s back office software engineering team.

White Oak ABL Appoints Griffith to Managing Director (ABL Advisor) Rated: B

White Oak ABL, LLC, an affiliate of White Oak Global Advisors, LLC, announced the appointment of Clark D. Griffith to Managing Director, based in San Francisco. Griffith joins from Encina Business Credit where he held the position of Senior Managing Director in charge of West Coast originations, offering lines of credit and term loans from $5 million to $50 million.

PNC to offer online business loan option in 2019 (Delaware Business Now) Rated: B

PNC announced that in 2019 it plans to begin offering fully digital business lines of credit, up to$100,000.

PNC will partner withOnDeck and use its Platform-as-a-Service to simplify and accelerate the conventional lending originations processes for PNC Bank’s small and medium-sized business customers.

PNC will combine its expertise with ODX’s online origination technology and professional services to create PNC Small Business Lending.

TickPick Announces Affirm Partnership, Expands Payment Options at Checkout (PR Newswire) Rated: B

TickPick, the no-fee ticket marketplace that is transforming the industry, announced today a partnership with Affirm, the company founded by entrepreneur Max Levchin to provide fair and honest alternatives to traditional credit. This new payment option makes TickPick the first and only secondary marketplace to offer Affirm, which allows customers the ability to spread out the cost of their purchase over time through simple monthly payments.

United Kingdom

Funding Circle’s broker channel reaches £1bn lending milestone (Bridging and Commercial) Rated: AAA

After four consecutive record-breaking quarters, the in-house broker team has supported the growth of 9,600 British businesses.

Prior to the lending milestone, the P2P platform promoted Tom Shave to head of broker.

Tom has assisted in developing a diverse network of introducers, big and small, across the country.

UK regions come to the fore in producing $ 1bn tech companies (London Loves Business) Rated: A

The UK’s leading tech clusters are competing head to head with European capitals, according to new analysis of company growth, in a sign that the success of the UK tech sector is pushing far beyond its London heartland.

Following the IPOs of Farfetch and Funding Circle, the UK is now home to 15 unicorns and six cities have produced so-called unicorns – $1bn tech companies – according to research prepared for Tech Nation and the Government’s Digital Economy Council by venture capital analytics company Dealroom.co. This latest research is published ahead of the Secretary of State for Digital, Culture, Media and Sport’s first meeting with the Digital Economy Council on 24 October 2018.

Looking at the creation of $1bn tech companies, Oxford and Cambridge combined have produced more fast-growing tech companies than both Paris and Berlin.

China

Loss-Making China Rapid Finance Limited (NYSE:XRF) Expected To Breakeven (Simply Wall St News) Rated: AAA

China Rapid Finance Limited’s (NYSE:XRF): China Rapid Finance Limited, through its subsidiaries, provides a consumer lending marketplace for lenders and borrowers in the People’s Republic of China. The US$156m market-cap posted a loss in its most recent financial year of -US$122m and a latest trailing-twelve-month loss of -US$49m shrinking the gap between loss and breakeven. As path to profitability is the topic on XRF’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for XRF.

European Union

Klarna Talks Split Payments at Money2020 Conference (Cheddar) Rated: A

Klarna is launching a new ‘Slice it in 4’ product, allowing users to split up payments. Michael Rouse, chief commercial officer of Klarna, explains how it works.

INDOCHINO Chooses Klarna to Give Consumers the Power to Pay Over Time (PR Newswire) Rated: B

INDOCHINO shoppers can now Slice it at the checkout by using Klarna’s online consumer financing to easily spread the cost of their purchase over 6-36 months. Slice it has a simple 4-step credit application process, real-time decisioning and is offered within the merchant’s own website – no re-directs – for a frictionless and fast purchase experience.

By taking the premium made-to-measure experience direct to the consumer, INDOCHINO has created a superior alternative to off-the-rack clothing at ready-to-wear prices. Their immersive multi-channel experience enables customers to order their custom garments with ease online or in-person at one of 30+ showrooms across North America

German fintech poster child N26’s major security gap (Handelsblatt) Rated: A

Germany’s fintech darling N26 is potentially vulnerable to money laundering and terrorism financing, according to research by Handelsblatt’s sister magazine WirtschaftsWoche, which exposed a security gap at the online banking startup.

The apple of discord is how easily someone can open an account with a fake ID. A WirtschaftsWoche correspondent saw first hand how a man, Milo T., scanned a friend’s ID, added his own passport photo to the ID, printed it out and stuck it atop of a white plastic card that was the same size as the office ID card in his country. He cut the edges to make them round and voilà: a new identification card.

It took five minutes and the result is so blatantly a forgery that it would fail to convince even the laxest of nightclub doormen. None of the holograms or other security features found on original IDs can be seen on the fake. Regardless, Milo effortlessly used this ID to set up an N26 account, and this wasn’t a one-off occurrence. WirtschaftsWoche documented how several people opened N26 accounts using forged papers.

Robo.cash welcomes new loan originator (Peer2Peer Finance  News) Rated: B

LATVIAN peer-to-peer payday lender Robo.cash has added a loan originator from Kazakhstan to its platform.

Z-FINANCE provides short-term private lending in Kazakhstan with an average loan size equivalent to €60 (£52).

Investors on the Robo.cash site can now invest in these loans, which have a repayment period up to 30 days and an expected interest rate up to 12 per cent per annum.

Z-FINANCE was launched in July this year and currently lends through a network of 102 sales branches in Kazakhstan.

International

ID Finance Group reports 61% revenue growth for the nine months of 2018 (Fintech Finance) Rated: AAA

ID Finance Group has reported 61 per cent revenue growth and revenues of $141.3 million for nine months of 2018 following strong growth in Europe and Latam. The data science, credit scoring and digital finance company issued $215.7m in loans in the first nine months of the year, a 64 per cent increase on the same period last year.

Its European and LatAm operations comprising Spain, Poland, Brazil and Mexico demonstrated exceptional growth experiencing a 197 per cent revenue growth and revenues of $32.6 million for the nine months of 2018. It issued $63.8 million in loans, a 142 per cent increase on the same period last year, and has also grown its customer base to over one million registered users with 20,000 new users joining weekly.The Group has now separated its European and LatAm operations from its CIS businesses (comprising Russia, Kazakhstan and Georgia) and it is functioning as a separate entity under the ID Finance name.

Moven Enterprise Expands Availability of AI Smart-Banking Solution with Global Launch (Business Wire) Rated: A

Moven Enterprise, the smart-banking solutions division of Movencorp, Inc, today announced that it has expanded its footprint globally to help banks deepen their digital customer engagement and drive new revenue streams while significantly reducing attrition and acquisition costs.

After working successfully with TD Bank (TD) in Canada, Westpac in New Zealand, and others, Moven is now bringing its AI-driven digital banking platform to banks across LatAm, APAC, Africa, the Middle East and Europe. The global expansion is well-positioned as Moven Enterprise received investment from SBI Group to enhance Moven’s footprint in Asia earlier this year. This included the formation of a joint venture, SBI Moven Asia. The company’s innovative platform leverages a bank’s data and uses proprietary algorithms to create contextual, individualized smart-banking experiences for consumers; providing them the right advice at the right time with the right offer and helping them move towards a better financial lifestyle.

The Complete Beginner’s Guide to Becoming a Private Lender—Pros & Cons (NuWire Investor) Rated: A

Private lending has picked up the pace in recent years. This is despite high-interest rates charged by private lenders. Many reasons have pushed lenders into this space including tightened requirements by banks.

In addition, banks tend to shy away from lending money to small businesses and startups. As a result, many borrowers look for other ways of funding, and such opportunities provide opportunities to private lenders.

However, starting out as a private lender is no easy walk in the park. Numerous risks lurk in the business, and you need to tread with caution. In this article, you’ll learn how to become a private lender and some of the pros and cons involved, so if you have an interest in becoming “a bank,” read on.

Fintech Streamlines Socially Responsible Impact Investing Via Robo-Advisors (Investor Place) Rated: A

What makes an investment socially responsible? There are several criteria. For instance, SRI investing avoids tobacco companies as their products cause health problems and death. Typically, a company’s social responsibility rating is based on its performance in three categories: environmental, social and governance (ESG). Positive practices across one or more of these spheres can land a company in the socially responsible category.

At the same time, robo-advisors are digital investment managers designed to grow your wealth through investing with models are based on sophisticated computerized algorithms, including ESG consideration. These fintech darlings have answered the call for socially responsible robo-advisors with a host of diverse options. Of course, you could choose a socially responsible mutual fund or ETF on your own. But, for the busy investor, let one of the many robo-advisors take charge of your investing, in line with your personal values.

Uphold Joins Crypto Lending Platform Cred for New Lending and Earning Solutions (Coin Speaker) Rated: A

In today’s business community, partnership has become one of the most promising tools on the way to new amazing developments and interesting projects that are aimed at offering customers really unique experience and opening new opportunities for them.

News about recently established collaborations regularly appears here and there. This time the headlines are made by Uphold which is a major global digital money platform, that has conducted transactions worth over $4.0 billion across 184 countries, and Cred that is a crypto-backed lending provider with over $250 million in credit facilities.

Joint Projects

Having announced their partnership Uphold and Cred have revealed their plans to launch two cutting edge blockchain-based consumer finance products: Uphold Earn and Uphold Borrow. Both products are aimed at helping customers to earn interest from stablecoin holdings and borrow money against the cryptocurrencies they have.

India

Indian P2P Lending Operators forms Association to Make P2P Industry More Credible (Indian Web2) Rated: AAA

After the Reserve Bank of India unveiled guidelines last October recognizing the need for peer-to-peer lending platforms as NBFC-P2P in the country, the regulatory authority had issued first license in May 2018 and since then 9 players have been recognized as NBFC-P2P companies. More than 12 companies are in the process of getting approval from the regulatory authority. Some of them are at advance to mid-level stage.

To represent the NBFC-P2P industry at various front as well as to represent country’s P2P lending industry at international forums, most of existing & new players have teamed-up and formed a registered body – Association of NBFC P2P Platforms.

The association has been registered under The Society Registration Act, 1860. Mr. Pramod Akhramka has been elected as President, Mr. Rajiv Ranjan as Secretary and Mr. Mukesh Bubna as Treasurer of the association.

Choose bank or online lender based on nature of loan (DNA Online) Rated: A

Unexpected expenditures often come knocking on your door when you want them the least. The reasons could range from maintenance for your vehicle to your old washing machine that needs to be replaced. The plus point of such expenses cropping up during the festive season is that you can always get a good bargain online (or at the store nearby). The fact still remains that these are expenses nevertheless. And that too when your festive expenditure is already lined up, leaving no financial bandwidth.

At times like these, loans bring a sigh of relief. But with so many options available in the market, whom should you approach with your loan requirement- banks or digital lending platforms?

Today, Indian consumers are benefitting from a range of financial products and financial institutions (FI) such as banks, non-banking finance companies, online lending platforms, etc, available at their disposal. If you are planning to take a loan or feel like there’s a possibility of availing the same in the near future, you must primarily understand that every lender has its own unique pros and cons. Some are quick in terms of loan approval and disbursal, some are cost-effective, some offer greater flexibility to their customers, while some offer innovative products that are more relevant for an applicant.

Authors:

George Popescu
Allen Taylor

Thursday March 23 2017, Daily News Digest

insurtech

News Comments Today’s main news: Kabbage to raise money for acquisitions, possibly OnDeck. Fundbox partners with Zoho. Goji launches diversified P2P lending bond. HNW Lending launches IFISA. Property Crowd launches IFISA. Today’s main analysis: Ron Suber on Fintech & fraud. Today’s thought-provoking articles: Podcast: Dominic Venturo on creating a model for innovation. Alternative finance for SMEs is even more urgent. Jail […]

insurtech

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United States

Kabbage looks to raise money for acquisitions (Reuters), Rated: AAA

Small U.S. business online lender Kabbage Inc is in talks to raise a new round of equity funding that could be used for potential acquisitions at a time when many of its peers face funding challenges, people familiar with the matter said.

One of the acquisition targets under consideration by Kabbage is rival On Deck Capital Inc, which has market capitalization of $321 million, according to one of the sources.

Ron Suber on Fintech & Fraud: A Global Challenge (Crowdfund Insider), Rated: AAA

How fraud occurs is a never-ending, shape-shifting challenge for individuals, companies and public authorities. There will always be another Ponzi or Madoff looking to separate hard-earned money from honest people via duplicitous actions. As all types of business shift online, fraudster’s will inevitably adapt to pursue their malevolent objectives.

Some of the challenges that impact online lenders include:

  • “Shotgunning” – taking out multiple loans from multiple platforms in under ten days
  • Loan stacking – multiple unsecured loans over several months

Download Ron Suber’s special report “Fintech & Fraud” here.

FUNDBOX PARTNERS WITH ZOHO TO SOLVE CASH FLOW GAPS (Fundbox Email), Rated: AAA

Fundbox, the cash flow optimization platform for small businesses (SMBs), and Zoho, the cloud-based business operating system, today announced a partnership in which Zoho will offer Fundbox to its user base of over 25M. Under the partnership, Zoho will provide access to Fundbox’s technology to streamline and automate the business borrowing experience within the Zoho ecosystem.

Fundbox addresses one of the biggest pain points for small businesses and freelancers: cash flow.  A recent Fundbox study revealed that 64 percent of small businesses are adversely affected by late payments. Over 80 percent of small business invoices are over 30 days due. This integration will allow Zoho customers approved for Fundbox Credit to advance funds tied up in their receivables so they can focus on business growth.

U.S. Bank’s Dominic Venturo on creating a model for innovation (Tearsheet), Rated: AAA

Every institution innovates differently. Our approach is to work with the businesses to understand their objectives and strategies. We want to keep a long-term eye on emerging technology and how consumers and businesses interact with technology. We’ll blend that into the product development roadmaps for the businesses. In some cases, emerging technology will look like it has a lot of potential but then you really have to see how it applies to a business, whether it solves a customer problem or pain point, and whether it can scale to a company our size. I don’t know if this is different than others, but it’s definitely our approach.

Ondeck announces extension, upsize of revolving credit facility with Deutsche Bank (Reuters), Rated: A

On Deck Capital Inc – amended its asset-backed revolving credit facility with Deutsche bank to extend facility’s maturity date to march 2019

On Deck Capital Inc – amended credit facility to increase facility’s borrowing capacity by about $52 million to a total of up to approximately $214 million

Online small-business lending recovering (Biz Journals), Rated: A

For online business lenders, 2016 was a rough year.

Two prominent fintech companies saw their market valuations drop. One small-business lender abruptly stopped issuing loans temporarily due to performance issues, while another was forced to shut down.

Lifshitz offers his view on the subject:

1. Fintech loan originations will surge in 2017.

It’s clear to me that the fintech space’s long-term themes are unchanged. The credit gap remains, and fintech companies still provide a much-needed service. Plus, they’re doing so in a far easier and seamless way than has been available to customers in the past.

Those who reacted to the negativity of 2016 are going to be surprised. Fintech companies will recover from the sector’s downbeat view. Demand and originations will continue to grow. I predict that market sentiment will come back as confidence returns.

2. Fintech companies will adapt by diversifying products and target markets.

Fintech also will get a boost from a secular trend. More millennials are joining the workforce and consuming more services online, including financial services. The generational change favors fintech companies.

3. Fintech companies could form partnerships with banks.

4. Fintech will dominate the user experience.

How one startup aims to help ‘credit invisible’ foreign workers in the U.S. (Tearsheet), Rated: A

For millions of immigrants and temporary foreign residents in the U.S., establishing a financial identity here can be complicated and expensive. Since credit reports don’t cross borders, an immigrant with an exceptional credit score in his home country may arrive in the U.S. as ‘credit invisible’ — a status that may render him ineligible for loans or long-term housing.

Nova Credit is an alternative score to assess foreign residents’ creditworthiness based on their home country credit data. It can also be used for Americans returning to the country after years working abroad. The company obtains the data through agreements with major foreign credit bureaus, a process that can only be initiated with the customer’s consent, Esipov said. Though Nova Credit is initially focusing on India and Mexico, it’s entered into arrangements with credit bureaus in Europe, Canada, Australia and the Philippines. Its revenue model is based on fees to lenders who request the reports.

BP Podcast 219: Private Lending, Turnkey Investing, and Crowdfunding Real Estate with Dr. Kenyon Meadows (Bigger Pockets), Rated: A

If you are looking to make your real estate more passive, this is one show you can’t afford to miss!

Humans to Robos: You Can’t Touch This (Think Advisor), Rated: A

Over the past five years, robo-advisors that provide algorithm-based financial advice and online portfolio management have skyrocketed in popularity. Once the robots take over, the argument goes, humans will be no more.

A commoditized approach to investing cannot incorporate potentially high-impact life events in the same way a knowledgeable human advisor can. Humans offer expertise throughout the life cycle of a client’s investments, while a robo-advisor often reduces a client to a formula. Moreover, the human advisor offers another invaluable service that the robo-advisor can’t replicate – emotional intelligence.

Industry research supports our view. The Financial Planning Association and Investopedia found that investors want a low cost, automated platform combined with personal advice from a human adviseor. Moreover, they noted that 40% of the investors surveyed revealed they are very uncomfortable with automated investing during periods of extreme market volatility.

MyPrivateBanking estimates that hybrid human/automated solutions will accumulate AUM of nearly $3.7 trillion by 2020, and $16.3 trillion (slightly more than 10% of all investable wealth) by 2025. They estimate that pure robo-advisors will have a market share of only 1.6% of total investable wealth by 2025.

New US insurtech Fabric targets parents (Business Insider), Rated: A

The number of insurtechs in the life insurance space has been in two minutes online; and Fabric Premium, a more comprehensive 20-year term policy. As of Tuesday, Fabric is live in 32 US states, with license applications in the remainder pending approval. Fabric recently raised a $2.5 million Seed round led by VC firm

Evolve Capital Partners Advises on Acquisition of LeaseDimensions (Yahoo! Finance), Rated: A

Evolve Capital Partners Inc., a specialized investment bank, today announced its client, LeaseDimensions, has been successfully acquired by GenPact (NYSE: G), a global professional services firm focused on delivering digital transformation for clients.

Founded in 1995, LeaseDimensions is a technology-enabled business processing management and information technology services company that specializes in providing finance process and technology domain expertise to equipment, vehicle finance and renewable energy companies. By acquiring LeaseDimensions, GenPact will unlock synergies across its core equipment financing businesses, offering enhanced growth and scalability opportunities while effectively providing onshore servicing capabilities.

Financial Stress Suggests Consumers are Making Impulsive Decisions in the Home Buying Process (Yahoo! Finance), Rated: A

Owners.com, an innovative online brokerage, recently commissioned a survey of more than 1,200 consumers considering a home purchase this year. The theme of this year’s spring real estate season? Stress. In fact, according to the study, 72 percent of potential home buyers stated that they expect stress in the home buying process, with many citing financial aspects as the most concerning. Additional key findings are included below.

When asked about concerns and issues when buying a home, leading financial aspects included:

  • Fear of losing earnest money deposit (64 percent)
  • Becoming “house poor” (61 percent)
  • Bidding wars driving up the price (59 percent)

Despite these financial stressors, when potential home buyers were questioned about their willingness to go over budget in a competitive bid to get into a dream home:

  • More than half (55 percent) said they were willing to go beyond their budget
  • For those willing to stretch their dollars, on average, consumers stated they were willing to go $37,809 over budget

Given these monetary pressures, savvy consumers are considering real estate models that offer opportunities to cut costs in the transaction. When asked about their propensity to handle the home buying or selling process themselves if they would be charged a lower commission, 85 percent said they were likely to consider this opportunity if it meant they had access to some of the more complicated transaction services like the appraisal or legal documents. Nearly one-quarter (23 percent) indicated that they would be motivated to work with a real estate agent or broker who would reward them financially for the work they do on their own. These consumers should look for opportunities to work with a brokerage that offers a buyer rebate or sellers an opportunity to save on traditionally high agent commissions.

Detroit Fintech Startup Autobooks Closes $ 5.5M Series A Round (Xconomy), Rated: A

Autobooks, the Detroit-based startup spun out of Billhighway in 2015, has closed on a $5.5 million Series A funding round. The investment was led by Pittsburgh-based Draper Triangle, with participation from CU Solutions Group, Baird Capital, Detroit Venture Partners, and Invest Michigan.

Autobooks, he explains, has created a set of digital tools to automatically handle a range of accounting tasks, including collecting payments owed to a business and disbursing money a business owes to others. The company licenses its software to banks and credit unions, and they in turn make the technology available to their small-business customers.

Autobooks sprang from Troy, MI-based Billhighway, a financial technology company serving large enterprise customers.

Banks are Back in the Game (Forbes), Rated: A

The introduction of online and small business lending has forced banks to rethink their strategies, but banks are now starting to play ball and shift the industry again.

In the lending industry, there’s a perception that extreme competitiveness has developed between banks and non-bank lending, but I don’t believe that’s the case. By working together, they can help small businesses – the backbone of the American Dream.

JPMorgan Chase and Bank of America took two different approaches to building out online small business lending. They were able to learn from non-bank lenders and emulate the customer experience, or partner with a non-bank lender, to improve their own offerings. Non-bank lenders like OnDeck have reinvented the customer journey. Combine that with the advantages banks have with cost of capital, customer base, underwriting credit cycles and access to data, and you have a good recipe for the future of small business lending.

But as Tufail pointed out, the migration from baby boomers to millennials will further emphasize digital channels. Tech savvy folks will want even quicker lending decisions, and that starts online.

5 ways banks are using Snapchat (Tearsheet), Rated: A

American banks have also amped up their Snapchat recruiting efforts. Not long after their launch of Snapchat Spectacles, Citibank employees began shooting videos with them to offer insights of life as a Citibank worker.

Dutch bank ABN Amro launched a Snapchat customer service capability (Snapchat “webcare”), a feature that’s yielded them 2000 followers since its launch a year ago. The bank posts stories to engage users who can ask questions using photos, videos, emojis and filters.

Through Snapchat, banks are affiliating themselves with causes close to customers’ hearts. For example, CIBC, Canada’s fifth-largest bank, launched a Snapchat pride filter to mark LGBTQ pride festivities last summer.

The Bank of Ireland pulled in celebrity influencers who use the Snapchat offer financial tips and advice to younger customers — a part of the bank’s FeelFree student reward program.

Bank of America’s Llama was used as a Snapchat lens was released last summer in conjunction with the MLB All Star Game to promote the bank’s mobile app.

Small Change Announces First Los Angeles-Based Real Estate Offering (Crowdfund Insider), Rated: B

Real estate crowdfunding platform Small Change announced on Wednesday the launch of its first Los Angeles-based offering.

Small Change describes Rosewood as a urban-minded development of four single-family units that are designed to achieve net-zero energy usage and further vitalize the area. Each of the units is designed with energy efficiency and resource conservation in mind and will also be pre-wired for solar panels with sufficient roof space to achieve net-zero energy living.

Small Change added a 10% return is projected on this investment.

Conference of State Bank Supervisors Releases Statement to Congress on OCC FinTech Charters (Buckley Sander), Rated: B

Ryan stated that the OCC’s Proposal “sets a dangerous precedent [by demonstrating that] the OCC has acted beyond the legal limits of its authority [and has] bypassed and ignored bipartisan objections from Congress, [thereby] creat[ing] new risks to consumers.” He asserted that the proposed charter would “preempt existing state consumer protections without a comparable mechanism to replace them. It also exposes taxpayers to the risk of inevitable [F]inTech failures.”

United Kingdom

Goji launches P2P lending bond (FT Adviser), Rated: AAA

Goji’s Diversified Peer-to-peer Lending Bond claims to be the UK’s first diversified peer-to-peer lending proposition with a portfolio of loans from a variety of lenders.

It is targeting returns in excess of 5 per cent over a one or three-year term.

The bond is eligible for inclusion within the Innovative Finance Isa.

HNW Lending unveils Innovative Finance ISA targeting 7% – 15% (AltFi), Rated: AAA

HNW Lending has received full approval from the Financial Conduct Authority approval to offer Innovative Finance ISAs (IFISA), with minimum investments of £5,000 per loan.

It will target returns of between 7 per cent per annum and 15 per cent per annum depending on the risk of the loans in which the investors choose to invest.

Property Crowd launches IFISA with target returns of 7-10% (AltFi), Rated: AAA

Property Crowd, the real estate crowdfunder that’s owned by global secondary market platform Global Alternatives, has launched its Innovative Finance ISA offering just days prior to the April 5th tax cut-off. The product offers investors returns of up to 10 per cent.

The minimum invest amount for the IFISA offering is £5k.

Pollen Street Capital-backed alternative lender Capitalflow has secured a new round of funding valued at £50m to finance its loans to Irish SMEs.

P2P platform Landbay is turning to crowdfunding for capital. The buy-to-let mortgage lending platform, is hosting a £1.5m equity crowdfunding round on SeedrsLandbay is already overfunded, with more than £1.7m invested so far.

Innovative Finance ISA offers sweet deal for investors – if they know it exists (The Investment Observer), Rated: A

The survey, which focused on understanding investors’ intentions for the year ahead, found priorities for savers included a fixed income (17%), the opportunity to self-select how and where their money is invested (18%) and tax efficiency (24%) were top of their list of investment priorities.

Whilst the IFISA aims to meet all of these needs, half of investors questioned said they had never heard of it. 29 percent said they do know the name but don’t know what it is and only one in 20 said they know enough about what an IFISA is to be able to explain it clearly to other people.

However, the survey also found that those that do know about IFISAs and have invested in them have invested more on averagethan in traditional Cash ISAs.  The average amount of £7,013 per person has been invested in Crowdstacker’s IFISA to date; this is compared to £5,810 in cash ISAs between 2015 and 2016.

Master Investor Show: Setting the Standard for Investment Events (Yahoo! Finance), Rated: B

The Master Investor Show brings together private investors of all portfolio sizes to hear keynote talks from celebrity investors and gain access to new investment opportunities.

Ordinary investors will get the opportunity to speak to the CEOs and founders of 100 companies from multiple investment sectors, including equity funds and retirement saving, crowdfunding, life sciences and FinTech, and alternative finance such as film funding and peer-to-peer lending.

This year’s main-stage celebrity line-up:

  • Gonçalo de Vasconcelos, CEO of SyndicateRoom, the innovative online investment platform
European Union

Alternative finance for SMEs is even more urgent (Irish Examiner), Rated: AAA

While recent Central Bank figures found that perception by Irish SMEs of the willingness of banks to provide them with credit have improved considerably in the past three years, other surveys show access to finance is still a high concern for about one-third of Irish small businesses.

This is why SMEs are looking beyond their banks for alternative sources of funding.

Among these options is peer-to-peer lending. The largest platform Linked Finance launched in 2013 and rival Grid Finance arriving the following year.

Ms Kenneally was getting frustrated with the 10-week wait for a decision on an application for a bank overdraft when a friend pointed her towards Microfinance Ireland, a government initiative to provide loans to small businesses. She received a loan of €25,000 and was impressed with the fast turnaround.

Another source is crowdfunding. The idea behind crowdfunding is to pair donors with small businesses, charities or arts events who want to raise funds for a project or campaign. Platforms include Fundit, iDonate, and Seedups.

Warburg Pincus buys stake in Swiss fintech group Avaloq (Financial Times), Rated: A

Warburg Pincus has agreed to pay close to SFr300m for a minority stake in Avaloq, Switzerland’s largest software provider to banks.

The acquisition of a 35 per cent stake by the private equity group values the company, which already serves key financial centres, in excess of SFr1bn ($1bn), the private equity group said.

Avaloq has more than 2,000 employees and serves 155 banks and wealth managers in financial centres, including London, Frankfurt and Paris. It generated revenues of SFr533m in 2016, which represented a 10 per cent increase from a year earlier.

The private equity group has recruited several leading banking figures to sit on the Swiss company’s advisory board. Among them are Javier Marín, the former chief executive of Santander, Stefan Krause, former chief financial officer at Deutsche Bank and Jacques Aigrain, former chief executive officer at Swiss Re.

Here’s why fintech will make banks stronger (City A.M.), Rated: A

Brian McCabe, who chairs the fintech working group at the Fintech and Payments Association of Ireland, says existing banks and financial players won’t get weaker at the expense of new entrants.

Collaboration will be a feature of fintech’s next phase as traditional banks, financial institutions and insurance companies in Europe seem to recognise the importance of becoming smarter, more efficient and customer-focused.

Now is the chance for banks to take what fintech pioneers have to offer, and use it to make themselves more competitive.

Australia

Commonwealth Bank of Australia and Austrade sign fintech collaboration agreement (Finextra), Rated: A

The Commonwealth Bank of Australia (CBA) and Austrade have signed a new collaboration agreement to support the flow of fintech innovation between Australia and the UK.

The agreement will be used to target and attract fintech investment to Australia, and assist Australian fintech companies to access the UK market.

Canada

Investing in the Fintech Revolution: How Glance Technologies is innovating mobile payments (OTC Markets), Rated: A

Now, the creator of PayByPhone parking app has set his eyes on the restaurant industry, creating the Glance Pay Mobile Payment App under Glance Technologies Inc. (CSE:GET) (OTCQB:GLNNF) to revolutionize a C$650 Billion restaurant bill payment industry. Glance Pay allows diners to pay their restaurant bill in seconds using their mobile phone while automatically receiving exclusive restaurant rewards. Gone are the days of waiting for the server to bring around the card machine. Restaurant owners benefit from automatic bill collection, built-in loyalty programs, turn-key in-app marketing and valuable customer experience feedback.

China

Jail sentences for P2P lending scam (Shangai Daily), Rated: AAA

FORTY-ONE people in the city’s first and high-profile P2P fraud case involving nearly 700 million yuan (US$10.2 million) have been jailed, according to Yangpu District prosecutors.

The 41 were staff members from five outlets of Baiyin Wealth Co, including one in downtown Xintiandi area. Sentences ranged from six to eight months in prison, with some granted a reprieve.

Other suspects are either being investigated or are waiting to be tried.

India

Peer to Peer Lending Advantages and Disadvantages [Case Study] (Scalar), Rated: A

Peer to Peer lending advantages and disadvantages – lenders perspective

Advantages

  1. Higher interest

For example, a 5 year bond with a fixed rate interest of an Indian bank offers 3% AER, while the same amount has the potential to earn 6.32% to 30% p.a. through a peer to peer website, on the same tenure.

  1. Diversification
  2. Freedom to commit

Disadvantages

  1. Waiting period
  2. No legal laws
Asia

How transparency is driving Asian asset managers to technology (The Asset), Rated: A

The need for improved transparency is pushing Asian asset managers to use more sophisticated technology than they’ve ever used before in the management of their portfolios and to boost the overall efficiency of their businesses.

Another trend among Asian asset managers is using technology as a way to drive transparency between what their internal stakeholders and investment teams are actually reading and what is driving their investment decision.

Asset managers are also using this technology to look at broker performance which involves having all their data, primarily data on trading positions and transactions, on one buyside platform.

Latin America

Latin American Venture Capital Firms Invest in MPOWER Financing (NBC12), Rated: AAA

VARIV Capital, a Latin American venture capital firm, and Chilango Ventures, an investment firm with offices in San Francisco and Mexico City, have invested in MPOWER Financing () to help the innovative fintech firm expand its presence in Latin America and attract a greater number of high-potential students to America’s best colleges and universities.

Latin American students already represent 25 percent of MPOWER’s outstanding loan portfolio, with Mexico representing the third-largest student population currently studying in the U.S. through MPOWER’s financial support.

With the addition of these two new equity investors, MPOWER Financing has assembled a diverse global investor base that is enabling the firm to fulfill its mission to provide educational loan support to high-potential, international students who do not fit within traditional credit assessment models. Currently, MPOWER Financing, founded in 2014, has a pipeline of more than $120 million in loan applications from students in Asia, Europe, Latin America and Africa which it expects to fill in 2017. The recent investments are part of the closing of MPOWER Financing’s Series A funding.

Authors:

George Popescu
Allen Taylor