Thursday May 23 2019, Weekly News Digest

young credit card delinquents

News Comments Today’s main news: DBRS assigns provisional ratings to SoFi Consumer Loan Program 2019-3 Trust. KBRA assigns preliminary ratings to Prosper Marketplace Issuance Trust, Series 2019-3. Funding Circle seeds shareholder input on wind-down plans for investment trust. TransferWise valuation doubles to $3.5B. Today’s main analysis: High income, super prime borrowers take bigger share of […]

The post Thursday May 23 2019, Weekly News Digest appeared first on Lending Times.

young credit card delinquents

News Comments

United States

United Kingdom

European Union

Other

News Summary

United States

DBRS Assigns Provisional Ratings to SoFi Consumer Loan Program 2019-3 Trust (DBRS Email), Rated: AAA

DBRS, Inc. (DBRS) assigned provisional ratings to the following classes of notes (collectively, the Notes) to be issued by SoFi Consumer Loan Program 2019-3 Trust (SCLP 2019-3):

— $420,000,000 Class A Notes at AAA (sf)
— $31,100,000 Class B Notes at AA (sf)
— $62,500,000 Class C Notes at A (sf)
— $35,600,000 Class D Notes at BBB (sf)

View the full report here.

KBRA Assigns Preliminary Ratings to Prosper Marketplace Issuance Trust, Series 2019-3 (Yahoo! Finance), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by Prosper Marketplace Issuance Trust 2019-3 (PMIT 2019-3). This is a $380.99 million consumer loan ABS transaction.

Class Rating Initial Class Principal
A A- (sf) $270,750,000
B BBB- (sf) $51,470,000
C BB- (sf) $39,720,000
D B- (sf) $19,050,000

Millennial DQs on the rise; GreenSky earnings; OCC on a fix for Madden? (PeerIQ), Rated: AAA

US consumer debt rose by 0.9% QoQ in 1Q to $13.7 Tn.

Source: Bloomberg, PeerIQ

Mixed FinTech Earnings

FinTech issuers saw growth in revenues and loans. Pace of loan growth weakened slightly as originations fell at Enova and grew by less than 10% YoY at OnDeck and OneMain. Stock price performance post earnings was mixed. Enova saw its stock price increase by 18% post earnings while OnDeck’s stock price dropped by 16%.

Source: Bloomberg, PeerIQ

High Income and Super Prime Borrowers Taking Bigger Share of Personal Loans on LendingTree Marketplace (Lending Tree), Rated: AAA

Over the past 10 years, the amount of outstanding personal loan debt has increased by 75%.

Key findings

  • The share of personal loan inquiries from those with incomes over $108,000 increased by 77% between the second quarter of 2017 and the first quarter of 2019, while the share of inquiries from people earning over $84,000 increased by 65%.
  • The share of personal loan inquiries from super prime borrowers (740 and higher) increased by 47% between the second quarter of 2017 and the first quarter of 2019, and the increase in prime and super prime borrowers (680 and higher) rose by 36%.
  • The share of personal loans closed by borrowers with incomes over $108,000 on the LendingTree marketplace increased by 38% between the second quarter of 2017 and the first quarter of 2019, and the share of borrowers earning over $84,000 increased by 26%.
  • The share of closed personal loans from super prime borrowers (740 and higher) increased by 37% between the second quarter of 2017 and the first quarter of 2019, and the increase in prime borrowers (680 and higher) rose by 19%.
  • Borrowers with incomes up to $24,000 decreased their share of closed loans by 22%, and those with incomes up to $48,000 decreased their share by 17%.
  • The share of loans closed by borrowers with scores below 560 increased by 28%, but the share of closed loans from borrowers with scores between 560 and 619 dropped by 24%.
  • The share of inquiries from people with incomes up to $24,000 dropped by 27% during the same period, while inquires from those with incomes up to $48,000 dropped by 16%.
  • The share of loan inquiries by borrowers with scores below 560 decreased by 12%, and the share of closed loans from borrowers with scores below 620 decreased by 9.2%.

For example, in the SoFi Consumer Loan Program 2017-3 LLC, securities show that the average gross income of borrowers as of May 2017, was $141,780, with an average FICO score of 731, and an average VantageScore of 682. The most recent offering, reported in February 2019, showed borrowers had an average income of $151,144, an average 753 FICO score, and a 713 VantageScore.

Job Loss and Medical Expenses Leading Causes of Bad Credit (Yahoo! Finance), Rated: AAA

Job loss and medical expenses are the leading factors causing Americans’ credit scores to drop, according to new research by Elevate’s Center for the New Middle Class (CNMC).

According to the new report, 55% of respondents cited job loss or reduction in work hours as the reason why their credit score dipped below 700. Nearly a quarter (24%) cited medical bills as the primary cause. Following these leading factors, a variety of typical, seemingly innocuous expenses follow, including repairing a car (11%), leaving home for the first time (6%), and putting a child through college (5%).

Non-prime consumers are 86% more likely to experience multiple factors that negatively affect their credit score compared to just one. For example, of the 23% who mention a medical reason, about three-quarters (75%) also experienced an income drop, severely complicating their ability to manage and cover medical expenses.

Americans Use Short-Term Loans to Pay Off Debt (Lexington Law), Rated: A

American debt is at an all-time high. How did we manage to dig ourselves into a steep $13 trillion hole? Credit card debt alone accounts for $1 trillion of this debt, with the average balance over $6,000 per capita.

  • 33% of Americans are going into debt to pay off debt
  • Generation X is most likely to incur short-term debt to pay down long-term debt
  • Women who use debt to make other debt payments tend to do so multiple times

Bernardo Martinez of Funding Circle USA (Lend Academy), Rated: A

In this podcast you will learn:

  • The knowledge that Bernardo brought with him from PayPal.
  • What he has learned in his first year on the job at Funding Circle.
  • The range of terms for their small business loans.
  • The types of investors they have on their platform today.
  • How and why 72% of their customers came to Funding Circle first.
  • How their offering compares to what is offered at banks today.
  • Who Bernardo sees as their biggest competitors.
  • How they view the SBA and their loan guarantee program.
  • How the LendingClub partnership came together.
  • Why no other online platform has reached significant scale in term loans for small business.
  • How they expanding their business into Canada.
  • Who they are hiring for their new Denver office.
  • How they are approaching their relationships with regulators in DC these days.
  • How they helped get SB-1235 passed in California.
  • How Funding Circle is monitoring their risk as it pertains to the economic cycle.
  • What is most exciting for Bernardo today at Funding Circle.

How a Silicon Valley startup is trying to rebrand payday loans (Vox), Rated: AAA

Once every few weeks, Myra Haq withdraws $100 or so from Earnin, an app that lets people borrow small sums of money.

The app lets her withdraw up to $100 a day, and never more than what she actually makes in a pay period, and then withdraws the money from her checking account once her direct deposit hits.

Unsurprisingly, payday lenders typically target low-income people — a 2013 Pew report found that 58 percent of people who use payday loans have trouble meeting monthly expenses at least half the time and usually borrow to deal with “persistent cash shortfalls rather than temporary emergencies.”

The average American household with student debt owes almost $48,000, and experts believe that student loan debt has held millennials back from major life milestones like marriage, homeownership, and having children.

How One Company Wants to Reduce or Even Eliminate Your Unpaid Medical Bills (Forbes), Rated: A

Relying on personal savings or insurance may not even be enough to pay off expensive medical bills. As a result, .

Earnin invited some community members to try HealthAid and was able to find savings for about 90% of people.

In one case, Earnin was able to get a patient’s $48,000 bill fully forgiven.

Figure Technologies loan platform secures $ 1B financing facility (CoinGeek), Rated: A

Figure Technologies looks to be profiting from increased interest in the cryptocurrency industry. Specifically, in a press release dated May 9, it was announced that the company had secured a $1 billion line of credit on the Provenance.io blockchain. The agreement also involves two other companies, Jefferies and WSFS Institutional Services, which will provide the line of credit.

LendKey’s Vince Passione on partnering with banks and credit unions and the future of lending as a service (Tearsheet), Rated: A

Vince joins us on the show to talk about his partnership model and the challenges and opportunities of working alongside banks and credit unions, which have deployed more than $2 billion in lending capital on the digital platform.

Small-business fintech launches lending platform for banks (American Banker), Rated: A

Spurred by bank interest, small-business lending platform Biz2Credit has unveiled a software-as-a-service version of its loan management, servicing and risk analytics product.

After HSBC and New York-based Popular Bank contracted with Biz2Credit to use the software, the company decided to launch the platform for all banks to use.

At a cramped desk on the 22nd floor of a downtown Manhattan office building, Gary Roth spotted a looming disaster.

An urban planner with two master’s degrees, Mr. Roth had a new job in 2010 analyzing taxi policy for the New York City government. But almost immediately, he noticed something disturbing: The price of a taxi medallion — the permit that lets a driver own a cab — had soared to nearly $700,000 from $200,000. In order to buy medallions, drivers were taking out loans they could not afford.

Prodigy Finance Aims to Bridge Healthcare Gap with New Loan Offering (University Business), Rated: A

Prodigy Finance today announces it will be supporting international students pursuing Master of Public Health (MPH) and Master of Science in Public Health (MSPH) degrees, Master of Science in Nursing (MSN) degrees, as well as those enrolling in Advanced Standing Dental programs and Select Certificate Dentistry programs in the U.S.

Crypto Lending Startup BlockFi Slashing Interest Rates on Ether Deposits (CoinDesk), Rated: A

Cryptocurrency lending startup BlockFi is almost halving the interest rates it offers on ether (ETH) deposits, while some bitcoin (BTC) rates will increase slightly.

From June 1, customers with 25–100 ETH balances in a BlockFi Interest Account (BIA) will see the interest rate drop from the current 6.2 percent annual percentage yield (APY) to 3.25 percent, the startup announced Tuesday. Those holding over 100 ETH balances will earn just 0.2 percent APY.

Some BTC balances, on the other hand, will see a slight interest rate increase – up to 2.15 percent from the current 2 percent – for deposits of over 25 BTC. Those holding 0.5–25 BTC will continue to earn 6.2 percent APY, BlockFi said.

Find the Right Loan Among 300+ Lending Partners for Credit Card Consolidation and More (CardRates), Rated: A

In a Nutshell: LoanStart helps consumers in search of a loan find a lender that suits their funding needs within just five minutes after submitting a simple, fee-free loan request form. Working securely with more than 300 trusted lending partners, including conveniently located storefront providers, the service makes finding a suitable lender easy. In today’s connected world where loan options abound, LoanStart cuts through the clutter to connect consumers in need of funds with lenders willing to provide financing.

Maxex Closes Series B Funding (FinSMEs), Rated: A

Maxex, LLC, an Atlanta, GA-based residential mortgage loan exchange, closed a Series B funding round of undisclosed amount.

CFPB Sues Debt-Collection Agency Over Deception Allegations (PYMNTS), Rated: A

The Consumer Financial Protection Bureau (CFPB) said Friday (May 17) that it has filed a lawsuit in federal court against a debt-collection agency that, the agency said, violated the Fair Debt Collection Practices Act.

The lawsuit targets Forster & Garbus, LLP, a debt-collection law firm based in New York.

Plaid gives digital banks and fintech a new tool to bypass traditional finance (CNBC), Rated: A

Start-up Plaid, recently valued at $2.7 billion, already connects bank accounts to fintech apps like Venmo, Robinhood, Coinbase and Acorns. It announced “Plaid Direct” on Wednesday, which lets users more easily connect to newer digital banks like Chime.

Capital Markets Veteran Joins PeerStreet to Manage Institutional Sales (BusinessWire), Rated: A

PeerStreet, a marketplace for investing in real estate backed loans, has announced the appointment of Deepa Salastekar as the Vice President of Institutional Sales. Ms. Salastekar joins PeerStreet to expand the company’s relationship base of institutional partners across all investment types available through PeerStreet.

Dharma now supports peer-to-peer lending in USDC to attract mainstream investors to DeFi (The Block Crypto), Rated: B

Defi startup Dharma announced Wednesday that it will start to support peer-to-peer lending of USDC, in a push to engage mainstream investors.

United Kingdom

Funding Circle investment trust asks shareholders to approve wind-down plans (P2P Finance News), Rated: AAA

FUNDING Circle is set to begin a managed wind-down of its dedicated investment trust, the Funding Circle SME Income Fund (FCIF), once it gets the green light from shareholders.

The FTSE 250-listed peer-to-peer business lender said last month that shareholders had backed plans to stop investing in new assets and begin the process of returning capital to investors.

Funding Circle Sets Hard Limit To Incentive Pay For Senior Executives (Morningstar), Rated: A

Funding Circle Holdings PLC clarified its director pay policy Wednesday following “feedback from shareholder advisory bodies”.

The small and medium enterprise loan platform said the amount granted in each year for a three year period under the company’s long-term incentive plan to can now no longer exceed GBP2.0 million and GBP1.1 million for the company’s chief executive and chief financial officer, respectively.

Span A Higher Than Span B for Funding Circle Sme Income Fund Limited (FCIF.L) (Williams Business Review), Rated: B

After a recent indicator scan, we have noted that Span A is currently higher than Span B for shares of Funding Circle Sme Income Fund Limited (FCIF.L). Traders may be paying close attention as this signal may indicate a possible bullish move.

TransferWise doubles its valuation to $ 3.5bn (Fintech Futures), Rated: AAA

UK-based international payments fintech TransferWise has doubled its value to $3.5 billion after raising $292 million in secondary funding, Jane Connolly writes.

Call for ‘credit curfew’ to help late-night borrowers (The Times), Rated: A

Banning borrowers from accessing high-cost credit websites between 11pm and 7am would ease the numbers of people spiralling into debt as activity peaks during these hours, according to researchers at Newcastle University.

Monzo hits 2m customers, adding 1m in eight months (AltFi), Rated: A

Monzo has hit 2 million current account customers in just two years since getting a banking license, and just eight months after it hit 1 million accounts.

It launched its current accounts less than 18 months ago with customers having spent £10.7bn through Monzo so far.

Arbuthnot Specialist Finance reveals offering (Bridging and Commercial), Rated: A

Arbuthnot Latham & Co has officially launched its specialist finance division.

Arbuthnot Specialist Finance will offer short-term residential finance up to 70% of market value (MV), with rates from 0.65% per month.

For this product, it will offer loans between £30,000–£3m-plus.

For commercial properties, it will offer up to 65% of MV, including interest and fees (up to 85% of the 90-day MV, or 95% of the purchase price, whichever is the lower), with rates available from 0.75%.

New peer-to-peer lender targets 7.5% return with education loans (Your Money), Rated: A

Lendwise plans to offer borrowers loans of up to £100,000, with interest rates ranging from 7.5% to 12%. Pricing will be based on a range of factors, which the peer-to-peer lender said go beyond the applicant’s financial profile and credit record. They include the specific postgraduate or professional qualification course they are taking, the length of study and the repayment period.

Finastra’s open cloud platform drives collaboration and innovation in financial services (Fintech Finance), Rated: A

Today ahead of its FusionONE developer conference, co-hosted with Microsoft, Finastra unveiled the latest developments to its FusionFabric.cloudopen platform for innovation.

The 61 new open APIs (and more than 200 Endpoints) span many of Finastra’s solutions, including retail and corporate banking (both enterprise and North American community markets), consumer lending and mortgage, payments and treasury and capital markets. These are now available in the FusionFabric.cloud API catalog for developers to harness in building financial services applications. Some of these powerful APIs are already enabling:

China

A fintech revenue surge helped Tencent smash quarterly expectations (Business Insider), Rated: AAA

Tencent posted record quarterly profits and smashed market expectations in Q1 2019, driven largely by surges in its fintech and cloud revenue, per Reuters.

Fintech and business services is now Tencent’s second largest division, responsible for a quarter of its revenue. This was the first time the tech giant broke out earnings for the unit, which brought in revenue of Rmb21.79bn ($3.2 billion), a 44% year-over-year (YoY) spike. Key in driving this growth is its payments wallet for WeChat, whose 1.11 billion users make it the largest social media platform in China, as well as its insurance services, which include a 20% stake in Aviva Hong Kong, and its cloud computing service.

Tencent’s online advertising grew 25% YoY, compared with 55% YoY in the same period last year, suggesting that China’s slowing economy and continued trade tensions with the US are hitting the firm.

Source: Business Insider Intelligence

DBS Bank Expects a Boost in Chinese P2P Lending Market from the Greater Bay Area (LearnBonds), Rated: A

Greater Bay Area could be the key to reviving the struggling P2P lending market in China, according to DBS Bank.

The Singaporean bank estimates that P2P lending will experience a 17% annual growth rate by 2030.

European Union

Identity technology and Dublin’s draw for fintech firms post-Brexit (Forbes), Rated: AAA

According to 

1 in 10 European banks to vanish by 2023 (AltFi), Rated: A

Bumper banking profits disguise an underlying weakness in traditional banks, as their per customer income has tumbled over the past decade.

That’s the finding of a report by consultants A.T. Kearney, which found data across 92 European banks revealed income per client had fallen 11% since 2008.

Australia/New Zealand

Commerce Commission’s court case against payday lender Ferratum scheduled for next year (Interest), Rated: AAA

A backlog of cases in the Auckland High Court means the next hearing in the Commerce Commission’s legal action against online payday lender Ferratum New Zealand won’t be held until June next year.

Asia

Indonesian fintech association sanctions lending platform that sets high interest rate (KrAsia), Rated: AAA

Two Indonesian lending platforms regulated under the country’s financial services authority (OJK) have been penalized by the ethics council of AFPI, the industry association for fintech lenders in Indonesia.

The organization revealed that one of the companies in question is P2P lender Do-It, which charged an interest fee rate of 1% per day.

Africa

Onefi is Expanding Carbon’s Digital Banking Services to Ghana (Technext), Rated: AAA

Nigerian digital financial platform, Carbon (formerly Paylater) is taking big steps to introduce its revamped financial services into Ghana. The online lender is looking to hire a new country manager for Ghana and this suggests the company is looking to introduce its new services like PayVest into Ghana.

Authors:

George Popescu
Allen Taylor

The post Thursday May 23 2019, Weekly News Digest appeared first on Lending Times.

Thursday November 22 2018, Daily News Digest

Major European Neobanks Customers

News Comments Today’s main news: Prosper to introduce HELOCs. Affirm to rebrand, get into travel. Elevate Credit misses earnings estimates. Zopa says parents borrow from children’s piggy banks. Revolut wants to raise $500M through SoftBank. LexinFintech shares jump 8% on 363% earnings increase. Fintonic, Amazon partner in Spain. Today’s main analysis: Are we in an online lending bubble? Today’s thought-provoking articles: […]

Major European Neobanks Customers

News Comments

United States

United Kingdom

China

European Union

International

Other

News Summary

United States

Prosper Announces HELOCs, Releases Q3 2018 Earnings (Lend Academy) Rated: AAA

Prosper noted that according to a 2017 TransUnion Study an estimated 10 million consumers will take out HELOCs between 2018 and 2022 which would be more than double the number originated from 2012-2016.

The new HELOC product will launch officially in early 2019.

Prosper also reported their Q3 2018 results today. Originations were $640.3 million, down 22% over the prior year period. Prosper attributed the decrease to credit tightening as well as the increase of interest rates to borrowers. The company has now originated $13.4 billion since inception. Net revenues also decreased as a result of decreased originations, with net revenue falling from $28.8 million in Q3 2017 to 20.6 million in Q3 2018. Below is a summary of Prosper’s other financial highlights that are availing in the company’s 10-Q.

Source: Lend Academy

Funding Circle US: Consumers will eschew Amazon to support small firms (Peer2Peer Finance) Rated: AAA

FUNDING Circle US has found that the majority of US consumers still make the effort to shop at independent small businesses and would be willing to pay more for the same item than it costs at e-commerce giant Amazon.

The peer-to-peer business lender, which recently floated on the London Stock Exchange, published the results of a survey on US consumers’ support for small businesses.

It found that 77 per cent of 2,171 US adults surveyed said they were willing to pay more for items at small businesses in order to keep money within their communities and support local jobs.

60 per cent of respondents said they would pay a 10 per cent premium or more on Amazon prices.

PayPal co-founder’s installments firm, Affirm, rebrands, gets into travel (Payments Source) Rated: AAA

PayPal co-founder Max Levchin has built a $1.8 billion business offering installment plans to American consumers. The problem: most shoppers have no idea they’re using his company, Affirm, when they choose how to pay at checkout.

Now, in an effort to make its name synonymous with online installment plans, Affirm is rebranding. Besides a new logo, the firm will list all the retailers it works with on its website. Affirm will also focus on travel, letting consumers pay for vacations over time.

Levchin Says Crypto Not a Good Currency But He Likes the Tech (Bloomberg) Rated: A

Elevate Credit (ELVT) Releases Earnings Results, Misses Estimates By

Elevate Credit (ELVT) Releases Earnings Results, Misses Estimates By $0.23 EPS (Fairfield Current) Rated: AAA

.23 EPS (Fairfield Current) Rated: AAA

Elevate Credit (NYSE:ELVT) announced its earnings results on Monday, October 29th. The company reported ($0.10) earnings per share for the quarter, missing the consensus estimate of $0.13 by ($0.23), MarketWatch Earnings reports. Elevate Credit had a positive return on equity of 12.69% and a negative net margin of 0.49%. The business had revenue of $201.48 million for the quarter, compared to analyst estimates of $201.71 million. During the same quarter last year, the company posted $0.01 EPS. Elevate Credit’s quarterly revenue was up 16.6% on a year-over-year basis. Elevate Credit updated its FY18 guidance to $0.23-0.32 EPS.

Source: Fairfield Current

Amazon: Fundrise Allows You to Invest in Property Near Amazon’s DC Headquarters with New eFund (Crowdfund Insider) Rated: A

Real estate investment platform Fundrise says it has been quietly accumulating property near the area Amazon (NASDAQ:AMZN) has just announced they will be establishing a new headquarters. Amazon’s east coast headquarters will create a huge economic impact for the DC/Northern Virginia market, not to mention increased demand for housing and apartments. Fundrise says it has invested in 30 different buildings in expectation of rising demand. Fundrise is offering a new investment fund for this purpose: HQ2 DC eFund.

According to Fundrise, the fund already features residential properties – ranging from houses, townhomes and condominiums – with plans to invest as much as $50 million in the area. This eFund, issued under Reg A+,  allows any investor the opportunity to capitalize on expected local real estate growth in the wake of Amazon’s announcement.

RealtyShares starting to crumble after lack of venture capital (Born2Invest) Rated: A

The website started out strong. From 2014 to 2016, venture capital was pouring in from crowdfunding firms. However, investors became less interested in the portal as the investment minimum started to ramp up steadily. Company founder Nav Athwal, who had left the company’s board earlier this year, is still a minority shareholder. He also has no idea what happened to the company he helped found.

He, however, has a few words for startups. “Don’t let your burn rates get really large, strive for cash-efficiency or profitability sooner rather than later. Build a resilient business that can continue growing, regardless of where the venture capital markets are.” He adds that a startup should understand its investors and its growth limit as well.

Are we in an online lending bubble? (Tearsheet) Rated: AAA

We’re in an interesting time in online lending. After years of fits and starts and boatloads of money flowing into the sector, record originations are being set all over the industry. We recently explored online lending trends going into 2019 and what participants in the sector are expecting in the near future.

Both consumer and business lenders are tracking strongly:

While personal loans have surged to a record as the fastest-growing U.S. consumer-lending category, according to data from credit bureau TransUnion, it’s fintech firms that are driving a lot of that growth.

Source: Tearsheet

Amalgamated Bank joins $ 26 million closing of Insikt social bond securitization (Impact Alpha) Rated: A

The fintech firm packages up the loans the into securities, which it then issues as bonds to financial institutions, foundations and private investors. Its latest $26 million securitizationattracted Amalgamated Bank, a B-corp-certified commercial bank that went public on the NASDAQ stock exchange in June.

The issuance marks Insikt’s fifth securitization this year, backed by 21,000 loans. INSIKT’s total securitization volume across 16 issuances reached $273 million.

If Recession Comes in 2020, What Will Innovation Look Like? (Bank Innovation) Rated: A

JPMorgan Chase last month predicted a 60% chance of recession by 2020, and that increases to an 80% chance by 2021. It’s not clear how traumatic an event it would be for the U.S. economy, but considering all the new players that have jumped onto the financial scene since the last downturn a decade ago.

CrowdOut Funds More “Eatertainment” (Business Wire) Rated: A

CrowdOut Capital announced the completion of a $20 million facility to Punch Bowl Social, the L Catterton–backed restaurant group that is defining the evolving category of experiential dining. The proceeds will enable the leader in the “eatertainment movement” to open multiple new locations throughout the U.S. This marks the second time Punch Bowl Social has worked with CrowdOut, choosing its flexible debt over traditional loans from financial institutions.

Sell Your House Without Making a Move – Figure Introduces a Smart Alternative for Baby Boomers to Secure Their Retirement (Corp Magazine) Rated: A

Figure Technologies, Inc. (Figure), a FinTech company creating innovative products and tools that empower homeowners to improve their finances, announced today Figure Home Advantage, a smart sell-and-leaseback alternative to reverse mortgages for retirees and a new way for Baby Boomers to lock in record housing prices as they plan their retirement. With Figure Home Advantage, homeowners convert their home equity into cash they can put to use now while continuing to enjoy life at home without the ongoing burden of property taxes, repairs, and maintenance.

Roughly 10,000 Baby Boomers turn 65 years old in the U.S. every day. A study by the National Conference of State Legislators and AARP found that 90 percent of people over age 65 want to stay in their home for as long as absolutely possible. Yet, most older Americans don’t have enough savings to cover retirement expenses or realize the lifestyle they’d imagined. According to a survey by the Insured Research Institute (IRI), only 25 percent of Baby Boomers believe they will have enough money in retirement.

Lenders Extending More Loans to Subprime Consumers as Credit Market Continues to Exhibit Signs of Strength (AP News) Rated: A

Auto loans, credit cards and personal loans all saw year-over-year growth in subprime originations this past quarter, a sign that lenders are returning to this space following several consecutive quarters of declining originations. The latest TransUnion (NYSE: TRU) Industry Insights Report includes insights into consumer credit trends around personal loans, auto loans, credit cards and mortgage loans through the third quarter of 2018.

TransUnion’s report found that origination growth in the subprime risk tier grew at a significant rate across auto, personal loans and credit cards following declines in 2017. Subprime originations in the personal loan category grew 28% between Q2 2017 and Q2 2018 (originations are viewed one quarter in arrears to account for reporting lag), compared to a yearly decline of 7.1% over the prior year. Auto showcased a similar trend, as independent lenders began issuing new loans to subprime consumers following industry pullback in 2016 and 2017. Subprime auto originations increased 7.3% year-over-year, after falling 7.8% year-over-year in Q2 2017.

Are you a minority borrower? You might want to think twice about using an online lender. (The Washington Post) Rated: A

It’s not just bank loan officers with racial biases who discriminate against black and Latino borrowers. Computer algorithms do, too.

That is the groundbreaking conclusion of University of California at Berkeley researchers who found that algorithmic credit scoring using big data is no better than humans at evening the playing field when it comes to determining home mortgage interest rates.

Both online and human lenders earn 11 to 17 percent higher profits off minority borrowers by charging African Americans and Latinos steeper rates, the study said. Black and Latino consumers pay 5.6 to 8.6 basis points higher interest on home purchase loans than their white or Asian counterparts with similar credit profiles — no matter whether they obtained their loans through a face-to-face process or online. The effect is smaller when it comes to refinancing, with black and Latino borrowers paying 3 basis points more.

Read the full report here.

AI-Driven Lead Distribution for Mortgage Lending Helps Loan Officers Deliver Faster Results (Verb Factory Email) Rated: A

ProPair, an innovative mortgage-industry technology start-up based in Silicon Valley, today launched an AI-based lead distribution solution that eliminates the uncertainty of the lead assignment process while optimizing results and ensuring fairness in the assignment process. Using artificial intelligence to correlate lead data with information about individual loan officers, ProPair facilitates the lead assignment process to allow lenders to distribute leads to maximize the performance of the entire loan team.

White Oak Healthcare Finance Provides $ 190 Million Financing for BM Eagle’s 17 SNF Portfolio (Business Wire) Rated: B

White Oak Healthcare Finance, LLC (“White Oak”), today announced it acted as administrative agent and lead lender on the funding of a $190 million senior credit facility of 17 skilled nursing facilities for BM Eagle Holdings, LLC (“BM Eagle”), a joint venture led by affiliates of BlueMountain Capital Management, LLC (“BlueMountain”). The facilities are located in Northern California and New England.

United Kingdom

Zopa: Parents borrowing from children’s piggy banks (Peer2Peer Finance) Rated: AAA

ZOPA research has found that two fifths of parents have admitted to raiding their children’s piggy banks to borrow cash.

Parents surveyed by the peer-to-peer consumer lender confessed to borrowing money from their kids with a fifth taking over £250 a year.

However, 80 per cent of parents said they will also be giving their children cash as a Christmas present this year.

Nearly a quarter of children can look forward to a gift of up to £100, whilst a lucky three per cent will be receiving more than £500 in cash.

Revolut is in talks with Softbank to raise $ 500 million (Business Insider) Rated: AAA

UK neobank Revolut is currently in talks with the Softbank fund, which is worth $92 billion, for its next funding round, according to City AM. The talks are still early on, but the funding round could be as high as $500 million. It’s not clear whether existing investors, including Draper Esprit and Index Ventures, would participate in the next round.

Source: Business Insider

Monzo to offer cash deposits via PayPoint (FinExtra) Rated: A

PayPoint has announced today that challenger bank, Monzo, has chosen PayPoint’s cash payments solution for its current account holders. Beginning Wednesday 21 November, customers will be able to deposit up to £300 cash directly into their Monzo account in a single transaction at any of PayPoint’s 28,000 convenience stores nationwide.

Starling Bank’s £10m funding helps it make a stand to Monzo (Fintech Future) Rated: A

Starling Bank, the mobile-only bank, has secured £10 million of new capital from Bahamas-based hedge fund manager Harald McPike.

According to the Daily Telegraph, the funding is in preparation for a £80 million round to keep up, or perhaps surpass, other mobile challengers like Monzo, which recently raised £85 millionto reach a £1.5 billion valuation, and getting over 1.1 million customers.

Why data scientists solve irrelevant problems (Bobs Guide) Rated: A

In today’s challenging financial market businesses need to utilize every available resource and technology to reduce risk when processing payments and credit applications. One area in particular that is often talked about, but still either under or incorrectly utilized, is data science.

While many financial institutions are working towards implementing data science within their risk decisioning processes many are still working on creating an environment and culture that allows data scientists to be fully effective.

In a recent webinar Ken Schultz, VP of data science at Elevate Credit – better known under their brand Sunny in the UK -discussed the benefits data science can bring to a financial services organization, including the opportunity to increase accuracy, expand your market, and reduce fraud, all of which can be used to drive business growth.

Lending Works Appoints Three New Board Members, Targets P2P Growth (Crowdfund Insider) Rated: B

Peer to peer lender Lending Works has selected three new members for their Board of Directors. The online lender has appointed; Simon Waugh, former Chairman of CMC Markets, Deputy CEO of British Gas, Paul Noble, CEO of Honeycomb Finance, a Pollen Street Capital business, and Melanie Goward, Investment Director of Maven Capital Partners.

Barclays partners with MarketInvoice (The MarketInvoice Blog) Rated: B

MarketInvoice and Barclays today announced a partnership deal that is set to transform the way small and medium enterprises (SMEs) in the UK manage cash flow and accelerate growth.

The bank has committed to a significant minority stake in MarketInvoice to give Barclays’ SME clients seamless access to innovative forms of finance. The new partnership is a key part of Barclays’ plans to invest in new business models for growth, and MarketInvoice’s ambition to broaden its reach across the UK.

China

Shares of LexinFintech Jump 8% In Early Trading as Earnings Soar 363% (Capital Watch) Rated: AAA

LexinFintech Holdings Ltd. (Nasdaq: LX) saw its shares jump more than 8 percent in early trading Wednesday after the company, an online peer-to-peer lending platform in China, posted better-than-expected earnings for the third quarter with net income increasing more than fourfold.

Despite recent market uncertainty, the Shenzhen-based lender said its operating revenue for the third three months increased more than 13 percent year-over-year to $246.7 million thanks to a 404 percent jump in income from its loan facilitation and servicing fees.

Net income for the quarter was $46 million, or 25 cents per fully diluted ADS, up from $9.93 million a year ago.

Source: Capital Watch

Tencent reboots profits as growth picks up beyond games (Nikkei Asian Review) Rated: AAA

China’s Tencent Holdings handed investors a much-needed profit recovery in the third quarter as revenue rose beyond online games, but the company warned that stricter regulation by Beijing on online advertising could sap growth.

The social media and online game group, which has lost about 40% of its market value since March as China has stalled approval of new games, beat market forecasts thanks to contributions from ads and cloud computing.

Source: Nikkei

China Rapid Finance to Announce Third Quarter 2018 Financial Results on November 20, 2018 (Acrofan) Rated: A

China Rapid Finance Limited (“China Rapid Finance” or the “Company”) (NYSE: XRF), operator of one of China’s largest consumer lending marketplaces, today announced that it plans to release its third quarter 2018 financial results on Tuesday, November 20, 2018, after U.S. market closes.

China Rapid Finance’s management will host an earnings conference call at 8:00 p.m. Eastern Time on November 20, 2018, (9:00 a.m. Beijing/Hong Kong Time on November 21, 2018).

Why China’s online lending crisis makes liberalisation of bank interest rates more urgent (South China Morning Post) Rated: A

How big is China’s fintech sector? I would say, Britain’s peer-to-peer (P2P) lender Funding Circle plus payday lender Wonga times 100. In addition to giants such as Alibaba’s Ant Financial, Pingan’s Lufax and Tencent’s WeBank, a dozen mid-size operators have gone public in the US and Hong Kong in the past 18 months alone. There are also 40 to 50 serious players that are waiting in the wings to go public. However, as the year-long official clampdown has revealed, there are far too many also-ran operators and Ponzi schemes about.

In just five to six years, fintech has surged to levels over US$200 billion in terms of total assets.

Cash-Strapped Online Lenders Ordered to Repay Investors (Caixin Global) Rated: A

Some local governments have ordered cash-strapped peer-to-peer (P2P) lending platforms to begin repaying their investors to head off growing turmoil in the industry.

Hangzhou-based P2P lending platform Yucaiyuan recently announced that the company “did not meet regulatory requirements and was ordered to start repaying (investors),” according to a post on the lender’s website (link in Chinese). The firm will have to repay the principal and interest on all outstanding loans until investors are fully repaid. It has 12 months to do so.

Regulators in the eastern city want to rein in what had once been runaway growth in the industry. They plan to do this by clearing out small and midsize platforms one step at a time, a P2P lender told Caixin.

European Union

Fintonic Links Up with Amazon (Finovate) Rated: AAA

Personal finance app Fintonic announced today it will collaborate with Amazon in Spain. Starting next week, Fintonic customers in Spain will be able to finance their Amazon.es purchases ranging from $225 to $1,100 (€200 to €1,000) at a rate of 0% interest for up to four months.

Mintos to Provide Debit Cards and IBAN Accounts to Investors (P2P Banking) Rated: AAA

P2P lending marketplace Mintos has raised 5 million EUR in a Series A. The money is earmarked to provide new features for investors.

Crowdlending campaign raises total of €1.5 million for the first time (The Brussels Times) Rated: A

A crowdlending campaign has, for the first time, raised a total of €1.5 million in Belgium.

The announcement came on Wednesday from the platform Look&Fin, which specialises in such participative finance loans. The company, Carimat Matériaux, based in Braine-le-Château and active in construction, has raised this record amount.

In total, 483 individuals have invested in Carimat Matériaux, for a global total of €1.5 million. The group, which has specialised in construction since 1988, recorded a turnover of €56 million in 2017 and employs more than 170 people.

Berlin-based fintech startup Bonify raises funding to provide free credit scores and financial advice (EU Startups) Rated: A

Want to apply for a loan, but you’re unsure about your credit score? The Berlin-based startup Bonify provides free, easy-to-read credit reports. Users can use the startup’s platform or app to check and correct their scores, monitor changes, and receive tips on personal finance and how to optimise their scores.

Bonify evaluates consumers real-time creditworthiness, enabling them to improve their financial wellbeing through tailored financial and non-financial recommendations. The app delivers recommendations for how consumers can save money, for instance by switching to a different loan or energy provider. Bonify is also able to predict six to eight weeks in advance when its users might go into their overdraft, and provide personalised suggestions for how to avoid this.

Italian lendtech Credimi feeling dreamy with €10m funding (Fintech Futures) Rated: A

The investment funds came via United Ventures and Vertis, as well as some of the (unnamed) investors who took part in the first round of €8.5 million in September 2015.

Ignazio Rocco di Torrepadula, Credimi founder and CEO, and cool name winner, says: “Credimi’s initial start-up phase has been exhilarating, with results that have far exceeded our expectations.

SME Online Lender Creditshelf Names Fabian Brügmann New CFO (Crowdfund Insider) Rated: B

Creditshelf Aktiengesellschaft, a Germany based online lender, announced on Wednesday it has appointed Fabian Brügmann as its new CFO, effective on January 15, 2019. The lender reported that this appointment continues its planned expansion of its management team and in the newly formed position, Brügmann will be responsible for Finance and Investor Relations and directly report to Dr. Tim Thabe, Chairman of the Management Board and CEO of Creditshelf. He will not serve as a member of the Management Board himself.

According to Creditshelf, Brügmann previously worked as Director of Investor Relations at Commerzbank AG, where he was the contact for shareholders, fixed-income investors, and sell-side analysts. He joined the bank’s Corporate Development and Corporate Finance team in 2012. As IR Manager, Brügmann worked on the capital market communication for the “Commerzbank 4.0” strategy. He previously spent six years with the U.S. bank Goldman Sachs in Frankfurt and London.

Small Business Lender iwoca Appoints Seema Desai as COO (Crowdfund Insider) Rated: B

Online lender iwoca has selected Seema Desai as their new Chief Operations Officer (COO). iwoca provides loans of up to £200,000 to small and micro businesses across the UK, Germany, and Poland via its website and through partner integrations using its proprietary Lending API.

Desai joined iwoca in January 2017 as Head of People, developing the company’s organizational capabilities. Prior to joining iwoca, Seema led the development of the Innovative Finance ISA at peer-to-peer lender Zopa as Head of Product.

As COO, Desai is expected to help scale customer service that has helped propel iwoca to become one of the fastest growing business lender in the UK.

International

Prodigy Finance Launches Refinance Product for International Working Graduates Looking to Reduce Financial Costs (PR Newswire) Rated: A

Prodigy Finance, the pioneer in cross-border finance, announces the launch of a loan refinance product for international working graduates looking to reduce their student debt. The product will allow these alumni, who previously had limited options available to them, to save at least US$20,0001 over the life of the loan, by accessing lower rates and choices of terms.

The edge a serial entrepreneur sees in challenger banks (American Banker) Rated: A

Challenger bank entrepreneur Anthony Thomson has had several lives in banking and fintech.

In 2010, with Commerce Bank founder Vernon Hill, he co-founded Metro Bank, which started with one location in London and now has more than 56 branches and 2,800 employees. Thomson founded a second challenger bank in 2014 called Atom Bank, the first mobile-only bank in the U.K. As of March, it had 1.3 billion pounds of deposits and lent 1.2 billion pounds in mortgages and small-business loans.

Thomson is currently working on his third institution, called 86,400, a mobile-first challenger bank slated to launch in Australia in early 2019.

So it’s fair to say Thomson has learned a lot about what it takes to raise money and how to make it as a neobank entrepreneur.

The Ripple Effect: Crypto Backed Lending Platform Exploring XRP-Powered xRapid (The Daily Hodl) Rated: A

The crypto lending platform Nexo says it’s exploring Ripple’s xRapid, which uses XRP to boost the speed and lower the cost of cross-border payments. The announcement comes from Antoni Trenchev, the co-founder and managing partner of Nexo.

The company is backed by TechCrunch founder Michael Arrington and calls itself a “decentralized lending ecosystem that facilitates open access to credit anywhere and anytime.” It uses a long list of banking and exchange partners to deliver loans.

Nexo follows the payment company and Ripple partner TransferGo, which also revealed its interest in xRapid this week. Nexo recently added XRP to its platform, becoming one of the first lenders to use XRP as collateral.

MSTS Makes B2B Commerce Effortless for SMBs with Credit as a Service (Globe Newswire) Rated: B

MSTS, a global B2B payment and credit solutions provider, today announced that its innovative Credit as a Service solution is now available to mid-market and small businesses.

The original enterprise product, with a record of accelerating sales growth for companies by as much as 500 percent, has been optimized to meet the needs of businesses with simpler payment and credit processes. The cloud-based Credit as a Service solution for mid-market businesses can issue credit lines in less than a minute, automate the customer onboarding process and apply unique B2B customer invoicing, accounts payable and payment term requirements – providing customers flexibility and an enhanced experience.

MSTS works with B2B companies across transportation, manufacturing, retail and eCommerce.

Australia

Advice demand soaring in Australia despite trust issues (International Investment) Rated: AAA

The 2018 Financial Advice Report from Investment Trends found that an estimated 2.1 million adults intend to turn to a financial planner for advice, up from 1.6 million in 2017.

However, trust levels in banks and financial planners fell severely over that same period. On a scale of 0 to 10, banks fell from a trust rating of 5.5 to 4.8, while financial planners fell from 5.1 to 4.8.

The report found more than 40% of Australians do not believe the financial services and banking industries are meeting their obligations to everyday citizens.

Big banks welcome government competition for small end of town (Sidney Morning Herald) Rated: A

Australia’s biggest banks insist they welcome the prospect of looming lending competition from the federal government’s proposed $2 billion small business loan plan.

Under the policy unveiled by Treasurer Josh Frydenberg on Wednesday the government will establish a $2 billion securitisation fund which it will use to buy pools of small business loans from smaller banks and non-bank lenders.

Small business cheer $ 2b end to funding drought (Australian Financial Review) Rated: A

Small business and non-bank lenders have endorsed the Morrison government’s plans to inject $2 billion into the small and medium enterprise loan market.

But regulatory experts warned the government must avoid taking too much financial risk and not weaken bank rules in its quest to stimulate SME funding via a separate proposed bank-financed Australian Business Growth Fund.

Piper Alderman brings in financial services team (Australasian Lawyer) Rated: B

A national firm has added a financial services team, including a new partner in Sydney.

Andrea Beatty has commenced at Piper Alderman as a partner. She brought to the firm two other lawyers and an administrative assistant from NewLaw outfit Keypoint Law, where she was a consulting principal since 2016.

With more than 20 years’ experience in financial services regulation and corporate finance, Beatty is a former partner at legacy Mallesons Stephen Jaques and then at K&L Gates.

Asia

New securities law sparks concerns from expert (Vietnam News) Rated: AAA

Under the revised draft Law on Securities, the foreign ownership ratio in a public company is expanded up to 100 per cent. Previous regulations had capped foreign ownership at 49 per cent. However, this ratio in commercial banks, which is a much-concerned issue recently, was not mentioned in the draft. Why?

The draft has removed limits on how many voting shares foreign investors can buy in public Vietnamese companies. This indicates that the Government has sped up the equitisation process in State-owned enterprises, especially in non-essential sectors that are not too sensitive to the economy. However, under the draft, some conditional business lines, such as commercial banks, would retain their existing 30 per cent limit. I agree with this provision of the drafting agency.

How Standard Chartered Bank is tackling digital disruption (Tech in Asia) Rated: A

While banks have not been immune to the technology bug that has spread in the last few decades, digitization in the industry has only largely been implemented “for purpose in the back end,” according to Michael Gorriz, group chief information officer at Standard Chartered Bank.

“Fifty years ago, we introduced mainframes. We took paper ledgers and put them into computers,” the CIO explains.

But the emergence of a tech-savvy millennial generation is bringing about “the first real massive change in banks since the inception of banking,” he says. As such, banks like Standard Chartered have to digitize front-facing processes or risk losing their customers.

Eurasia

Russian Online Lender MFC Zaymer Joins Robo.cash (Crowdfund Insider) Rated: AAA

Automated peer to peer platform Robo.cash has issued a note saying Russian microfinance company MFC Zaymer is joining their platform. The company operates Zaymer.ru that offers short-term (payday) loans with interest rates for investors of 14% in Euros and up to 18% for loans originated in Rubles.

Africa

Nigeria dials up mobile banking revolution (Financial Times) Rated: AAA

Nigeria’s central bank is looking to increase access to millions of people by opening up the banking system to non-financial companies for the first time; South African telecom operator MTN is set to be the biggest beneficiary with more than 50 million customers located in Nigeria; MTN is planning to apply for a banking license soon with the hopes of having their Mobile Money product available in country by Q2 2019; more than 60 million people in Nigeria do not have bank accounts, showing there is an enormous opportunity for telcos to expand the banking footprint.

Authors:

George Popescu
Allen Taylor

Thursday April 26 2018, Daily News Digest

Hong Kong IPO

News Comments Today’s main news: FTC says LendingClub misled customers on fees. Credit Karma expands ID theft monitoring to include dark web data. Two startup robos were top performers in Q1. Shanlin Finance leaders charged with operating Ponzi scheme. TransferWise launches borderless accounts in European nations. Today’s main analysis: Small-dollar loans. Today’s thought-provoking articles: Elevate’s safe credit. Hong Kong makes […]

Hong Kong IPO

News Comments

United States

United Kingdom

China

European Union

International

Other

News Summary

United States

Lending Club misled customers about hidden fees, regulators say (CNN Money) Rated: AAA

The Federal Trade Commission said the company, which connects borrowers to investors without banks in the middle, “lures” customers with the promise of no hidden fees.

Instead, Lending Club deducts money up front — hundreds and sometimes thousands of dollars, the FTC said.

The FTC also accused Lending Club (LC) of falsely leading customers to believe they have been approved for a loan.

The FTC further accused Lending Club of withdrawing double payments from the accounts of its customers and charging customers who had canceled auto-payments or already paid off their loans.

LendingClub (LC) Said FTC Allegations are Unwarranted (Street Insider) Rated: A

Following an inquiry that began in May 2016, the U.S. Federal Trade Commission (FTC) brought an action against LendingClub(NYSE: LC) earlier today in the Northern District of California alleging that certain LendingClub practices do not, or in the past did not, comply with the requirements of the FTC and Gramm-Leach-Bliley Acts.

LendingClub believes that the allegations in the FTC’s complaint are legally and factually unwarranted. The company is disappointed that it was not possible to resolve this matter constructively with the agency’s current leadership and intends to oppose the claims and work towards an early resolution of the matter in Federal Court. Additional information about the complaint and LendingClub’s response are on its blog.

Why LendingClub Corp Stock Plunged Today (Motley Fool) Rated: B

Shares of peer-to-peer (P2P) lending company LendingClub Corp (NYSE:LC) are down by about 15% as of 3:30 p.m. EDT after the Federal Trade Commission charged the company with deceiving customers.

Elevate Provides Safe Credit To People Banks Can’t Serve With FICO (Forbes) Rated: AAA

Providing credit to 160 million Americans who are being ignored by banks sounds like a great business. And indeed, Elevate, which does just that, has been growing faster than Lending Club, SoFi, or OnDeck and is more profitable than any of them, said Ken Rees, the company’s CEO .

“Forty percent of Americans show monthly income swings of 30%. The majority of Americans need access to emergency credit but the banks have pulled back. Credit is particularly important because they have very low savings.”

Credit Karma expands its identity theft monitoring tool to include dark web data (Tech Crunch) Rated: AAA

After introducing a free identity monitoring tool for its users late last year, Credit Karma is widening the scope of its fraud-fighting scans to include data from the dark web.

Credit Karma’s  existing ID-monitoring tool searches 4.5 billion public breaches for a user’s personal data, but the improved service will scour additional breaches culled from the dark web. Added up, the tool will now search through 13 billion data breaches.

The company estimates that 65 percent of its users have experienced a data breach, whether they know it or not, so Credit Karma is well-positioned to issue a wake-up call about protecting identifying information online.

2 New Robo-Advisors Among the Top Performers in Q1 (ThinkAdvisor) Rated: AAA

Two relative newcomers to the robo-advisor space are among the industry’s top three performers in the first quarter, according to the latest Robo Report from BackEnd Benchmarking.

SoFi Wealth Management, which launched in May 2017 as an offshoot from the SoFi online lending platform, took first place; TIAA SRI, the socially responsible investment portfolio of its TIAA Personal Portfolio robo, placed third; and sandwiched between the two was Schwab Intelligent Portfolios.

All three robos lost money in the first quarter in their taxable, balanced portfolios, split roughly 60/40 between stocks and bonds, but they performed better than other digital advisors and the overall stock market, which was down 0.76%, for the S&P 500. Their losses ranged from 0.14% for SoFi and 0.45% for TIAA SRI.

Schwab Intelligent Portfolios excelled largely because of its fixed income allocation, which included high-yield bonds and international debt, according to the Robo Report. It placed first for fixed income performance not only for the first quarter of 2018 but for the one-year and two-year trailing periods.

Source: Think Advisor

Small-dollar loans (Lexology) Rated: AAA

The Trump Administration has also taken notable steps to ease the burden placed on the payday lending industry. These include terminating the Obama-era “Operation Choke Point,” which was designed to discourage banks from doing business with payday lenders,11 as well as removing payday-bank partnership restrictions for at least one payday lender.12 This signals a significant departure from regulatory constraints put in place a decade ago prohibiting affiliations between national banks and payday lenders that sought to circumvent state interest rate caps.13

In addition to established market participants targeting borrowers with high credit scores, new internet-based startups are offering small-dollar loans to non-prime borrowers, directly targeting the payday lenders’ customer base. Fintechs aim to compete with traditional payday lenders by marketing a more customer-centric approach, as well as flexible terms and lower fees. These new market entrants generally rely on the use of AI-driven scoring products and non-traditional data analytics to assess a borrower’s creditworthiness. In addition to fair lending considerations, these new online startups generally rely on mobile devices and related technology to host their software and undertake lending decisions, thereby raising privacy and cybersecurity concerns.

Source: Lexology

Navient reports higher earnings in first quarter (Delaware Business Now) Rated: A

Wilmington-based Navient reported higher earnings in the first quarter as the company expanded its segment reporting to reflect a broader array of businesses.

Results that included the origination of $500 million of private education refinance loans, a 43 percent decrease in private education loan charge-offs and a 32 percent increase in business processing fee revenue from the year-ago quarter.

For the first-quarter 2018, GAAP (Generally Accepted Accounting Principles) net income was $126 million compared with $88 million ($0.30 diluted earnings per share) for the year-ago quarter.

California merchant accuses lender of ‘rent-a-bank’ scheme (Rueters) Rated: A

Utah-based Celtic Bank and Georgia-based lender Kabbage Inc have been hit with a proposed class action accusing them of creating a “rent-a-bank” arrangement to issue high-interest loans to small businesses in California and evade the state’s usury laws.

The case was removed by Celtic Bank to federal court in Los Angeles on Tuesday after being filed last month in Los Angeles County Superior Court.

How employees build and shape the rock-solid cultures at 5 local tech companies (Built In Chicago) Rated: A

What is the foundation of Enova’s culture?

If I may grossly generalize and speak for the majority of the millennial workforce, workplace culture is a big job-hunting factor. Of course, we want to make decent salaries and have access to good health insurance. We also want to be spending those 40 or more hours per week with people we enjoy working with, tackling independent and collaborative work, constantly learning new things, and developing our skills — all of which Enova does a great job of cultivating.

What is the foundation of Avant’s culture?

Avant’s culture is based a lot around letting the best idea win. No matter what part of the business someone is in, if they have an idea that really shines through and will resolve the issue at hand, they are heard. In my experience, even if you’re not in your domain, people will listen to you as long as you come in with a clear spec. If you ask for something and have a good explanation as to why it’s needed, you can get it.

 

 

CEO of student loan marketplace LendEDU admits the name of the founder of a partner site is fake (CNBC) Rated: A

A spokesman cited in publications, including a CNBC story in March about students using their financial aid money to invest in cryptocurrencies, is a fake, the CEO of a partner website has admitted.

Nate Matherson, CEO of student loan refinancing company, LendEDU, said he started The Student Loan Report — studentloans.net — in 2016.

 

Where to Get a Loan of $ 5,000 or Less (Student Loan Hero) Rated: A

Many online lenders have personal loans that offer more flexibility. Some lenders set borrowing minimums as low as $1,000.

Pros: Some online lenders offer flexible repayment plans. For example, Avant allows you to make changes to your upcoming payments online, including the amount and date of your current or future payments. The company says it’s willing to work with you if you’re unable to make a payment, making it easier to repay your loan.

Kirsten Gillibrand Unveils A Public Option For Banking (Huffington Post) Rated: A

Sen. Kirsten Gillibrand (D-N.Y.) is introducing legislation Wednesday that would require every U.S. post office to provide basic banking services, an ambitious step aimed at improving the lives of Americans with limited financial resources.

The postal system’s 30,000 locations touch every community. A majority ― 59 percent ― are in so-called banking deserts, or zip codes that have either no bank branches or just one.

Upgrade Personal Loans Review: Low Rates and Free Credit Monitoring (Student Loan Hero) Rated: A

Upgrade is an online lender that primarily offers unsecured personal loans between $1,000 and $50,000. You can use these loans for a variety of purposes, including home improvement, debt consolidation, or a big purchase.

As unsecured loans, these personal loans don’t require any collateral.

Source: Student Loan Hero

How to Cope With the High Costs of Infertility (US News) Rated: A

According to the National Survey of Family Growth by the Centers for Disease Control and Prevention, one in eight couples have trouble getting pregnant or sustaining a pregnancy and more than 85,000 women in the U.S. undergo in vitro fertilization each year.

According to a 2015 study about the sentiment, costs and financial impact of fertility treatments in the U.S. by Prosper Marketplace, a peer-to-peer lending marketplace, nearly half of those polled said that prices impacted the level of treatment they sought. Almost 34 percent of those women surveyed had to stop treatment due to the financial burden. Meanwhile, 70 percent of participants reported acquiring some degree of debt in their quest to conceive with more than 26 percent taking on over $30,000 of debt. The cost of treatments was also the single largest factor for those respondents who initially decided to delay fertility treatment at nearly 82 percent.

Washington Wants to Weaken Bank Rules. Not Every Regulator Agrees. (The New York Times) Rated: A

In recent weeks, federal banking regulators have proposed softening a requirement that puts a hard limit on how much the largest banks can borrow. The rule, known as the supplementary leverage ratio, requires that banks prepare for a disaster by maintaining a certain level of capital on their balance sheets based on their total size.

Banks have long complained that the rule is too restrictive and makes it harder for them to do business, including lending, in important markets. They have asserted that the ratio is too blunt of an instrument and often the strictest of the various capital requirements that were put in place after the crisis.

Which Is Best: REITs or Real Estate Crowdfunding? (US News) Rated: A

Who can invest in REITs and real estate crowdfunding? The best investors for REITs and real estate crowdfunding might not be the same. Joseph Hogue, chartered financial analyst and owner of Crowd 101, a crowdfunding website, says that although real estate crowdfunding is less work than direct investment in properties, it still involves more due diligence than REIT investing.

What are the advantages and disadvantages of REITs and real estate crowdfunding? For hands-on investors, who want to customize their real estate investing, crowdfunding fits the bill, says Javier Benson, senior vice president of strategy and implementation at crowdfunding site RealtyShares. RealtyShares specializes in funding commercial real estate projects valued at more than $50 million, certainly not a market for the individual investor.

Benson summarizes the benefits of real estate crowdfunding: “lower fee loads, increased transparency and the opportunity to select individual projects.”

Lenders reject 9% of CT loan applications (Hartford Business) Rated: A

Mortgage lenders rejected 9 percent of loan applications in recent years from Greater Hartford borrowers, which is the nation’s 10th worst denial rate, according to a recent study.

The study by national lending exchange marketplace Lending Tree said lenders denied mortgage shoppers in Hartford, West Hartford and East Hartford at a high rate mainly due to insufficient debt-to-income ratios and collateral.

Hartford’s would-be borrowers ranked second in the nation for cities where collateral issues resulted in their mortgage denial, which amounts to 24 percent of its denials.

LendingTree and COMPLY2018 Announce the Kraken Innovation Award (PR Newswire) Rated: B

COMPLY2018 announces that LendingTree, the nation’s leading online loan marketplace, will award one company as The Most Innovative Company during the annual RegTech and Compliance Conference May 16-17 in New York City.

United Kingdom

Growth Street Celebrates Full FCA Authorization & New GrowthLine Lending Product: Need to Borrow £2M? (Crowdfund Insider) Rated: AAA

UK alternative finance firm Growth Street has been granted full FCA authorization,  a significant milestone for Growth Street, which had been operating as an Appointed Representative of Resolution Compliance Limited since 2016.

Growth Street has simultaneously rolled out an update to its flagship business lending product, GrowthLine. The firm is now accepting applications from businesses looking to borrow up to £2M, a substantial increase from the previous maximum limit of £1M.

Borrowers unaware of how to check loan providers as scams increase (Peer2Peer Finance) Rated: A

A THIRD of personal loan applicants have admitted they weren’t confident about how to check if their provider was legitimate, the Financial Conduct Authority (FCA) has revealed.

Research by the City watchdog found 36 per cent of those who took out a loan product in the past three years didn’t do any checks to ensure the legitimacy of their loan provider.

The FCA has revealed that more than £3.5m has been lost to loan fee fraud and said reports to its consumer helpline on this issue had increased by 44 per cent.

China

Eight charged in China over ‘Ponzi scheme posing as P2P lender’ that took US$ 9 billion (China Morning Post) Rated: AAA

Eight ringleaders of the Shanghai-based Shanlin Finance have been charged with illegally obtaining deposits and taken into custody, according to local public prosecutor the Shanghai Pudong district People’s Procuratorate, the official Xinhua News Agency reported on Tuesday.

The scheme was disguised as a peer-to-peer lending platform, police said. Shanlin’s online lending platforms and mobile apps have been suspended from service.

Big Bang Means Buyer Beware in Hong Kong IPOs (Bloomberg) Rated: AAA

Hong Kong Exchanges & Clearing Ltd. will allow innovative companies that use shares with weighted voting rights to apply for IPOs starting April 30, and will also admit unprofitable biotech firms. That’s a landmark departure from the exchange’s longstanding adherence to the one-share-one-vote principle and the requirement for a three-year profit track record.

China has also opened the door for companies listed on its National Equities Exchange and Quotations market – an over-the-counter trading venue that’s developed something of a reputation as a casino – to sell H shares in Hong Kong.

Looser entry rules will create a vastly different market.

The Fall of Peer-to-Peer Lending in China (Caixin Global) Rated: A

P2P lending, which was designed to bypass traditional lending by matching individual borrowers and lenders, began to flourish on the Chinese mainland in 2011 as the government encouraged the wider use of technology to expand financial services to small businesses and individuals. At P2P lending’s peak in late 2015, there were more than 3,300 platforms operating, according to Wandaizhijia, a portal site that tracks the sector.

However, due to the absence of unified regulations, a great proportion of P2P lenders began collecting cash from investors, offering high returns. A market worth more than 1 trillion yuan ($158 billion) quickly developed.

China’s online lenders reel from industry shake-out (Financial Times) Rated: A

A survey by FT Confidential Research shows the online lending industry in China continues to consolidate from new regulations; the days of significant growth and platform expansion have ended as the government looks to weed out the smaller players; since 2016 the government has capped borrowing limits, shut down secondary markets and forced platforms to file with local regulators

European Union

Fintech unicorn Transferwise launches a ‘borderless’ account in Sweden, Finland and Denmark (Business Insider Nordic) Rated: AAA

Transferwise is today rolling out a “borderless” consumer account and linked debit card, which will let people hold money in multiple currencies.

The service, which Transferwise says is the first one of its kind, has been openly trialed among a few thousand customers since January, and goes live globally including in Sweden, Denmark and Finland. Norway will follow later on.

This means that people will be able to transfer and spend money abroad, with little or no exchange or mark-up fees. They will also be able to make withdrawals through a Mastercard debit card. The debit card will me made available for larger businesses later in 2018.

RBS plans to move 1m users to new challenger bank, says report (AltFi News) Rated: A

According to an insider at the Royal Bank of Scotland, the bank has set an internal target of switching more than 1m users from Natwest to its latest project, a “next generation mobile-only bank”, in time for its debut in the third quarter of 2018.

In another interesting move, the insider has said that RBS’ mobile-only bank will be pursuing a marketplace business model, aiming to forge third-party partnerships as its primary source of revenue over lending. This is a model that is now well-known in the digital banking sector, hailed by dominant players like Monzo and Starling Bank as the future of next generation banking.

GDPR and financial advice: Processing data on children (Professional Adviser) Rated: A

The General Data Protection Regulation (GDPR) makes special mention of children and, for the purposes of the regulation, consent cannot be granted without parental approval by anyone under the age of 13. Upon their 13thbirthday, data subjects can freely consent to how their data is processed – in other words, they can sign up to newsletters and appropriate alerts.

Unlikely as it may be that a 13-year-old will be signing up for newsletters from financial advisers, advice firms will still be processing large amounts of data on under-13s. Taking Intelligent Office as an example, there are currently more than 75,000 records of people under the age of 13 and so it is important that appropriate checks are in place and that parental consent has been granted at the beginning of the process.

Deposit Solutions shows potential of open banking (Euromoney) Rated: A

However, don’t tell that to Deposit Solutions. The Hamburg-based provider of an open-banking platform that lets deposit-rich banks offer their account holders insured savings products from other banks is growing fast. It launched its own business-to-consumer marketplace Zinspilot in September 2015 and by the end of 2016 had transmitted $1 billion in deposits.

Deposit Solutions also has 50 banks in 16 European countries on its B2B platform. These include Deutsche Bank, FFB – the German subsidiary of Fidelity – and MünchenerHyp in Germany, and Atom Bank and Close Brothers in the UK.

So-called product banks, such as Atom, that are seeking funding, but don’t want to invest in a traditional deposit-gathering infrastructure, can offer terms to so-called client banks, such as Deutsche, with lots of customers, but already an excess of deposits.

International

Inside Santander’s plans to digitize money (Tearsheet) Rated: AAA

The Spanish banking giant’s U.K. arm recently launched One Pay FX, a mobile payments service for its U.K. debit card holders that want to send payments to people in Euro Zone countries and the U.S. It’s the first market-ready product built on blockchain technology, Ripple’s xCurrent protocol, for retail customers. It had been running as a pilot for employees for the last 18 months.

Santander, one of the founding members of R3 CEV, a prominent consortium of banks investing in the company’s blockchain technology for financial applications, soon became one of the first members to exit the group as it concentrated on other payments-focused group work like the Utility Settlement Coin — “a tokenized version of central bank money,” in Faura’s words — and the Global Payments Steering Group.

Source: Tearsheet

This MBA Loan Provider Is Helping International Students Start New Careers Abroad (Business Because) Rated: A

According to BusinessBecause data, 90% of MBA applicants would consider studying abroad. At the same time, over 60% say they wouldn’t be able to pursue an MBA without financial aid.

Prodigy Finance has lent more than $505 million in loans to over 10,300 students globally. Those loans have enabled international students such as Alex Brack, originally from Brazil and a recent MBA graduate for The F.W. Olin Graduate School of Business at Babson College, to thrive.

ZPER Secures Crypto Mobile Wallet with Trustonic (Global Banking and Finance Review) Rated: B

Following an increase in incidents such as the January 2018 theft of $425 million from Coincheck Inc, ZPER, the decentralised peer-to-peer (P2P) financial ecosystem, is launching the most secure cryptocurrency wallet available. ZPER is achieving this by embedding advanced security solutions from app and device security leader, Trustonic, to provide best-in-class protection. This move is in response to growing concerns about the vulnerability of cryptocurrencies when stored in exchanges.

Australia

 

Instant cash loan machines may target most vulnerable with quick dollars, financial counsellor says (Australian Broadcasting Corporation) Rated: A

The emergence of instant cash loan machines across parts of New South Wales has sparked fears about low-income families being potentially caught in a debt trap.

The machines, which look like ATMs, only require identification and bank details before users are approved for cash loans almost immediately.

Financial counsellors have expressed concern about the devices, which they say appear to be popping up in low socio-economic areas.

India

 

RentoMojo is using machine learning to create credit profiles of users (Tech Circle) Rated: AAA

It raised $10 million (Rs 64.3 crore) in a Series B round of funding led by Bain Capital Ventures and Renaud Laplanche, a French-American entrepreneur. The company had earlier raised $2 million in a pre-Series A round from Accel Partners and IDG Ventures India in November 2016.

Asia

Emerging Asian leaders in Blockchain and Cryptocurrency to watch out (Finextra) Rated: A

Crowd-Genie, an Asia-wide cross-border lending platform, concluded its ICO on March 1, raising over $5.5 million. Under the stewardship of CEO and Co-Founder,Akshay Mehra, Genie is aiming to build a private capital hub using smart contracts to make borrowing safer, cheaper and more efficient. Mehra is certified in CMFAS by the MAS and has over 15 years industry experience. His goal of creating a tokenized lending platform puts him at the forefront of blockchain and cryptocurrency technology in Asia.

Under Mehra’s leadership, Crowd Genie’s goal is to develop a Business Loans Asset Exchange on which lenders can enhance their liquidity by transferring asset ownership. Crowd Genie Financial Services Pte. Ltd. is one of a handful of licensed platforms in Singapore to hold a ‘Dealing in Securities’ license by MAS and GenieICO’s token – CGC – was listed on the Cobinhood exchange on March 19.

Latin America

Brazilian bank IPO tests disruption potential of fintech firms (Reuters) Rated: AAA

The first initial public offering (IPO) by a Brazilian retail bank in nearly a decade, set to price on Thursday, will test if investors expect new technologies to give smaller lenders a fighting chance against Brazil’s dominant big four banks.

Banco Inter SA, a tiny mortgage lender that has reinvented itself as a purely online bank, is the first in a wave of feisty digital challengers planning to go public – and looking to trade at higher multiples than many of Brazil’s largest lenders.

Authors:

George Popescu
Allen Taylor

Friday October 6 2017, Daily News Digest

Funding Circle lending

News Comments Today’s main news: LendingClub completes second self-sponsored securitization. Pennsylvania AG sues Navient. Federal regulator clamps down on payday lending. Elevate supports rule on small dollar lending. RateSetter expected to profit next year. China’s pyramid schemes double in 2017. KBRA opens first European office. LendIt leadership changes. Today’s main analysis: Funding Circle’s October review. Today’s thought-provoking articles: Payday lending’s tough restrictions. Cordray’s […]

Funding Circle lending

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

News Summary

United States

LendingClub Corp Completes Second Self-Sponsored Securitization (Financials Trend), Rated: AAA

LendingClub Corp (NYSE:LC), America’s leading web marketplace connecting investors and borrowers, has contributed to and sponsored its second securitization contract. The Consumer Loan Underlying Bond Credit Trust 2017-P1 released $323.1 million in prime notes supported by consumer loan assets enabled through the LendingClub platform. It marks as the sixth securitization sponsored or supported by company, and the fourth rated securitization of company facilitated loans overall.

This deal was backed by around $350 million of collateral and comprises $217.3 million of Class ‘A’ notes rated “A-(sf)”, $51 million of Class ‘B’ notes rated “BBB (sf)” and Class ‘C’ notes worth $54.7 million rated “BB (sf)”. All ratings were given by Kroll Bond Rating Agency, Inc.

Pa. attorney general files suit against student-loan company (Philly.com), Rated: AAA

The Pennsylvania Attorney General’s Office filed suit Thursday against Navient, the largest U.S. student-loan servicer, alleging widespread abuses and deceptive acts involving its administration of student loans.

The suit against Navient Corp. and its subsidiary Navient Solutions LLC, formerly a part of Sallie Mae, could affect hundreds of thousands of Pennsylvanians, Attorney General Josh Shapiro said, adding that the office is seeking restitution for all borrowers affected by the practices.

That includes anyone who received private student loans from Sallie Mae or who has had federal or private student loans serviced by Navient and has had problems with repayment.

The Wilmington-based company, which has a large servicing center in Wilkes-Barre, already is the subject of a federal lawsuit filed this year by the Consumer Financial Protection Bureau (CFPB). Washington state and Illinois also have sued the company.

Pennsylvania residents have filed 1,059 complaints against Navient with the CFPB as of September, the Attorney General’s Office said.

Online lender Earnest sells to Navient, in a disappointing deal for investors (TechCrunch), Rated: A

Earnest, a well-funded fintech startup with bold ambitions to create a modern financial institution, is selling to the student-loan company Navient for $155 million in cash.

The exit isn’t so great for Earnest’s investors. They’d plugged roughly $320 million in cash and debt into the company, which was initially centered around providing small loans to people based on their earning potential and evolved over time to provide personal loans to a broader base of customers, as well as lend money to coding academies, as it told TechCrunch in late 2015.

Fintech deal suggests everything old is new again (NASDAQ), Rated: A

Everything old is new again in finance. Navient, which services debt, is buying startup student-loan refinancer Earnest for less than half its 2015 valuation. Even then, it’ll eat into the new owner’s earnings and share buybacks. Worse, Navient faces a fresh lawsuit over dodgy practices.

The Pennsylvania attorney general’s office filed charges on Thursday that follow ones from the U.S. Consumer Financial Protection Bureau in January with Illinois and Washington. All allege that Navient in some way or other cheated borrowers paying for college, which the company denies.

Earnest’s $155 million price tag suggests most in the industry have downgraded their expectations about profitable growth.

Navient shares tumbled 12 percent, erasing market value more than three times the value of the acquisition.

Elevate Expresses Full Support for CFPB Small Dollar Lending Rule (BusinessWire), Rated: AAA

Ken Rees, CEO of Elevate Credit, Inc. (“Elevate”), a tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, issued the following statement in response to the final “small dollar lending” rule issued today by the Consumer Financial Protection Bureau (CFPB):

“We applaud the CFPB, and we fully support this rule. We believe this rule is good for consumers and for the business we have built to better serve them. The small dollar rule protects consumers from the cycle of debt inherent in payday loans, short-term auto title loans, and certain balloon payment loans, and it encourages the kind of innovation we’re doing in underwriting, pricing and product development. We are heartened that regulatory uncertainty has been lifted with today’s announcement. Our current view is that the rule requires minimal or no changes to our business.”

Federal Regulator Clamps Down on Payday Lending Industry (U.S. News), Rated: AAA

Payday and auto title lenders will have to adhere to stricter rules that could significantly curtail their business under rules finalized Thursday by a federal regulator. But the first nationwide regulation of the industry is still likely to face resistance from Congress.

The Consumer Financial Protection Bureau’s rules largely reflect what the agency proposed last year for an industry where the annual interest rate on a payday loan can be 300 percent or more. The cornerstone is that lenders must now determine before giving a loan whether a borrower can afford to repay it in full with interest within 30 days.

Because studies by the CFPB have found that about 60 percent of all loans are renewed at least once and that 22 percent of all loans are renewed at least seven times, this cap is likely to severely wound the industry’s business model. In California, the largest payday loan market, repeat borrowers made up 83 percent of the industry’s loan volume.

The CFPB estimated that loan volume in the payday lending industry could fall by 55 percent under the new rules.

Roughly 12 million people took out a payday loan in 2010, according to the Pew Charitable Trusts.

In addition to the “full payment test” and the limits on loan renewals, the CFPB rules would also restrict the number of times a payday lender can attempt to debit a borrowers’ account for the full amount without getting additional authorization.

This Government Agency Is Seriously Overstepping Its Bounds (Fortune), Rated: A

The Consumer Financial Protection Bureau (CFPB) has a mission: to protect consumers from unfair, deceptive, or abusive practices. According to a new national poll by the Cato Institute in collaboration with YouGov, protection from deceptive practices is just what the American public wants. Asked to prioritize regulatory goals, the majority of respondents put “protect consumers from fraud” front and center.

Unfortunately, the CFPB continually misses the mark, issuing rules that make splashy headlines but in practice do little to stop bad behavior. Its latest proposed rule, expected to become final soon, doesn’t target fraud itself. Instead, it goes after an entire industry and will significantly reduce consumers’ access to credit at the exact moments they need it most.

As the Cato poll finds, the majority of payday borrowers say they receive good information about rates and fees from their payday lenders.

Payday Lending Faces Tough New Restrictions by Consumer Agency (The New York Times), Rated: AAA

The operators of those stores make around $46 billion a year in loans, collecting $7 billion in fees. Some 12 million people, many of whom lack other access to credit, take out the short-term loans each year, researchers estimate.

Industry officials said on Thursday that they would file lawsuits to block the rules from taking effect in 2019 as scheduled.

Under the new rules, lenders would be allowed to make a single loan of up to $500 with few restrictions, but only to borrowers with no other outstanding payday loans.

A dropoff of that magnitude would push many small lending operations out of business, lenders have said. The $37,000 annual profit generated by the average storefront lender would become a $28,000 loss, according to an economic studypaid for by an industry trade association.

Prepared Remarks of CFPB Director Richard Cordray on the Payday Rule Press Call (ConsumerFinance.gov), Rated: AAA

After a long process of research, outreach, and review of over one million public comments, the Consumer Bureau today has issued a rule aimed at stopping debt traps on payday and auto title loans. The rule is guided by the basic principle of requiring lenders to determine upfront whether people can afford to repay their loans. These strong protections cover loans that require consumers to pay all or most of the debt at once, including payday loans, auto title loans, deposit advance products, and longer-term loans with large “balloon” payments. The new rule also curtails repeated attempts to debit checking accounts that rack up fees and make it harder for consumers to get out of debt. This provision applies to the same kinds of loans and to high-cost installment loans as well. These protections bring needed reform to a market where far too often lenders have succeeded by setting up borrowers to fail.

Loans like these are heavily marketed to financially vulnerable consumers. Though they offer cash-strapped consumers access to credit, the full-payment requirement can make these loans unaffordable.

More than four out of five payday loans are re-borrowed within a month, usually right when the loan is due or soon thereafter. In fact, about one-in-four initial payday loans are re-borrowed nine times or more, as consumers pay far more in fees than they borrowed in the first place. Just like payday loans, the vast majority of single-payment auto title loans are rolled over or re-borrowed on the day they come due or soon thereafter. And one-in-five borrowers end up having their car or truck seized by the lender because they cannot repay the debt.

Our research has shown that the business model for payday and auto title lenders is built on miring people in debt.

The new rule also addresses how lenders extract loan payments from consumers’ accounts. This part of the rule covers short-term loans, balloon loans, and high-cost longer-term loans where the lender has account access. After two straight unsuccessful attempts, the lender cannot debit the account again unless it gets a new authorization from the borrower. In addition, lenders must notify consumers in writing before attempting to debit an account at an irregular time or for an irregular amount.

The final rule issued today applies the underwriting requirements only to lenders of short-term and balloon-payment loans. This is a change from our proposal, which would have required underwriting for a wider swathe of longer-term loans. We want to take more time to consider how the longer-term market is evolving and the best ways to address practices that are currently of concern and others that may arise as the market responds to the reforms prompted by this new rule.

The Bureau has spent five years developing this rule.

Despite Ban on Payday Lending, Public Pensions Profit from Outlawed Loans (NBC New York), Rated: A

Short-term, high-interest debt known as payday loans are illegal inside New York borders. But that hasn’t stopped state and city retirement funds from investing more than $40 million in payday lenders that operate in other states.

The Finance Industry’s Complaint Against the Consumer Financial Protection Bureau (U.S. District Court, Northern District of Texas), Rated: A

Read the full complaint here.

Fifth Third Bancorp’s Greg Carmichael Discusses the Relationship Between FinTechs and Banks (The Clearing House), Rated: A

This environment presents challenges to introducing technologies, products, or services. If we have an issue, we can’t advance the products or services. A zero-tolerance regulatory environment puts constraints on products and services that we may like to get into the marketplace. For instance, small dollar lending has been problematic. As you know, Jim, small-dollar lending is a very important product for our customers. Many customers are regularly going out to payday lenders, title loans, and pawn shops to get short-term access to dollars.

When you look at the amount of capital you have to hold, and the underwriting requirements for a small business loan versus a larger loan, the cost is the same. It makes it more difficult to serve small businesses, and you see small business lending by banks being significantly reduced over what you saw pre-crisis.

This partnership has already helped us form relationships with companies like GreenSky, ApplePie Capital, Transactis, and AvidXchange. This has enabled Fifth Third to accelerate our innovation in those different areas, whether it is unsecured lending, small business franchise lending, or accounts payable automation.

Well, the interesting thing with FinTechs is that most of them need a bank as a partner to be successful.

GreenSky doesn’t exist, Lending Club doesn’t exist, OnDeck doesn’t exist without liquidity and the safe harbor banks provide for the asset. Partnerships between a bank and a FinTechs are a potential strong win for our customers and a win for our banking shareholders because we’re more efficient in how we deliver innovative products and services.

Our $30 billion community commitment focuses on supporting low- to moderate-income borrowers. $11 billion of our five-year commitment is dedicated to mortgage lending; $10 billion is for small business lending; and $9 billion is for community development lending and investments.

Balance Credit Expands to California Consumer Credit Market (BusinessWire), Rated: A

Balance Credit, a leading online lender whose analytics and technology-driven solutions have enabled nearly $100 million in credit access for underserved Americans, has expanded its personal loan offering to residents of California. The expansion will allow Balance to assist the estimated 26 percent of Californians who are currently underserved by mainstream banking products. With the launch in California, Balance has expanded its geographic coverage from 19% to 31% of US consumers.

With today’s news, California marks the 9th state where Balance Credit operates, including Delaware, Missouri, New Mexico, Ohio, South Carolina, Texas, Utah, and Wisconsin.

5 ways to buy a home with a low down payment (KHOU.com), Rated: B

In fact, the average down payment, according to the National Association of Realtors, has been 6 percent for the last three years.

What do you do if you don’t have 20% lying around?

SoFi. SoFi is new to the mortgage lending space, but it’s setting itself apart in a big way. It accepts borrowers with a 10 percent down payment, but they primarily target borrowers with higher FICO Scores — think 700+. On the bright side, they do not charge mortgage insurance. In fact, SoFi doesn’t charge any loan origination, application or broker commission fees.

Lawmakers Call Ex-Equifax CEO’s Testimony Insufficient (Law360), Rated: A

House lawmakers on Thursday sharply questioned the former chairman and chief executive of Equifax Inc. over a massive data breach that left more than 145 million Americans’ personal information exposed, raising questions about why he had appeared to testify as opposed to current executives.

Appearing in his fourth congressional hearing over a three-day span, former Equifax Chairman and CEO Richard Smith faced a flurry of questions over the details of the breach, including over curious stock trades by top company executives just before the breach was made….

Ex-Bookkeeper Stole $ 1.6M From NJ Co. Via PayPal (Law360), Rated: B

Pennsylvania federal prosecutors Thursday filed an indictment charging a Philadelphia man with using PayPal to embezzle $1.6 million from his former employer, a New Jersey company that sells products for the cellular phone industry.

Peter Goodchild, 54, who was a bookkeeper at the Florham Park, New Jersey-based QwikSource LLC, allegedly pilfered the funds over a 10-year period. He also faces charges of money laundering, aggravated identity theft and filing false income tax returns.

Barclays US tests personal finance tool (Banking Technology), Rated: B

Barclays US is dipping its toe into the financial health business, testing a personal financial management tool that aggregates all of a customer’s Barclays credit cards, personal loans and savings products – as well as accounts with other banks – in one place, reports Banking Technology‘s sister publication Paybefore.

This new service, My Personal Bank, which will be announced soon, is embedded in the bank’s credit card mobile app.

Allrise Financial moves into downtown Reno (Northern Nevada Business Weekly), Rated: B

Allrise Financial Group has leased 5,500 square feet at 200 S. Virginia Street in Reno.

Did the CEO of Hardwick Clothes Cut Ties With the NFL Over ‘Unpatriotic’ Protests? (Snopes), Rated: B

In September 2017, Tennessee businessman and CEO of Hardwick Clothes Allan Jones withdrew all NFL-related advertising for his companies, in response to “unpatriotic” national anthem protests.

Source: Snopes

On 26 September 2017, Jones, who also owns Buy Here Pay Here U.S.A. and U.S. Money Shops, posted a screenshot to his Facebook page showing an email instructing his ad-buyer to stop any commercials for his companies from being broadcast during NFL games.

United Kingdom

RateSetter will return to profit next year, says CEO (P2P Finance News), Rated: AAA

RATESETTER will return to profit next year, its chief executive and co-founder has said.

The peer-to-peer lender was profitable in the financial years ended 2014 and 2015, but has fallen into the red since then, as it has invested heavily into scaling up the business.

The ‘big three’ platform published a recording of a recent speech by Rhydian Lewis (pictured) on its website on Thursday, in which he underlined his belief that RateSetter is a “sustainable and profitable model”.

Your October Review – Insight and Analysis (Funding Circle), Rated: AAA

Last month Funding Circle investors, like you, lent over £100 million to UK businesses to help them grow and develop.

Source: Funding Circle

September industry news

Thanks to investors, last year over £1 billion was lent to 10,000 businesses through Funding Circle, helping to create 25,000 new jobs.

We recommend lending £2,000 or more, so you can lend to 100+ businesses, with no more than 1% going to each one.

Source: Funding Circle

From peer-to-peer to here: Three issues that Zopa must solve (AltFi), Rated: AAA

Zopa is the world’s original peer-to-peer lending platform and the biggest consumer-focused platform in the UK. It has also been closed to new investors for the better part of eight months. The reason is explicitly that it cannot find enough new borrowers. Demand for its loans among existing investors is more than sufficient to match demand on the other side of the marketplace. For this reason, Zopa‘s Innovative Finance ISA has largely been an exercise in tax efficiently wrapping money that it already had on the platform.

A more meaningful initiative in the platform’s ongoing plight to attract borrowers might be its latest partnership with Saffron Building Society. This, for the first time in Zopa’s 12 year history, brings it into branches. Its loans will now be made available to Saffron’s 90,000 customers in any of its 11 branches across Hertfordshire, Essex and Suffolk, as well as via the building society’s website. Applicants can expect a quote within minutes.

Zopa may well have a bright future, but in the short-term it seems to me that it has three core issues that it must iron out:

  • Finding new origination channels in order to open to new customers once more, capitalise on the IFISA opportunity and take advantage of the cost benefits of deposit funding.
  • Meaningfully speed up whatever is delaying loan sales on the platform.
  • Find a way to maintain an attractive risk-premium for its P2P investors.

LendInvest CEO Christian Faes Challenges Government to Back SME Builders: Game On (Crowdfund Insider), Rated: A

“There are five times fewer small scale developers today than in the last housebuilding boom and not a single one of today’s top ten housebuilders was created before 1990. There is a clear monopoly in the sector,” clarified LendInvest Co-Founder & CEO Christian Faes.

Online Lender Lendy Seeks IFISA Permission & Announces Repayment For Largest P2P Loan (Crowdfund Insider), Rated: A

UK-based peer-to-peer property platform Lendy is currently seeking permission to launch an innovative finance ISA (IFISA). This news comes just after the online lender announced its 2016 earnings and additional growth plans.

Meanwhile, Lendy also announced the repayment of its largest p2p loan. Bridge and Commercial reported that the loan, which was secured against former the Kentish Town Studios building in North London, has been repaid in full 21-days ahead of schedule and even returned a gross 12% per annum in interest.

Digital wealth manager Moneyfarm acquires tech behind fintech chatbot Ernest (TechCrunch), Rated: A

Moneyfarm, the U.K.-headquartered “digital wealth manager” has acquired the technology behind personal finance chatbot Ernest. Terms of the deal aren’t being disclosed, though I understand that, along with the tech, this is an acqui-hire of sorts, seeing London-based Ernest’s CTO Lorenzo Sicilia join Moneyfarm to oversee technology integration.

Starling Bank expands to offer business accounts (Banking Technology), Rated: A

Starling Bank, one of the first banking challengers to offer a mobile-only current account in the UK, is expanding into the business market.

The Starling for Business account will initially be for entrepreneurs, sole-traders, and small business owners. The aim is to offer “fast, secure, and flexible” ways of managing business finance from mobile.

Can a robot give financial advice? (Which?), Rated: B

New guidance setting out how artificial intelligence services can give streamlined financial advice has been published by the Financial Conduct Authority (FCA).

Some of the most popular include:

  • Nutmeg: an online service that suggests a diversified investment portfolio tailored to the personal information you provide. Nutmeg will continually rebalance your portfolio in line with your risk profile, unless you change your preferences.
  • BestInvest: a platform to manage your investments online, offering research and analysis tools. Further advice is provided via phone by advisers.
  • RPlan: a tool for DIY investors, with the choice to choose, track and review investments online.
  • Barclays Financial Personality Assessment: this tool helps you identify your attitude towards risk and your composure levels. Users can then work with an adviser to build a portfolio.

Robo-advice on mortgages

Aside from investing advice, online services are also helping people make another major financial decision – applying for a mortgage.

A handful of robo-advisers for mortgages are currently operating in the UK market – Trussle and Habito are both up and running, while MortgageGym was granted a license from the FCA earlier this year.

Saving by app

  • Chip is a smartphone app which analyses your spending patterns and automatically transfers your money into a savings account, based on what it thinks you can add afford to save. While its standard interest rate is 1% AER, users can earn up to 5% AER by referring friends to the app.
  • Plum operates in a similar way, analysing your transactions and recommending savings, though it communicates via Facebook Messenger.
  • Cleo analyses your spending and suggests improvements to help you save more, but it won’t move your money for you.

Where are the top 10 buy-to-let postcodes? (Bridging&Commercial), Rated: B

Luton has held off Colchester to remain top of the LendInvest buy-to-let index, while Manchester has broken into the top three amid increasingly stronger metrics in northern markets.

The top 10 buy-to-let postcodes

Source: Bridging & Commercial

The bottom 10 buy-to-let postcodes

Source: Bridging & Commercial
China

Pyramid scheme investigations in China double during 2017 (NASDAQ), Rated: AAA

The number of pyramid schemes investigated by Chinese police more than doubled in the first nine months of the year, with cases involving nearly 30 billion yuan ($4.5 billion), the official Xinhua News Agency said on Thursday.

Police investigated 5,983 schemes from January through September, an increase of 118 percent, with internet-based pyramid schemes on the rise, many involving virtual currencies, according to the report which cited the Ministry of Public Security.

European Union

Rating agency opens in Europe (Structured Credit Investor), Rated: AAA

KBRA has opened its first European office, located in Dublin, Ireland, and intends to expand into further jurisdictions (SCI passim). Several new hires and some existing staff will support the European effort, which will have a concerted focus on infrastructure and aviation securitisation, along with traditional core business areas.

MyBucks Named ‘Best Financial Inclusion Company’ at European FinTech Awards 2017 (Next Billion), Rated: B

Luxembourg-based and Frankfurt-listed fintech, MyBucks S.A., was announced as the winner of the Award for ‘Best European Financial Inclusion Company’ at the European Fintech Awards 2017 taking place in Brussels, Belgium.

International

Leadership Changes at LendIt (Lend Academy), Rated: AAA

LendIt events today look and feel very different from our early events. Along with that LendIt as an organization has grown and matured. Last month we made some internal changes that I want to share with you here.

My partner Jason Jones, who has been the driving force in the growth of our business, took over the CEO role some time ago as the business became more complex.

As of early September, Jason has transitioned out of the CEO role and is now Co-Chairman along with me. This allows him to focus his entrepreneurial drive on areas of our business where he can make the most impact. He is turning his attention to become more client focused as major global financial services and technology companies become more involved in our business.

Bo Brustkern, who has until recently stayed in the background, is now taking on the mantle of CEO of LendIt.

Similarly, we have promoted Joy Schwartz, our longtime head of operations, to become President of LendIt.

Finastra, R3 and seven banks have blockchain plan (Banking Technology), Rated: A

FinastraR3 and seven banks – including BNP ParibasBNY MellonHSBCING and State Street – are working together to create a blockchain-fuelled online marketplace for the syndicated loan market.

Underpinned by Corda, R3’s distributed ledger technology (DLT) based platform, Fusion LenderComm exposes real-time credit agreement, accrual balances, position information and transaction data to lenders, from agent bank loan servicing platforms such as Finastra’s Fusion Banking Loan IQ.

How Prodigy Finance Helped Fund My MBA At London Business School (Business Because), Rated: A

Determined to boost her business skills and gain more international exposure, Argentinian Amelia Martinez decided to pursue an MBA at London Business School (LBS).

Coming from a developing country with high levels of inflation and currency fluctuations, she faced many hurdles funding her MBA, particularly when new government restrictions were imposed preventing her from taking money out of her country to pay for the last instalment of her tuition.

With a Prodigy Finance loan however, she was able to pay for and complete her degree. Having completed her MBA at LBS, she’s since gone on to work for the company that helped her do it.

Banks team up with IBM in trade finance blockchain (Financial Times), Rated: B

A group of banks are teaming up with IBM to build a new global system for trade finance using blockchain technology that is designed to track goods and automatically release payments as they move around the world by plane, ship or truck.

Bank of Montreal, Caixabank, Erste Bank and Commerzbank are joining the project called Batavia, which was launched by UBS and IBM last year and aims to start testing the technology using real transactions by early next year.

Australia

Millennial Money: We’re not willing to pay to keep our finances in check (Stuff), Rated: A

A 2014 survey by global investment banking company UBS found millennials preferred to seek advice from their friends rather than a professional.

Most millennials, like older generations, first looked to a spouse or partner for financial advice. Their next choice is their parents, followed by friends and other family members.

Non-millennials were much bigger champions of financial advisors: 40 per cent of non-millennial respondents reported seeking advice from one as their first port of call on a financial decision, while only 14 per cent of millennials said the same.

Source: Stuff

Blockchain Driven P2P Lending & Investment Platform Announces Crowdsale (Coin Idol), Rated: B

The crowdsale for the platforms ‘LoanBit Token (LBT)’ is scheduled to go live in November, with a presale beginning on 4th October 2017, and ending on 15th October 2017.

The ICO for LoanBit is set to go live on in November and will be open for only 31 days.

LoanBit – Legit Bitcoin Lending Interest Rates & Earning Platform? (Bitcoin Exchange), Rated: A

LoanBit is a lending platform created by an Australian startup called LoanBit Proprietary Limited. The platform is designed to work as a mediator between bitcoin lenders and businesses looking for short-term loans in bitcoin.

LoanBit promises to offer you a guaranteed daily interest rate of 2% to 5%, which adds up to triple or quadruple digit guaranteed returns per year. You can invest in LoanBit for as little as 0.01 BTC.

LoanBit claims to be a legitimately registered Australian company. The company lists an address in Canberra (17/7-17 Bunda St). They also have an Australian company number (610 418 794).

In any case, the LoanBit.net website was registered on February 16, 2017. The latest version of the website, which features the HYIP scam, only appeared online on September 10, 2017 – so it’s brand new.

Yes, LoanBit appears to be a scam, based on all of the information we can find online today.

India

P2P lending norms will bring order to industry, but speed bumps ahead (VC Circle), Rated: AAA

India’s P2P lending market, which is predicted to be worth $4-5 billion by 2023 according to community loan exchange platform Faircent, has several players operating in the space, such as LenDenClub, Monexo, BillionLoans, i-Lend, LoanMeet, i2iFunding and FinMomenta. However, so far, P2P lending had been operating in a regulatory grey area. As such, the rollout of these guidelines gives legitimacy to the business.

FinMomenta co-founder and CEO Brahma Mahesh Khaderbad believes it paves the way for P2P platforms to gain legality, transparency and credibility.

The RBI has said that every company seeking registration should have a net-owned fund of not less than Rs 2 crore.

The guidelines say that any fund transfer between participants on a P2P lending platform shall be through an escrow account, which will be operated by a trustee. At least two escrow accounts, one for funds received from lenders and pending disbursal, and the other for collections from borrowers, shall be maintained.

The central bank has said that the aggregate exposure of a lender to all his/her borrowers at any point, across all P2Ps, should be capped at Rs 10 lakh. The aggregate loans taken by a borrower at any point of time, across all P2Ps, has also been capped at the same amount. The exposure of a single lender to the same borrower, across all P2Ps, shall not exceed Rs 50,000.

Read more on the guidelines here.

P2P lending platforms to get transparent, safer (Business-Standard), Rated: A

The norms on peer-to-peer (P2P) lending platforms issued by the Reserve Bank of India (RBI) will help make them more transparent and also safer for customers. “The regulations ensure that P2P platforms will protect the interests of lenders and borrowers will get faster access to credit,” says Shankar Vaddadi, founder and director of i-lend.

What peer-to-peer lending is and how RBI’s guidelines will impact it (Financial Express), Rated: B

The RBI said P2P lending, even though of no significant in value, yet can “disrupt the financial sector and throw up surprises” in future, and the associated risks to the financial system are “too important to be ignored”.

The RBI has laid down following criteria for registering under Non-Banking Financial Companies (NBFC) :

  • P2Ps should have a minimum Rs 2 crore capital
  • P2Ps cannot take any loan exposure themselves
  • P2P will undertake credit assessment and risk profiling of the borrowers and lenders
  • P2P will maintain documents related to loan agreements
  • P2P will provide assistance in disbursement and repayments of loan amount
  • P2Ps cannot hold balance sheet or funds
  • P2Ps cannot cross-sell products except for some insurance products

“This is an extremely positive step for the P2P lending business. The retail millennial lenders, an investor demographic which has been focussed on extensively in the regulations will be leveraging the power of the crowd for the benefit of small
borrowers,” Vinay Mathews, Founder & COO, Faircent.com said.

Student micro-financing startup SlicePay raises Series A round (VC Circle), Rated: A

SlicePay, a digital payment platform catering to college students, has raised $2 million (about Rs 13 crore) in a Series A round from Japanese investment fund Das Capital and Russian early-stage investor Simile Venture Partners, its co-founder told VCCircle.

Existing investor Blume Ventures also participated in the round.

YES BANK launches second cohort of YES FINTECH accelerator (YourStory), Rated: A

YES BANK, India’s fifth-largest private sector bank, has been significantly contributing to the fintech space by collaborating with and mentoring more than 100 fintech startups to co-create innovative financial solutions for its Corporate, SME, and retail customer base. In March this year, they launched a business accelerator programme for fintech startups called YES FINTECH, in association with T-Hub, Anthill, and LetsTalkPayments.

YES BANK is all set to launch the second cohort of YES FINTECH, which will kick off on November 13.

The YES FINTECH roadshow in Mumbai will include a Fireside Discussion on GES (Global Entrepreneurship Summit) and its impact on Fintech and Mumbai as India’s Fintech Hub. In conversation will be Amit Goel, Founder LTP, Puneet Shukla, NITI Aayog and Vivek Belgavi, Partner, PwC. After this, Rajeev Chari, COO, Numberz and Arpit Ratan, Founder, Signzy, both startups that graduated from the Summer Cohort of YES FINTECH, will share their experience of being a part of the programme.

When: 6th October

Where: ISME Ace, One India Bulls, Lower Parel, Mumbai

Time: 2 pm-5pm

The YES FINTECH roadshow in Bengaluru will begin with a GES lead-up panel discussion on ‘Women in Fintech. Panellists will include Lizzie Chapman from Zestmoney, Prashanthi Reddy from YES BANK and Dr. Anna Roy of NITI Aayog.  Following this, Shankar, Founder, FRS Labs, and  Ankit Ratan, Founder, Signzy, both startups that graduated from the Summer Cohort of YES FINTECH, will share their experience of what it was to participate in the programme.

When: 11th October

Where: 91 Springboard, 8th Block Koramangala, Bengaluru

Time: 2 pm-5pm

Authors:

George Popescu
Allen Taylor

Tuesday September 5 2017, Daily News Digest

OneMain

News Comments Today’s main news: OnDeck celebrates 10 years of online lending with $7B+ milestone.SoFi responds to sexual harassment allegations, wage lawsuits.RateSetter hires Dave Bibby for North of England.Assetz Capital gets FCA approval.Zopa vows to improve loan sale times.China bans ICOs. Today’s main analysis: OneMain deal analysis.International P2P lending volumes for August 2017. Today’s thought-provoking […]

OneMain

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Latin America

News Summary

United States

OnDeck Provides Over $ 7B in Capital to Small Businesses in 10 Years (ABL Advisor), Rated: AAA

In 2007, the first online loans from OnDeck to small businesses in the United States created a new type of commercial lender, one that believed the Internet could revolutionize how small business owners access capital.  Today, OnDeck celebrates a decade of innovation on behalf of entrepreneurs, having emerged as the nation’s largest online lender to small businesses. To date, OnDeck has provided over $7 billion in capital to more than 70,000 customers in 700 different industries across the United States, Canada and Australia.

Flash forward to 2017 and the company has now provided small businesses more than $7 billion in capital. In the retail industry alone, OnDeck has lent more than $1 billion online.

OnDeck Celebrates 10 Years of Online Lending (Crowdfund Insider), Rated: AAA

Noah Breslow, CEO of OnDeck, stated:

“OnDeck started lending online to small businesses ten years ago with a customer-first philosophy and a relentless commitment to providing capital online with speed, efficiency and top-quality service to America’s small business owners. This is still the hallmark of our business today as we celebrate a decade of innovation on behalf of small business owners, truly the lifeblood of our economy.”

Source: Crowdfund Insider

On Deck Capital, Inc. (ONDK) Downgraded by Zacks Investment Research (Stock News Times), Rated: A

Zacks Investment Research downgraded shares of On Deck Capital, Inc. (NYSE:ONDK) from a buy rating to a hold rating in a report published on Saturday.

SoFi responds to sexual harassment and wage lawsuits (TechCrunch), Rated: AAA

Now, SoFi CEO Mike Cagney is sharing more information about those suits, which were filed by the same lawyer, Robert Ottinger. In a new post, he also stresses that he’s taking the complaints seriously, writing:

“While we’re confident in our positions in these cases, we take these types of claims seriously. Our legal team is hard at work preparing our responses, and as part of that work, we’ve had many discussions with current and former employees about these issues.

Based on these discussions, we’ve discovered that the same lawyer has been trying to collect information relating to alleged sexual harassment at the company, and that he has several people who are prepared to formally allege they were the victims of or witnesses to improper activity at our Healdsburg operations office.

To be blunt, that kind of behavior has no place at SoFi, and we’re not going to tolerate it.”

Online lender SoFi investigating sexual harassment claims (L.A. Times), Rated: A

Social Finance Inc., the hot online lender known as SoFi, has launched an internal investigation into claims of sexual harassment at the San Francisco company.

In a post on the company blog, co-founder and Chief Executive Mike Cagney wrote Friday that outside attorneys are conducting an investigation in response to a lawsuit filed last month and amended this week by a former employee.

The executive board of ride-hailing company Uber recently hired a new chief executive to replace Travis Kalanick, who left amid complaints of sexual harassment, discrimination, bullying and retaliation at the San Francisco-based firm.

OneMain Deal Analysis (PeerIQ), Rated: AAA

In our recent earnings overview, we highlighted OneMain Financial as the pack leader across non-bank lenders. And it shows – initially slated for $639 Mn, OneMain increased the deal size by almost 50% to $947 Mn due to strong investor demand. OneMain differentiates via their high touch approach, unique distribution channels, and strong servicing, and decades of historical underwriting data.

Source: Kroll Bond Ratings Agency, PeerIQ

OneMain Financial continues to deliver some of the safest bonds in the consumer lending space. For instance, the KBRA net loss range is 115 bps better (6.85% to 8.85%)–a lower loss-rate than even the super-prime borrowers in SoFi’s SCLP 2017-4 (not shown).

Capital Structure and Pricing

Although OMFIT 2017-1’s structure is much closer to SLFT 2017-A than OMFIT 2016-3, its senior tranche has a much shorter WAL than both. OMFIT 2017-1’s A-2 floater pays LIBOR + 80bps with no floor or cap. This introduces a layer of interest rate risk because the underlying loans are not variable rate. At the same time, the floater enables investors to guard against rising rates.

Source: Kroll Bond Ratings Agency, PeerIQ

Amortization Triggers and Revolving Period

An early amortization event will be triggered if OMFIT’s ANL is greater than 17% for any rolling 3-month period. As you can see, OneMain typically has a generous cushion between its 1-month ANL and the 17% trigger.

Source: OneMain Financial, PeerIQ

Amex releases mobile feature in bid to challenge personal lenders (American Banker), Rated: A

American Express unveiled a new mobile feature Wednesday that allows customers to make small installment payments on individual purchases.

Has the marketplace lending sector fully recovered in the USA? (AltFi), Rated: A

The year 2016 will be forever remembered as the annus horribilis in the marketplace lending industry in the US.

According to Pitchbook, online lending equity investment was $2.3 billion in the USA in 2016. Through August 3rd of this year the total stood at $2.5 billion. While this is still down from the heady days of 2015 when $5.6 billion came flowing into the industry we are having a much better year in 2017 than in 2016.

Here are some interesting deals that have closed so far in 2017:

  1. SoFi raised $500 million in a Series F round led by Silver Lake.
  2. Kabbage raised $250 million in a Series F led by SoftBank.
  3. Bread raised $126 million in a Series B led by Menlo Ventures.
  4. Funding Circle raised $100 million in a Series F led by Accel Partners.
  5. Upgrade raised $60 million in a Series A, the largest ever Series A for a US fintech company.

The biggest segment of online lending is still unsecured consumer loans. And with millennials now coming into their peak borrowing years this will provide a significant tailwind for the industry in the US.

There is Bad News: Returns are Dropping

Read the rest.

Adapt, Automate, Accelerate: AI and the Future of SME Lending (Let’s Talk Payments), Rated: A

One of the struggles when lending to an SME is the cost that goes into making a lending decision. It is estimated that at regional and community banks, $4-5K in operational costs go into processing each loan under $100K, leaving very little margin for bad loan decisions. In fact, these small loans take nearly as much time and manpower to process as much bigger loans. This is where automation and artificial intelligence (AI) can come into play.

Unlike traditional models of underwriting, which focus on only a handful of credit attributes, machine learning can analyze thousands of data pointsfrom various sources, which allows for a bank to model credit risk for SMEs more accurately than ever before. These machine learning techniques are able to radically outperform traditional scorecards in SME lending. In the not-distant future, a bank could use robots and predictive AI to 100% automate lending decisions in cases where the SME is under a certain amount and the predictive analytics give the applicant a certain baseline score.

Upgrade Loans In-Depth Review – Read This Before Applying for an Upgrade Loan (Supermoney), Rated: A

Upgrade’s founders are Renaud LaPlanche and Soul Htite. This may not be the first time you’ve heard these names used together because they were both co-founders of LendingClub, America’s largest loan marketplace.

LendingClub has arranged over 28 billion dollars in loans to over 1.5 million customers. Htite also founded one of China’s largest marketplace lending platforms, Dianrong.

So, both founders have a good track record in the online lending business.

Upgrade’s application process is online, and the personal loan structure is pretty standard. It offers term loans with fixed interest rates and charges an origination fee. All loans are unsecured, so no collateral is required.

A differentiating factor about the company is in their plan to help people manage and improve their credit. If applicants are denied, they will have the necessary support to help them improve their credit and work towards getting approved in the future.

 Pros

  • Easy and fast online application which doesn’t hurt your credit score
  • Plans to provide credit monitoring, alerts, and mentoring
  • Can pick your payment due date
  • No prepayment penalties
  • Founders very successful in past online lending ventures
  • Competitive fixed interest rates
  • Funds are quickly transferred to bank account upon approval

 Cons

  • Company is still very new
  • Charges an origination fee
  • Doesn’t offer lowest-advertised interest rate range on the market
  • Only offers fixed interest rates, no variable rates

Ohio has highest U.S. payday lending interest rates (Star Beacon), Rated: A

Local officials are supporting efforts to limit interest rates on advance or “payday” loans in Ohio, which are the highest on average in the country — close to 600 percent; two or three times higher than neighboring states.

That bill — currently in committee in the Ohio Statehouse — modifies the Short-Term Loan Act of 2008, which capped interest rates at 28 percent but also contained a loophole allowing lenders to keep charging whatever fees they want through another loan law.

One in 10 Ohioans — about a million people — have borrowed from a payday lender, according to a May study from the Pew Charitable Trusts. In Ohio, the average APR is 591 percent, meaning a $300, five-month loan could end up costing Ohioans between $780 and $880, according to the study.

How a bank bet on fintech for its digital reboot (American Banker), Rated: A

When Kevin Karrels first joined the digital team at First Tennessee, he knew a drastic overhaul was in order.

“I inherited a broken and weak digital platform,” said Karrels, senior vice president and digital channel strategy executive at the $29.4 billion-asset bank.

Karrels also realized the online and mobile experience was not up to snuff, especially when it came to meeting the expectations of digital-savvy millennial consumers.

For that reason, First Tennessee ditched its multiple vendor relationships to revamp both online and mobile with D3 Banking, a relatively new entrant in the banking technology space; it was founded in 2008.

 

Richard Cordray could step down soon, leaving the Consumer Financial Protection Bureau in limbo (L.A. Times), Rated: A

The Republican push to oust Richard Cordray as director of the Consumer Financial Protection Bureau soon might get a boost from an unexpected source: Cordray himself.

Cordray’s term as the bureau’s first and only director doesn’t expire until next summer. But there is widespread speculation that he will run for the Democratic nomination for governor of his home state of Ohio.

His departure could leave the controversial watchdog agency, created in the aftermath of the 2008 financial crisis, in limbo for months and jeopardize regulations covering consumer arbitration clauses and payday lending.

I ditched my financial advisor for an app, and saving money has never been easier (Business Insider), Rated: A

At the risk of sounding cliché, I’m a millennial with almost no investing experience. I have a 401(k) retirement account, but all my non-retirement savings has been stashed in a standard savings account from Bank of America.

Plus, I knew there was a possible alternative. As someone plugged into the tech world (and someone who listens to a lot of podcasts with ads), I’d been hearing about so-called robo-advisors, apps that automatically manage and invest your money for you. The meeting with the financial advisor got me intrigued about whether these apps might offer a better alternative. So I went home that night and downloaded the two most popular ones, Wealthfront and Betterment.

Not only did the apps take much less time than the human advisor to offer similar advice, they came with a big cost advantage. Wealthfront manages your first $10,000 for free. After that, both Betterment and Wealthfront charge an annual fee equal to 0.25% of your investments.

One other benefit: You can start an account with either service by investing just $500, which is significantly less than what traditional financial advisors typically require.

$ 2B Trial Puts Tribal Payday Lending In Spotlight (Law360), Rated: A

Race car driver Scott Tucker and lawyer Timothy Muir are slated to stand trial soon on charges they ran an illegal $2 billion payday loan operation that they tried to hide behind the sovereign immunity of three Native American tribes, proceedings that are expected to intensify scrutiny of how tribes participate in the business of high-interest online lending.

Optimal Blue’s Digital Marketplace leverages largest investor database (Housingwire), Rated: B

For originators, Optimal Blue delivers an Enterprise Secondary Marketing Solution that completely automates their operations including product and pricing, lock desk workflow, pipeline risk management, secondary market commitment and delivery, and more.

For investors, Optimal Blue provides an Investor Network Management Solution that automates compliance, product and pricing distribution, marketing, and business intelligence capabilities.

For providers, Optimal Blue’s best-in-class eCommerce platform leverages state-of-the-art API capabilities to integrate with their leading technology and service solutions used by originators and investors throughout the loan life cycle – wherever, whenever it matters most.

Rep. Hensarling seeks answers from CFPB’s Cordray on payday loan rule (Financial Regulation News), Rated: B

Responding to reports that the Consumer Financial Protection Bureau’s (CFPB) final payday loan rule will be narrower in its coverage than originally proposed, Rep. Jeb Hensarling (R-TX) is questioning CFPB Director Richard Cordray on the reported change.

The CFPB’s original proposal established limitations for a “covered loan” which could be either a short-term consumer loan with a term of 45 days or less or a loan with a term of more than 45 days where the total cost of credit exceeds an annual rate of 36 percent along with other qualifications.

SoFi’s Career Incubator SoFi Accelerate Is Heading to Chicago (Crowdfund Insider), Rated: B

Online lender SoFi announced this week its program, SoFi Accelerate, will be heading to Chicago later this month. According to the lending platform, SoFi Accelerator is the first-of-its-kind career incubator that gives “ambitious” professionals the time and space to think big – and the tools and structures to make it happen.

How Crowdfunding is Finding Its Way Into Real Estate (Tech.co), Rated: A

Nowadays, we are seeing an increase in platforms providing investors with the chance to join forces and capitalize on real estate properties to diversify and enhance their investment portfolio.

Not only are you able to join other investors in launching a new company and receive the benefits from those companies, now “you are also able to choose from multiple investment opportunities and gain the full return on investment targeted at the beginning of your investment process” says, Craig Cecilio, CEO at DiversyFund.

You want to look for a platform with tools that allow you to:

  • Analyze an investment opportunity the same way the platform is analyzing it. Trust a company that shows you all their research, pictures, market studies, etc.
  • Keep a close eye on the development process of an investment property. Make sure they send you regular updates, so you can feel comfortable every month until payout time.
  • Have a profile dashboard where you can keep track of your earnings as well as new opportunities in the market. A platform you can trust is always creating new ways to help its investors grow their earnings.
  • Be virtually anywhere in the world, but still able to invest when the time is right for you. The world is a lot smaller these days, thanks to technology itself. Your investments should be able to be with you and travel with you anywhere you go.

Research Finds Fintech Enhances Financial Inclusion at Lower Cost (JD Supra), Rated: A

The report concluded that fintech lending has “penetrated areas that could benefit from additional credit supply, such as areas that lose bank branches and those in highly concentrated banking markets,” and that the use of alternative information sources has allowed some borrowers who would be classified as subprime by traditional criteria to be slotted into “better” loan grades and therefore receive lower-priced credit.

The report relied upon five sources of information for its analysis: data on loans that were originated through an online alternative channel (specifically, loan-level data from the Lending Club platform), data on loans that were originated from traditional banking channels, consumer credit panel data, banking market concentration data and bank branch information, and economic factors.

The Federal Reserve Bank of Philadelphia noted an increasing disparity between the rating grades of Lending Club and FICO scores. While the lender’s rating grades initially tracked the FICO scores of borrowers (with roughly 80 percent correlation in 2007), the similarities have dropped to only 35 percent in 2016, seeming to indicate that Lending Club is relying more on other information.

Overall, the study found that Lending Club’s rating grades have served as a good predictor for the borrowers’ probability of becoming at least 60 days past due within the 12-month period following the loan origination date, “despite the fact that the rating grades have a low correlation with the FICO scores.”

To read the working paper, click here.

Why Online Investing Makes It Easy to Diversify Your Real Estate Portfolio (Crowdfund Insider), Rated: A

Diversification is important because it spreads risk across multiple types of investments within a single portfolio.

Asset allocation is important because it reduces the risk of an outsized impact on an investor’s portfolio from a market moving change in one asset class. In addition, asset allocation takes into account each individual investor’s risk tolerance, time horizon and investment goals.

Real estate is an important part of a well-diversified portfolio, and the advent of online real estate investing makes it easy, convenient, and transparent for all investors to add real estate to their investment strategy.

Online lending firm LendUp sees growth opportuniity in Richmond area (Richmond Times-Dispatch), Rated: B

Since opening its first East Coast office in Chesterfield County in late 2015, LendUp Global Inc. has hired 50 employees locally, and company officials say they expect to add more jobs in the area as the company grows.

Nelson and other LendUp managers say the company expects to broaden its hiring in the Richmond area soon to include more engineers and technology specialists.

A Better Model for Lending to the Poor (Bacon’s Rebellion), Rated: A

California-based LendUp Global Inc., is an example of a social justice enterprise that has the potential to help ameliorate the lives of millions of poor people — without a single dollar of government funding.

They conceived the idea of tapping the emerging FinTech industry to make small loans to an estimated 100 million Americans, mostly poor with low credit ratings and income volatility, who cannot get loans from traditional banks. In early 2016, LendUp raised $150 million in venture capital with the goal of becoming a better small-loan provider.

As with payday lenders, LendUp’s interest rates are extremely high on small, short-term loans. A $250 loan repayable within a month would carry a finance charge of $44, equivalent to an annualized interest rate of 214 percent. Interest payments must cover the transaction costs of making the loans, after all. They also reflect the increased risk on non-payment by low credit-score borrowers.

Earlier this year, LendUp passed the $1 billion mark in loans provided. It has made more than 3.5 million loans.

LendingTree announces changes to senior management, board of directors (Housingwire), Rated: B

LendingTree recently announced a pair of changes to its management, promoting its chief financial officer to its board of directors and replacing him with the company’s senior vice president of corporate development.

Gabe Dalporto, who served as the LendingTree’s CFO since 2015 and who previously served as the company’s chief marketing officer from March 2011 to June 2015, was promoted to the company’s board of directors.

Replacing Dalporto as CFO will be J.D. Moriarty, who joined the company earlier this year as SVP of corporate development.

Fintech Robinhood chooses Orlando for regional headquarters, 200 jobs (Biz Journals), Rated: B

Stock-trading app Robinhood is joining the stampede of Bay Area fintechs heading to lower-cost cities to create jobs. Utah and Florida are among the big winners.

United Kingdom

RateSetter hires Dave Bibby to boost property lending in North of England (P2P Finance News), Rated: AAA

RATESETTER has hired high street banking veteran Dave Bibby (pictured) to join its specialist property development team.

The ‘big three’ peer-to-peer lender said that this was a newly created role and that Bibby would have responsibility for developing its property finance business across the North of England.

Bibby has more than 30 years of experience in the banking sector, having worked at NatWest and Santander.

Assetz Capital’s P2P lending platform gets FCA approval (Finextra), Rated: AAA

Today, Assetz Capital, one of the UK’s largest Peer-to-Peer platforms, announced it has received full authorisation from the UK regulator, the Financial Conduct Authority (FCA).

As the UK’s second largest peer-to-peer business and property lending platform, to date it has lent more than £316 million to businesses nationwide. Following its successful FCA application, Assetz Capital is now in the final stages of completing its work on its Innovative Finance ISA (IFISA), which will be ready for roll out in Q4 2017.

Full steam ahead! RateSetter backs Flying Scotsman restorer (P2P Finance News), Rated: A

RATESETTER has helped fuel a locomotive repair specialist best known for overhauling the famous Flying Scotsman.

Investors on the peer-to-peer platform have helped fund a £420,000 loan to restorer Riley and Son to help restructure existing debt and improve cashflow.

The company – one of only three in the UK able to carry out locomotive repair work on the scale of The Flying Scotsman – which is 70ft long, 13ft high and weighs around 10 tonnes – had been given 18 months’ notice to move premises.

Zopa vows to improve loan sale times (P2P Finance News), Rated: AAA

ZOPA has promised a “large change” to address investor concerns about the time it is taking to sell loans.

Investors have been complaining about loan sale times in recent weeks, with some on the P2P Independent Forum claiming it can take weeks to sell out.

The peer-to-peer consumer lending platform has now recognised there is an issue.

Peer to peer Isa fails to take off (Money Observer), Rated: A

Peer-to-peer Isas failed to gain much popularity in their first year, while the amount held in cash Isas fell by nearly £20 billion.

Just 2,000 Innovative Finance Isa accounts were opened in the tax year 2016/2017, according to the latest statistics from HMRC.

Across the 2,000 IF Isa accounts opened, £17 million worth was subscribed. The average subscription per account was £8,500 – about the same as the average stocks and shares Isa account subscription.

Overall, the amount held in Isas in 2016/17 fell to £61.5 billion, compared with £80 billion the previous tax year. This decline was largely driven by a steep fall in the amount held in cash Isas. In 2015/16, a total of £58.7 billion was held in cash Isas; in the latest tax year this fell by a third to £39 billion.Across the 2,000 IF Isa accounts opened, £17 million worth was subscribed. The average subscription per account was £8,500 – about the same as the average stocks and shares Isa account subscription.

How P2P lenders should counter “black box” accusations (AltFi), Rated: A

The UK’s peer-to-peer lenders are shifting towards passive investment strategies. Funding Circle, the leading online marketplace for small business loans, called a halt to manual loan selection at the end of August. Henceforth it will funnel customers into one of two passive investment accounts, with a view to generating more consistent returns for all of its investors.

The change has earned the platform a number of disgruntled investors. One investor, commenting on an AltFi article, called it “the last straw”. “I’ll be withdrawing all my funds from FC and placing them on more attractive P2P platforms,” he wrote.

Canaccord: P2P Global faces long road to recovery (Citywire), Rated: A

Investors in P2P Global Investments (P2P) are no longer being compensated for the risks they are taking, according to Canaccord.

Alan Brierley and Brian Newell, analysts at Canaccord, have downgraded the peer-to-peer lending trust from ‘hold’ to ‘sell’ because they expect returns will stay below the 6% to 8% target until the end of 2018.

Proptech startup Habito lands £18.5m to make mortgages digital (City A.M.), Rated: A

Atomico, the venture fund set up by Skype founder Niklas Zennstrom, led the £18.5m series B round with existing investors Ribbit Capital, Mosaic Ventures and Revolutionary (ad)Ventures also participating.

It brings total funding for the startup – which is also backed by the entrepreneurs behind Transferwise and Funding Circle Taavet Hinrikus and Samir Desai respectively – to £27.5m. City A.M. exclusively revealed its first major round of funding earlier this year.

Atomico, the venture fund set up by Skype founder Niklas Zennstrom, led the £18.5m series B round with existing investors Ribbit Capital, Mosaic Ventures and Revolutionary (ad)Ventures also participating.

It brings total funding for the startup – which is also backed by the entrepreneurs behind Transferwise and Funding Circle Taavet Hinrikus and Samir Desai respectively – to £27.5m. City A.M. exclusively revealed its first major round of funding earlier this year.

PayPal picks five FinTech startups for its year-long incubation program (The News Minute), Rated: A

Global online payments leader PayPal has inducted five new FinTech startups into its PayPal Incubator in Chennai.

The give startups to be selected are Finbox, Neoeyed, Paymatrix, Scalend and Tybo.

“In its 5th year, the PayPal Incubator has received an overwhelming response with over 250 applications from early stage FinTech startups – a 150% growth from last year, reflecting both the need for an incubation program, as well as the FinTech industry’s potential,” said Guru Bhat, GM Technology & Head of Engineering – PayPal.

How do you invest yours? The P2P platforms offering auto-bid or manual lending (P2P Finance News), Rated: A

FUNDING Circle’s upcoming shift away from manual lending will soon mean the three biggest peer-to-peer lenders in the UK only offer auto-bid options, but there is still plenty of choice for investors still looking to self-select their loans.

The manual versus auto-bid debate is important in P2P as it dictates the level of due diligence and diversification an investor will need to conduct.

P2P “unlikely to become primary lending source” (P2P Finance News), Rated: A

PEER-TO-PEER lending poses little threat to the traditional banking business model, new research claims.

A report by the Bank for International Settlements – an international financial institution owned by central banks – looks at ways in which fintech could change how mainstream lenders and regulators operate.

The report suggests this scenario, where P2P becomes a primary source of lending, is unlikely to become significant in the short to medium term.

Abundance made up majority of IFISAs in the last tax year (P2P Finance News), Rated: A

RENEWABLES and ethical investment peer-to-peer platform Abundance took the biggest slice of the Innovative Finance ISA (IFISA) market in the last tax year, figures show.

HMRC data last week revealed that 2,000 IFISAs had been opened in the first tax year of the scheme, with £17m subscriptions.

Now Abundance has revealed that its customers opened 1,436 IFISA accounts last year, equating to total investment of £10.5m.

P2P lenders insist Isa take-up will increase (FT Adviser), Rated: A

Peer-to-peer lenders have said the Innovative Finance Isa will prove much more popular this year as more providers enter the market.

Figures published yesterday (31 August) by HM Revenue & Customs revealed only 2,000 of this type of Isa had been openedin 2016 to 2017.

This compared to 2.5 million stocks and shares Isas and 8.4 million cash Isas during the same year.

Building trust by raising standards—a path to fair treatment of SMEs (Prospect Magazine), Rated: A

It is worth reminding ourselves what an important part SMEs play in the UK economy. At the start of 2016, there were approximately 5.5 million private sector businesses in the UK, of which 99.9% fell within the SME definition. These businesses employ 15.7 million people, accounting for 60% of all private sector employment in the UK.

The launch of the government portal, enabling SMEs declined by high street banks to be referred to an alternative lender, will hopefully help in terms of access, although the Treasury has commissioned an early review of bank referrals to the portal as usage has been lower than anticipated. Meanwhile, banks stand ready to lend and there are also many new lenders on the market—start ups, peer to peer platforms, crowdfunders, fintechs—offering innovative products, with a desire to provide finance for SMEs and encourage entrepreneurs.

New Developments Highlight Manchester As Buy To Let Hotspot (Residential Landlord), Rated: A

Manchester has been flagged as the UK’s new buy to let hotspot following a boost from new developments, according to the latest report from LendInvest.

Following the decline that has marred the buy to let sector in London, investors have been seeking a new location to turn to. Manchester has seen strong growth in both culture and economy, as well as through infrastructure. The report found that Manchester has the fastest rental growth in the UK, with rental prices up 7.53 per cent in the last year. The city is also ranked number one for rental yields in the UK, offering average returns of 6.11 per cent for landlords and buy to let investors.

Debt mess leaves innocent bystander struggling with system (Express), Rated: A

Now in her 70s and caring for her husband, she always has a lot on which is why she didn’t immediately scrutinise the name on a letter that arrived in July.

It turned out to be from agency Pastdue Credit Solutions chasing £588.60 on behalf of its client, payday lender Wonga.

While it detailed Ann’s address correctly, it named not her but a relative who had not lived there for over 20 years.

Ann’s ignorance about the laws governing credit and the way the sector operates led her to fear both for her relative and her home being blacklisted, so she decided to settle the account.

She adds: “They accept my money no problem, but have never explained how they got my address or the issue of any double payment.

SA lending platform Prodigy Finance chose London for ‘pro-business regulation’ (Ventureburn), Rated: B

Cape Town founder of multi-million dollar lending platform AlphaCode and a global investment bank.

So what if the banks leave? We’re the fintech capital (Property Week), Rated: B

I didn’t vote for Brexit. But is all this doom and gloom justified?

Traditional banks might be looking elsewhere today, but we only need to pay attention to office lettings to realise that London is already the place to be for tomorrow’s leaders.

In FinTechCity’s latest annual Fintech50 list, which profiles the European businesses that are transforming financial services, 31 of those listed are based in London.

China

China hits booming cryptocurrency market with coin fundraising ban (Reuters), Rated: AAA

China on Monday banned and deemed illegal the practice of raising funds through launches of token-based digital currencies.

Individuals and organizations that have completed ICO fundraisings should make arrangements to return funds, said a joint statement from the People’s Bank of China (PBOC), the securities and banking regulators and other government departments that was posted on the central bank’s website.

In total, $2.32 billion has been raised through ICOs, with $2.16 billion of that being raised since the start of 2017, according to cryptocurrency analysis website Cryptocompare.

By creating and issuing digital tokens, entrepreneurs can raise large sums quickly — sometimes hundreds of millions of dollars in minutes — with little or no regulatory oversight. But unlike traditional fundraising, token holders are generally not given any share in the particular project, nor any security.

China’s Internet Finance Association Issues ICO Warning (Coindesk), Rated: A

In a statement yesterday, the National Internet Finance Association of China warned that ICOs may be using misleading information as part of fundraising campaigns, urging investors to proceed with extreme caution. The group, which works with government agencies on regulatory matters, further stated its intention to toughen security measures.

What is the development of financial technology in the United States? Please see IDF from the front of the report. (Sohu), Rated: A

To promote the exchange of financial and technological fields between China and the United States, local time from August 23 to 24, by the Peking University Digital Finance Research Center (IDF) and the Shanghai New Financial Research Institute (SFI) organized by the US financial technology delegation , To San Francisco financial technology enterprises and regulatory agencies to visit and study.

Chinese Online Lender Fincera Changes Ticker to YUANF (Crowdfund Insider), Rated: B

Fincera Inc. has received FINRA approval to change its ticker symbol to “YUANF“.  Previously, the China based online lender had traded under “AUTCF”.

European Union

Klarna’s CEO: These two things will make or break a fintech startup (Business Insider), Rated: AAA

This week, as Sthlm Tech Fest gathered the Swedish tech elite under one roof, fintech stood out as a key theme. Recent breakthroughs by homegrown payment giants like iZettleKlarna and Bambora catalyzed a vivid discussion.

Izettle co-founder and CEO Jacob de Geer pointed towards key fintech trends: increased consolidation, lower startup valuations, and the importance of making money on other things than just payments.

This week, as Sthlm Tech Fest gathered the Swedish tech elite under one roof, fintech stood out as a key theme. Recent breakthroughs by homegrown payment giants like iZettleKlarna and Bambora catalyzed a vivid discussion.

Izettle co-founder and CEO Jacob de Geer pointed towards key fintech trends: increased consolidation, lower startup valuations, and the importance of making money on other things than just payments.

Small Businesses Fear Spike in Cost of Capital After Brexit (WSJ), Rated: A

Banks operating in the U.K. could face approximately €15 billion ($17.8 billion) in restructuring expenses, plus potentially another €40 billion in extra capital requirements, according to a study by Boston Consulting Group Inc. and Clifford Chance LLP. Some of these costs could be passed on to companies.

Small and medium-size enterprises are particularly exposed to higher charges, as they often rely on a single bank and lack contingency plans to deal with the fallout from the U.K.’s departure from the European Union. Firms with annual revenue of up to €10 million are defined as small businesses. Medium-size ones earn maximum revenue of €50 million, according to the EU Commission.

U.K. banks in June charged SMEs an average of 3.89% for an overdraft facility and 3.12% for a loan, according to the Bank of England. A year ago, the rates were 4.11% and 3.36%, respectively.

MiFID II: How It Will Impact FinTech’s Future (The Market Mogul), Rated: A

New legislation on the European financial markets, MiFID II, is expected to come into force on January 3rd 2018 and will impact Fintech’s future. Through regulating trading activities and enhancing investors protection, it will aid the creation of more transparent and robust financial markets. It will also extend the regulatory coverage to non-equity products, including cash and derivative instruments in fixed income, foreign exchange and commodities.

The amended directive will also apply to more industry stakeholders engaged in investment services, such as investment banks, portfolio managers, brokers and market makers.

International

International P2P Lending Volumes August 2017 (P2P-Banking), Rated: AAA

Milestones reached this month are:

  • Bondora reaches 100 million Euro in financed loans since launch
Source: P2P-Banking

*Prosper and Lending Club no longer publish origination data for the most recent month.

Lender of Last Resort (Handelsblatt Global), Rated: A

Kreditech has a controversial business model. The company’s 29-year-old chief executive Alexander Graubner-Müller spends a good deal of time explaining how the company rates clients and gives them credit.

Kreditech looks at potential borrowers’ Facebook friendships, among other factors, to score their credit. Based on that score, the company might offer them a loan – but in some cases with double-digit interest, which critics say is excessively high.

But that hasn’t kept Kreditech from securing the kind of high-caliber investors few German fintech firms can match. Besides World Bank’s IFC, the company counts US private equity firm J.C. Flowers among its backers, as well as Paypal founder and Donald Trump supporter Peter Thiel.

Payment services provider PayU, owned by the South African media conglomerate Naspers, spent €110 million ($129.9 million) on a roughly one-third stake.

Australia

Timelio Receives Investment from Anthony Thomson, founder of Atom Bank & Metro Bank (Crowdfund Insider), Rated: AAA

Timelio, an online invoice financing marketplace operating in Australia, has received the backing of Anthony Thomson – a leading Fintech entrepreneur who is founder and Chairman of Atom Bank and founder and former Chairman of Metro Bank. Atom Bank is a digital only platform that received a banking license in 2015 establishing itself as a “Branch-free, Paper-free and Stress-free Bank.” Specific details on the investment were not made available.

To date, Timelio has now funded over $100 million in invoices since platform launch, just over 2 years ago.

Picking your peer-to-peer platform provider to invest (The Australian), Rated: A

Disruption is not just happening to retail, hospitality and taxis. It’s also happening in financial services, especially banks, where borrowers and lenders are finding ways to engage, cutting traditional players out of the picture.

At best, in this scenario, both investors and borrowers can end up winning, with better lending rates and higher returns.

The lenders

Funds are available for personal commitments such as car and housing loans and refinancing existing debts as well as those seeking small business loans.

One of the largest companies in the market is SocietyOne. It offer consumer loans from $5000 up to $50,000 for up to five years with principal and interest repayments fortnightly or monthly. It also lends to the agricultural sector. SocietyOne does not pool loans like some industry rivals; rather investors can select individual loans in which to invest.

At RateSetter, supply and demand for products determine the rates of return. Minimum investment is just $10, for terms of 1 month out to five years.

ThinCats Australia deals in secured business loans for Australian companies. Lenders bid for amounts for fixed rate loans, with a minimum bid of $1000, the maximum being the value of the loan.

Fintech for pets and the rise of alternative business lending (Finder), Rated: B

New research from Businessloans.com.au has found that small businesses are embracing peer-to-peer lending, crowdfunding and online loans. However, while businesses are looking outside the traditional and applying with fintech lenders, not all SMEs are getting the loans they hope for.

Household payment platform easyshare last week ran a promotion for those house sharing in Sydney’s inner west. The first 100 share houses to sign up would be personally delivered a case of beer.

Good Money Microfinance Celebrates Five Years of Three-Way Partnership (Probono Australia), Rated: B

Not for profit Good Shepherd Microfinance says the fifth anniversary of its low or no-interest Good Money shops, now operating in three states, has proved the worth of the three-way partnership between business, community and government.

Since beginning as a pilot store in Victoria, Good Money has grown to seven Australian stores located in Victoria, South Australia and Queensland and is the result of a partnership between banking group NAB, state governments and community organisation Good Shepherd Microfinance.

Good Shepherd Microfinance CEO Adam Mooney told Pro Bono News the stores had provided more than 5,800 low or no-low interest loans to “vulnerable Australians” living on a low income.

Currambine school catches student’s hearing impairment (Community News), Rated: B

IT was not until moving to Perth a couple of years ago that Alyssa Cranston’s hearing impairment was discovered.

The initial test was expensive and the device costed $2500, compounded by the fact Mrs Cranston had been struggling with her own health issues and about the same time was told she needed hearing aids.

They decided their “last resort” was to take out a personal loan through SocietyOne, which uses marketplace lending that connects borrowers with private investors.

India

Company Name : Square Capital (Business Wire India), Rated: AAA

Square Capital, the digital lending arm of India’s largest real estate transaction platform Square Yards has underlined its market dominance by becoming the largest organized distributor of secured mortgages in the country. It is currently facilitating USD 30- 40Mn (INR 200cr – INR 260cr) of loan disbursals every month, contributed majorly by secured mortgages spread across 50+ banking partners for their different products in home loan, home against property and business loan.

Startup Street: An Incubator For Non-Profit Startups (Bloomberg Quint), Rated: A

An incubator for non-profit startups, backed by big names like MakeMyTrip founder Deep Kalra and Paytm chief Vijay Shekhar Sharma, has picked 10 early-stage startups for a six-month programme.

The applicants include non-profit startups by graduates from top institutions such as Harvard, Yale, Princeton, Stanford, Oxford, Indian Institutes of Technology and Indian Institutes of Management, the statement said.

Source: Bloomberg Quint

Banks lag in fintech, startup acquisitions will make them relevant (YourStory), Rated: AAA

It was early 2016 and Rajiv Anand, the Executive Director of Retail Banking at Axis Bank, was hard at work with his team to figure out the impact of the digital world on banking. Among the questions he asked his team was whether the present day consumers know how a bank would look in the future.

His team realised that the answers are not going to come from their bank, but from the people outside his company. Young people in urban centres are no longer going to be in a physical bank branch, but are going to be exploring the bank digitally.

One can say that in July 2017, the marriage between Axis Bank and startups was the best move that happened in the banking sector since a decade. Axis Bank’s acquisition of mobile wallet company FreeCharge for Rs 385 crore in an all-cash deal has taken that relationship further, quite possibly opening the doors to more such deals in the future.

Therefore Axis Banks’s first bunch of startups which are S2Pay, FintechLabs, Perpule, Pally, Paymatrix, and Gieom are indeed defining how banks should function in the future. Of these startups Pally, FintechLabs and Gieom have been selected for long-term engagements with the bank.

YES Bank has tied up with BankBazaar to showcase loan products, including personal loans, home loans, and car loans. The big daddy of them all, State Bank of India, whose balance sheet size is Rs 41 lakh crore, has also entered into the agreement with BankBazaar to display its home loan products on bankbazaar.com and initiate door-step delivery.

Mobile payments and loans startup ftcash too has launched Unified Payment Interface(UPI) for merchants in association with ICICI Bank.

Source: YourStory

9 Indian Startup News That You Don’t Want To Miss This Week (Inc42), Rated: A

WikiLeaks recently published a report claiming that the Central Intelligence Agency, the CIA, in its cyber spying efforts may have compromised Aadhaar data. The report alleges that the CIA is using tools devised by US-based technology provider Cross Match Technologies for cyber spying. However, the official sources have rubbished the reports.

A Mumbai-based firm, Global E-services, has reportedly dragged Amazon India to Bombay High Court over non-payment of rental dues.

After receiving backlash by the government-operated India Post over the unsanctioned use of the term ‘postcard’ Indian startup Paytm has rebranded its cash envelopes to lifafa.

DIPP has, for the first time, included a section dedicated to Indian startups.

Indian startup OYO announced the launch of OYO Asset Management Service. The service is geared towards building a nationwide network of hotels through a partnership with real estate asset owners.

Mumbai-based technology company Zeta has started partnering with banks to deploy solutions around BharatQR, Unified Payments Interface, and card payments to capitalise on the spurt in digital transactions for retail payments.

XSTOK PayLater card is a “Purchase Now, Pay Later” payment option enabled through a line of credit sanctioned to a buyer (member), for making purchases on XSTOK.com.

Fintech helps banks disburse more loans (ET Markets), Rated: A

Two years of fin tech driven reach has helped banks grow about 15 to 20 per cent indicating that banks’ dependence on `feet-on-street’ to campaign for loans may recede in a few years. Bankers said nearly a third of their customers below 30 years were on-boarded through the digital platform.

Reserve Bank of India data showed retail loans grew 15 per cent while overall banking credit grew 4.7 per cent on a year-on-year (YoY) basis. Personal loans grew the most at 35.7 per cent followed by credit card outstanding at over 32.5 per cent. Loans to weaker sections also grew over 11 per cent on a YoY basis.

Future of Fintech: India in 2050 (Busisiness World), Rated: A

If Fintech is such a big revolution, why not seize the opportunity? This is exactly what the emerging start-ups of India are doing and consequently, providing efficient and cheaper financial services with Paytm, Mobikwik, Freecharge, Bank Bazaar etc. leading the way and several others following in to test their Fintech ideas. To share some numbers, the first quarter of 2017 saw global investments in Fintech, to the tune of approximately $3 billion which includes a $1.4 billion investment in Indian giant- Paytm! PwC estimates that within the next 3-5 years, the total investment in Fintech would rise to a whopping $150 bn globally. Needless to say, the age of Fintech entrepreneurs is here to stay!

Let us now explore the Fintech ecosystem and the sectors in Fintech which will roll the next set of innovations!

  • Blockchains
  • Alternate lending- Traditional banking industry found it unprofitable to lend to small entrepreneurs. Fintech entrepreneurs took advantage of this opportunity by diving into Peer to peer (P2P) based lending and building web platforms to bring together the lenders and borrowers at lower interest rates.
  • Robo advisory- Earlier intermediaries played an important role between the stock market and the investors. Many times this led to non-traceable and inefficient transactions. Robo advisory will make the stock market easier to access, transparent and traceable and give more value addition to the smarter investors.
  • Digital payments- Fintech start-ups have increased the speed and convenience of payments. Mobile wallets have already replaced traditional wallets in a lot of places and will penetrate further with better and faster payment options.
  • Insurance sector- Currently, we can find various online market places where consumers can compare their insurance policies and take prudent decisions.

Indian online fintech startups ill-prepared to handle cyberattacks (Gadgets Now), Rated: A

Indian organisations rank quite low in cybersecuritypreparedness, with online fintech startups being the worst performer among them, a report said on Friday.

According to a report by Bengaluru-based cybersecurity startup FireCompass, the online fintech startups scored eight out of 100 as per security benchmark.

Most industries performed moderate, like telecom (61%), IT (52%), manufacturing (51%), insurance (45%) and small banks (43%).

Asia

Indonesian Online Lender UangTeman Raises $ 12m in Equity Funding for Consumer Loans (MicroCapital), Rated: A

UangTeman, an Indonesian firm offering online loans of up to USD 350, recently announced it has secured USD 12 million in Series A funding from Thailand’s K2 Venture Capital, US-based Draper Associates, Indonesia’s Alpha JWC Ventures, Malaysian angel investor Terrence Teong Chee Hooi and multiple unidentified local investors. Hong Kong-based STI Financial Group also lent the firm an undisclosed amount. UangTeman plans to invest a portion of the funding in research and development offices in India and Singapore.

Web operator offers loan refinancing (The Nation), Rated: A

BORROWERS are finding themselves with more options from a financial technology (fintech) startup that aims to secure loan refinancing business worth Bt3.4 billion in transaction value by the end of this year.

The operator, refinn.com, is looking to get 1,700 debtors on board to secure the year-end goal.

Latin America

Three Colombian Fintech Startups Chosen for Village Capital’s Latin American Accelerator Program (Finance Colombia), Rated: A

Three Colombian fintech startups have been selected to participate in an exclusive accelerator program coordinated by Washington-based venture capital firm Village Capital that will award a $75,000 USD investment to top-performing early-stage Latin American companies.

Payment platform ePayco, short-term loan provider RapiCredit, and tuition savings facilitator ESCALA Educación are the three Colombian companies that have been chosen to compete in the first ever regional “Village Capital FinTech – Latin America 2017” program.

Along with these finalists, eight other fintech startups from across Latin America were picked out of the nearly 100 companies that applied for the program, which is supported by PayPalCitibanamex, and BlackRock in addition to Village Capital.

Authors

George Popescu
Allen Taylor

Monday August 21 2017, Daily News Digest

Bulge Bracket Banks

News Comments Today’s main news: Prodigy Finance raises $240M in debt and equity. RateSetter withdraws from UK Peer to Peer Finance Association. OCC motions to dismiss lawsuit. Funding Circle offers manual investment in Self Selected Loans. Lufax turns profit ahead of IPO. N26 has half a million customers. Today’s main analysis: Regulatory clarity RE: Madden v. Midland; Q2 earnings season […]

Bulge Bracket Banks

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

APAC

Middle East

Africa

News Summary

United States

OCC Motion to Dismiss Regarding Conference of State Bank Supervisors Lawsuit (Crowdfund Insider), Rated: AAA

In a motion to dismiss the lawsuit, the OCC states;

“The Complaint by the Conference of State Bank Supervisors represents a fatally premature attempt to invoke the jurisdiction of this Court to remedy a speculative harm that CSBS alleges may arise from future action by the Office of the Comptroller of the Currency – action that the OCC may never take. The CSBS Complaint challenges:

(1) provisions of an OCC regulation amended in 2003 to authorize special purpose charters that have, to date, never been used to charter a bank; and

(2) a series of public OCC statements as part of an ongoing policy initiative that CSBS alleges to be a final decision by the OCC to make charters available to “nonbank” financial technology (“fintech”) companies.

CSBS’s denomination of these public statements as a “Nonbank Charter Decision,” Compl. ¶ 52, is wrong in two fundamental respects: it ignores that the proposal contemplates a form of national bank charter and that no final decision has been reached.”

Read the full memorandum here.

Student Online Lender Prodigy Finance Raises $ 240 Million in Equity and Debt (The New York Times), Rated: AAA

UK-based online lender Prodigy Finance has raised $240 million in equity and debt funding, as it seeks to speed up its expansion in the United States.

The funding round comprises of $40 million in equity led by venture capital firm Index Ventures, with participation from Balderton Capital and AlphaCode, and $200 million in a debt facility led by a global investment bank, Prodigy Finance said on Monday.

Regulatory Clarity in Sight for Madden V. Midland; Q2 Earnings Season Highlights (PeerIQ), Rated: AAA

Congress may clear up the regulatory uncertainty introduced via Madden V. Midland before year end. Representatives Gregory Meeks, (D-NY) and Patrick McHenry (R-NC) introduced Protecting Consumer’s Access to Credit Act of 2016. The bill reaffirms the “valid when made” doctrine, which holds that interest rates originated by a national banks are legal even after a loan is assigned to a third-party. Political insiders assign favorable odds to the passage of the bill due to its bipartisan support.

Research has shown that the Madden V. Midland district court ruling has “significantly reduced credit availability for riskier borrowers”. PeerIQ has also observed a significant reduction in the willingness of warehouse lenders to finance loans subject to “Madden Midland” risk.

Bulge Bracket Banks

Compared to a year ago, all of the banks have increased their focus on lending business lines as revenue from trading continues to come under pressure.

Source: PeerIQ; Bloomberg

Non-Bank Lenders & FinTech 

  • OneMain is leading the pack in YTD stock performance by a large margin. OMF has improved ROE and NIM while keeping charge-off rates to mid-single digits.
  • Except for Enova, all of the non-bank lenders increased their reserves as a % of total loans outstanding.
  • We see a trend of higher net-charge off rates and increased reserves. We believe this reflects prudent risk management and responsiveness to changing borrower behavior (e.g., stacking, greater access to credit, late stage credit cycle dynamics, etc.)
Source: PeerIQ; Bloomberg

Has Fintech Industry Growth Just Begun? (The Motley Fool), Rated: AAA

However, recent earnings releases from each of three public fintech stocks — Lending Club (NYSE:LC)OnDeck Capital (NYSE:ONDK), and Elevate Credit, Inc. (NYSE:ELVT) — show the tide may be turning. Here are three positives each company showed in the quarter.

Improving credit

While Lending Club began tightening standards well over a year ago, OnDeck did so more recently. While originations declined 19% sequentially, loss provisions also declined from 8.7% to 7.2%. That, combined with a $45 million cost-reduction plan, led to an adjusted net loss of only $1.5 million, a huge improvement over the $16 million loss in the prior-year quarter.  If not for a $3.2 million severance charge, the company would have recorded positive GAAP income.

Increasing acceptance

In Lending Club’s case, tightening credit attracted banks back to its platform in a big way. Banks funded 44% of loans in the quarter, compared with 13% in the third quarter of 2016.

Trending up

While Lending Club took a year to repair controls and rebuild investor trust, last quarter’s loan originations were up 10%, both sequentially and year-over-year. Even better, revenue was up 35% year over year, as the company was able to earn more revenue per loan.

And while OnDeck deliberately slowed down in a big way this quarter, the company still grew revenues 25% year-over-year.

Finally, while Elevate’s revenue growth slowed to 19%, this is mainly due to the rapid growth of its Elastic product, which carries a lower interest rate than its other products; however, Elastic typically has a better-quality customer, with lower chargeoff rates. Originations grew 29% year over year, which is still very healthy.

ActiveProspect Announces Partnership with LendingTree to Independently Certify Web Leads (Benzinga), Rated: A

ActiveProspect, a SaaS provider of lead acquisition solutions, is partnering with LendingTree, the nation’s leading online loan marketplace, to independently certify its web leads using ActiveProspect’s TrustedForm product.

Venture Capitalists Wary Of Online Lenders (PYMNTS), Rated: A

According to a news report in CNBC, BlueVine CEO Eyal Lifshitz said that when meeting venture capitalists in recent years, the company has had to have a good story as to why it is different from other online lenders in order to get funding — something it didn’t have to deal with three years ago.

BlueVine, which is an online lender that is focused on the small business market, raised funding last year and has secured a total of $188 million in venture capital funding since 2013.

Investors have become skeptical about online lending since early pioneers flamed out (CNBC), Rated: A

Online lending startups looking to raise money now have to answer one important question that didn’t get asked much in the past: how do avoid the fate of early pioneers like Lending Club or On Deck, which have lost nearly 80 percent of their value since going public in 2014.

According to CB Insights, the number of funding rounds in the online lending space is on pace to hit a 5-year low in 2017. The dollar amount is also expected to drop to $2 billion in 2017, less than half of the $4.4 billion the sector saw in 2015.

Kabbage raised $250 million at a reportedly higher valuation than its last round, while Prosper is reported to be raising at a valuation that’s 70 percent below its previous round. Both companies last raised in 2015.

BLOCKCHAINS, INNOVATIONS, AND INTERMEDIARIES (AllAboutAlpha), Rated: A

One investment fund that intrigues Kaal is LendingRobot, which invests in lending marketplaces such as Prosper Funding Circle and Lending Home.  What fascinates him is that its trading is automated, an algorithm based on investor risk preference. Due to blockchain technology, all transactions are a matter of public record, in compliance with best execution obligations. This facilitates the location and auditing of trades, internal investigation, and reporting to regulators.

Blockchain might very well diminish the role of banks in the asset management industry. As Kaal writes, banks charged $1.7 trillion in processing fees in 2014. But with blockchain “financial transactions can be executed instantaneously at near zero transaction costs, increasing the efficiency for businesses and individuals exponentially.”

Online loan marketplace DebtX to accept bids on nearly $ 1.1 billion in loans tied to First NBC collapse (The Advocate), Rated: A

DebtX, which operates an online marketplace for loans, plans to accept bids starting next month on nearly $1.1 billion in loans tied to First NBC Bank’s collapse.

On Sept. 12, DebtX plans to accept bids on a $117 million, single-relationship loan pool secured by energy-related assets in Louisiana. Bidding ends Sept. 29.

Data-sharing debate grows contentious as fintechs vent grievances (American Banker), Rated: A

A recently formed group representing 31 data aggregators and fintech companies, called Consumer Financial Data Rights, says banks still aren’t forking over as much data as they should be. The group is meeting with bank regulators to plead their case and trying to get consumers to petition regulators on their behalf, urging them to send a Tweet that says, “.@CFPB protect Americans’ ability to grant access to their financial information. #handsoffmyfinancialdata.”

The leaders of the CFDR accused banks of pushing bilateral agreements that restrict the types of data that will be shared and the use cases under which it can be shared. They also said large banks refuse to even talk with them about these issues. They say they would like to see the industry coalesce around a set of principles such as the European Union’s General Data Protection Rule.

Banks say they have no intention of restricting data sharing, that they want to let customers decide with whom their bank account data should be shared, and that they want to make sure that data is secure.

Marketplace Lending News Roundup – August 19 (Lend Academy), Rated: A

PayPal acquires Swift; Lending Club and OnDeck Q2 Earnings from PeerIQ – The weekly PeerIQ newsletter delves into the recent LendingClub and OnDeck earnings.

SoFi Is Being Sued by an Employee Claiming He Was Fired for Reporting Sexual Harassmentfrom Fortune – Bad news for SoFi. A former employee is suing the company and a class action lawsuit is coming.

Daylight Transparency: A Win/Win for Lenders and Investors from eOriginal – Transparency is so important in marketplace lending and eOriginal weighs in on recent comments from Ron Suber.

Why cybercriminals like AI as much as cyberdefenders do from American Banker – Penny Crosman takes an interesting look at the competition in AI between cybersecurity and criminals.

Five Key Things To Know About LendingClub Notes from LendingClub – This week LendingClub released a paper to help retail investors understand what is important.

Original Tech helps banks offer better loan applications (TechCrunch), Rated: A

Americans apply for more than 250 million new financial products each year, but the majority of those applications are completed on paper or over the phone. A startup called Original Tech wants to change that by providing white-label software to improve loan applications completed online.

It enables borrowers to apply for loans on desktop, tablet or mobile devices without needing to go through the manual process of filling out paper applications or fax documents to the financial institution.

For lenders, Original Tech takes care of the data collection, fraud prevention and compliance enforcement. But its system is designed to work within lenders’ existing workflows and allows them to apply all their own underwriting rules.

United Kingdom

RateSetter Withdraws From the UK Peer to Peer Finance Association (Crowdfund Insider), Rated: AAA

n Friday, P2P lending platform RateSetter announced it has withdrawn from the Peer-to-Peer Finance Association (P2PFA). This news comes less than a month after the online lender was hit with a series of significant operational challenges as several large loans have struggled.

As previously reported, RateSetter hit an operational hurdle that culminated in approximately £80 million worth of loans being taken over by the platform. The online lender apparently lent £36 million to the Vehicle Trading Group Limited and the company has since fallen into administration (bankruptcy) after taking on too much debt. Additionally, £12 million was lent to an advertising company Adpod and £8.5 million of the loans are still outstanding and should not have cleared its own credit policy.

Funding Circle Stops to Offer Manual Investment in Self Selected Loans (P2P-Banking), Rated: AAA

UK p2p lending Marketplace Funding Circle announced today that from September 18th, there will be an important change to how investors can invest on the marketplace. From that date Funding Circle will withdraw the option to manually choose which businesses to lend to and which loan parts to sell. Instead Funding Circle says it will launch a significantly improved and upgraded version of existing Autobid and Autosell lending tools.

Investors will be able to choose one of two new lending options based on their personal preference. Both options will be available as a Funding Circle ISA, which Funding Circle intends to launch later this tax year.

  • Balanced: you will automatically lend to the full range of creditworthy businesses (A+ to E), aiming to achieve an attractive, stable return. This will allow you to build a balanced portfolio similar to the makeup of small businesses in the UK today. The projected return is estimated to be 7.5% per year after fees and bad debt.
  • Conservative: you will focus on lending to businesses that have been assessed as lower risk (initially A+/A) but with a lower projected return. The projected return is estimated to be 4.8% per year after fees and bad debt.
Source: P2P-Banking

The ‘finance franchise’ and fintech (Part 1) (FT Alphaville), Rated: AAA

To the authors, there are three ways finance operates through the economy: 1) credit intermediation 2) credit-multiplication and 3) credit generation.

Source: FT Alphaville

“Credit-multiplication” they note is the most familiar counter-example. This encapsulates the theory of fractional reserve banking, the idea that the banking system lends out more than it receives in investor deposits and holds only enough of the latter to handle anticipated daily withdrawals. The rest is continuously lent out.

 

 

 

If banks are free to create money from thin air, what then are the limitations?

The authors argue since credit outstanding is not fundamentally dependent upon—or, therefore, limited by— pre-accumulated investment capital, it must be limited only by investment opportunities which are viewed as potentially profitable. “In other words, credit is endogenous rather than subject to exogenously given, pre-accumulated funds.” If the opportunities are there, banks will generate the funds (on effectively maximum leverage by way of an accounting trick) to find ways to finance them.

Source: FT Alphaville

The ‘finance franchise’ and fintech (Part 2) (FT Alhpaville), Rated: A

What’s really interesting, however, is how it applies to the budding fintech sector, which aims to increase its independence from the official sector by recreating models based on loanable funds (credit intermediation) assumptions.

While the authors note it’s probably too early to decisively write off fintech, the way things are proceeding seems to support their theory. In short, they believe that if these systems are to expand beyond their peripheral place, they will have to reintegrate into the core finance franchise system eventually.

Why security is king in P2P lending (FT Adviser), Rated: A

The Peer to Peer (P2P) lending market has risen from zero, around 10 years ago, to an outstanding investment level of more than £8.7bn of loans in the UK alone.

An obvious point perhaps, but the first thing to understand about P2P platforms is that no two operate the same model. Despite residing in a busy market-place, every platform takes a different approach to security, risk assessment and its lending processes.

1) Pre-approval of loan: The checks put in place to ensure that high-quality loans are approved, where the loan can be afforded by the borrower but still recoverable in case one day it is not.

2) Post-approval of loan: The measures put in place to deal with loans defaulting and the recovery of capital in that situation.

LendingCrowd is offering both new and existing investors the chance to earn £150 cashback when they invest £2,500 or more before 31 August.Lending Crowd offers two investment products, which are both eligible for the £150 cashback offer.Both can be included within the company’s Innovative Finance ISA.The Growth Account automatically invests funds in a diversified portfolio, which offers a target rate of 6% a year (after fees and bad debt). You need a minimum of £1,000 to invest.The Growth ISA and Self-select ISA allow you to invest up to £20,000, with the target returns being tax-free. The platform also allows transfers in from existing ISAs.

Croydon is high-risk mortgage hotspot (Mortgage Finance Gazette), Rated: A

According to new research by peer to peer secured lending platform Lendy, Croydon saw a 35.6% rise in the number of high-risk mortgages, up from 309 in 2015.

Across the UK, 88,057 high-risk mortgages were taken out last year, equating to 8.1% of all home loans. The percentage of high-risk mortgages taken out in Croydon was more than double this at 16.5%.

Lendy says that lower LTVs play a big role in ensuring that risk is reduced for their investors and it offers LTVs of 70% or below on its properties.

Source: Mortgage Finance Gazette

Two alt lenders land major business-boosting deals (Business Insider), Rated: A

Two of the UK’s biggest names in small- and medium-sized business (SMB) alt lending, 

Chatbots, application-free lenders and consumer hubs – Moving the mortgage tech debate on (Mortgage Solutions), Rated: A

Advancements in mortgage technology have been made but it seems they have yet to revolutionise the mortgage process – but every one knows they will.

The ideal is a digitally joined up housing, mortgage and legal process allowing the consumer to transact in a way which is convenient to them, and in a shorter time frame – but this has yet to be achieved.

Full online integration of APIs in the UK mortgage lending market is being worked on by a handful of stakeholders, although attendees said that behind closed doors a lender is close to rolling out its application-free mortgage process.

2 discounted investment trusts for income investors (AOL), Rated: A

Investing in peer-to-peer lending is one way to improve the return on your savings, but for investors who don’t want to go through the trouble of setting up their own account with a peer-to-peer lending platform and micro-managing each debt investment, P2P Global Investments (LSE: P2P) offers an alternative route for savers to gain access to the sector.

Shares in the investment trust have gained 12% since April, after the fund manager announced a review of its performance in light of falling returns.

At a current price of 861p a share, P2P Global Investments currently trades at a dividend yield of 5.6%.

KeyBank partners with Invesco’s robo-adviser (Robo Advice News), Rated: B

Invesco, the parent company of UK-based Invesco Perpetual, is continuing to expand into robo-advice and passive investing.

Digital start-up Starling taking financial services by storm (CNBC), Rated: B

Boden founded her British fintech start-up in 2014, shortly after she left one of Ireland’s biggest financial institutions, Allied Irish Bank, where she worked as the chief operating officer.

“I started thinking about a bank that really focused on doing a couple of things well, that was all about everyday transactional banking, the daily banking business, and what (would happen) if you used the information on each transaction, to give people insight into their overall lives.”

Boden believes that the challenger bank’s smaller scale operation gives it an edge over larger players, by significantly reducing the costs of running a bank.

China

Ping An’s online lending platform Lufax turns profit ahead of IPO (Asian Review), Rated: AAA

Shenzhen-based financial conglomerate Ping An Insurance Group said Friday that its online lending operator Lufax Holdings was no longer loss-making as it prepares for an initial public offering.

Established in 2011 with the help of Shanghai municipal government, Lufax, or Shanghai Lujiazui International Financial Asset Exchange, is currently the largest peer-to-peer lending platform in mainland China in terms of outstanding loans, totaling 1.5 trillion yuan ($225 billion) as of Friday, according to industry consultant WDZJ.com.

Of Ping An’s nonstandard debts, 56.9% were exposed to infrastructure investments, followed by 27.7% to non-bank financials and 12.3% to real estate.

Compared to last year when Ping An netted 9.5 billion yuan from a restructuring, net profit of its internet finance business fell 94.7% to 420 million yuan in the first half. That represented 0.9% of the wider group’s net profit, which totaled 43.43 billion yuan in the first half, up 6.5% from a year ago.

Greg Gibb of Lufax (Lend Academy), Rated: A

Lufax has gone from a simple peer to peer lending platform that launched in 2012 to a diversified wealth management platform with over $60 billion in assets under management. They are a true success story and how Greg and his team have done this is simply fascinating.

  • How Greg, an American, ended up in China becoming the CEO of a fintech company.
  • What was the opportunity that Greg and the Ping An chairman saw that led to the founding of Lufax.
  • What they really wanted to do and why they ended up deciding to start with a P2P lending platform.

Jack Ma-backed Yunfeng leads $ 1.7 billion purchase of MassMutual Asia unit (Reuters), Rated: A

Yunfeng Financial Group (0376.HK) said it would be the main investor in a $1.7 billion acquisition of insurer MassMutual International’s Hong Kong unit – a deal that sent shares in the Jack Ma-backed finance firm soaring as much as 30 percent.

Yunfeng will own 60 percent of MassMutual Asia. The rest will be owned by other investors such as Ant Financial Services, an affiliate of billionaire Jack Ma’s Alibaba (BABA.N), as well as Singapore sovereign wealth fund GIC Private Ltd and Chinese Internet and telecoms firm SINA Corp (SINA.O).

Students failing to learn debt-control lessons (China Daily), Rated: A

In April, a sophomore in Xiamen, Fujian province, killed herself because she was unable to repay 570,000 yuan ($85,448) she had obtained via a peer-to-peer lender, according to reports in Fujian Daily.

Earlier this year, the Inner Mongolia Morning Post reported that about 900 university students in the autonomous region were cheated out of more than 9 million yuan after they signed up for a “promotion” that purported to offer iPhones for 800 yuan, rather than the usual price of about 2,000 yuan. In fact, they had unwittingly applied for loans from a peer-to-peer platform and were quickly pressured to repay the money at high rates of interest.

Although there are no nationwide statistics related to criminal incidents linked to peer-to-peer lending, a number of provinces and regions have released data that illustrate the gravity of the situation.

In May, police in Jilin province said they had handled 193 cases related to the issue, busted three gangs and detained 31 people suspected of using the system to defraud would-be recipients.

Online Automobile Leasing Platform ‘Come Use a Car’ Wins RMB 100 Series A (Marbridge Consulting), Rated: A

Tianjin-based Gongming Zhongtai International Assets Leasing, operator of online and mobile automobile leasing platform Laiyongche (literally “Come Use a Car”), has won RMB 100 mln in Series A funding, according to an announcement from CEO Lu Yuquan at a press conference in Beijing. The round was led by P2P lending platform Meili Jinrong (Meili Finance) and mobile gaming company Jinke Culture Industry (300459.SZ), with participation from Xingyi Capital and Xu Xuepeng, founder of Yuehui Capital.

Techies don’t always want to work in Hong Kong banking. Here’s why they should (efinancial careers), Rated: B

As blockchain, AI and other emerging technologies become ever more prevalent in Hong Kong finance, demand for specialist tech candidates is heating up and firms have to offer more – both financially and in terms of career development – to prospective employees.

In short, we need to build a larger financial technology talent base in Hong Kong – not just developers and engineers, but also fintech entrepreneurs and creative thinkers.

European Union

N26 now has 500,000 customers for its bank of the future (TechCrunch), Rated: AAA

Fintech startup N26 is getting more and more customers. The company reported 300,000 customers back in March. It now has 500,000 customers across Europe.

More importantly, growth seems to be accelerating as the startup announced that it was adding a thousand customers every day back in March. Now, around 1,500 customers sign up every day.

International

IVC Poised to Invest in Fintech Unicorn Transferwise (Crowdfund Insider), Rated: AAA

IVC, one of the original venture capital firms on Sand Hill Road in Silicon Valley, is poised to take a substantial stake in Fintech unicorn Transferwise. This is a according to a report by Sky News that indicated IVP would invest approximately $60 million in the young firm that is an express route to disrupt the banking industry.

Fintech Funding Roundup: Instamojo, AnyPay, Aegon, Funding Circle (Paybefore), Rated: A

Options, a provider of cloud-enabled managed services to capital markets, has received nearly $100 million in investment from New York-based private equity firm Bregal Sagemount. The money will be used for growth and platform innovations.

Instamojo, an India-based digital payments platform for SMEs, has raised undisclosed pre-Series B funding from Japanese payments company AnyPay.

Dutch financial services provider Aegon is partnering with online lending platform Funding Circle.

Australia

Loans rebound but APRA caps could limit short-term growth (Courier Mail), Rated: AAA

BUNDABERG-based Auswide has criticised how lending regulatory caps are impacting small banks, saying they will partially suppress its own loan growth in the next six months.

The comments come as the 23-branch lender reports a rise in profits and dividends.

Auswide accelerated lending in the second half, and its loan book rose 4.01 per cent for the year to $2.773 billion. That remains off industry averages of 5.4 per cent, according to Reserve Bank of Australia statistics.

Auswide profits rose from $11.7 million to $15.1 million – expenses from merger activity in fiscal 2016 were not repeated. On its preferred underlying result, earnings rose from $14 million to $15.6 million.

India

Fintech startup Capital Float raises $ 45 mn in Series C round led by Ribbit Capital (VC Circle), Rated: AAA

Bengaluru-based digital lending platform Capital Float has raised $45 million (Rs 293 crore) in its Series C round of funding led by Silicon Valley-based fintech-focussed venture capital firm Ribbit Capital.

Existing investors SAIF Partners, Sequoia India and Creation Investments also participated in the round, Capital Float said in a statement.

Finding the right balance on crowdfunding (livemint), Rated: A

There are currently two crowdfunding models that are of interest to regulators. The equity-based model allows for a stake in the venture via private placement. And peer-to-peer (P2P) lending, which falls under the Reserve Bank of India’s (RBI’s) purview, connects lenders and borrowers who may mutually agree upon either a fixed interest rate or a variable one. Both operate via third-party digital platforms.

Other benefits are less obvious. In a 2016 paper for the US government’s small business administration, Research On The Current State Of Crowdfunding: The Effect Of Crowdfunding Performance And Outside Capital, Venkat Kuppuswammy and Kathy Roth found that crowdfunding success served as proof of concept and made it easier to subsequently access capital from more traditional sources such as banks, venture capitalists and angel investors.

The immaturity of digital crowdfunding globally and the start-up sector in India mean that these come with plenty of caveats, however.

APAC

Vietnam Startup Ecosystem (Vietnam-Briefing), Rated: A

Fintech has emerged as the most attractive sector in which to invest with remarkable growth figures in 2016, having received USD$ 129 million in investments. M&A activity has also been intense lately, which contributed to the overall progress of the ecosystem. Payment still accounts for the largest pool of fintech startups. Foreign and local startups could easily break into new sectors, namely InsurTech (insurance), Wealthtech (wealth), and Regtech (regulation). Vietnam has even set up a steering committee on fintech led by the Central Bank with the purpose of supporting the State Bank of Vietnam Governor in his policies.

BSP readies rules on fintech platforms (Inquirer), Rated: A

The Bangko Sentral ng Pilipinas (BSP) is studying new digital solutions as financial technology platforms proliferate, opening up new markets and access for broader segments of society while also increasing the risk of harm to unwitting consumers and investors.

Espenilla said the BSP was considering two solutions: An API system, which streamlines the reporting requirements between the BSP and regulated entities such as banks, and an automated complaint handling portal, which establishes a direct link with customers.

Middle East

Funding squeeze hastens take-off of non-bank lending in Middle East (Reuters), Rated: AAA

Middle East investment companies are ramping up their lending to businesses, providing a lifeline for small and medium-sized firms struggling to secure finance from banks that tightened credit after a suffering rise in bad loans.

Industry participants estimate non-bank lenders in the region could provide around $1 billion over the next three to five years, including secured loans, mezzanine debt, preferred shares and convertible loans and bonds.

Africa

Sanlam buys into EasyEquities (IOL), Rated: AAA

Sanlam Investment Holdings has acquired shares in financial technology business EasyEquities.

Authors:

George Popescu
Allen Taylor

Thursday July 27 2017, Daily News Digest

fintech adoption millennials

News Comments Today’s main news: Betterment expands financial advice to all users. Lendio originates $500M in business loans. UK fintech funding jumps 37%. Linked Finance secures more than 1M Euro for Waterford businesses. Fintech adoption in Canada doubles in 18 months. Today’s main analysis: Marketing fintech solutions to millennials. Today’s thought-provoking articles: The SEC investigative report that will put […]

fintech adoption millennials

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Middle East

Africa

Canada

News Summary

United States

After raising $ 70M, Betterment expands financial advice to all users (TechCrunch), Rated: AAA

On the heels of announcing a fresh $70 million in funding led by Swedish investment firm Kinnevik AB, Betterment is launching a new messaging feature that will allow users to ask questions and get answers from its team of financial advisors.

With its new messaging product, Betterment is offering up personalized financial advice to a larger portion of its user base — that is, anyone with an account. Customers can send secure messages through the Betterment app to ask for financial advice and get a response within one business day from one of the company’s experts.

Lendio Surpasses $ 500 Million in Business Loans Originated Through Its Online Marketplace (PR Newswire), Rated: AAA

Lendio, the nation’s leading marketplace for small business loans, today announced that it has helped facilitate more than $500 million in financing to over 21,000 small businesses across the U.S. Lendio helps fuel the American Dream through its marketplace of over 75 small business lenders in all 50 states and parts of Canada. The growth milestone comes after a 141 percent increase in loans originated through the Lendio platform in the last fiscal year.

Small business lending indices show that small business borrowing is at its highest level in nearly a year. According to Thomson Reuters/PayNet, business owners are investing to meet customer demand, which is driving the economy. Data from Lendio’s platform is telling a similar story, and it’s not just businesses on the nation’s coastlines that are thriving. A heat map of Lendio’s top states for small business loans, based on loan volume, shows small business growth is booming in America’s heartland, the southern states and beyond.

The average loan size among Lendio’s small business customers is $26,873. The top five industries funded on Lendio’s marketplace include construction, restaurants, retail, healthcare, and manufacturing. Lendio also helps small businesses get loans fast, with 70 percent of businesses getting funding within five days of submitting an application.

MARKETING FINTECH SOLUTIONS TO MILLENNIALS (Envisionit), Rated: A

One of the key factors that set millennials apart from other generations is their adaptation of technology into their everyday lives. They are hyper-connected: disproportionately drawn to mobile and wearable devices for their day-to-day needs; far more likely to make purchases on them instead of computers or in person; and constant users of social media.

Source: Pew Research Center, Social Media Survey, April 2016

Not only are millennials more likely than Gen X’ers and Baby Boomers to use fintech products now, they are expected to use them even more in the future.

  • 68% say that in 5 years, the way we access our money will be totally different
  • 70% say that in 5 years, the way we pay for things will be totally different
  • 73% would be more excited about a new offering in financial services from Google, Amazon, Apple, Paypal or Square than from their own nationwide bank
  • 33% believe they won’t need a bank at all in 5 years
Source: EY, EY Fintech Adoption Index, 2016

Although awareness and lead generation campaigns can still be effective, millennials also look for reviews, comments, and other content that will help them trust the brand.

  • 33% say they read blogs before making a purchase
  • 62% say that if a brand engages with them on a social network, they are more likely to become a loyal customer
Source: Google/Millward Brown Digital, B2B Path to Purchase Study, 2014

Here is the SEC Investigative Report on ICOs that Will Squelch Emerging ICO Market (Crowdfund Insider), Rated: AAA

The Securities and Exchange Commission (SEC) issued an investigate report on the fast growing Initial Coin Offering (ICO) market that will squelch the ICO market, at least in the US. This investigation compelled the SEC to determine that DAO Tokens represented securities as defined under the Securities Act of 1933 and the Securities Exchange Act of 1934.

Get the full report now.

The New Breed of Small Business Lenders: Amazon, Paypal and Square (Lend Academy), Rated: A

If asked where to get a small business loan most people would state their local banks or even some of the bigger traditional banks. Those aware of the online lending space may mention the likes of KabbageOnDeckFunding Circle or maybe even some of the new online initiatives of big banks like Wells Fargo’s FastFlex product. However there is another, often overlooked segment of small business lenders and they are names you have heard of: AmazonPaypal and Square.

Since Amazon is a marketplace for sellers they have an incredible amount of data on the cash flow of businesses that operate on the platform. They also have a significant pool of borrowers, resulting in virtually no customer acquisition costs.

Not only can Amazon select the borrowers they want to lend to but lending also helps grow the sales on Amazon.com. Pajitnov initially borrowed $1,000 dollars but eventually borrowed $19,000 to buy out a competitor.

Square is able to efficiently underwrite small businesses and have repayment be based on sales. Square’s average loan size is just $6,000. According to Square’s Q1 2017 earnings release Square Capital facilitated over 40,000 business loans totaling $251 million in the first quarter of 2017, up 64% year over year. The company is reportedly looking to lend to consumers as well.

Digital or doomed? What credit unions need to be top of wallet (Credit Union Journal), Rated: A

Outstanding service on its own isn’t enough for credit unions to get top-of-wallet status with members.

This past quarter, Clark noted, Venmo processed $6.8 billion in total payment volume, double the amount from the same quarter one year prior. These companies are not just processing payments, he said, they are capturing information that can be used to improve the customer experience and build brand loyalty.

Clark pointed to online personal finance company SoFi, which, by leveraging digital, has turned the concept of “scale” on its head. The company has funded $19 billion in loans to 300,000 members, and has resulted in $1.45 billion in member savings.

Clark said credit union management must focus on delivering via digital channels, because payments are now the leading indicator of PFI status, and offering speed, agility and a frictionless experience are critical to growing PFI.

How Real Estate Investing Is Spurring Millennial Home Ownership (Forbes), Rated: A

Millennials are the largest group of home buyers for the fourth consecutive year, according to the National Association of Realtors 2017 Home Buyers and Sellers Generational Trends Report. Nearly 40% of home buyers were under 36 years old.

But most importantly, in a joint Real Estate Investment Survey with Harris Interactive, RealtyShares found that 55% of millennials are enthusiastic about home ownership as an investment, and over half would invest in property other than their primary residence.

In fact, 70% of all Americans think investing in real estate is more difficult than investing in other asset classes. Few are aware of the options towards home ownership, such as borrowing from retirement, real estate crowdfunding or house hacking.

Not surprisingly, millennials believe technology makes the real estate investment process easier.

Realtor.com analyzed the top 10 cities where millennials want to live and (of the 60 largest U.S. cities) found the top were: Salt Lake City, Miami, Orlando, Seattle, Houston, Los Angeles, Buffalo, Albany, San Francisco, and San Jose. Millennials also want homes over 2,375 sq. ft. on average and nearly half surveyed in the March 2016 National Association of Home Builders study said they wanted at least four bedrooms, an outdoor space (deck, patio and front porch), shower and tub in the master bath and hardwood floors on the main level of the home.

CFTC Grants First Authorization to LedgerX to Operate as Clearing House for Digital Currency Derivatives (Crowdfund Insider), Rated: A

LedgerX, has received regulatory approval from the US Commodities and Futures Trading Commission (CFTC) to operate as a clearing platform for derivatives in contracts clearing in digital currencies such as Bitcoin.

This fund offers a more diversified way to dip your toes into alternative waters (The Globe and Mail), Rated: A

So-called “alternative investments” have long been the preserve of pension funds and well-heeled accredited investors, providing access to non-traditional asset classes such as private equity, infrastructure, hedge funds, emerging-market debt and limited partnerships.

Enter mutual-fund giant Mackenzie Financial Corp., which of late has been scooping up $30-million a month in a mutual fund designed to complement an old-fashioned balanced fund and the usual 60/40 asset mix. The Mackenzie Diversified Alternative Fund (“MDAF,” Series A and Series F) has a standard minimum investment of $500, in reach of any investor with a financial adviser. Launched two years ago, it has $350-million in assets, says Allan Seychuk, Mackenzie’s senior investment director of asset allocation.

Household Credit and Local Economic Uncertainty (USC Lusk), Rated: A

This paper investigates the impact of uncertainty on consumer credit outcomes. Individual-level data on credit-card balances and mortgages reveal strong borrower-specific heterogeneity in response to changes in an equity-based measure of county-level economic uncertainty. Low-risk borrowers reduce their credit-card balances and use of mortgage credit in response to increased localized uncertainty, while lenders expand the availability of credit to these borrowers. The opposite is obtained for high-risk borrowers. The economic magnitudes are especially large during the recent financial crisis. This evidence suggests that localized uncertainty about economic conditions might independently affect aggregate economic activity through consumer credit markets.

Source: Household Credit and Local Economic Uncertainty (USC Lusk)

Read the full white paper here.

Why Enova’s tech recruiters look beyond the languages on your resume (Built in Chicago), Rated: A

An early adopter of the Ruby on Rails framework, Enova is one of the city’s biggest Rails shops. But for developers looking to get a job with the online lender, prior Ruby experience is by no means a prerequisite. Enova hires for aptitude and personality, rather than resume bullet points.

What is the most interesting technological challenge to making that happen?

Caprio: Scale. Each year, we process as many loans as a small bank does — but we do it with orders of magnitude fewer people. The only way you can do that is with technology, analytics and massive amounts of efficiencies.

We also have to navigate a globally regulated environment. Each country has different rules and regulations. Some of our teams interact with five different regulating bodies in three different countries. It’s not easy to keep all of those in balance while still having upward of 60 software releases a week.

And then you need to adapt when those rules and regulations change.

Caprio: Recently, the laws in one state changed in a way that required a custom product. We were able to segment it, size it, spec it out and build it in about five weeks. You can’t even get a loan from a bank in four weeks, so the fact that we could actually create a completely new lending product in that time is a testament to what we’re capable of.

Why do you think other companies don’t offer opportunities like that?

Caprio: Our interview process is probably only 30 percent technical, and the rest is behavioral, problem solving and cultural add. We want to see what kind of partner you’re going to be, and what kind of co-worker you’re going to be.

Lahari Manam, technology manager: We also have something called fellowships. If someone has an exciting idea that requires more than a few days for research and prototyping, they can apply for a fellowship to work on it for three or four weeks instead of doing their normal day-to-day work.

Banks may have new foe in cellphone companies (American Banker), Rated: A

Banks have increasingly turned to cellphone devices in helping them to reach customers. But cellphone companies may soon be trying to offer financial services of their own.

In recent years, the country’s largest cellphone carriers have begun to experiment with new financing options for smartphones and other devices.

Easy to raise 28 million US dollars C round financing IDG capital growth fund leader (01Caijing), Rated: A

July 26 news, the domestic mobilization platform was easy to raise in early 2017 to complete the 28 million US dollars C round of financing, the current round of investment for IDG Capital’s growth fund leader, Tencent, IDG, Germany with capital, fellow capital Old shareholders with the vote.

Up to now, easy chip has a total of about $ 65 million financing. The company’s existing investors include Tencent, IDG Capital, Germany with capital, fellow capital, IDG capital growth fund.

Using Peer-to-Peer Lending As A Method For Startup Growth (Forbes), Rated: B

Typically, you can’t borrow more than $35,000, but for many small businesses or startups, that amount (or less) is just the infusion of cash they need.

Some of the immediate benefits of a P2P loan is that no collateral is required. Lower interest rates tend to be available, depending on your credit score, loan amount and loan term, because the peer-to-peer lenders operate with low overhead. You can repay the loan early and not have to contend with any prepayment penalties. Since it is an online lending environment, you’ll also enjoy faster approval and no paperwork except for a few online forms and a digital signature.

First, think about your current credit score to see if you qualify. These P2P lenders are not just giving out loans and want to see how fiscally responsible you are with loans. If you have a low credit score, you may have to work on improving it before this option becomes available.

United Kingdom

UK fintech funding jumps 37% led by Funding Circle, Zopa, Monzo (AltFi), Rated: AAA

The United Kingdom attracted £432m ($564m) of new venture capital investment in the first six months of 2017 representing an uptick of 37 per cent compared to the same period in 2016, according to research from Innovate Finance.

Alternative lending, challenger banks and wealth management  were the top three investment verticals for UK fintech investments with notably large cash raises from Atom Bank, Funding Circle and Monzo.

UK fintech investment smashes pre-Brexit levels so far this year (Independent), Rated: AAA

UK-based fintech startups pulled in $564m (£433m) of venture capital investment in the first six months of the year, more than half of which came from outside Britain.

The latest figures paint a promising picture, with investment up almost 50 per cent on the second half of last year in the aftermath of the Brexit vote.

That still lags 2015, when a record $676m was invested in the first half of the year and over $1.3bn for the entire year. But from July 1 to July 23, the sector has already raised another $155m.

Funding Circle Teams Up With Just Eat to Offer Discounted Business Loans to Takeaway Restaurants (Crowdfund Insider), Rated: A

Peer-to-peer lender Funding Circle has reportedly joined forces with UK-based Just Eat to provide takeaway restaurants with discounted business loans. Funding Circle will now offer nearly 30,000 restaurants that use Just Eat the discounted loans. The takeaway businesses will now be able to borrow up to £60,000 from the online lender.

Salamanca Group Completes Series A Funding for P2P Lender Proplend (Crowdfund Insider), Rated: A

Salamanca Group, a London-based Merchant Bank, announced on Wednesday it recently completed a Series A funding round for peer-to-peer lending platform, Proplend. The company states it facilitated the fundraising through its proprietary network and has also acquired a stake in the online lender.

Identifying the risks of crowdfunding (City A.M.), Rated: A

With the market recently hitting £10bn, crowdfunding is no longer a small fish in the big finance pond. But as the sector expands, it’s also becoming more complex.

In equity crowdfunding, for example, you may buy a small stake in an exciting new business, investing early in the hope of making maybe 10 times your money. The majority of new businesses will fail, so investors should create a broad portfolio on the assumption that over time a few big successes outweigh the failures.

In contrast, lending to more established businesses may not have the potential to make tenfold returns, but consequently the risk of losing your capital is typically lower. This is perhaps why 97 per cent of the £10bn crowdfunding market is in debt-based alternative finance.

Lending Works offers bonus of up to £200 to new and existing investors (P2P Finance News), Rated: B

LENDING Works is offering cash bonuses of up to £200 to new and existing investors for a limited time period.

The peer-to-peer consumer lender said that from Monday 24 July, investors will receive a £50 bonus for every £5,000 they invest. The offer expires on Sunday 20 August, meaning that customers could potentially earn up to £200, if they invest at least £5,000 in each of the four weeks.

Fintech startup Cleo secures £2 million in new round of funding (Tech.eu), Rated: A

Financial management app Cleo has raised £2 million led by Local Globe’s Robin Klein with participation from Atomico CEO Niklas Zennström and Albion founder Jason Goodman.

Launched in January, Cleo uses AI to monitor your bank accounts and manage your money. According to the company, it’s currently managing £400 million in assets where it handles user queries about balances, spending, savings, and bills. Insights are delivered through Facebook Messenger. Its key demographic is under-30s.

‘Leeds has phenomenal potential to become fintech hub’ (Yorkshire Post), Rated: B

YORKSHIRE has phenomenal potential to become a hub for financial technology – or fintech – companies because it is starting to attract fast-growing firms that have moved from London, according to a leading entrepreneur.

Daniel Rajkumar, the owner of investUP, which is based in the Leeds Digital Hub, believes that the region’s traditional financial services sector can join forces with technology firms to secure jobs and investment.

The peer-to- peer lending industry is growing at a rate of around 30 per cent a year.

Mr Rajkumar believes there is great scope to grow the region’s fintech sector, and initiatives like the Leeds Digital Hub are helping to promote collaboration.

Prodigy Finance Takes MBA From McKinsey In India To The UK’s Top-Ranked Business School (Business Because), Rated: B

Close to postponing her enrollment, Vinni was introduced to alternative student loans provider Prodigy Finance, a financial technology – fintech – company, founded by MBAs, for MBAs.

While banks are reluctant to lend internationally, Prodigy Finance’s borderless, peer-to-peer lending model gives international MBA and master’s students – from 150 countries worldwide – access to the loans they need to study abroad.

China

Moderate Regulation Necessary for ICO Projects: PBoC Advisor (Cryptocoins News), Rated: AAA

A senior aide and advisor to China’s central bank has called for the regulation of ICO (initial coin offering) projects while urging investors to show caution.

In an interview with prominent Chinese financial publication Yicai, Sheng Songcheng – a counselor to the People’s Bank of China (PBoC), claimed moderate regulation was necessary for ICOs.

Sheng believes the government should warn investors of the risks whilst ensuring that regulatory moves don’t trample on innovation.

European Union

Irish P2P Lender Linked Finance Secures More Than €1 Million for Waterford-Based Businesses (Crowdfund Insider), Rated: AAA

Irish peer-to-peer lending platform Linked Finance has successfully secured more than €1 million for Waterford-based businesses. According to the Muster Express, over 30 businesses in Waterford have raised funds through the lending platform to facilitate their business growth.

Zinsbaustein Crowdfunds Real Estate Project in Munich (Crowdfund Insider), Rated: A

Zinsbaustein is partnering with well-known development group Demos Wohnbau GmbH, a company with 50 years of expertise in Munich and the surrounding area. The investment crowdfunding platform is giving investors the opportunity to participate in a subordinated loan with as little as €500 at an interest rate of 5.25% per year. The project includes 95 apartments and associated parking spaces. Reportedly, 40% of the apartments have already been sold are have been reserved.

NEW REPORT: Shutting Down PSD2’s New Security Threat (PYMNTS), Rated: A

The July PYMNTS Digital Identity Tracker™, powered by Socure, features news on how security technology providers are using new technology, including biometrics and two-factor authentication, to protect customer data and comply with new regulations surrounding data security.

In fact, according to one recent study, 60 percent of transactions conducted by the start of the next decade will be authenticated and completed using biometric technology.

International

TECHNOLOGICAL LEAPFROGGING: WHY RICH COUNTRIES LAG BEHIND IN FINTECH ADOPTION (Meshed Society), Rated: AAA

The results of a study recently published by the consulting firm EY revealed that China and India have the highest adoption of FinTech services among its online population out of 20 countries. 69 percent of China’s and 52 percent of India’s digitally active citizens have used at least 2 FinTech services over the past 6 months.

In many developed countries on the other hand, where people have over many years learned to associate the Internet with the PC, smartphones still often are being considered a secondary device for many digital tasks; a device that people use only when they are not near a PC. This narrative has naturally been accepted even by the commercial players, which prevented a dynamic advancement of FinTech services similar to the the one which, for example, can be witnessed in China right now.

Source: Meshed Society

Global VC fintech investment attracts $ 6.5 Billion in H1 2017 (Finextra), Rated: AAA

Global VC investment for FinTech in H1 2017 attracted $6.5 billion of VC investment with 787 deals, a 45% decrease year on year, according to statistics compiled through Pitchbook by Innovate Finance, the not-for-profit membership association for global FinTech.

The US attracted the most investment both in deal value, which topped $3.3 billion, and deal volume, with 357 investments in total. Overall, the US experienced a 7.7% increase on H1 2016 deal value, but an 18.5% decrease in deal volume. Last year this quarter, the US secured 438 deals.

The top three global FinTech deals came from the US and China, with American firm SoFi raising the largest round globally at $453 million.

Atom Bank ($102 million), Funding Circle ($101 million), Zopa ($41 million), Monzo ($27 million) and Currency Cloud ($25 million) led the top 5 top UK deals. Collectively the firms attracted $296 million in funding.

Australia

Anna Bligh on open bank data (Innovation AUS), Rated: A

Speaking at the National Press Club on Wednesday afternoon, the former Queensland premier described the various technological changes that the banking sector is facing, singling out open data as the biggest on the horizon that will benefit consumers.

An open banking regime would force banks to share product and customer data with their customers and other third parties with consent.

Ms Bligh said Australian banks would welcome this new open data regime if a focus is placed on security and data safety.

India

How CoinTribe is eyeing disbursal of Rs 600 Cr to small businesses by 2019 (Your Story), Rated: AAA

Conceived in May 2015, their enterprise, CoinTribe, is a loan marketplace focused sharply on Micro-Small Medium Enterprises (MSMEs). The model facilitates not just loan or lead generation for banks, but also assesses a customer’s credit risk through proprietary underwriting engines and provides suitable suggestions.

The startup looks at mainly providing standardised business loans. The company’s website does mention personal loans, but that’s not a focus area.

Including all costs of operations, predictive NPAs (non-performing assets) and margins, CoinTribe gives unsecured business loans at interest rates ranging from 16 to 21 percent. But the average interest rate by portfolio is 19 percent.

Money Laundering And A $ 7.6 Bn Scam: A Grim Look At The Dark Side Of P2P Lending (Inc42), Rated: AAA

News of Ezubao bilking 900,000 investors out of more than $7.6 Bn surfaced soon afterwards. What followed was a country-wide hysteria as part of what is now considered the largest financial scam in Chinese as well as global history.

As per reports by The New York Times, more than 95% of Ezubao’s investment products turned out to be fake.

In April 2016, reports surfaced that Lending Club’s then-CEO Renaud Laplanchemade alterations in loan application documents in order to hasten the transaction process. Laplanche eventually stepped down amidst reports of employee embezzlement, scam and conflict of interest. Following the controversy, Lending Club, which was once valued at $8 Bn, saw a markdown to around $1.7 Bn.

To thwart competition, many companies tend to project lower delinquency rates than the actual numbers. Between 2007 and 2008, for instance, Prosper reported a loss rate of 26.1%. According to third-party verification, however, the company’s default rate during that period was actually around 36.1%.

In the UK, Quakle ceased operations in 2011, as a result of a near-100% default rate.

Known for lending money to individuals with a less-than-stellar credit score, Estonia-based Bondora reportedly has a loan default rate of more than 70%.

All the above factors bring us to the general lack of transparency that continues to plague the P2P lending market, more than 10 years after the world’s first peer-to-peer lending platform Zopa cropped up in the UK.

During the financial crisis of 2007-08, subprime lending was often supported by very little verifiable documentation and credit checks. The originators of the subprime mortgages served only intermediaries that, like the P2P lending platforms, did not have any “skin in the game”. Lenders, on the other hand, had to rely on third-party credit ratings and assessment that were at times unreliable. The lack of transparency was actually one of the major contributing factors behind the housing market scam in 2008.

The average ticket size of peer-to-peer investments in India ranges between $2,330 (INR 1.5 Lakhs) and $3,107 (INR 2 Lakhs). Since interest rates are not fixed, they can be below 10% but, at times, can also reach 30%-40%.

According to a report by Reuters, unsecured personal loans currently constitute 4% of all loans in India. In March 2016 alone, $47.4 Bn (INR 2,96,800 Cr) was issued as personal loans to the country’s 1.31 Bn population.

FinTech Firms Alibaba and Paytm in Talks over India’s Leading Online Grocer (Cryptocoin News), Rated: A

Asia

China, India deals lift Asian venture capital fintech financing to US$ 2.7b (SCMP), Rated: AAA

That was up from US$1.6 billion generated across 55 transactions in the same period last year, and marked the highest number of fintech deal activity in Asia for the past five quarters, according to a new report from venture capital research firm CB Insights.

Overall funding raised by venture capital-backed fintech start-ups in Asia last year hit a record US$5.4 billion across 165 transactions, compared with US$4.8 billion over 162 transactions in 2015.

The region’s latest quarterly fintech tally surpassed the US$2 billion raised in North America and about US$500 million in Europe during the same period. The global total was US$5.2 billion over 251 deals.

Asia’s top-ranked fintech deal, however, was the US$1.4 billion investment made in May by Japanese telecommunications and internet conglomerate SoftBank Group Corp for a minority stake in One97 Communications, the parent of Indian digital payments giant Paytm.

That was followed by the US$292 million Series D, or fourth round, fundraising by mainland peer-to-peer lending platform operator Tuandaiwang in the same month.

From Porn Filter to Credit Rater (Forbes), Rated: A

Remark has managed to collect data from almost every social media site on Earth: 1.3 billion active user profiles, 10 billion images, 15 billion posts and 50 billion comments are gathered from Tencent, Alibaba, Facebook, Twitter and others. Remark’s intelligence platform, KanKan, was assembled to analyze data and build facial-recognition algorithms to help live-streaming companies filter out pornography.

Now the New York-born Tao, 40, has decided that credit rating in China has a more stimulating future.

The company, with $59 million in revenues in 2016, claims to have signed up one of China’s largest banks for KanKan.

Middle East

Islamic crowdfunding: Spotlight on real estate (Gulf Times), Rated: A

MercyCrowd offers for the first time to the people in Qatar opportunities for international real estate purchases through crowdfunding. Not only that, the platform puts an emphasis on socially responsible investments, which means it offers international premium property to as many people as possible and not just the wealthy upper bracket, and also obeys ethical financing and actively promotes donations.

Via its platform, people can either become investors in lettable real estate with minimum investments as little as £50 and projected returns of between 4% and 10% annually plus a potential capital appreciation when the property is sold, or sponsors looking to fund their property through crowdfunding.

Africa

Uganda on the Fintech curve (IT News Africa), Rated: AAA

Fintech today has many variations, one of the most widespread being payments in the form of mobile payments, mobile wallets and payment apps. In Uganda, “mobile money” is the most ubiquitous of these.

Another category is investment management through the use of robo-advisors (machine learning and artificial intelligence) for wealth and retirement planning. We see Fintech in fundraising through equity and non-equity crowd funding platforms for access to private and alternative investment opportunities and online lending platforms. Fintech is also making its presence felt in deposits and lending, especially peer-to-peer or marketplace lending. Digital currencies such as Bitcoin have emerged and are growing in significance and popularity.

Fintech is an intersection of finance and technology and, in Uganda’s case, there is lack of clarity as to the main regulator. Should Fintech be regulated as Finance or as Technology?

Canada

FinTech adoption rate more than doubles in 18 months (Insurance-Journal), Rated: AAA

Canada’s FinTech adoption rate has more than doubled in the past 18 months, going from 8 per cent to 18 per cent since 2015, says EY’s 2017 Fintech Adoption Index released July 25.

 

Authors:

George Popescu
Allen Taylor

Tuesday November 22, 2016 Daily News Digest

sme overdrafts uk

News Comments Today’s main news: Prodigy Finance funding foreign MBA students at U.S. colleges. Today’s main analysis : UK banks shift overdraft lending toward big businesses. Today’s thought-provoking articles: FinTech ideas banks are stealing. Credit rating agency questions rise of lending algorithms. Ways to mitigate P2P lending risk. United States Foreign MBA students get college loans through Prodigy […]

sme overdrafts uk

News Comments

United States

United Kingdom

European Union

Australia

China

India

Asia

International

News Summary

United States

Prodigy Finance Is Putting International Applicants Into Top-Ranked MBA Programs In The US (BusinessBecause), Rated: AAA

After several years working for Deloitte, Abhirath started looking at funding options to study an MBA abroad. But most local banks were unwilling to lend internationally and offered only high-interest loans, riddled with clauses and extra costs.

Instead, Abhirath applied for an international post-graduate loan from community lender, Prodigy Finance.

Prodigy Finance’s borderless, peer-to-peer lending model gives international students access to the loans they need to study abroad.

In September, Abhirath, along with Vyom Vats, was chosen for Prodigy Finance’s inaugural scholarship program. They both received $20,000 in additional funding.

Crowdsourced-Debt Financing is Growing (ValueWalk), Rated: A

The consumer online lending market is experiencing difficulty, with increasing delinquency and default. When questions were raised regarding the lack of due diligence in online loans, they were initially dismissed. What could go wrong? Now two years later the answer is clear as defaults are leading to business closures. Business lending for asset-based revolving lines of credit, however, has taken a different path.

Part of causation for the defaults is due to the race to grow, a trend that has reversed recently. Avant cut its monthly lending target in half while Circlebank Lending stopped making new loans entirely, Bloomberg reported. Shakeups have occurred in the C-Suite.  LendingClub CEO Renaud Laplanche resigned in May amid questions regarding faltering loans and Prosper Marketplace CEO Aaron Vermut recently resigned as it cut 25% of its staff, reported a $35 million second quarter loss and closed its secondary market for loans.

Krista Morgan, CEO of P2Binvestor, an online platform providing business lending for emerging companies businesses seeking revolving lines of credit, has taken a different approach.

The two-year-old company, which just received $7.7 million in a second round of angel financing, conducts due diligence on each loan and has skin in the game, investing alongside other investors.

The online lender currently works only with a small group of accredited investors connected to the firm, but plans to expand to offer the investment to a wider range of accredited investors shortly.  Investors can gain exposure to a large $10 million line of credit by only accepting as little as $1,000 of the risk exposure.

Crowd Valley at Cornell’s Fintech Hackathon in New York City (GrowVC Group), Rated: A

From Friday the 11th to 13th of November, Crowd Valley (a Grow VC Group company) joined professionals from EY, Capital One, Addepar and CoVenture as well as students from institutions such as Cornell, NYU Stern and Columbia for Cornell’s annual Fintech Hackathon held at their Cornell Tech location in New York City. The focus of the event was to promote the innovation of applications and technology for two verticals: Financial Inclusion and Anti Money Laundering (AML).

OnDeck To Present At The J.P. Morgan 2016 Fintech & Specialty Finance Forum (PR Newswire), Rated: B

OnDeck® (NYSE: ONDK), the leader in online lending for small business, announced today that Noah Breslow, Chief Executive Officer, and Howard Katzenberg, Chief Financial Officer, are scheduled to present at the J.P. Morgan 2016 Fintech & Specialty Finance Forum in New York on November 30, 2016 beginning at 12:30 p.m. E.T.

United Kingdom

Conrad Ford argues that UK SMEs are still under pressure as banks shift overdraft lending in favour of large businesses (Asset Finance International), Rated: AAA

SMEs remain under pressure as banks continue to shift overdraft lending away from them in favour of large businesses.

There has been a 37% fall in the value of overdrafts provided to SMEs over the last five years from £19 billion to £12 billion* (see graph), whilst overdrafts given to large businesses have increased by 25% over the same period from £19 billion to £24 billion.

SMEs, especially those within the retail and leisure sectors, can find the lead up to Christmas very challenging if they do not have access to overdrafts. This is because firms increase spending in order to stock up ahead of the crucial Christmas trading period but customers often delay invoice payments until the New Year.

Furthermore, salaries tend to be brought forward so staff can be paid before Christmas and overdrafts are often used to cover this cost.

SMEs face growing pressure and difficult choices as the value of overdrafts available to them continues to fall.

AU10TIX Announces Partnership With Startupbootcamp Fintech Accelerator Program (Crowdfund Insider), Rated: B

AU10TIX, a fully owned subsidiary of ICTS International N.V, announced on Monday it has formed a new partnership with the Startupbootcamp Fintech Accelerator Program as a way to help support fintech startups.

European Union

Weekly industry news roundup – November 21, 2016 (Bondora), Rated: AAA

The Hindu Business Line reported on data released from the Peer-to-Peer Finance Association which shared data indicating that worldwide P2P lending has grown from £2.2 million in 2012 to £4.4 billion in 2015.

For our German readership, Huffington Post released an article which details how P2P platform are the best alternatives for investors looking for higher investment returns and borrowers looking for cheaper credit options than current banking system offers them.

Sweden’s Klarna buys talent from troubled German fintech startup Cookies (Tech.eu), Rated: A

Swedish payment service provider Klarna has agreed to take on the team behind the insolvent Berlin fintech startup Cookies.

While the terms of the acquisition by Klarna were not disclosed, Swedish media reports that the sum is likely low and that it was essentially an “acquihire.”

Australia

Credit rating agency questions the rise of lending algorithms (Australian Financial Review), Rated: AAA

The increased use of algorithms to write consumer loans has been met with scepticism by rating agency experts who doubt the ability of computers to fully assess credit risk.

Speaking at the Australian Securitisation Forum, Moody’s US-based managing director Jim Ahern told the audience algorithms “work until they don’t” when it comes to approving loans.

Algorithms, he said, are only informed by past and recent data and may be unhelpful if there are meaningful changes in the environment.

We need plans for when robots are in driver’s seat (Australian Financial Review), Rated: A

Financial services companies, including technology-oriented fintech start-ups, are emerging to challenge the roles of banks and the large financial institutions. Fintechs are rapidly transforming and disrupting the marketplace by providing digital or “robo-advice” using highly sophisticated algorithms operating on mobile and web-based environments.

However, the rapid pace of ICT development — with A.T. Kearney predicting robo-advisers in the US will manage investment assets worth $2 trillion by 2020 — makes it critical that we plan for a world where technology is in the driver’s seat.

The ASIC position does not go as far as the one adopted by the EU, which provides an explicit “right to explain” and “right to challenge” on decisions made by algorithms. Nor does the ASIC guidance place an explicit onus on the algorithmic provider to explain, in simple terms, the logic behind an algorithmic decision. This might be intentional since algorithms may involve highly complex code and technical considerations well beyond the skill set expected from an average financial services adviser.

China

Mainland Chinese banks lag global rivals in digital investment, says McKinsey (South China Morning Post), Rated: AAA

Mainland Chinese banks are lagging far behind their global rivals in investing in the digital technology needed to compete in a challenging industry landscape with evolving client demand and fierce competition from fintech companies, an industry report said on Monday.

Many mainland banks devote less than 1 to 3 per cent of their income to technology and digitalisation, while leading global banks on average invested 17 to 20 per cent of pre-tax income to embrace the digital era, McKinsey & Company said in a banking report.

Han Feng, an associate partner at McKinsey, said the digital era for China’s banking industry has arrived.

India

P2P lending: the real benefits and ways to mitigate risk (YourStory), Rated: A

A few critical steps, if followed diligently by the P2P platform, can help minimise this risk for lenders. Traditional data like bank statements, salary slips, ITR etc. supported by digital data, online transaction data, and mobile and social data should be carefully evaluated and studied to understand the borrower’s ability, stability, and intention to repay the loan taken.

The CIBIL of the borrower is a must for the platform to be able to evaluate past performance. The identity verification process (physical or through technology) has to be done to eliminate fraudulent applications.

P2P lending platforms should allow lenders to diversify across many loans by factionalising an individual borrower. Diversification is a crucial step lenders must take to mitigate risk. As a lender, you need to check if the platform gives you a diversity of borrowers for investment. It’s always better to spread your  investment across a minimum of 100 loans of different types and risk grades viz. city, risk/returns, loan purpose, gender, caste/community, tenure, loan amount, etc.

Check how strong the risk team is. Who runs the risk department? If required, please speak/write to the CRO. Ideally, the risk team should be of people with a strong track record in risk management and practice. The data science team within the organisation should be responsible and producing analytical work to improve the quality of the decision-making. In India today, not many P2P lending players publish data and statistics about loan purpose, returns, and default ratio on their website. However, serious, long-term players will, because they realise that it’s critical to do so to bring transparency in the system and build lender confidence.

The agreement between the lender and the borrower is “I owe you”  and one can rest assured that the lender has the right to collect what is due to him at any point in the future when say, the country is out of recession or overcomes the impact of a natural disaster. The P2P platform should keep in touch with the borrower and get regular updates on his/her status. Having said that, India’s story looks very positive for the next 10 years.

Asia

Fintech ideas that banks are already stealing (The Middle Ground), Rated: AAA

On the one hand, some forms of Fintech – such as credit card comparison sites and home loan comparison sites – are mostly on the side of the banks. They make most of their money by directing the customers to the banks (more on this below). The banks, of course, tolerate them because they bring in customers.

On the other hand, some forms of Fintech threaten to replace entire segments of the banking business. The P2P lending websites, such as Capital Match and MoolahSense, could well replace banks in the area of small business loans. Most notably, Fintech companies such as Nutmeg have begun to pose a serious threat to the notion of private banking, by replacing the traditional relationship officer or private banker with online wealth management.

Recent developments though, suggest that big banks are taking a third alternative.

And now, Goldman Sachs has become the first bank to launch a P2P lending service. While Fintech lovers often claim that banks lack the innovation and flexibility to match Fintech counterparts, they seem to be forgetting that money is a sort of superpower. The cost of setting up a P2P lending website is peanuts to a bank, and they even have the sheer capital to guarantee loans that go bad.

If a bank launches a P2P site that’s also backed with its own guarantees, it will draw customers from smaller Fintech companies. And unlike those smaller companies, the bank can afford to fail repeatedly.

HSBC is already testing a transaction platform that uses blockchain technology. One of the underlying drivers of cryptocurrencies such as Bitcoin, blockchain is (among other things) a method of verifying transactions.

With blockchain technology, multiple unrelated sources witness the transaction; and it’s not possible for any one party to fabricate it. Think of it as handing money to someone in a dark alley, versus handing money to someone in a well-lit area with 200 witnesses. The latter is fairer and safer.

Fintech sites are filling in many of the problems with traditional banking, but they might be a little overconfident regarding their edge. They might do well to remember second-mover advantage, and that what they’ve build over a decade the banks can pay enough to imitate within the year.

Fintech companies need to pursue that one great quality that banks can’t buy and copy – customer service, and a good relationship with their users. Because if there’s one thing banks – or anyone – can ever own, it’s good service.

Here are the Ten Fintech Firms that Singapore Just Gave S$ 1.15 Million (Crowdfund Insider), Rated: A

As part of the first annual Fintech Festival, Singapore gifted S$1.15 million to ten different Fintech firms.

The 10 awardees are:

Award         Company Name Prize
ABS Global FinTech Award1 BioCatch S$150,000
MAS FinTech Awards (Singapore Open)2 1st place – fastacash Pte Ltd S$250,000
2nd place – M-DAQ Pte Ltd S$100,000
3rd place – Pole Star Space Applications Ltd S$50,000
MAS FinTech Awards (Singapore SME)3 1st place – Tookitaki S$150,000
2nd place – Turnkey Lender Pte Ltd S$100,000
3rd place – Funding Societies Pte Ltd S$50,000
MAS FinTech Awards (Singapore Founder)4 1st place – CashRun S$150,000
2nd place – Aimazing S$100,000
3rd place – FinChat Technology S$50,000
International

Capgemini launches global fintech initiative (Econotimes), Rated: A

Capgemini, a global leader in consulting, technology and outsourcing, announced that it is launching its global fintech initiative in order to fast-track fintech engagements with its global financial services clients.

The fintech initiative by Capgemini, is aimed to extend beyond the traditional incubator concept to encompass connection, curation, incubation, and investment stages. The initiative will elevate the company as an active participant in the process of validating and evolving the core value propositions of participating companies in collaboration with clients. It will also address challenges in integrating external innovation by bridging gaps in adoption including tech integration, data management, process changes, among others.

Authors:

George Popescu
Allen Taylor