Tuesday May 8 2018, Daily News Digest

Ant Financial

News Comments Today’s main news: Sharestates forms sister company, launches $300M fund with bank partners. UK mortgage industry in need of innovation, says FCA. PaisaDukan raises $225K in seed money. ShopBack buys Seedly. Today’s main analysis: Credit card usage at all-time high, delinquency rates in check. Today’s thought-provoking articles: Ant Financial is getting policy attention in China. Investor experience […]

Ant Financial

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United States

United Kingdom

China

International

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News Summary

United States

Sharestates Partners with Prominent Banks, Equity Investors to Launch $ 300 Million Fund (ADVFN) Rated: AAA

Sharestates, an online real estate investment platform, today announced their partnership with prominent bank partners and equity investors, launching a new $300 Million fund that will provide individual and institutional investors with increased funding power for real estate deals.

Coinciding with the launch of the $300 Million fund will be Syndicate Profile, a sister company offering 12-40% annual returns to investors with the potential for quarterly cash flow. With individual investments starting at $25,000, individual and institutional investors, as well as family offices, will be able to deploy capital across a spectrum of real estate opportunities not available outside of Syndicate Profile.

Credit Card Usage at All-Time Highs, But Delinquency Rates Still Remain in Check (Global Newswire) Rated: AAA

TransUnion’s report found that serious credit card delinquency rates per borrower (90+ DPD) increased in Q1 2018 to 1.78%, up from 1.69% in Q1 2017. The delinquency rate is now level with the 1.77% mark observed six years prior in Q1 2012, though it remains below the 10-year first quarter average of 1.91%. The average card debt per borrower also followed a similar path as delinquencies during the last year, rising 2.63% to $5,472 in Q1 2018 from $5,332 in Q1 2017.

The number of credit card accounts rose 2.6% in the last year to 416.5 million in Q1 2018, up from 405.8 million in Q1 2017. In that same timeframe, the number of consumers with access to a credit card also increased by 2.1% to 174.9 million from 171.4 million one year ago.

The latest origination data point to a modest 1% growth rate between Q4 2017 and Q4 2016.

Changes between Q1 2018 and Q1 2017 for Key Consumer Credit Metrics

New York State Bill Would Add Another Compliance Hurdle with “Limited Charter” for Online Lenders (Crowdfund Insider) Rated: A

A bill (Senate Bill S8340) sitting in the New York State Senate now, will create a limited state charter for internet lending.

Sponsored by New York State Senator Elaine Phillips, the bill would authorize the Department of Financial Services (DFS) to issue a new, limited state charter to “Internet Lending Services Corporations.” These entities are defined as businesses making loans over an internet or electronic platform.

Frank Rotman of QED Investors (Lend Academy) Rated: A

Frank Rotman is a founding partner of QED Investors, the most prolific VC investor in fintech over the past decade. He also authors an excellent blog, Confessions of a Fintech Junkie, which is where he published his seminal white paper, The Copernican Revolution in Banking.

 

Jitters mount as loans from private equity continue to rise (Financial Times) Rated: A

An article in the FT shares examples of businesses that have not benefited from the recent economic expansion and at the same time took out loans; companies with poor credit ratings took out $564 billion in commercial loans in 2017 which beat out a record set before the financial crisis; these loans are funded by private equity firms and other types of asset managers; the article notes that loan quality may be deteriorating as more capital enters the space and lenders look to make riskier loans.

All that tech, yet customers keep opening accounts at branches (American Banker) Rated: A

Heeding predictions that the future of banking is digital, banks of every size now offer customers mobile and online ways of opening accounts. Yet according to J.D. Power, the majority of customers — even millennials who prefer digital banking — say they open bank accounts in branches because it is too confusing to do so online.

Potential LendingTree HQ move would have significant impact to downtown Pineville, town manager says (Charlotte Business Journal) Rated: B

The online lender is considering a roughly 30-acre site in downtown Pineville for its headquarters after determining that its plans for SouthPark would not be adequate to accommodate its growth. LendingTree will go before Pineville Town Council on Tuesday to discuss its proposal for what’s known as the Cone Mill site, at 436 Cone Ave.

StratiFi Technologies Raises $ 7M in Series A Funding (Finsmes) Rated: A

StratiFi Technologies Inc., a New York- and San Francisco, CA-based provider of fintech technology solutions, raised $7m in Series A funding.

The round was led by Anthemis Group, with participation from Wolverine Holdings, Cboe Global Markets, HOF Capital, AngelList, Mike Curcio, Matt Hougan, Matt Wyndowe, and Luke Powell.

 

CyberMiles gains praise at global blockchain technology expo! (Crypto Recorder) Rated: A

CyberMiles (CMT) is one project that has been flying under the radar for some time now, but one that has the potential to transform ecommerce as we know it for good. Think of it like a next generation eBay. Therefore, it is not surprising that it was selected as the most promising blockchains during the recent global blockchain technology expo.

Last, but not least, CyberMiles (CMT) has the potential to change how loans are made and disbursed in the finance sector. That’s because it allows for the use of a person’s blockchain identity to be used in peer-to-peer lending.

FinTech Breakthrough Names CIT Point-Of-Sale Platform As “Best Small Business Lending Solution” In 2018 (PR Newswire) Rated: B

FinTech Breakthrough, an independent organization that recognizes the top companies, technologies and products in the global FinTech market, today announced that it has selected CIT‘s point-of-sale digital platform as the winner of its “Best Small Business Lending Solution” award. The platform allows business customers to finance their purchases at the point-of-sale in as little as five minutes.

CIT’s point-of-sale platform finances B2B purchases of more than $2,500. An automated credit process and mobile document signing, simplifies the financing experience enabling customers to shop, apply and complete purchases either in store or online.

United Kingdom

FCA Says Mortgage Industry in Need of Innovation (Crowdfund Insider) Rated: AAA

The Financial Conduct Authority (FCA) has published an interim report on UK mortgage market. According to the FCA, Mortgage debt accounts for over 80% of total UK household liabilities – so this is a significant sector of finance that has a profound impact on individuals.

While the FCA found that competition was effective for providing home financing, the sector of finance could do with a bit more innovation.

Source: FCA

Read the full report here.

 

China

China’s Got Jack Ma’s Finance Giant in Its Crosshairs (Bloomberg) Rated: AAA

Spanning online payments, insurance, lending, credit scores, asset management and more, Jack Ma’s Chinese behemoth resembles a mashup of PayPal, Geico, Wells Fargo and Equifax — with a bit of BlackRock thrown in for good measure. Thanks to clever mobile apps and a burgeoning Chinese middle class, Ant oversees the world’s biggest money-market fundand handles more than $2.4 trillion of mobile payments every three months. Many of the company’s 870 million customers rely on it for nearly every aspect of their financial lives.

But Ant’s extraordinary reach may soon expose the company to a major challenge: Chinese policy makers, worried that Ant and other financial holding companies pose systemic risks to the nation’s $12.7 trillion economy, are drafting new regulations that could make it much harder for the companies to grow.

12 Banks in China Implemented Blockchain Technology in 2017 (The Oofy) Rated: A

CEBNet, which is the news source for China’s banking sector, reported on Friday that twelve of the 26 Chinese banks had included in their annual filings a case in which blockchain applications were accepted to be used in different cases over the past year. Among these institutions, there are commercial banks, including China Construction Bank, Bank of China, and the Agriculture Bank of China, as well as private ones such as the Chinese Merchants Bank and some other banks at the city level.

European Union

Experience of investors determines the future p2p lending (TechBullion) Rated: AAA

Peer-to-peer lending is turning to a priority type of additional income for a growing number of the European investors and going to increase its importance in the next few years. According to the studies conducted by the own analytical center of the Latvian P2P platform Robo.cash, the younger generation of investors who consider P2P lending as an advantageous and comfortable financial tool will contribute to the dynamics greatly.

The younger generation is speeding up

With an account of stagnating interest rates on deposits in developed countries, as well as the cautious lending policies held by banks after the global economic crisis, alternative lending is attracting more and more investors and borrowers. Its volumes have grown drastically and the global scale is predictedto come close to $1 trillion by 2025. The increased volume of investments made by investors, who are already experienced in P2P lending, and a grown number of new investors help to maintain such a high momentum on the market.

The own statistics of the P2P platform Robo.cash working in the European market since February 2017 shows that 22-37-year-old Millennials are steadily catching up with an elder generation of investors. This promises to create a favorable environment for the further growth of alternative lending globally. Six months ago, an average age of investors of the platform was equal to 38 years and age groups were distributed as follows: Silent Generation (73-90) — 0.8%; Baby Boomers (54-72) — 9.5%; Gen X (38-53) — 38.6%; Millennials (22-37) — 50.3% and Post-Millennials (18-21) — 0.8%. Today, the typical investor has grown younger to 37 years due to the increased share of investors under 37 years old: Millennials — 53.9% and Post-Millennials — 1.8%.

Source: TechBullion

How banking is open to innovation (Global Banking and Finance Review) Rated: A

Open Banking, which is the sister regulation of the EU’s PSD2 legislation, is off to a slow start – but that is to be expected. We’re only at the start of a revolution which will unleash an incredible range of innovative financial services and products, and profoundly change the financial and tech industry. Ultimately, it may radically alter how we think about money and do business.

Data sources have been restricted or denied, integration was complex and slow, and there was no universal regime for security and compliance. In short, all the cards were stacked in favour of financial institutions – they could push exclusive arrangements or buy any solution perceived as a threat at a very early stage. As a result, innovation has been largely restricted to international payment processing, automation, peer-to-peer lending and accounting software. Scaling a consumer focused fintech solution that seeks to do a core banking service better or cheaper has been incredibly difficult to pull off. Open Banking turns this situation on its head.

International

Amazon. Stop Being Everything to Everybody! (Crowdfund Insider) Rated: AAA

While Amazon may have missed out in the purchase of Flipkart, Amazon just extended it’s investment into India’s Capital Float – India’s largest online lender.

May, 2018 – Amazon Pay – Who moved PayPal and Square’s cheese? Amazon did.

March, 2018 – Amazon Checking Account

March, 2018 – Amazon Mortgage – Amazon is making it’s first inroad into personal finance with Amazon Mortgage.

Feb, 2018 – Amazon Lending – We have known this for sometime now, Amazon Lending started back in 2011 has made over 3 billion worth of loans to small businesses that sells goods on their platform. An invitation only program, Amazon lends anywhere from $1,000 to $750,000. Terms are favorable to credit cards and the fees a deducted from the merchant’s seller accounts at Amazon. Of course amazon uses sellers inventory, product mix and revenue data to underwrite but now with the help of Bank of America, Amazon is ready to restart their SME (Small and Medium-sized Enterprises) lending in a big way again. This is a direct threat to OnDeck, recently teamed up with JPMorgan Chase and Kabbage, which might need to re-stack their chips and integrate more with Ebay and Paypal. –  “Amazon has partnered with Bank of America for its lending program: Sources” –

Ten years before Jeff Bezos founded Amazon.com, a movie entitled “1984” was released. If you haven’t watched this film, stop reading and do yourself a favor and get it today…. on Amazon. DOH!

How to Use AI in Fintech and Improve Your Financial Services (Payments Journal) Rated: AAA

There are a few main ways how AI is used today in the financial world.

  1. Advanced customer service
  2. Fraud detection
  3. Lowering the risk in P2P lending
  4.  Improved insurance support
  5. Enhanced investment analysis

Kabbage
This company is a P2P lender that actively uses AI in their service. Their company is situated in the USA. They created AI algorithms that can assess all risks of lending money to a certain customer, and it allows managers of the company to give loans very fast.

India

P2P Lending Marketplace PaisaDukan Raises Additional Seed Funding of $ 225K (BW Disrupt) Rated: AAA

PaisaDukan.com, a P2P Lending marketplace owned by Mumbai based FinTech start-up BigWin Infotech today announced second round of seed funding and secured USD 225K through angel investment. The company has raised $650K of seed funding last month that takes company to the total Seed investment of $875K till date. The investors’ names are still undisclosed by the company.

Fintech Valley Vizag and Knowledge Partner KPMG Announce Startup Market Connect 2018 (The New Indian Express) Rated: B

Fintech Valley Vizag, an initiative of Government of Andhra Pradesh, conducted a demo day to enable startups to showcase their solutions to leading corporates in banking and financial industry. As a part of this Connect, eight corporate partners who were looking for innovative solutions shared their 19 high priority use cases. These corporate partners included ICICI Lombard, DCB, Kotak Mahindra, RBL Bank, Fullerton India, IDFC, Tata Capital and Bajaj Allianz.

MENA

Vault Investment and MIG jointly form “Relam Investment” (Zawya) Rated: A

UAE-based company Vault Investment  and Vietnamese MIG Holding, announced that they have aligned to form Relam Investment Company LLC.

Lootah also announced three new technological investment projects. The first would serve the real estate sector through the crowdfunding platform.

During the launch ceremony today, Relam Investment Company signed three partnership agreements. The second agreement was with Cygnus Technology Services represented by Mr. Swapnil Patil which is a technological company to launch the services system (OYA) in UAE and Vietnam followed by the agreement for BRICX – a Real Estate Crowdfunding  project with MMD Technologies represented by Mr. Samy Moselhy.

Investing in My Future by Investing in Israel (The Times of Isreal) Rated: A

A thriving economy starts with local investments, and for my future and the future of my kids, I know that investing in Israel is the right choice moving forward. Low risk investment optionsexist, and this includes your standard bonds, real estate and certain stock options.

It’s difficult to help fund a startup through venture capital, but through peer to peer lending, a lot of investors can invest in local, small companies. OurCrowd is a go-to choice, based in Israel, that allows you to invest in upcoming startups.

Asia

Seedly helps millennials manage their money – and Singapore’s ShopBack just acquired it (Tech in Asia) Rated: AAA

Singapore-based ShopBack, an online product comparison and rewards platform, has made its first acquisition. The company snapped up Seedly, which focuses on personal finance advice and expense tracking for young people.

Founded in 2016, Seedly developed an app that allows users to connect their bank accounts and credit cards as well as get detailed reports about their spending habits.

On its website, community members can ask each other questions and review products like mobile plans, lending startups, and robo-advisors.

Authors:

George Popescu
Allen Taylor

Tuesday November 14 2017, Daily News Digest

Fed rates

News Comments Today’s main news: Prosper loses $26M with spike in lending. Prosper’s Q3 growth with $1.5B in securitizations for 2017. LexinFintech files for $500M U.S. IPO. Finastra named best in class. The first securities lending platform launched. Compass raises $100M for expansion. Today’s main analysis: The U.S. yield curve flattening. Today’s thought-provoking articles: Have we reached the end of […]

Fed rates

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

News Summary

United States

Prosper reports $ 26M loss despite spike in lending (American Banker), Rated: AAA

Prosper Marketplace recorded a big jump in loan originations during the third quarter, but the San Francisco-based online lender still racked up $26.9 million in losses.

The privately held firm has lost $210 million since the start of 2016, in spite of various cost-cutting measures. In July, Prosper announced plans to discontinue a personal finance app that it acquired in 2015.

Prosper Reports Third Quarter Growth; Closes $ 1.5 Billion of Securitizations in 2017 (BusinessWire), Rated: AAA

Prosper, a peer-to-peer lending platform for consumer loans, today reported growth in both transaction revenue and loan originations for the third quarter of 2017. Continued demand for Prosper’s personal loan product resulted in $822 million in loan originations through its platform, up 6% quarter-over-quarter and 164% year-over-year. The company also grew transaction fee revenue 5% quarter-over-quarter and 164% year-over-year.

The following table summarizes the financial highlights from the quarter:

Key Operating and Financial Metrics (Unaudited)
(in thousands)
Three Months Ended September 30,
2017 2016
Loan Originations $ 821,841 $ 311,776
Transaction Fees, Net 37,250 14,086
Servicing Fees, Net 6,976 7,079
Net Loss (26,940) (17,417)
Adjusted EBITDA(1) 7,271 (8,804)
Net Cash Provided by (Used in) Operating Activities 9,881 (4,237)

Summary of Key Financial Highlights:

  • Prosper facilitated $822 million in loan originations through its platform, up 6% quarter-over-quarter and 164% year-over-year, driven by strong demand for its personal loan product.
  • Transaction fee revenue rose to $37.2 million, up 5% quarter-over-quarter and 164% year-over-year.
  • The company reported a Net Loss of $26.9 million in the third quarter of 2017, which included $28.1 million in non-cash charges related to warrants to purchase preferred stock that were issued to a consortium of investors and a third party in connection with a settlement agreement.
  • Prosper generated $9.9 million of Net Cash from Operating Activities and Adjusted EBITDA(1) of $7.3 million in the third quarter of 2017.

The U.S. Yield Curve Is Flattening and Here’s Why It Matters (Bloomberg), Rated: AAA

To put it simply, the Treasury yield curve measures the spread between short- and long-term debt issued by the U.S. government. It’s the extra compensation that investors demand to lock away their money for an extended period.

To get a sense of just how dramatic this trend has been, here’s a look at a handful of curve measures now versus the start of 2017. In trading Monday, they were all close to the flattest levels in a decade.

  • From two years to 10 years: 72 basis points, down from 125
  • From two years to 30 years: 119 basis points, down from 187
  • From five years to 10 years: 33 basis points, down from 52
  • From five years to 30 years: 80 basis points, down from 114

The two-year Treasury yield is at the highest level since 2008 as investors prepare for a rate hike in December, and begin to build up expectations for further increases next year.

Source: Bloomberg

Asset-liability managers like insurance companies and pension funds are always seeking duration, and 30-year Treasuries are among the best ways to get it. Combine that appetite with increased demand from passive mutual fund giantslike Vanguard and BlackRock, and you’ve got a recipe for a sustained bid on the long end of the Treasury curve.

Source: Bloomberg

If one does take history at face value though, the $14.3 trillion Treasuries market is sending a warning about the economic outlook. Yield curves are the flattest in a decade, and it’s no coincidence that about 10 years ago marked the start of an 18-month recession.

Source: Bloomberg

While banks’ lending margins have increased slightly from their 2015 lows, they remain below the average of the past 30 years, according to the Fed.

Real estate tech company Compass raises $ 100 million, plans massive expansion (Housingwire), Rated: AAA

That capital raise placed the company’s valuation at more than $1 billion.

Now, one year later, the company’s valuation is nearly double that, thanks to another significant capital raise.

Compass announced this week that it raised $100 million in its Series E investment round, which placed the company’s valuation at $1.8 billion.

All total, the company has now raised $325 million.

PeerStreet Continues to Expand Resources and Technology Services to Lenders (BusinessWire), Rated: A

PeerStreet, an award-winning platform for investing in real estate backed loans, is excited to announce that it is aggressively expanding available resources and tools for private real estate lenders on its platform.

PeerStreet lenders can now access detailed Property Valuation Reports which allow lenders to analyze property data and adjust property details to generate highly accurate valuations that reflect current or future market conditions. The data that makes this possible is licensed by PeerStreet from HouseCanary, a leading provider of real estate valuation data and analytics. PeerStreet is providing this service to our lenders free of charge through our Lender Platform.

“Currently, our platform is a robust secondary marketplace for lenders. We’ve purchased over half a billion in loans from local lenders, but we see great value in developing practical tools to grow lenders’ businesses beyond providing capital to them,” said Brew Johnson, Co-Founder and CEO of PeerStreet.

Hornets, LendingTree Announce New Multi-Year Founding Level Partnership Highlighted (NBA), Rated: A

The Charlotte Hornets and LendingTree today announced a multi-year partnership in which the Charlotte-based online loan marketplace’s logo will appear on the team’s jerseys, effective immediately.  LendingTree also becomes a Founding Level Partner of the organization and the Official Loan Shopping Partner of the Charlotte Hornets.  The Hornets will wear the LendingTree logo on their jerseys for the first time on Wednesday, November 15, when the team debuts its new Classic Edition uniform in an 8 p.m. contest against the Cleveland Cavaliers that will be televised nationally on ESPN.

Along with placement on all team uniforms, LendingTree will have fixed signage on the Spectrum Center concourse and on the venue’s mobile entry scanners, as well as digital signage on the scorer’s table, basket stanchion, center-hung scoreboard and 360 LED boards.  LendingTree also receives entitlement of the new Hornets app, the team roster page on hornets.com and score updates on the team’s social media outlets.  Additional advertising elements include banner ads and pre-roll video ads on hornets.com and spots on Hornets television broadcasts on FOX Sports Southeast and radio broadcasts on WFNZ.

Miles Reidy of QED Investors on Regtech (Lend Academy), Rated: A

In this podcast you will learn:

  • Miles varied background in finance and how he landed at QED Investors.
  • His areas of focus at QED.
  • How Miles defines regtech.
  • Why regtech has its origins in the changes brought on by the financial crisis.
  • The comparison of regtech to the changes that happened in consumer credit in the 1980s and ’90s.
  • How automation is making a difference today in KYC.
  • Why consumers should be in control of who has access to their personal information.
  • The most profound change that regtech is going to bring to financial services.
  • The single hardest job at a large bank today.
  • Why integration is the key for any successful regtech project at a large bank.
  • Why the real regulatory innovation will be driven by the UK.
  • Why QED decided to create their own regtech conference in Washington DC.
  • What they will be covering at this event.
  • What Miles thinks are the most interesting areas of regtech today.

Two Startup Acquisitions Within 30 Hours For Plug and Play FinTech (Business Insider), Rated: A

Within 30 hours, two of Plug and Play FinTech’s batch startups were acquired: Vault by Acorns and Qumram by Dynatrace.

The Guarantors Raises €10.07M in Series A Funding (FINSMES), Rated: A

The Guarantors, a NYC-based insurtech startup focused on the real estate industry, raised €10.07M (approx. $11.7M) in Series A funding.

The round was led by White Star Capital and Alven Capital with participation from SilverTech Ventures, Global Founders Capital, Rocket Internet Capital Partners, Partech Ventures, and other investors.

The company will use the funds to continue to develop the product and launch beyond NY in 2018.

The internet name many banks are afraid to use (American Banker), Rated: A

After Farmers & Merchants State Bank in Archbold, Ohio, switched its internet domain from dot-com to dot-bank, it got a handful of calls from customers wondering where its website had gone.

The $1 billion-asset bank also noted some assumed when a sentence ended “.bank.” in its promotional materials, the last period was part of the web address, instead of perfect punctuation.

Farmers & Merchants is one of only a few hundred institutions that have made the switch to the generic top-level domain that became widely available in mid-2015. While the extension is supposed to signal a bank is, in fact, a bank, the domain is still not available to most bank customers.

SEC Says Companies Can Expect New Guidelines on Reporting Cybersecurity Breaches (WSJ), Rated: A

A senior Securities and Exchange Commission regulator said Thursday that public companies will soon face new guidelines for how they report cybersecurity breaches to investors.

The agency will probably update directions that it gave to companies over six years ago, before the spate of high-profile breaches, including at the SEC itself and Equifax , EFX 0.05% Inc., the credit-reporting firm with access to sensitive financial details for millions of consumers.

How to Become an Investor: Startup Capital (Investor Ideas), Rated: A

While it is not encouraged to apply for loans from major financial institutions like big banks (owing to interest rates of 15% – 23%), there are other options such as Lending Club that offer interest rates at just 5.32% for preferred clients. With interest rates that low, it is viable to consider nonconventional options to get your investments up and running. Lending Club is one example of a highly reputable service comprising a community of lenders that can help investors achieve their objectives.

Survey Shows Payday Borrowers Have No Regrets (Credit Union Times), Rated: A

According to the CFPB, payday loan companies collectively raked in roughly $3.6 billion in fee revenue in 2015. The CFPB also estimated that there are 15,766 payday loan stores throughout the U.S., slightly more than the country’s 14,350 McDonalds.

This lending product is commonly targeted at low-income consumers who use payday loans as plugs gaps in expenses in order to keep them afloat. Some credit unions see this an opportunity to help the underserved/underbanked market.

The Hoboken, N.J.-based LendEDU polled 1,000 consumers who have used a payday loan in the last year with some surprising results:

  • The average payday loan borrower used a payday loan 3.80 times in the last year.
  • Eighty-two percent said they looked at the interest rate and fees before borrowing.
  • The average amount borrowed was $442.16.
  • Fifty-one percent said they did not regret using a payday loan.
  • Two-thirds of respondents said they explored other borrowing options (ex. installment loans, credit cards) before using a payday loan.

However, some 75% of respondents indicated they were well informed throughout the application process; and when asked “Did payday loans make your financial situation better or worse off?” more borrowers stated that payday loans made their situations better, (44.2%) than worse, (30.3%).

FinTech Fast Tracks Mortgages (The MReport), Rated: B

According to a report by Sarah Strochak of the Urban Institute, the outpouring of financial technology (fintech) in the mortgage space has brought with it all sorts of innovation, including new ways to capture data, reaching more people and expanding access to credit. The Urban institute also states that in having the ability to reach more people, fintech firms also have the potential to disrupt the inequality status quo in the economy.

For example, the Urban Institute draws on the case of Down Payment Resource, a company that has created a database that matches customers with down payment assistance programs.

United Kingdom

Weekend press review: “…of a return to normality in markets that are still climbing a wall of worry about valuations…” (IFA Magazine), Rated: AAA

The Telegraph asks a question which will evoke a sigh from many readers. Have we seen the end of the peer-to-peer lending boom? Last year’s record £3.2 billion lending total – of which two thirds went to Zopa, Funding Circle or RateSetter – has been impacted by a succession of unrelated bad news stories.

First there’s been the falling rate of returns, which run at barely 3.7% for Zopa Core 4.5% at Zopa Plus – down by a good 1.5% since the good times. Not to mention a deteriorating risk situation: nowadays, the Telegraph says, fully 20% of applicants get Zopa approval compared with barely 0.5% in the old days. That puts Zopa’s approval rate on a par with the mainstream banks.

P2P sector urges chancellor to set bold housing agenda in Autumn Budget (P2P Finance News), Rated: A

THE PEER-TO-PEER lending sector has called on the chancellor to introduce a more ambitious housing programme in this month’s Budget.

There have been several rumours about the content of Philip Hammond’s first Autumn Budget, set for 22 November 2017, including the scrapping of stamp duty for first-time buyers.

Supporters of the policy claim it could help to bridge the UK’s generational divide, but P2P lenders think a more transformative housing policy is required.

Fintech startup Flux partners with Barclays for itemised receipts (TechCrunch), Rated: A

Flux, the London fintech startup founded by former early employees at Revolut, has announced a partnership with Barclays in the U.K. that will see it trial its itemised receipt technology with 10,000 of the bank’s customers.

The young company has built a software platform that bridges the gap between the itemised receipt data captured by a merchant’s point-of-sale (POS) system and what little information typically shows up on your bank statement or mobile banking app.

ThinCats Appoints Alison Whistance to Cover South-West Region (Crowdfund Insider), Rated: B

Alison Whistance, described as a finance expert, joins ThinCats as Origination Manager, South-West, as the peer to peer lender gears up for its next period of growth. Recently, ThinCats announced a £200 million funding program in conjunction with its parent company ESF Capital.

FinTech firms, banks and insurers give evidence to Committee (Parliament.uk), Rated: B

The EU Financial Affairs Sub-Committee continues its inquiry on financial regulation and supervision by taking evidence from banks, insurers and FinTech specialists.

Witnesses

Wednesday 15 November 2017 in Committee Room 4A, Palace of Westminster.

At 10.15am

  • Sally Dewar, International Head of Regulatory Affairs, JP Morgan
  • Julian Adams, Group Regulatory & Government Relations Director, Prudential

At 11.15am

  • Flora Coleman, Head of Government Relations, Transferwise
  • Charlotte Crosswell, Chief Executive Officer, Innovate Finance
China

LexinFintech files for $ 500m IPO in US (Financial Times), Rated: AAA

LexinFintech Holdings, a Chinese online consumer lending company, has filed for a $500m initial public offering in the US and in the process revealed that funding costs have spiked this year – just as Beijing has signalled its intent to crack down on the sector in a drive to rein in financial risk.

LexinFintech said in a Securities Exchange Commission filing that it was seeking to raise as much as $500m from its listing on the Nasdaq equities exchange under the ticker symbol “LX”.

The company said total operating revenue for the nine months to the end of September rose 35.3 per cent year on year to Rmb3.99bn ($600.6m), while operating costs rose 19.9 per cent to Rmb3.1bn, shaking out to a net profit of Rmb5.8m for the period, compared to a loss of Rmb193.7m a year prior.

‘Proptech’ follows fintech’s footsteps (China Daily), Rated: A

In the past few years, technology has revolutionized the financial sector, and as fintech continues to swell into more sectors, the real estate industry will welcome its own version, known as proptech, according to a senior executive from international real estate consultancy company Jones Lang LaSalle.

Perhaps the most prominent example of fintech on life in China is the ubiquity of mobile payment. The Better Than Cash Alliance reported earlier this year that Alipay and WeChat Pay enabled $2.9 trillion in Chinese digital payments in 2016, a 20-fold increase in the past four years.

A recent HSBC study finds that 70 percent of Chinese millennials have their own property, with 91 percent planning to buy a house in the next five years, a greater percentage than their counterparts in countries including Canada, France, the US and the UK.

European Union

Orange Bank goes live with Backbase banking platform (Banking Technology), Rated: A

France’s latest mobile-only bank, Orange Bank, has gone live on Backbase’sOmnichannel Banking Platform.

Backbase says Orange is the only French bank to offer for free a service that provides real-time balances, mobile payments and a virtual adviser that is available 24 hours a day, seven days a week.

European Commission to Assess Potential of EU-Wide Blockchain Infrastructure (Coindesk), Rated: B

The European Commission (EC), the economic bloc’s legislative body, is launching a study aimed to assess the feasibility and potential of an EU-wide blockchain infrastructure.

The study, which is set to cost €250,000, will focus on whether blockchain can assist the EC’s objective of creating the conditions for a reliable, transparent and EU law compliant “data and transactional environment.”

International

FINASTRA SOLUTIONS NAMED BEST-IN-CLASS (Finastra), Rated: AAA

Aite Group has awarded Finastra “Best-in-Class” status for its commercial loan origination solutions, including Total Lending powered by LaserPro and FusionBanking Credit Management Enterprise (CME). The standing reinforces Finastra’s position as the industry leader in end-to-end commercial lending.

Aite Group’s bi-annual report, Commercial Loan Origination: Scoping the Market and Comparing the Vendors, is a comprehensive review and ranking of the 10 leading global commercial loan origination vendors. It uses a highly governed and quantitative vendor evaluation methodology known as the Aite Impact Matrix (AIM), which provides an in-depth market assessment of financial technology vendors.

Total Lending, powered by LaserPro (the installed base of which was evaluated based on the long-standing D+H commercial loan origination capabilities that comprise this new “good-better-best” tiered offering) was recognized by Aite Group as having the highest client strength score.

FusionBanking Credit Management Enterprise obtained the highest score for product features, delivering on the largest number of required commercial loan origination functionalities with the least amount of required configuration or custom code.

Finastra also received the “All Things to Everyone” award for its breadth of offerings from a single vendor.

SBL Network Ltd launches peer-to-peer securities lending platform (FTSE Global Markets), Rated: AAA

SBL Network Ltd, the new financial technology company created to provide transaction and information services to the global capital markets industry, is to launch the industry’s first peer-to-peer securities lending platform.

Aquila Network provides the first market place allowing major institutional owners of equities such as Pension Funds, Insurance Companies and Sovereign Wealth Funds, to negotiate and lend directly to Hedge Funds.

SBL has raised approximately £1m this year via two EIS-qualifying funding rounds and now announces the launch of its Aquila Network, the first peer-to-peer securities lending platform, established in response to what the firm says is growing demand for greater transparency in the securities lending marketplace.

What to Expect When Participating in a Token Launch (Consensys), Rated: AAA

When you initially learn about a token launch you’d like to participate in, gather all the information you can. Not every token launch is structured in the same way.

Make sure you do a few things before the token launch begins:

  • Research, research, research
  • Understand the value proposition of the project
  • Know the prerequisites you need in order to be a valid investor
  • Find out how you will pay for the token, and how tokens will be distributed

Watch out for Red Flags

The Ethereum space is exciting and full of opportunities, but there are scammers and phishers of all sorts looking to take advantage of people’s trust.

  • Never share your private key
  • Always do a deep read of the whitepaper, check out the source code
  • Listen to the community

KPMG: In Q3 Global Fintech Investment Hit $ 8.2 Billion (Crowdfund Insider), Rated: B

Overall, global Fintech investment remains solid with$8.2 billion invested across 274 deals.

Some of the larger investments  during the quarter include:

  • Intacct – $850 million
  • Concardis – $806 million
  • CardConnect – $ 750 million
  • Xactly – $564 million
  • Merchants’ Choice Payments solutions – $470 million
  • Access Point Financial $350 million
  • Service Finance Company – $304 million
  • Prodigy Finance – $204 million
  • TIO Networks – $238.9 million
  • Dianrong – $220 million

Insurtech is on course for a record breaking year with VC investments standing at $1.53 billion by the end of Q3 for 179 deals. For the entire year of 2016, Insurtech saw $1.79 billion invested in 203 deals.

Regionally, Fintech deals break down as follows:

  • Americas – $5.35 billion for 158 deals
    • the US claimed $5 billion and 142 deals
  • Europe – $1.66 billion for 73 deals
    • The UK dominated
  • Asia – $1.2 billion fro 41 deals
    • China continued to dominate but deals in Hong Kong, India and Korea were in the top 10
India

How to take a bank loan while working for a blacklisted employer (Financial Express), Rated: A

What happens when a company gets blacklisted? Will the employees have access to credit or will they get declined despite having good credit scores and salaries?

If one lands in such a situation, the logical thing to do is to change the employer. More because it would not only have an impact on one’s credit life, but more importantly, continued employment with a blacklisted employer can lead to financial disruptions sooner or later.

If the need for funding arises while being employed with a such company, one could take the following steps:

# The first lending institution to be contacted has to be the bank with your salary account.

# Each lending institution has its own methodology of categorizing companies and the current employer may not be part of the list with all lenders. So, “there may be some lenders willing to give loans unless one is employed with prominent companies that go bankrupt (as we have seen over past few years). However, one has to be very careful and in the endeavor to procure credit one must not apply with various lenders at the same time since this can have adverse impact on the credit profile. A better option would be to connect with a credit advisor with established repute and seek assistance,” informs Ramamurthy.

# Peer to peer lending is another new age option that can be explored by such individuals.

Asia

Kazakh fintech start-up holds its first global ICO (Astana Times), Rated: A

LendEx financial-tech (fintech) start-up plans to initiate an ICO (Initial Coin Offering) using the Ethereum platform based on block chain technology. The investments will be used to launch the LendEx P2P (peer to peer) lending platform, which will focus on online lending to clients in Central and Southeast Asia.

“The LendEx online platform, built with the help of block chain technologies, will provide crypto investors with access to the platform and will allow issuing microcredits for borrowers checked in national currencies,” said fintech entrepreneur and start-up author Alexey Sidorov.

The LendEx release will be held in two stages: the actual ICO and pre-ICO, which will begin Dec. 1.

Authors:

George Popescu
Allen Taylor

The QED Matrix Helps Leaves and Mountains Become Trees

QED Matrix

Nigel Morris is a co-founder of Capital One and has led it to emerge as a multi-billion dollar behemoth. During his time at Capital One, he noticed there is a gap between banks and the fintech industry. To bridge this void, his team rolled out QED Investors in 2007 and was able to bring on board […]

QED Matrix

Nigel Morris is a co-founder of Capital One and has led it to emerge as a multi-billion dollar behemoth. During his time at Capital One, he noticed there is a gap between banks and the fintech industry. To bridge this void, his team rolled out QED Investors in 2007 and was able to bring on board some ex-colleagues from Capital One to build QED; this helped him to ensure the team hit the ground running. QED has invested in multiple startups that have not only become unicorns, but have changed the entire landscape of the financial ecosystem in which they operate. Most notable are Credit Karma, SoFi, Prosper, GreenSky, BrainTree, and ApplePie.

Fintech Opportunities and Hindrances

Morris has seen the best and worst of big banking and fintech startups. He has seen that banks have some really important assets that fintech companies lack: low-cost deposits, regulatory access, top-notch compliance, huge customer base, and high profitability. But they are trying to be everything to everyone and this is where fintech companies are gaining ground. Fintech companies, rather than offering everything, offer a specific product or service that banks haven’t developed or cannot develop because that is just not part of their DNA.

On the other hand, Fintechs have been extremely nimble and have evolved into dominating spaces that have been vacated or neglected by banks, online consumer lending and small business lending being prime examples. However, banks have accepted the hard truth and have started striking partnerships with fintech lenders.

Morris is of the opinion that both sectors had been operating in silos. Though both have “complementary sets of skills,” they have only now really started communicating and exploring opportunities together. This lack of being able to meet on common ground was more of a cultural issue than anything. Startups do not understand or appreciate the hierarchy and sometimes bureaucratic structural setup of banks, and banks obviously are extremely wary of aligning themselves with unwieldy trigger-happy startups that can land them in a regulatory mess. So this communication gap is the biggest hindrance that both sides need to overcome to make this partnership work.

Bridging the Bank-Fintech Gap

In their endeavor to bridge the gap, QED has taken massive strides in the last six months by striking groundbreaking partnerships–one with Fifth Third in Cincinnati and another with Scotia Bank in Toronto. This partnership is beneficial for all three parties involved: Banks, Fintech companies, and QED.

Fifth Third has invested heavily in QED portfolio companies like GreenSky, ApplePie Capital, and AvidXchange. The focus of the Scotia relationship is in Latin America as they have a tremendous presence in LatAm and Central American countries outside of Brazil. They are exploring multiple opportunities together in those markets and should be able to announce a groundbreaking deal soon.

The QED Matrix

Nigel Morris believes that differentiating between fintechs and banks on a single perimeter is not feasible or sufficient. That’s why he came up with the QED Matrix.

The matrix has been developed on the lines of the BCG matrix (which is used for analyzing business units). The QED Matrix is used to show the trade-offs in the business model structure of the financial service institutions. The gist of is that each quadrant has its strengths and weaknesses, so entities moving towards the center are in the best shape.

The Matrix is based on two spectrums:

  • Resilience is a function of factors like brand capitalization and product suite diversification;
  • Flexibility concerns both infrastructure and decision making, and also includes organizational design, technology, culture, talent, and much more.

Classifications of each quadrant:

  • Mountains – Firms listed as mountains are high in resilience and low in flexibility. They have resilience because businesses have product diversity, brand, capital reserves, distribution networks, and low cost of capital. But low in flexibility due to institutional inertia, low growth, technical debt, and focus on regulation and cost reduction.

Examples: Citibank, Fifth Third Bank, Suntrust etc.

  • Boulders – Firms under this quadrant represents low resilience and low flexibility. Low resilience due to lack of capital reserves or product diversification of larger banks. They also lack in flexibility due to legacy infrastructure, weak talent pipeline etc.

Examples: Regional banks, Credit unions, Community banks.

  • Trees – Trees represent high resilience and high flexibility. High resilience due to factors like product diversification and loyal customer base and high flexibility due to clutter-free organizational structure, less technical debt, and open access to talent.

Examples: SoFi

  • Leaves – Firms under this quadrant represents low resilience and high flexibility. Low resilience due to product concentration and lack of stable low-cost capital. High in flexibility due to simple organizational structure, technology infrastructure, etc.

Examples: GreenSky, Avant

Analysis

Obviously, Trees represent the best of both worlds. But the thought process behind the QED Matrix is for banks and fintechs to realize where they are in the matrix and what type of partnerships should they pursue to ensure they remain relevant in the twenty-first century. So a boulder should look to partner with leaves so that its customer base can be monetized properly. Leaves should look to partner with mountains so that they have access to cheaper capital and a diversified offering and customer base. Whatever the situation, QED is sitting in the middle of the matrix. It is not only a capital provider to fintechs, but also the creator of a platform for dialogue with banks; this should help it become the first choice for entrepreneurs looking to build a sustainable fintech business.

Read about Nigel Morris’s LendIt USA 2017 keynote titled “If I Were to Start a Bank Today, This is What It Would Look Like.”

Author:

Written by Heena Dhir.

If I Were To Start a Bank, This is What It Would Look Like

banks

Nigel Morris, Managing Partner of QED Investors, shared his insights into what a bank in the digital era would like, or should like, at the LendIt USA 2017 conference today. He began his presentation with a list of items that are, on a practical level, what anyone in the business might call “common sense.” His […]

banks

Nigel Morris, Managing Partner of QED Investors, shared his insights into what a bank in the digital era would like, or should like, at the LendIt USA 2017 conference today. He began his presentation with a list of items that are, on a practical level, what anyone in the business might call “common sense.” His list included:

  • Delight the customer in service and product design
  • Embrace digital channels and avoid creating technology debt
  • Develop culture of discipline and consistency
  • Attract and retain top talent
  • Don’t get sideways with regulators
  • And more

“The problem is, none of these are actionable,” Morris said. “To me, starting a bank is a tightrope exercise between managing resilience and flexibility. Either one of those by itself is a bad thing.”

Morris went on to say that return on equity for banks was very good up through 2007. Since then, it’s been very low.

“Every year,” he said, “banks are making money, but they’re not returning a huge return for their investors.”

In order to be success, a bank has to be good at receiving deposits, or taking people’s money, look after it safely, and provide interest. But they also have to be good at lending it out and letting it make more money. If they’re just good at lending, they won’t have any deposits. If they’re just good at taking deposits, they won’t make a profit.

“The vast majority are leaving money lying around,” Morris said. Many of the large regional banks got out of unsecured lending because they weren’t making any money at it. This created a huge market for technology-based companies to step into and take advantage of the opportunity. In fact, since the Great Recession, many disruptors have tackled that market, he said.

Bank profits have been squeezed by regulator pressure, low interest rates, and evolving technology. The high cost of technology is a burden to banks. Mobile computing has reduced the value of the bank branch. On top of that, consumers are increasingly more willing to unbundle banking services.

When you add these factors together, it means one thing for traditional banking: This is the beginning of the decline of their influence. This is evident in their late trouble attracting and retaining great talent.

One thing financial technology disruptors have going in their favor is that many of the leading company innovators come from a banking background. Mike Cagney of SoFi was a senior vice president at Wells Fargo; Justin Basini of ClearScore was vice president of Capital One UK and global head of marketing and communications in the global banking division of Deutsche Bank; Sasha Orloff of LendUp was senior vice president of Citi Ventures and global technology microfinance analyst at The World Bank. Having an understanding of both banks and technology gives them a competitive advantage.

Morris also said both banks and FinTech companies operate at fragile extremes. Banks are slow to adopt digital channels, married to legacy technology infrastructure, make conservative use of alternative data, operate with organizational inflexibility, have a culture of “no” and little regulatory overhead, struggle to launch new businesses, have a weak talent attraction and retention model, and are poor promoters of credit scores. FinTech companies, by contrast, are more monoline with a narrow product suite, lack built-in physical distribution systems, operate on a scarcity of customer data, are millennially focused, struggle to scale, have a high cost of capital and debt, lack capital reserves, and have minimal compliance requirements.

Morris sees the playing field much more level now than in the past. QED Investors developed a framework to analyze business units and pull all of this data together to create a map of retail financial services.

By dividing the banking industry and FinTech competitors into a 4-quadrant grid, Morris has given food for thought about what a bank should look like in this new millennium. Unfortunately, I didn’t get to see the end of his presentation, but I’d suspect, based on what I did see, if he were to start a bank today, he’d want to incorporate the best of what traditional banks have to offer and the best of what marketplace lending companies like SoFi and LendUp have to offer. It might look something like Cross River Bank. Of course, there’s always a way to build a better bank.

Authors:

Allen Taylor