Thursday October 24 2019, Weekly News Digest

P2P lending tax rates

News Comments Today’s main news: Judge says OCC cannot issue fintech charters. Kabbage ends Q3 with nearly $100M in revenue. Funding Circle shares up over 10% while loans under management up over 30%. Balboa competes $409M securitization. FundingSecure enters administration. Today’s main analysis: Q3 bank earnings. Today’s thought-provoking articles: 2019 financial fears infographic. Why there […]

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P2P lending tax rates

News Comments

United States

United Kingdom

China

Other

News Summary

United States

Fintech unicorn Kabbage ends Q3 with nearly 0 million in revenue amid loan growth (MarketWatch), Rated: AAA

Financial technology unicorn Kabbage finished the third quarter with just shy of $100 million in revenue as the company continued to grow its small-business lending platform.

The decade-old company told MarketWatch that it generated $99.4 million in third-quarter revenue as loan originations ticked up 43% on a year-over-year basis. The company said it extended $715 million in loans to customers during the quarter.

US fintech Kabbage launches new payment service to help small businesses get paid quicker (AltFi), Rated: B

Kabbage, a US fintech backed by Softbank which uses AI-based algorithms to help work out the terms of small business lending, is launching a payments service which it says will cut the time it takes small businesses to get paid from 90 days to 24 hours.

Judge Rules OCC Unable to Issue Fintech Charters (Lend Academy), Rated: AAA

Yesterday, a federal judge ruled that the OCC does not have the legal authority to issue bank charters to non-banks. Judge Victor Marrero ruled on the fact that a clause in the National Bank Act’s business of banking requires that only firms which take deposits can receive a national bank charter.

Banking charter remains a long way off for fintechs after court ruling (American Banker), Rated: A

Fintech firms continue to face a murky path into the banking system after a federal court ruling that threw out the Office of the Comptroller of the Currency’s special-purpose charter, observers said.

The charter has already been on unsteady ground. No firm has yet applied with the OCC facing legal challenges. But the decision Monday out of the U.S. District Court for the Southern District of New York shines an even brighter light on potential alternatives for fintech companies seeking a national licensing solution.

Is This the End for the OCC Fintech Charter? (Payments Journal), Rated: B

The story isn’t over yet. The OCC has said it will appeal the decision.

New Jersey bank partners with On Deck Capital (Biz Journals), Rated: A

Marketplace Lending Update #7: This and That (The National Law Review), Rated: A

In striking down the OCC’s interpretation of Section 5.20(e)(1), Judge Marrero reasoned that the National Bank Act “unambiguously requires that, absent a statutory provision to the contrary, only depository institutions are eligible to receive national bank charters from the OCC.”

Kabbage Heads to Court (Again)

Non-bank marketplace lender Kabbage joins the growing number of online lenders who are defending Madden and “true lender” claims in New York’s federal courts. Unlike prior lawsuits, such as those recently filed against Capital One and Chase Bank,2 the putative class action against Kabbage targets small business loans, not credit card or other consumer loans.

Q3 Bank Earnings, Venmo & AmEx Card Launch (PeerIQ), Rated: AAA

PayPal is launching a Venmo credit card (expected 2H 2020). Venmo’s credit card launch follows a flurry of launches from Avant, Upgrade, Ollo, Brex and others in recent years. PayPal has a unique edge – the breadth of customers on its payment network. Relatedly, PayPal and Synchrony extending their overall 15-year consumer credit relationship.

Bank Earnings Season Underway

JPM

  • Industry leading ROE of 18% driven by consumer banking ROE 30%+ [!!]
Source: PeerIQ, JPMorgan Chase & Co

Citi

  • Strongest 35% YTD share price gain in KBW index (stock trading below book value)
  • 66% of new deposits coming from areas where they do not have branches

GS

  • ROE in the 12% range, profit drops 26%. ROE will be low for the foreseeable future while GS pours billions in investing in building a consumer franchise
  • CEO David Solomon: “In three short years, we have raised $55 billion in deposits on the Marcus platform, generated $5 billion in loans, and built a new credit-card platform and launched Apple Card,” adding “which we believe is the most successful credit card launch ever.”

Bank of America

  • Profits up 8% YOY; NIM robust at 244 bps just shy of recent peak of 251 bps
  • #1 in mobile banking and online banking. Digital banking users have increased by 5% over the past year and number of active mobile users has increased by almost 11%. – Number of branches has decreased by 1.9

Balboa Completes Largest Securitization in Company History at $ 409MM (Monitor Daily), Rated: AAA

Online lender Balboa Capital successfully completed a $409 million asset-backed securitization (ABS) of small and mid-ticket equipment loans and leases, its sixth and largest transaction to date.

ABS Professionals Look to New Financial Partners Amidst Changing Economic Landscape, Capital One (ABL Advisor), Rated: A

Capital One survey conducted at ABS East 2019, a conference convening professionals from across the asset-backed securities (ABS) industry, found more than one-third (38 percent) of professionals plan to engage with new financial partners and implement new technologies, over the next 12 months, to prepare for the changing economic landscape. Additionally, 34 percent of respondents plan on reviewing or reshaping their credit and underwriting risks over the next 12 months.

Of the various challenges facing the industry, ABS professionals elected that regulatory uncertainty (22 percent), increased credit risk (18 percent) and increased competition (18 percent) pose the greatest challenges for their businesses over the next 12 months. Fluctuations in interest rates was listed as the greatest challenge for 15 percent of respondents.

2019 Financial Fears Survey (Wallet Hub), Rated: AAA

Current Mortgage Rates in Iowa (Benzinga), Rated: A

Quick Look: Best Mortgage Lenders in Iowa

  1. Academy Mortgage Corporation: Best Overall
  2. Quicken Loans: Best for Online Lending
  3. Wells Fargo: Best for First-time Home Buyers
  4. Bank Iowa: Best for Customer Service
  5. US Bank: Best for Competetive Rates

1. Best Overall: Academy Mortgage Corporation

You can get in-person service and online loan assistance for conventional, FHA, VA and refinance loans, as well as first-time homebuyer education.

IIRR Management Services Discusses RealtyShares Acquisition (Crowdfund Insider), Rated: A

IIRR Management Services (IRM) claims to be one of the largest crowdfunded real estate investment firms in the world. IRM is owned by RREAF Holdings and iintoo Investments. The company recently took over management of Realtyshares’​ portfolio – once a prominent entrant in the real estate crowdfunding sector that unexpectedly collapsed in 2018 stunning the industry. Today, IRM claims over $1.5 billion in combined assets salvaged from RealtyShares.

CrowdStreet: A Platform that Democratizes Real Estate Investment Opportunities While Diversifying Portfolios (CardRates), Rated: A

CrowdStreet indicates a total average annual return rate of 25.5% across all fully realized deals, according to the company website. The company believes markets are stronger when they are more accessible, transparent, and efficient.

Since CrowdStreet launched in 2014, the company has posted over 360 projects on its Marketplace and has raised more than $800 million from thousands of investors, he said.

The platform allows accredited investors to diversify their portfolios by investing in individual projects or funds for as little as $25,000.

Finitive Receives $ 2M in Venture Debt from Silicon Valley Bank (FINSMES), Rated: A

Finitive, a NYC-based financial technology platform providing institutional investors with direct access to alternative lending investments, closed a $2m venture debt.

Bitcoin IRA to Launch Interest-Earning Crypto Accounts (Altcoin Buzz), Rated: A

Bitcoin IRA has partnered with the leading crypto trading and lending firm Genesis Capital to launch interest-earning cryptocurrency accounts.

The crypto trading firm will accept Bitcoin (BTC), Ether (ETH), Litecoin (LTC), and ZCASH.

Crypto-powered foundation Rippleworks expands its reach (Devex), Rated: A

Galen and Larsen, who built the online lender E-Loan together, are both interested in broadening the perspectives of Silicon Valley executives who might otherwise be detached from ways to make an impact on the rest of the world.

Fintech Innovator Fundbox Named to Prestigious IDC FinTech Rankings by IDC Financial Insights (Yahoo! Finance), Rated: B

Fundbox, the B2B payments and credit network designed to facilitate and accelerate B2B commerce at scale, announced that the company ranked #92 on the 2019 IDC FinTech Rankings.

Beware Online Loan Calculators (WSJ), Rated: B

According to a study published online in the Journal of Behavioral and Experimental Finance in June, borrowers unconsciously could be manipulated into choosing a more expensive loan, depending on the calculator’s default settings.

United Kingdom

Shares in Funding Circle up over 10 per cent, after loans under management jump by more than 30 per cent (AltFi), Rated: AAA

Shares in peer-to-peer lender Funding Circle climbed over 10 percent after its loans under management soared 31 percent to £3.7bn, but the company cautioned of “an uncertain economic environment”.

It said loans under management had grown to £3.7bn compared to £2.8bn the year previous.

Funding Circle reported that loan originations were up from £1.6bn in 2018 to £1.8bn in 2019.

FundingSecure goes into administration (P2P Finance News), Rated: AAA

FUNDINGSECURE, the peer-to-peer pawnbroker and property lender, has gone into administration.

FundingSecure administration not a ‘reflection of P2P as a whole’, claims major platform (Bridging and Commercial), Rated: A

Jonathan Avery-Gee, Edward Avery-Gee and Daniel Richardson at CG & Co have been appointed administrators of the company and are working closely with the FCA.

Stuart Law, CEO at Assetz Capital, claimed that smaller P2P lenders were “clearly struggling to keep up”.

Assetz chief rules out purchase of FundingSecure loanbook

Industry raises concerns as Funding Secure enters administration (Mortgage Introducer), Rated: A

The collapse of the P2P firm has left around 3,500 investors facing an unclear future as the administrator works their way through the loans.

Starling Bank Raises £30 Million to Fund its Expansion as it Approaches its Millionth Account (The Fintech Times), Rated: A

Starling Bank, the UK digital bank, has raised £30 million in a new funding round. Merian Chrysalis Investment Company Limited is leading the round with an investment of £20 million, while Starling’s existing investor, JTC, has added a further £10 million.

Andrew Lawson joins Oodle Car Finance as chief product officer (Asset Finance International), Rated: A

Oodle Car Finance has appointed Andrew Lawson as chief product officer.

He joins from Zopa, the world’s first peer-to-peer lender, where he spent five years as chief product officer responsible for business growth during a period of expansion that saw the brand become the UK’s largest online open market lender.

Celsius Network Now Supports Tether At 12% Interest (CryptoBriefing), Rated: A

Celsius Network will begin supporting Tether (USDT), the largest stablecoin in the market, in its interest-earning wallet. That will enable users to leverage their holdings in order to receive a passive income.

Wayfair, Klarna bring flexible payments to UK shoppers (The Paypers), Rated: A

Klarna’s range of flexible payments are available to shoppers online at Wayfair.co.uk, with additional new features on Wayfair.de. Joining Klarna’s partner list, Wayfair customers across the UK now have control over how and when they pay for their purchases, with payments options such as Pay later and Pay in 3.

Six bids made for stricken reseller (Channel Web), Rated: B

Six offers have been made for welsh education reseller Gaia, which fell into administration earlier this year.

A number of lenders were also revealed to be owed hundreds of thousands of pounds, with White Oak UK and Funding Circle owed £703,000 and £500,000 respectively. HMRC is owed £866,148.

Capitalise.com launches partnership with iwoca and a high street bank to enable instant funding quotes for SMEs (Fintech Finance), Rated: B

Capitalise.com, the business funding platform for accountants, has today announced a partnership with small business lender, iwoca, and a high street bank, to launch Instant Offers. The partnership enables accountants to receive instant quotes on funding applications for their clients. Accountants benefit from offering their clients exceptional customer service with instant quotations and eligibility on suitable financial products whilst lenders can onboard high credit quality businesses, faster.

China

The Meteoric Rise and Spectacular Fall of Peer to Peer Lending in China (Lend Academy), Rated: AAA

I first wrote about the Chinese p2p lending industry later that year and introduced the west to CreditEase, the company that was the largest p2p lending platform in the world. Over the next couple of years the industry thrived with thousands of platforms launching and the total loan volume skyrocketing to over $150 billion in 2015, which was four times the loan volume of 2014.

China’s Biggest Ever Financial Scandal

We got the first inkling that something was not quite right when China was rocked by the biggest financial scandal in its history. Ezubao, one of China’s largest p2p lending platforms, collapsed as it was revealed the business was nothing more than an elaborate Ponzi scheme. Around 900,000 investors collectively lost $7.6 billion in what was the second largest Ponzi scheme the world had ever seen (Madoff being the largest).

There Will Be No LendIt China in 2019

We have held LendIt China every year since 2016 in Shanghai and I am sad to report that in 2019 there will be no event. While we have expanded beyond online lending it still represented a significant part of our business in 2018 but given the recent challenges we expect no lending companies will be interested in speaking, sponsoring or even attending this year. So, we made the difficult decision to cancel the event. We will regroup in 2020 and hopefully will be able to bring our unique event back to China.

Chinese Regulators Forcing More P2P Platform Closures With Stricter Rules (Business Times), Rated: A

The newly imposed rules by the China Banking and Insurance Regulatory Commission (CBIRC) will mainly be targeting online P2P lending companies. These companies often entail high-risk lending activities that result in massive defaults, suicide, deaths, and illegal debt collections.

Since 2017, the country has had an estimated $692.8 billion in bad loans. The sector has tried to dispose of these bad loans as best they can through different methods.

China’s Incredible Shrinking P2P Lending Industry (Caixin Global), Rated: A

The draconian cleanup campaign of China’s scandal-ridden peer-to-peer (P2P) industry has led to a three-year implosion that has put the sector almost back to where it was in 2014.

The number of functioning P2P lending platforms fell to 646 in September, a decline of nine compared with August and the lowest since early 2014 when the industry was booming, data compiled by Wangdaizhijia, an online lending research portal, show. The scale of the drop has been dramatic — at its peak in November 2015, the sector had more than 3,600 platforms.

European Union

Digital lending platform Roostify plots expansion with new investment from Santander (Housingwire), Rated: AAA

Roostify, which powers the digital mortgage platforms of JPMorgan ChaseTD BankGuild MortgageHSBC Bank USA and more, is plotting an expansion in the U.S. and internationally thanks to a new injection of funding from Santander Group and others.

International

Tax Rates on P2P Lending – Low versus High (P2P-Banking), Rated: AAA

In the countries colored in black the income tax rate is applied on interest earned on p2p lending investments. That means the individual rate of taxation depends on the other and overall income of the investor. For example in the UK the tax bands are 20%, 40% and 45% dependent on overall income. In Ireland tax bands are 20% and 40%.

Source: P2P-Banking

Banks That Can’t Keep Pace With Fintech Firms Risk $ 88 Billion Revenue Loss (Forbes), Rated: AAA

Days after it was announced that banks across the world are currently in a ‘do-or-die dilemma,’ Accenture’s 2019 Global Payments Survey reveals that 60 percent of the participants believe they will lose up to 15 percent of payments revenue – $88 billion – in the next three years after being displaced by emerging, competing financial services players.

38 percent of respondents said that big technology companies pose a competitive threat and 32 percent of those surveyed feel the same about fintech firms, which makes sense with the latter attracting nearly $11 billion through over 800 deals between 2016 and 2018.

Asia

Fintech companies need strict law to protect consumers, ensure fair business (The Jakarta Post), Rated: AAA

Indonesia’s growing financial technology (fintech) companies have called on the government and legislators to issue a new law to ensure fair business for and better protection of both the industry and consumers. The Indonesian Fintech Lenders Association (AFPI) said that fintech companies, especially those involved in peer-to-peer (P2P) lending or online lending, needed a stricter regulation to ensure that all the stakeholders, such as borrowers and investors, would receive better protection.

The Explosion of FinTech in Indonesia and how Companies like Gojek and Weyland Tech, Inc. are Winning (Investor Ideas), Rated: A

According to one recent report, “Indonesia’s fintech industry is in the midst of a period of significant growth. P2P lending recorded a triple-digit increase in 2018, while e-payment services have grown more than six-fold since 2012, prompting a surge of new foreign investment into a vibrant and increasingly diverse start-up community.”

Canada

Luge Capital raises $ 85M to invest in Canadian fintech startups (TechCrunch), Rated: AAA

There are 831 financial technology startups headquartered in or operating in Canada, according to data collected by Fintech Growth Syndicate, yet only a handful of venture capital funds specializing in the region and sector.

Luge Capital, a fintech and AI-focused venture capital fund headquartered in Montreal and Toronto, is looking to close that gap. The firm has raised $85 million for its debut fund and plans to make seed investments as small as $150,000 and as large as $2 million.

Authors:

George Popescu
Allen Taylor

The post Thursday October 24 2019, Weekly News Digest appeared first on Lending Times.

Thursday July 18 2019, Weekly News Digest

Digital-only banks U.S.

News Comments Today’s main news: N26 raises $170M at $3.5B valuation for U.S. launch. OnDeck, Upserve partner on restaurant financing. Quicken Loans has best quarter in history. Curve raises $55M at $25M valuation. Lufax to bow out of P2P lending. Goldman funds Lendable. Today’s main analysis: Is America ready for challenger banks? (A MUST-READ) Today’s […]

The post Thursday July 18 2019, Weekly News Digest appeared first on Lending Times.

Digital-only banks U.S.

News Comments

United States

United Kingdom

China

Other

News Summary

United States

Thiel-Backed Bank Valued at $ 3.5 Billion Amid U.S. Launch (Bloomberg), Rated: AAA

A German smartphone bank backed by billionaires Peter Thiel and Li Ka-shing has raised new funds at a valuation of $3.5 billion, making the company one of Europe’s highest valued non-listed fintech firms.

N26 GmbH extended its Series D funding round by $170 million to a total $470 million, the Berlin-based company said on Thursday.

OnDeck And Upserve Partner To Speed Financing To Restaurants (Yahoo! Finance), Rated: AAA

OnDeck (ONDK) and Upserve today announced a partnership to provide Upserve’s restaurant customers with online financing options from OnDeck. Over 10,000 restaurants currently use Upserve’s restaurant management platform and Point of Sales (POS) software to manage relationships with more than 57 million active diners.

Quicken Loans Has Best Quarter in Company’s 34-Year History (PR Newswire), Rated: AAA

Detroit-based Quicken Loans, America’s largest mortgage lender, today announced that the second quarter of 2019 was the best in the 34-year-old company’s history.

The second quarter of the year was the first three times the company has originated more than $10 billion in a single month, with each month setting a new record for the highest closed loan volume – culminating in June being the best month in Quicken Loans history. In June, the company closed nearly $11 billion in mortgage volume, contributing to the $32 billionoriginated for the quarter.

Over 57% of Purchase Borrowers Received Mortgage Rates Under 4.25% Last Week (LendingTree), Rated: AAA

Mortgage Rate Distribution

  • For 30-year, fixed-rate mortgages, approximately 56.8% of purchase borrowers received offers of 4.25% or less. That is down from 60.1% of borrowers the previous week. A year ago, 0.07% of offers were under 4.25%.
  • Across all 30-year, fixed-rate mortgage purchase applications on LendingTree, 4.0% was the most common interest rate. This rate was offered to 15.4% of borrowers.
  • Of 30-year, fixed-rate mortgage refinance borrowers, 70.6% received offers of 4.25% or less, which is down from 72.8% the previous week. A year ago, no refinance offers were under 4.25%.
  • Across all 30-year, fixed-rate mortgage refinance applications, the most common interest rate was 4.0%, offered to 17.95% of borrowers.

Mortgage Rate Competition Index

  • Across all 30-year, fixed-rate mortgage purchase applications on LendingTree, the index was 0.99, down from 1.19 the previous week.
  • How big of a deal is it to get a mortgage APR that’s 0.99 percentage points lower than the competition? Over 30 years, that could translate to $47,073 in savings on a $300,000 loan (see Mortgage Savings Tracker graphic below).
  • The index was wider in the refinance market at 1.10, down from 1.35 the previous week. Refinance borrowers could have saved $52,554 by shopping for the lowest rate.

Rate Cuts; Digital Banks (PeerIQ), Rated: AAA

Source: PeerIQ, WSJ

Digital Banks – The Future of FinTech Lending?

FinTechs lenders meanwhile are white-labelling banking services to complete the customer product roadmap while awaiting a charter. SoFi Money, WSFS, Radius Bank and its deposit partnerships with FinTechs are great examples of this.

This week, Boston-based Radius Bank is looking to adopt the user-friendly style set forth by the aforementioned European banks.

European Challenger Banks Launch U.S. Invasion – Is America Ready? (The Financial Brand), Rated: AAA

At a time when U.S. consumers are increasingly becoming comfortable with branchless banking and alternative financial providers, is there room for alternative digital-only banks with zero name recognition? Recent announcements by Germany-based N26 and U.K.-based Monzo that they will be entering the highly competitive U.S. in the next few months will provide a good test of the viability of foreign-based banking competition.

N26 Invites 100,000 Wait-Listed U.S. Consumers To Open Accounts

According to N26, there will be a staged rollout beginning immediately, with the 100,000 people on the U.S. wait list being invited to sign up and have full access to the product.

Is Monzo the ‘Bank of the Future’?

Referring to itself as the “bank of the future,” Monzo has also begun marketing efforts in the U.S., hoping to disrupt the traditional banks and credit unions in a way similar to what they have done in the U.K. Valued at more than $1 billion, Monzo has a mobile-only customer base in the U.K. of 2.2 million customers.

Varo files application for bank charter that will differentiate it (Business Insider), Rated: A

Challenger bank Varo, which has raised $179 million from Warburg Pincus and TPG, just took a big step that might separate it from competitors like Chime and Monzo.

In the past year Varo has tripled its customer base and is expected to reach 750,000 registered customers this month, Walsh said.

Moven’s Plan B after buyout bid stalls: Expansion into lending (American Banker), Rated: A

Obstacles remain in Moven’s path to a charter in the U.S., even as its private-label banking offering expands across Africa and Asia.

JPMorgan Chase’s Dimon: Finn app was not a failure (bank innovation), Rated: A

Specifically, Dimon said the bank learned how to conduct digital account openings through Finn and that the process was shaved down to just a few minutes. CFO Jennifer Piepszak added that 25% of new account openings at Chase are now digital signups rather than through a bank branch. The bank reported it has opened 2 million accounts digitally.

The bank had pulled the plug on the digital-only offering in June, just a year after its launch, and rolled some of Finn’s most popular features into Chase’s main mobile banking app.

JPMorgan warns that lending income will fall in the second half (American Banker), Rated: A

The largest U.S. bank on Tuesday reported a drop in bond trading and cut its full-year outlook for net interest income — revenue from customers’ loan payments minus what the bank pays depositors — by $500 million. NII accounted for about half the New York-based company’s revenue last year.

Navient plans full-Earnest loan pool in $ 535.2M student-loan ABS (Asset Securitization Report), Rated: A

Navient Solution’s next securitization of private student-loan refinancing will involve only loans primarily issued to advanced-degree professionals by online lender Earnest – which Navient acquired in 2017.

The $535.2 million Navient Private Education Refi Loan Trust 2019-E will include two tranches of Class A notes with preliminary triple-A ratings from DBRS and S&P Global Ratings. The Class A-1 fixed-rate notes total $263 million, while the $228 million in Class A-2 notes will be divided into fixed- and variable-rate tranches.

Technology’s Inescapable Impact on Real Estate Investments – (MarketCurrents Wealth Management), Rated: A

Research-driven, professional investments in real estate have traditionally been reserved for family offices and institutional investors. Now, a swathe of new technology platforms and consumer products are revolutionizing the industry, opening up access and shifting valuations.

Millennials say real estate investing is one of the best ways to build wealth (Business Insider), Rated: A

According to a new survey from Bankrate, over one-third of millennials say real estate is the best way to invest money they won’t need for at least 10 years, more than the share of millennials surveyed who prefer stocks, savings accounts and certificates of deposit (CDs), gold, bonds, and cryptocurrency.

Real Estate Investing in a “1-Click” World (Propmodo), Rated: A

The plain truth is that there will never been such a thing as “Amazon 1-Click for real estate.” The end-to-end logistics solution for buying and managing property has not yet been perfected. Whilst there are a lot of great technology solutions being developed for the property industry they typically tackle just one or two specific pain points in a broader transaction. In isolation, these solutions have less impact on the overall customer experience because their piece is just one of a much larger puzzle. As an example, there’s not much point streamlining the purchase itself if the legal documents and mortgage approval take weeks of frustrating back-and-forth, duplicating much of the same process and paperwork.

Krista Morgan of P2Binvestor Overcomes Naysayers To Fund Growing Small Businesses (Forbes), Rated: A

With all the attention given to angel and venture capital, you might think that these financing options are the most likely to be used. To the contrary, debt is by far the dominant form of outside funding used: for example, 86% of $1 — $10 million companies seeking outside financing applied for a loan compared to 5% seeking equity financing, according to The 2018 Small Business Credit Survey.

However, since the late 1990s, as banks have consolidated and sought out more profitable sectors of the credit market, they have been shifting activity away from the small business credit market, according to Why Small Business Lending Isn’t What It Used to Be.

Lendbuzz, AI Auto Startup That Steps in When FICO Fails, Raises $ 150M (Xconomy), Rated: A

The Boston-based software company announced Monday it has raised $150 million in new funding to expand its team and issue more financing backed by its machine learning algorithms.

Most of the cash—$130 million—for Lendbuzz is in the form of debt financing from four banks and an insurance company to fund car loans through the startup’s platform. The rest is an equity investment led by venture capital investor 83North.

Soros, Innovation Endeavors Provide Fresh Funding for AlphaSense (Institutional Investor), Rated: A

AlphaSense has attracted $50 million from investors including Soros Fund Management and Innovation Endeavors, in a fresh round of funding that will help the company expand its artificial-intelligence-powered offering for asset managers.

House Democrats draft bill to keep big tech out of financial services (Yahoo! Finance), Rated: A

According to the draft bill, titled “Keep Big Tech Out Of Finance Act,” companies in violation would face a $1 million daily fine.

The legislation would apply to companies with $25 billion or more in annual revenue.

As the draft stands now, it would prohibit Facebook (FB) and other tech companies with at least $25 billion in revenue from becoming a financial institution or issuing a cryptocurrency.

San Jose payday-advance startup faces racial discrimination, retaliation lawsuit (The Mercury News), Rated: A

A former manager at PayActiv, a San Jose startup that provides payday advances, is accusing the company of racial discrimination and questionable business practices.

Ibarra said in his lawsuit that he was the only Hispanic employee when he was hired in 2014, the year the company was founded. The co-founders are of Pakistani descent, the suit said.

Pedro Ibarra said he was fired because he complained about being harassed by the company’s founders over his ethnicity, and because he raised concerns about PayActiv’s handling of user data and whether the company is acting like a regular payday lender and therefore should be classified as a creditor.

New apps competing for your money can have hidden costs (ABC Action News), Rated: A

A new crop of digital wallets, apps and financial tech companies are fighting for customers’ banking business. The push comes as federal data shows the Tampa Bay region hit a six-year high for the number of people living without banking accounts or easy access to credit.

CrediVia Brings New Experience to Multifamily Financing (BusinessWire), Rated: A

CrediVia launched last fall as a hospitality financing marketplace intent on driving smarter decisions and stronger engagement in the loan process. Today the company has announced expanded platform capabilities to execute multifamilydeals as well, part of its ongoing mission to become the preferred source for more effective and transparent commercial real estate lending.

SEC Posts Final Judgement in Enforcement Action Against Founders of iFunding (Crowdfund Insider), Rated: A

The Securities and Exchange Commission (SEC) has posted final judgments in the case of real estate crowdfunding platform iFunding and co-founders William Skelley and Sohin Shah.  The two founders were charged last year by the SEC Enforcement Division regarding allegations of fraud in the misappropriation of over $1.17 million from investors. The final judgments against Skelley and Shah were obtained this month.

Lending Express evolves into Become (Become email), Rated: B

Lending Express has rebranded to This transition comes at a pivotal point in the company’s growth and highlights its dedication to providing businesses withopportunities to improvfundabilitysecure funding, and ultimately become more.

Cross River Names Global Finance Veteran Melissa Ballenger As CFO (Yahoo! Finance), Rated: B

Cross River Bank (“Cross River”) today announced that it has appointed Melissa Ballenger as its Executive Vice President and Chief Financial Officer, effective immediately.

SecurCapital Acquires Breakout Capital Finance’s Lending Business (PR Newswire), Rated: B

SecurCapital Corp, an expanding supply chain and financial services provider headquartered in California, today announced the acquisition of the lending business of Breakout Capital Finance, a fintech company and nationwide small business lender. SecurCapital is also providing additional equity capital to drive growth in Breakout Capital Finance’s two primary lending products: its highly regarded and innovative term-loan product and its FactorAdvantage lending solution for small businesses that utilize factoring to finance their business. The acquired lending business assets will be operated by a subsidiary of SecurCapital that will conduct business as Breakout Capital.

CheapAir.com Expands “Travel Now, Pay Later” Option (Yahoo! Finance), Rated: B

Online travel agency CheapAir.com today announced an expansion of its travel budgeting tool in partnership with Affirm, giving customers the opportunity to prequalify for a travel budget and then book and pay for all elements of their trip over time.

Sokolov-Miller Family Center again recognized as leader in financial education (PSU), Rated: B

Each year the online loan marketplace LendEDU ranks programs based on its 50-point scale. This year, the Sokolov-Miller Family Center moved up two positions, tying for 13th place.

Community Capital Appoints New Board Member, Camden R. Fine (Yahoo! Finance), Rated: B

Community Capital Technology Inc. (“CCT”), a digital loan transaction marketplace for community banks, regional banks, and other non-bank originators and credit investors, today announced the appointment of Camden (“Cam”) R. Fine, former President & CEO of the Independent Community Bankers Association (ICBA), to its Board of Directors.

United Kingdom

Curve raises $ 55M at a $ 250M valuation (TechCrunch), Rated: AAA

Curve, the London-based “over-the-top banking platform,” has raised $55 million in new funding. The startup lets you consolidate all of your bank cards into a single Curve  card and app to make it easier to manage your spending and access other benefits.

Curve’s Series B round is led by Gauss Ventures, the London-HQ’d fintech investor, alongside Creditease, IDC Ventures and previous backer Outward VC (formerly Investec’s INVC fund).

What will the appropriateness test actually look like? (P2P Finance News), Rated: AAA

IT’S OFFICIAL – the Financial Conduct Authority (FCA) will soon make it mandatory for all peer-to-peer platforms to introduce an “appropriateness test” for new investors.

The purpose of the test will be to weed out any unsuitable lenders, and any potential lenders who do not fully understand the risks associated with P2P.

Uber, Lyft share prices: as tech IPOs disappoint, how can investors spot winners? (CMC Markets), Rated: AAA

Funding Circle [FCH], an online lending platform that enables individuals and companies to lend to small businesses, is the latest example of a hyped IPO from a business yet to turn a profit. A few lacklustre earnings announcements later, it appears the stock was indeed overvalued.

What metrics can traders look out for when weighing up a stock amid such an increasing amount of cash-burning companies looking to go public?

Lendy administrator outlines the state of collapsed P2P lender’s loanbook (P2P Finance News), Rated: A

LENDY investors are likely to receive an average of 57p on the pound for development finance and 58p for every pound from bridging loans funded on the collapsed peer-to-peer lending platform.

The document shows that 22 of the 29 bridging loans made via the platform are in insolvency proceedings, with 14 out of 25 development loans in the same situation.

The document reveals the outstanding value of the bridging loans is £36m, secured against assets historically valued at £81m.

Rishi Khosla of OakNorth (Lend Academy), Rated: A

In this podcast you will learn:

  • The incident that was the seed of the idea for OakNorth.
  • Why fast growth companies have trouble raising debt capital.
  • The range of loan sizes, terms and interest rates that OakNorth offers.
  • Why they started with building a tech platform first.
  • How their underwriting process works and what they have automated.
  • Rishi’s thoughts on defaults and his famous “zero defaults to date” quote.
  • How they are funding their loans in the UK.
  • Why the US is a core market for OakNorth’s international expansion.
  • Who they are offering the platform to in the US.
  • Why the “ai” in Oaknorth.ai stands for analytical intelligence.
  • The geographies where they are live today.
  • Why they will not be getting a banking license in markets outside the UK.
  • Why OakNorth launched a mortgage product for UK entrepreneurs.
  • How SoftBank is helping OakNorth beyond providing capital.
  • How OakNorth is attacking the Chinese market.
  • How Rishi is spending his time these days.

OAKNORTH LENDS £19.5M TO CARE CONCERN GROUP TO SUPPORT ALPHA REAL CAPITAL OPERATING CARE HOMES (Business Leader), Rated: B

OakNorth Bank has provided a £19.5m loan to Care Concern Group, a UK-based care home operator.

$ 2.9 Billion in Deals in 2019 on Track to Top Year Prior (Crowdfund Insider), Rated: A

Innovate Finance has just published its Q2 UK Fintech investment report tallying activity for the first half of 2019.

The most recent report from Innovate Finance, covering Q1 of 2019, indicated that overall investment into Fintech, including venture capital, angel investing, private equity etc., topped $1 billion. In brief, Fintech boomed in Q1 as the industry experienced a 41% growth versus the prior quarter (Q4). Comparing to Q1 of 2018 it quadrupled.

Latest UK fintech investment figures reflect the evolution of the sector (ComputerWeekly), Rated: A

Investment in UK fintechs in the first half of this year was £2.9bn, which is 85% of the total invested in 2018, according to figures from fintech industry body Innovate Finance. It is also 45% higher than the same six month period last year. London based companies took 90% of this.

For example challenger banks including OakNorth ($440m), Monzo ($147m) and Starling Bank ($98m) got the most significant investments. In payments and foreign exchange sectors Checkout.com ($230m), WorldRemit ($175m) and GoCardless ($76m) were major recipients.

Could ‘bad credit’ credit cards be more expensive than a payday loan? (Which?), Rated: A

Around four million people in the UK have subprime credit cards, charging interest ranging from 30% to 70% – compared to the average 20% APR on mainstream deals.

P2PFA looks to woo intermediaries (P2P Finance News), Rated: A

THE PEER-TO-PEER Finance Association (P2PFA) is looking at ways of boosting distribution for members.

LendIt Fintech Europe 2019 Preview (Lend Academy), Rated: A

LendIt is returning to London again for the sixth annual LendIt Fintech Europe event. It will be held on 26 – 27 September at the same location as last year, the Business Design Centre. We are expecting well over 1,000 people at the event this year.

Some of the featured keynote speakers this year will be:

  • Rishi Khosla – CEO, OakNorth
  • Jaidev Janardana – CEO, Zopa
  • Anne Boden – CEO, Starling Bank
  • Rhydian Lewis – CEO, Ratesetter
  • Husayn Kassai – CEO, Onfido
  • Tamaz Georgadze – CEO, Raisin

How Jules B uses tech to stay ahead online (Essential Retail), Rated: B

Independent luxury fashion retailer Jules B has six stores across the Lake District an Newcastle, as well as a strong online presence.

To that end it has been working with fintech company Klarna to provide more payment options, which he says allows it to “compete in that marketplace for the younger generation.”

China

Ping An-backed Lufax to ditch P2P lending on regulatory woes (Reuters), Rated: AAA

Lufax, one of China’s largest online wealth management platforms that is backed by financial giant Ping An Insurance (601318.SS), plans to exit its once-core peer-to-peer lending (P2P) business, three sources with direct knowledge of the matter told Reuters.

China slowdown, trade dispute hurt global carmakers (DW.com), Rated: A

The Chinese auto sector has been under a lot of pressure over the past 18 months, hurt by an economic slowdown that has dented consumer confidence, the ongoing trade dispute between Beijing and Washington, and the government’s crackdown on peer-to-peer lending. Looming stricter emissions rules are also causing Chinese buyers to wait to buy new cars.

China rich with opportunity for fintech talent (China Daily), Rated: A

China is on the cutting edge of the fintech industry and promises great opportunities for fintech talent, fuelled by a rising demand for financial services and technology professionals, according to Hays plc, a global professional recruiting group.

European Union

Bitcoin Suisse Applies for Banking License with Swiss Regulators (BTC Manager), Rated: A

As stated in its press release, the leading Swiss-based regulated cryptocurrency broker and financial services provider, has applied for a banking license with FINMA, following the Swiss Banking Act Art. 1a.

The firm claims it has also achieved several significant milestones in recent months, including the expansion the number of tradable digital assets, with more than 6,000 trading pairs, as well as the provision of a large scale collateralized crypto lending service to its institutional clients.

International

Goldman, UK’s Lendable Strike £200M Deal (PYMNTS), Rated: AAA

Goldman Sachs and personal loan startup Lendable from the U.K. have reached a £200m deal, in a sign of Goldman’s confidence in the startup, according to a report by the Financial Times.

A conversation with Zac Prince, Founder, CEO, BlockFi (The Block Crypto), Rated: A

Zac Prince is CEO of BlockFi, which helps crypto investors manage digital assets and grow their net worth through services such as Bitcoin loans. Frank Chaparro and Ryan Todd discuss the complexity of crypto loans and the future of the industry.

Australia

P2P lender joins another aggregator’s panel (Australian Broker), Rated: AAA

RateSetter’s personal loans and secured automotive offering will be made available to Australian Finance Group’s (AFG) broker network of over 2,900 from 22 July.

The P2P lender provides risk-based pricing for its personal loans, with interest rates starting at 5.49%. The loans range from $2,001 to $45,000 for terms between six months to five years. Creditworthy borrowers typically gain access to finance within 24 hours of filling out the five-minute application.

SME lender expands presence within Australia (Australian Broker), Rated: A

OnDeck Australia has joined the lending panel at Finance & Systems Technology (FAST), in an arrangement that will help facilitate more opportunities for FAST brokers interested in expanding into the SME lending channel.

X factor mortgages: The lenders offering more than just hot rates (Mozo), Rated: A

With the official cash rate sitting at just 1.00% following two RBA rate cuts, you may have noticed a flurry of home loan rate drops, with some lenders slashing rates towards the 3.00% mark and below.

Asia

Smaller Banks in Singapore Are at Risk As Fintechs Eye Digital Banking License (Fintech News), Rated: AAA

Competition is heating up in Singapore’s digital banking landscape as an increasing number of fintechs including e-wallet operators and payment services providers are looking to apply for when applications open in August.

Strong contenders for the Singapore’s digital bank licenses

Liquid Group, Xfers, MatchMove Pay, FOMO Pay, Razer and Singtel would be competing against the likes of Grab, Southeast Asia’s ride-hailing giant and the region’s first “decacorn,” Validus Capital, a peer-to-peer lending platform, and InstaReM, a remittance startup, which are also eyeing a digital bank license.

In June, the Monetary Authority of Singapore (MAS) said that it will issue up to five new digital bank licenses, comprising up to two digital full bank licenses and up to three digital wholesale bank licenses.

Accountants have critical role in helping businesses fight cybercrime (Channel News Asia), Rated: A

Finally, accountants should also focus on financial crime compliance, which must evolve to keep up with new business models such as peer-to-peer lending, the minister said.

Canada

Give your BBQ the royal treatment (The Daily Courier), Rated: AAA

Ramsey will also introduce HousingHub, a new initiative for B.C. Housing to provide more affordable rental and ownership housing for middle-income individuals and families.

Small businesses can apply for a short-term loan of up to $250,000 online, and if they qualify, the funds can be delivered electronically to the business in as little as one business day.

The agreement will use OnDeck’s data analytics and digital technology to make real-time lending decisions and Coast Capital Savings to provide the financing.

Authors:

George Popescu
Allen Taylor

The post Thursday July 18 2019, Weekly News Digest appeared first on Lending Times.

Thursday June 20 2019, Weekly News Digest

ASIC borrowers

News Comments Today’s main news: LendingClub expands borrower program. Funding Circle forced to narrow range of valuation. Yirendai revenues come from haircut loans. Chinese P2P lenders explore southeast Asia. Borrowell passes 1M members, raises $20M. Today’s main analysis: 5 ASIC findings on marketplace lending. Today’s thought-provoking articles: US Core, inflation ease. Fintech lending algorithms discriminate […]

The post Thursday June 20 2019, Weekly News Digest appeared first on Lending Times.

ASIC borrowers

News Comments

United States

United Kingdom

China

Other

News Summary

United States

LendingClub Expands Program to Help Borrowers Actually Pay Off Debt (Lend Academy), Rated: AAA

LendingClub shared a few stats on borrowers who choose this method:

  • Save an average of nearly $900 over the course of their loan
  • Cut their credit card interest rate nearly in half
  • Increase their credit score in just three months

The product has been tested for over a year and LendingClub is working with a partner network of over 1,700 credit card, bank and loan companies to make the process seamless. What’s interesting is borrowers can add up to 12 creditors per loan which is an important feature since borrowers often hold balances across many cards.

Turning Lending Club’s Worst Loans into Investment Gold (Towards Data Science), Rated: A

This is a writeup of a machine learning project I completed. In this post I hope to:

  • Describe my algorithm for predicting loan defaults.
  • Use the algorithm to construct a portfolio of clean loans

Inflation Miss (PeerIQ), Rated: AAA

US Core CPI rose by 2% YoY in May, just at the Fed’s target rate but below economists’ expectations. Consistently low inflation is boosting calls for a rate cut next week. The market is pricing in a 24% probability of a rate cut next week and a 76% probability of a rate cut in September.

Source: Bloomberg, PeerIQ

Fintech algorithms discriminate 40% less than traditional lenders (Quartz), Rated: AAA

Algorithmic fintech lending is less discriminatory against minorities than traditional loan officers, according to a recent study of US mortgages. The findings signal hope that technology could provide financing that’s more fair, but the research also underscores how widespread discrimination remains.

The US housing market has long been prejudiced against minorities. When Latino and Africa-American borrowers are looking to buy a home, they usually end up paying 7.9 basis points (0.079 percentage points) more than whites to take out the mortgage, and 3.6 basis points more when they refinance the debt, according to a National Bureau of Economic Researchworking paper published this month.

Buttigieg worries tech may add racial bias to credit decisions (American Banker), Rated: A

Pete Buttigieg said the way credit scoring is done in the U.S. is fraught with inequality and he’s worried the process may get worse with systems based on artificial intelligence.

Commercial Real Estate Crowdfunding Eyes ’18-Hour Cities’ for Small Investors (The Street), Rated: A

When Clear Point Gardens, a 604-unit apartment complex in Columbus, Ohio, recently changed hands, it produced a nearly 43% gain in 16 months, an amazing windfall for investors in the deal.

All 68 of them.

The sale of Clear Point, financed with help from investors on CrowdStreet’s online platform, is the latest example of how online syndication is revolutionizing the way deals are financed in the $6 trillion commercial real estate market.

HSBC launches digital mortgage platform with help from Roostify (HousingWire), Rated: A

One of the world’s largest banks is about to join the digital mortgage revolution, as HSBC Bank USA, the U.S. arm of HSBC Group, announced that it is partnering with Roostify to launch a digital mortgage platform.

Mirador’s Trevor Dryer: ‘The world doesn’t need another high price lender’ (Tearsheet), Rated: A

Trevor started Mirador to fill this void of bank-originated small business lending. We talk about why he started Mirador with a lending as a service model and what painpoints he was addressing.

Dave is launching a checking account that helps users build their credit score (Business Insider), Rated: A

The Los Angeles-based company, backed by investors including Mark Cuban, the DJ Diplo, and hedge fund Mark 2 Capital, said on Tuesday it’s rolling out a new checking account product that reports all rent payments to credit agencies. The new feature, added to Dave’s original app, helps customers to build their credit. Dave plans to begin reporting utility payments later this summer.

CoreLogic Launches Marketrac Platinum (CoreLogic), Rated: A

With Marketrac Platinum, lenders and title companies can utilize the interactive platform to identify top performing real estate agents and brokerage firms to prioritize professional relationships based on market trends.

Zirtue Revolutionizes Peer-to-Peer Lending (IT Business Net), Rated: A

Sprout Mortgage Launches ACORN Automated Underwriting System (Yahoo! Finance), Rated: A

Sprout Mortgage, the innovative force in Non-QM lending, today announced the launch of its ACORN automated underwriting system (AUS) as part of an ongoing effort to deliver value-added services to its third-party origination clients.

Finicity Integrates with LendingQB to Optimize Mortgage Origination Process (PR Web), Rated: B

Finicity announced today an integration with LendingQB. LendingQB’s platform now uses Finicity’s digital Verification of Assets (VoA) solution to allow lenders to free up resources, increase processing speed and reduce mortgage fraud while providing borrowers with a more efficient and positive experience.

Cardholders Seek to Capital-ize on Madden (The National Law Review), Rated: A

Last week, three Capital One cardholders filed a putative class action in the Eastern District of New York, Cohen v. Capital One Funding, LLC,1 alleging that the rates of interest they paid to a securitization trust unlawfully exceed the sixteen percent threshold in New York’s usury statutes.  The Plaintiffs seek to recoup the allegedly excessive interest payments and an injunction to cap the interest rates going forward.

Fundbox Tapped By Top B2B E-Commerce Software Provider OroCommerce to Power Net Terms (Fundbox Email), Rated: A

According to a 2019 research study by

Cross River poaches execs from student refinancing firm Laurel Road (American Banker), Rated: A

Cross River Bank, a Teaneck, N.J.-based bank that focuses most of its energy on supporting fintechs, is hiring several people from the student loan refinancing company Laurel Road to its capital markets team.

Cross River’s fintech partners include Affirm, Circle, Best Egg, Coinbase, Rocket Loans, Stripe, Upstart and Transferwise.

Optimizely Closes $ US105M Financing Round (Which-50), Rated: A

Optimisation platform Optimizely has closed US$105 million in financing, including US$50 million in Series D funding. The funding, led by Goldman Sachs Private Capital Investing, also included Accenture Ventures.

Austin Niemiec Named New Executive Vice President of Quicken Loans Mortgage Services (Yahoo! Finance), Rated: B

Quicken Loans Mortgage Services (QLMS), the second largest mortgage lender serving the needs of brokers, regional banks and credit unions, today announced that Austin Niemiec has been named Executive Vice President.

Self Lender Awarded Inaugural Inclusive Fintech 50 (PR Newswire), Rated: B

Self Lender is pleased to announce its inclusion in the inaugural list of winners of the Inclusive Fintech 50. The Inclusive Fintech 50 is a competition launched in February to help early-stage fintech companies attract capital and resources to benefit the world’s 3 billion financially underserved people. The competition was organized by MetLife Foundation and Visa Inc., with global nonprofit Accion and World Bank Group member IFC.

United Kingdom

No sign yet of breaking out of circle (The Times), Rated: AAA

The early days of a company’s life on the stock market tends to set the tone for what follows. The grief around Funding Circle’s listing began even earlier and has continued to plague it.

Days before trading in shares of the specialist online lender began at the end of September, Funding Circle and its bankers were gunning for a valuation of up to £1.75 billion, only to be forced to narrow the expected range shortly before it came to market, and then to price the shares at the lower level of 440p apiece.

Source: Refinitiv

Three Biggest Overperformers And One Underperformer In Peer-To-Peer Lending (4th Way Email), Rated: AAA

Landbay

  • Over £300 million lent.
  • Maximum loan size to property valuation (LTV) 80% – better than all the major high-street banks.
  • Average LTV: 72% – highly suitable for these kinds of mortgages.
  • Average rent: 190% of the monthly mortgage payment.
  • Over 90% of mortgages are to experienced and professional landlords.
  • Reserve fund: 0.6% of outstanding mortgages – modest but useful.
  • Type of lending: residential BTL.
  • Typical risk of this type of bank lending: very low.
  • P2P bad debts: none.
  • Interest rate: 3.54% after expected bad debts.

Proplend

  • £65 million lent.
  • Maximum loan size to property valuation (LTV) 75% and investors can choose to limit to 50% – lower than all high-street banks.
  • Average LTV  60% – highly suitable for these kinds of mortgages and loans.
  • Minimum rent on rental properties usually 110% of the monthly mortgage payment.
  • Type of lending: residential and commercial rented properties up to five years; some development lending; a mix of senior and junior debt (junior means other lenders get repaid first if the borrower’s property has to be forcibly sold to repay the loans).
  • Typical risk of this type of bank lending: low to moderate for shorter-term rental properties; moderate to high for developments and junior debt.
  • P2P bad debts: none.
  • Interest rate: 7.32% to 9.43% after expected bad debts (7.32%-12.13% before bad debts).

CrowdProperty

  • £35 million lent.
  • Maximum loan size to property valuation (LTV) 70% and investors can choose to limit to 50% – lower than all high-street banks.
  • Average LTV  61% (against starting value of property) – very low for these kinds of loans.
  • Type of lending: property development lending.
  • Typical risk of this type of bank lending: moderate to high.
  • P2P bad debts: none.
  • Interest rate: 8% after expected bad debts (7.32%-12.13% before bad debts).

Rebuildingsociety – the Underperformer

  • £15 million lent.
  • Type of lending: unsecured small business lending to sub-prime.
  • Typical risk of this type of bank lending: moderate to high.
  • P2P bad debts: 17% of total lent in pounds
  • Interest rates: estimate an average 5% after heavy losses.

British Business Bank adds £60m firepower to non-bank lender (AltFi), Rated: A

Simply, a non-bank lender, focused on SME asset financing has scored a a third financing tranche of £60m from the British Business Bank.

One fifth of UK investors upping exposure to debt investments (Investment Week), Rated: A

One-fifth of UK investors are increasing their exposure to debt amid low interest rates and Brexit uncertainty, according to research from FJP Investment, which found this number climbs to 34% when 18-to-35 year-olds are considered in isolation.

However, the independent survey – which comprises 950 investors – discovered 44% of participants are more focused on short-term debt investments over this financial year due to both political and economic uncertainty; this figure rose to 68% among under 35s.

OakNorth completes loan to Oncore IT for the acquisition of Fuse Technologies (Fintech Finance), Rated: A

OakNorth – the bank for entrepreneurs, by entrepreneurs – has provided a loan to Oncore IT, a managed service and cloud platform provider.

The finance has been used for the acquisition of Fuse Technologies, a London based provider of unified communications tools.

Brexit and drive for growth sees IT fintech salaries surge (AltFi), Rated: A

London-based java developers lead the pack, commanding starting salaries of up to £60,000, followed by software developers in the capital on up to £55,000.

Intense competition between UK-based fintechs – lead by Revolut, TransferWise, OakNorth and Funding Circle – and high street banks attempting to upgrade their services has led to bidding wars in order to gain top level IT professionals, said the report called The UK Fintech Revolution.

Lloyds first to launch open banking app for credit cards and savings (Fintech Futures), Rated: A

Customers of Lloyds Bank, Halifax and Bank of Scotland are the first to see their savings accounts and credit cards in one place, thanks to open banking technology, reports Jane Connolly.

J.P. Morgan working on a secretive digital banking project based out of London (TechCrunch), Rated: A

A number of incumbent banks are known to be developing new digital-first products in a bid to keep the new wave of challenger banks at bay and now it appears that the latest to make that move is J.P. Morgan.

According to sources, the investment bank has begun recruiting for a secretive skunkworks project within London’s booming fintech industry. Very few details are known about what exactly J.P. Morgan plans to build, although TechCrunch understands the bank is busy hiring high level developers with full-stack and cloud-based dev skills for the new project, along with other personnel.

Following Facebook’s Libra launch, UK regulator hints at greater Big Tech scrutiny (AltFi), Rated: A

The FCA says technology is dramatically changing the markets it regulates and blurring regulatory boundaries in a new report into its activities.

China

Yirendai Revenues Come From Suspect Haircut Loans (Seeking Alpha), Rated: AAA

Over 60% of YRD’s FY 2018 revenues stem from “haircut loans” (P2P service fees charged to borrowers) that are prohibited by Chinese regulation. Recent developments in the P2P lending sector with regards to questionable lending practices, unethical collections, and usury are not being disclosed in YRD’s SEC filings, leaving U.S., Canadian, and international investors completely in the dark.

The Chinese P2P Lending Market

Unlike in developed countries, there are no administrative bodies (such as the U.S. Securities Exchange Commission) which regulate peer to peer lending exchanges in China. Instead, such services are regulated by self-organized internet associations and retail banks. The lack of meaningful oversight has caused the Chinese P2P lending market to bubble into $178.9 Billion in FY2018, almost 22 times the size of the P2P lending market in the United States and 447 times that of Japan’s.

Over 850+ fraudulent/ponzi lending platforms were exposed in FY 2018 alone.

Source: iiMedia Research

But the bad numbers don’t end here:

– The total loan volume amounted to 245.9 billion in Q12019, down -55.5% Y/Y.

– 85.7 in new loans were lent in March 2019, down -53.5% Y/Y.

– Principal balance of all loans: 8,029 CNY billion, down -3.6% Y/Y.

– sum of P2P lenders and borrowers, up 21%.

Chinese P2P lending platforms look to Southeast Asia amid industry purge back home (Technode), Rated: AAA

A slew of Chinese fintech and peer-to-peer (P2P) lending platforms are looking to more lenient markets in Southeast Asia (SEA), following a prolonged industry crackdown in China that has left the sector reeling.

Over the past year, China’s regulatory clampdown on risky financial practices has wiped out more than half of the country’s P2P lending platforms. As of May, just 900 survived, down from almost 1,900 recorded a year ago.

In early June, Indian daily newspaper the Economic Times reported that Chinese fintech companies, including WeShare, 9F Group, and CashBUS, are exploring investment opportunities in the country’s burgeoning online lending sector, particularly in the P2P lending space.

XW Bank Welcomed by IMF as One of 6 Outstanding FinTech Companies From China (Yahoo! Finance), Rated: A

The International Monetary Fund (IMF) welcomed 6 outstanding FinTech companies from China including Ant Financial, WeBank and XW Bank.

European Union

Snask helps Klarna to communicate its ‘smooth’ banking offer with off-the-wall film and photography (Creative Boom), Rated: A

When Stockholm studio Snask was approached by Klarna, one of Europe’s biggest banks, to help communicate how its revolutionary payment solutions make life easier for its customers, it set out to create seven “never-seen-before” worlds.

LHV Bank Integrates Estateguru Investments in Online Banking Dashboard (P2P-Banking), Rated: A

You might wonder why that is relevant as most readers are unlikely to be LHV Bank customers. LHV Bank is a bank in Estonia.

I think it is highly interesting, as it is – to my knowledge – the first time a bank has integrated p2p lending investments in its customer interface. So the LHV bank customers, not only see their accounts and stock depots, but also their Estateguru investments conveniently listed in their online bank dashboard. Much has been talked about what role could banks have in p2p lending (mere transaction banks? providing credit lines?) and also there is a lot of speculation if PSD2 (open banking) will help fintechs to seize the access to the customer from banks because they could control the user interface in the future. But this is actually a first step a bank takes in the opposite direction. By aggregating “non-bank” information inside the dashboard, they aim to make the banking interface more useful for the customers.

International

How Klarna is Helping the World Shop Like a Queen (Power Retail), Rated: AAA

Klarna is the latest Buy Now Pay Later (BNPL) app to sweep through the world. Originating in Sweden, the BNPL platform allows users to purchase goods and schedule repayments in timeslots. At this point in time, Klarna is the first and only BNPL platform that’s available in the U.S. It’s also available in the UK, Denmark, Norway, Belgium and many other European countries.

Australia

Five key ASIC findings on marketplace lending (Cuffelinks), Rated: AAA

In April 2019, the Australian Securities and Investments Commission (ASIC) released its third report on marketplace lending, the Survey of marketplace lending providers: 2017–18The report paints a clear picture of a once-nascent industry enjoying growth with new borrowing increasing by nearly 45% in the 2017-18 financial year. The report notes that this growth is moderating compared to the near doubling in funds borrowed the previous year (from $156 million to $300 million). By contrast, the Australian Bureau of Statistics (ABS) reports that overall personal lending has declined by an astonishing 24% in the 12 months to March 2019.

Source: Cuffelinks

The ASIC report found that the average interest rate charged for marketplace loans entered into during the 2017–18 financial year was 11.5%, up from 10.5% in the 2016–17 financial year.

Source: Cuffelinks
India

All you need to know about P2P lending and Commodities (India Times), Rated: AAA

Vinay Mathews, Founder and COO, Faircent and Sanjay Gakhar, Vice President, MCX talks about the benefits of investing via the P2P platform and Commodities, ET Wealth investment Workshop in Delhi Listen in!

Watch the video here.

Asia

Indonesian firms turn to P2P lenders for funds (Asia-First), Rated: AAA

Small companies in Asia-Pacific are tapping new funding sources, according to the Economist Intelligence Unit (EIU) study commissioned by Mastercard, with peer-to-peer (P2P) lending platforms in Indonesia reportedly posting USD1.4bn worth of transactions in 2018, an increase from USD20m in 2016.

Canada

Borrowell passes one million members, raises $ 20 million in new capital (Zone Startups), Rated: AAA

RFI alumni company Borrowell announced that it had reached significantly more than a million users, making it Canada’s largest consumer fintech company by that measure.

In addition to this membership milestone, Borrowell also confirmed that it has received $20 million in Series B funding.

AltFi Toronto Summit 2019 (AltFi), Rated: B

WED, 9 OCTOBER 2019, 08:30 – 17:30 EDT

Blind Bird tickets are now on sale at a 50% discount ahead of the Summit’s agenda being announced later this Summer.

Authors:

George Popescu
Allen Taylor

The post Thursday June 20 2019, Weekly News Digest appeared first on Lending Times.

Mobile Lending: The Expectations of Modern Borrowers

mobile lending

Contemporary borrowers want to be able to price, decide. and act on loans from their phones. Make no mistake: Quicken Loans’ 2018 Super Bowl commercials with Keegan-Michael Key had its sights on lenders who might be a lot like you. Quicken Loans wants to peel away young, affluent customers who judge the aptitude of lenders […]

The post Mobile Lending: The Expectations of Modern Borrowers appeared first on Lending Times.

mobile lending

Contemporary borrowers want to be able to price, decide. and act on loans from their phones.

Make no mistake: Quicken Loans’ 2018 Super Bowl commercials with Keegan-Michael Key had its sights on lenders who might be a lot like you.

Quicken Loans wants to peel away young, affluent customers who judge the aptitude of lenders based on their ability to answer their questions and deliver a product through a language of graphics and swipes.

The ads have a young couple sitting in an office across the desk from a bald, middle-aged loan officer. “Yeah,” he says, “you can get a mortgage that avoids PMI, but there’s no way to avoid MIP on an FHA. Now there’s—“

Mr. Key rolls out on a desk chair from behind the couple and shows them a cell phone. “Hey, this will help.”

The next frame shows the Rocket Mortgage home page, as the narrator intones, “Rocket Mortgage by Quicken Loans makes the complex, simple. Understand the details and get approved in less than 8 minutes.” The message here is clear, your competition understands that borrowers want clarity and convenience, and your challenge is to be sure that you are meeting those expectations.

The reality for some credit unions and community banks is that they can’t afford to adapt their processes to fit into the palm of a smart phone user’s hand. But the costs of avoiding the expense can be even greater than a line item in an operations budget. Lenders risk their reputation. A bad mobile experience tells your customers that their needs aren’t your priority. How many of those customers can you afford to lose?

Technology is not about being trendy. It’s a requirement to stay ahead of the market and meet your customers expectations. Lenders with online lending programs optimized for mobile phones are following advice their grandparents might have given: Meet people where they are—not where you want them to be. Does your loan origination system maximize your customers’ online experience, allowing you to lend anywhere and at any time? This is something you need to consider when starting or improving your online lending experience.

Mobile Lending and Smart Phone Usage

Mobile lending has become the method of choice for many young affluent customers who will soon be the backbone of your portfolio. A Federal Reserve Study found that 38% of all bank customers in 2015 were using mobile phones to at least get information about their accounts. The base for that comparison included customers who didn’t even own a phone, and other Fed studies indicate that number surpassed 50% in 2018.

A 2018 study by the Pew Research Center found more than three quarters of adults have a smart phone. While distribution is roughly even between men and women, and among racial and ethnic groups, the distribution by age, income, and education shows wide gaps. Smartphone ownership is:

  • 94% of ages 18-29
  • 89% of ages 30-49
  • 73% of ages 50-64
  • 46% of ages 64 and over

Those with college degrees or annual incomes over $75,000 have smartphone ownership rates exceeding 90%, while those without any college education or incomes below $30,000 have ownership rates below 70%.

A 2018 study by the University of Southern California’s Center for the Digital Future found that more than one in three bank customers under age 45 would switch their primary bank for “better online/mobile services.”

Among most age groups, interest rates and fees were by far the biggest reason to switch, but among those ages 25 to 34, the gap was narrow: 47% would switch for online/mobile services, compared with 54% for lower fees and rates. If you require a driver’s license as a stipulation for a loan, these borrowers expect to be able to take a picture of it with their phone and send it to you within a few seconds. It would not be wise to expect them to stop by your branch or even scan-and-email stipulated documents.

Maximizing customer convenience is just as important as advertising low rates and fees. And while age matters, these studies are also showing that mobile usage is increasing sharply among all age categories and incomes, including older consumers. Your institution’s future is at stake if you’re not keeping up with the convenience borrowers expect, and providing that level of service requires advanced technology. You want to meet your customers where they live. And if they’re moving, you want to be the first to greet them.

These trends are clear. How are you addressing them?

Author:

Written by Jim DuPlessis. First published at TCI Credit.

The post Mobile Lending: The Expectations of Modern Borrowers appeared first on Lending Times.

Monday January 8 2018, Daily News Digest

marketplace banking

News Comments Today’s main news: Texas regulator sends cease & desist order to BitConnect. UK wins race for tech investment. Tencent licensed to sell mutual funds to WeChat users. Wishfin to raise $50M. FINTQ goes beyond lending. Today’s main analysis: Strategies banks, credit unions must implement this year (a must-read). Today’s thought-provoking articles: How the tech giants are going […]

marketplace banking

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

APAC

News Summary

United States

Securities Regulator Issues C&D to UK Based Cryptocurrency Marketplace BitConnect & Planned ICO (Crowdfund Insider), Rated: AAA

The Texas State Securities Boardhas issued an Emergency Cease and Desist Order targeting BiConnect, a UK based cryptocurrency platform. BitConnect is planning a new initial coin offering (ICO) later this month and Texas is stating the tokens are unregistered securities.

The Texas regulators say BitConnecthas placed 9.4 million of the coins into the online cryptocurrency marketplace, representing a market value of $4.1 billion as of Jan. 3 and expects to issue a maximum of 28 million coins.

The tech giants are coming for your customers (American Banker), Rated: AAA

Lost in all this was an inescapable fact: Big tech firms like Amazon don’t need a charter to disrupt the banking industry. Indeed, they are already changing it.

Amazon has done more than $1 billion in small-business lending since it first started offering loans. In 2017, it launched Amazon Cash, which effectively allows it to take cash deposits from customers via ubiquitous convenience stores like 7-Eleven and Sheetz. Other tech firms, including Apple and Samsung, offer their own payment apps.

If banks effectively end up as utilities to larger tech firms, they will lose out. McKinsey forecasts manufacturing will produce only 35% of profits in finance, a return on equity of 4.4%. Distribution, meanwhile, will produce 65% of profits, with a return on equity of 20%.

It’s not clear what tech giants have in store next, but they will likely push the limits of traditional finance. It’s not hard to imagine the Bank of Alexa, enabling customers to move money and pay bills just by shouting at the Amazon Echo in their living rooms.

The year of digital is upon us (Business Insider), Rated: AAA

With that, these are our top 10 market structure trends to watch in 2018:

MiFID II soft launches

You’re probably thinking, “It’s not a soft launch—MiFID II is the law of the land now!” That is technically true, of course. And for better or worse, even though the SEC has provided U.S. firms with “no-action relief” from some European rules, Europe’s regulators don’t have the no-action relief lever that U.S. regulators became so fond of using as they implemented Dodd-Frank. However, MiFID II is so wide-reaching and impactful, it is unreasonable to think European regulators can or will crack down on imperfect compliance as the year gets underway.

Active investing is still huge, but passive keeps growing

However, Greenwich Associates research in 2017 found that most portfolio managers see 40% of assets in passive as the limit, compared to today’s 22%—that is a huge opportunity for growth.

Alternative data becomes less alternative

Ninety percent of investors using alternative data today tell Greenwich Associates they’ve see a positive return on their investment.

And while the alpha to be captured via alternative data is set to grow, the sheer quantity of data available to drive investment decisions is growing exponentially faster.

Data matters more than trading

But even in these and other cases where some data is made public, individual market participants can only find real value when also examining trades that failed, RFQs that were lost and orders that never left the blotter. Even equity exchanges will need to up their game, as the Consolidated Audit Trail (CAT) reporting requirements finally become a reality and MiFID II makes the market more transparent than ever before. Selling data is great, but helping clients to understand what it really means to them is even better. Inject the growing focus on indices (following several notable acquisitions in 2017) as passive investing grows, and things really start to get interesting.

Wealth management comes out of retirement

Robo-advisors are an opportunity, not a threat.

The move to fee-based accounts couldn’t have come at a better time, with this never-ending bull market generating wealth for investors that, in turn, generate fees for their managers. However, if the market decides to correct, as baby boomers pull out more money than millennials put in, this party might not last forever.

Podcast 133: Rosemary Kelley of Kroll Bond Rating Agency (Lend Academy), Rated: A

In this podcast you will learn:

  • How KBRA got started and how their focus has evolved.
  • When marketplace lending first got on Rosemary’s radar.
  • What made KBRA comfortable enough to be able to provide their first rating in the space.
  • How KBRA has become the leader in rating unsecured consumer lending deals.
  • What has been driving the growth of securitization in marketplace lending.
  • What does the tightening of spreads tell us about investor appetite.
  • How platforms creating their own shelf has changed how these deals get done.
  • Why the deals that have breached their triggers have not tempered investor demand.
  • Some best practices for a platform doing their first securitization.
  • What leads to KBRA deciding to upgrade a deal.
  • Rosemary’s thoughts on the macro environment and how it will impact consumer credit.
  • What platforms can do to mitigate a slow down in securitization markets.
  • What Rosemary thinks about the competitive environment in marketplace lending.

Roostify’s Rajesh Bhat: ‘We’re still in the first quarter of the online mortgage game’ (Tearsheet), Rated: A

Why did you enter the digital mortgage space?
That first year, we spent the entire year looking for a home to buy and it was an entirely painful and traumatic experience. Born out of that was the idea behind Roostify. That’s where we began building out the solution we have today.

Why are mortgages so hard to digitize?
The eligibility aspect is complex. Once eligibility is determined, the fulfillment process is equally complex — if not more. Those two things coupled with the fact that on a normal year over half the mortgages issued have a real estate transaction integrally tied to the mortgage transaction make it very complex.

Where are we in the evolution of the digital mortgage?
If this is a four quarter game, we’re still in the first quarter. The evolution has been, and will continue to be, driven by the consumer. Banks recognize that consumers are willing to do certain tasks themselves to drive this process. Companies are launching now that really understand the consumer pain points and they’re delivering to that as opposed to banks’ pain points.

YieldStreet brings new opportunities to smaller investors (Bankless Times), Rated: A

Rather than cut a $20,000 check to access one opportunity, what if you could use that amount to diversify across 30 deals? Mr. Mehere asked himself that question back in 2014 when consumer P2Ps, small business financing platforms and real estate companies were gaining footholds online.

YieldStreet launched in April 2015 with 80 investments across various asset classes. The idea has proven attractive to retail investors, from whom they have raised $240 million.

They have returned more than 100,000 individual payments and in excess of $80 million in principal and interest to investors. 15 of the original 80 investments have fully matured without a loss.

Wells Fargo’s 2017 Silver Lining Is Drop in CFPB Complaints (Bloomberg), Rated: A

Complaints lodged against the lender with the Consumer Financial Protection Bureau through Dec. 15 dropped 18 percent from the same period of 2016, the steepest decline among major banks, federal figures show. Still, it remained first among that group in total complaints.

Source: Bloomberg

Seven of the 10 biggest banks by U.S. deposits experienced a drop in CFPB complaints compared with the 2016 period, including Citigroup Inc., JPMorgan Chase & Co., and Bank of America Corp.

10 Answers to Frequently Asked Questions About Personal Loans (Quicken Loans), Rated: A

You might have a million questions running through your head. Luckily, we reached out to the experts at RocketLoans to answer these 10 frequently asked questions about personal loans.

What Is a Personal Loan?

Also known as an “unsecured loan,” a personal loan isn’t backed by collateral like a mortgage or car loan.

What Is a Personal Loan with Collateral?

If you don’t have a credit score that’s between the 600 and 700+ range that most personal lenders look for, some lenders might offer you a secured personal loan, also known as a collateral loan.

How Much Can I Borrow and How Long Can I Borrow?

Depending on the lender and your personal financial situation, personal loans can average between $5,000 and $15,000, with a maximum of $35,000 and terms between 24 and 60 months.

What Is an Origination Fee, and How Much Is It?

An origination fee can range from 1% to 6% depending on the lender and, like your interest rate, is based on your credit and length of the loan. Like the interest rate, the higher the credit score, the lower the origination fee.

Chord of Confidence: Making Real Estate Agents Look Like Rock Stars (RISMedia), Rated: A

Quicken Loans is the largest online mortgage lender and the second-largest retail mortgage lender in the United States, according to Inside Mortgage Finance.

Putting Agents at the Center of the Transaction
To make the mortgage process better for consumers, Quicken Loans executives turned their attention to working hand-in-hand with real estate agents, their most powerful ally, says Tom Dempsey, divisional vice president of Business Development with Quicken Loans.

The centerpiece of this effort: MyQL Agent Insight, a custom back-end platform that increases loan visibility by letting agents see exactly where their client stands in the loan approval process.

Service, Technology Part of a Broader Culture
What exactly makes Quicken Loans different from its competitors? It starts with the company’s culture of service and the many “ISMs,” or ideals, the company strives to work and live by, Dempsey says.

Some of the standout ISMs include “Do the right thing,” “Every second counts,” and “Simplicity is genius.”

Q-text
A texting service that allows agents to receive text updates on the status of their clients’ loans, keeping agents up-to-date on each step in the process while they’re on-the-go.

Elevating the Consumer Experience
Quicken Loans has evolved in its 33-year history as a direct lender.

In its first full year of operation, Rocket Mortgage funded more than $7 billion of the record $96 billion in total closed loan volume in 2016 for Quicken Loans.

Rocket Mortgage clients have gone from application to closing in as little as eight days on refinance loans, and 16 days on the purchase side, according to internal data. In contrast, the industry’s average closing time on new purchase loans is about 45 days.

President of the Jason Mitchell Group at My Home Group Real Estate in Scottsdale, Ariz., Mitchell has closed more than 900 transactions and over $215 million in sales volume since 2012. More than 65 percent of that business came from clients who used Quicken Loans, Mitchell says.

Source: RISMedia

FormFree’s AccountChek Asset Report Meets Underwriting Guidelines for VA Loans (PR Newswire), Rated: A

FormFree today announced that asset reports generated by its AccountChek® automated asset verification service meet all underwriting guidelines established by the U.S. Department of Veterans Affairs (VA) for loans guaranteed by its Loan Guaranty Service. The announcement follows the VA’s December 29, 2017 release of Circular 26-17-43, which was issued in response to increasing lender interest in automated verification of borrower assets for VA loans.

AccountChek eliminates the burden of gathering asset documents for loans by letting consumers easily and securely transmit their online banking, retirement and investment account data for automated analysis. In just minutes, AccountChek delivers asset data to lenders in a standardized report along with a ReIssueKey that enables secure and streamlined sharing with the secondary market. The result is an easier, safer and more accurate process that closes loans up to 20 days faster, provides a better borrower experience and circumvents a host of common “hiccups” that plague manual asset verification.

4 Best Investments To Make In 2018 (Forbes), Rated: A

#1: The Stock Market

One company I always suggest is Betterment. With Betterment, your money can be invested in ETFs and they don’t charge a fee for managing these for you. Plus, they actually pick the ETFs you invest in based on your appetite for risk, investing goals, and other factors.

Plus, there are a multitude of other “robo-advisors” to choose from.

#2: Peer-to-Peer Lending

A second place to stash some of your excess cash this year is in peer-to-peer lending platforms like Lending Club and Prosper. With these companies, you’re able to loan money to individuals in small increments as if you were the bank. The best part is, you get to earn a pretty decent rate of return – usually upward of 6% or more.

#3: Real Estate

One option I’m really excited about is a company called Fundrise. Fundriseoffers an investing scenario similar to the one above. They buy commercial properties and allow investors to invest small sums of money. Obviously, this is yet another hands-off investment. You may own part of a commercial real estate project, but you don’t even see or deal with the property itself.

Like Lending Club, Fundrise requires an upfront sum of around $1,000 to get started.

Fundrise claims its returns have averaged between 8.76% up to 12.42% over the last five years.

Payday Loan Mogul Trades Ferrari-Racing Life for Prison Term (Bloomberg), Rated: A

Scott Tucker says he’s a pioneering self-made man who, without a college degree, founded successful businesses in a variety of fields and contributed billions of dollars to the U.S. economy. A judge says he’s an unrepentant fraud and sentenced him to almost 17 years in prison.

Jurors found the men guilty of collecting unlawful debts, using misleading contracts and falsely stating that the businesses were owned and operated by Native American tribes. That bogus claim helped them get around state laws that prohibited the business practices, the U.S. said. The scam ran from 1997 to 2013, Castel said.

From 2008 to 2012 alone, Tucker victimized 4.65 million people, according to prosecutors, collecting $1.3 billion in illegal interest payments as some people paid a total of almost $1,000 to settle a $300 loan.

Ad Valorem! The Future of Niche Reserve Based Value Investing and Lending is Here (Huffington Post), Rated: A

Valorem Foundation, the community peer-to-peer platform for multi-party transactions, is launching soon. It is a new blockchain-based platform that allows users to exchange value via smart contracts. Once on the platform, users can borrow, lend, invest, transfer, and exchange money between each other, creating a trust-based platform that removes the need for 3rd-party services or external vendors.

One of Valorem’s products, the Microloan, has been quite successful because of the platform’s risk distribution system and foundation on smart contract-based functionality. Its feature of spreading loan default risk over multiple people forces people in the Valorem community to make smarter choices about buying products like cars, student loans, and insurance.

Marine Corps Vet Earns OnDeck Small Business Spotlight (Guru Focus), Rated: B

OnDeck (NYSE: ONDK), the leader in online lending to small business, today announced that digital agency Majestyk Apps, led by Marine Corps veteran Donald Coolidge, has been selected as the OnDeck Small Business of the Month for January 2018.

United Kingdom

UK shrugs off Brexit worries by winning race for technology investment (Express.co.uk), Rated: AAA

Venture capital funding in UK technology firms was nearly £3billion, more than double the amount invested in Germany and France combined.

London technology drew the most. Its £2.45billion was more than the other top 10 cities put together, according to funding database Pitchbook for London & Partners figures.

Fintech, or financial technology, attracted £1.34billion in venture capital funding, with TransferWise and Funding Circle investment, while artificial intelligence companies raised a record £488million, more than double 2016.

Brexit cynics were wrong about London’s fintech companies (Quartz), Rated: A

Below the surface there are reasons to be concerned, but the data so far looks positive. UK companies raised $7.7 billion last year, more than double that of 2016, according to Dealroom. Fintech companies raked in $2.9 billion, the biggest share. TransferWise raised £211 million ($286 million) while Funding Circle took in £81.9 million, according to lobby group London & Partners.

Source: Quartz

Attitudes across Europe are diverging. While the UK is the No. 1 destination for investment, entrepreneurs in France, Belgium, the Netherlands, and Luxembourg (Benelux) are substantially more positive about the future of Europe’s tech scene than their peers in Britain: 70% of the former are more optimistic than they were 12 months ago, compared with 42% in the UK and Ireland, according to a survey by venture capital firm Atomico.

Olivier Goy, founder of crowd-lending platform Lendix, says he’s even more positive about France’s potential than he was after the poll.

A risky P2P opportunity for 2018 (MoneyWeek), Rated: A

Returns from investing directly in the biggest platforms, including Zopa, Ratesetter and Funding Circle, averaged 5.4% including losses from defaults, according to analytics firm AltFi Data.

For example, P2PGI moved from a premium of 15% to a discount of 15% – ie, the share price now trades at 15% below the net asset value (NAV) of the fund’s investments.

Funding Circle’s SME Income fund trades at a small premium (around 2%) to NAV, and has delivered returns equivalent to a 5.6% yield on the current share price.

As for bonds, Lendinvest – a property lending platform – issued the first listed retail bond from a P2P platform, raising £50m at a yield of 5.25%. This was well received and is now trading at a small premium of 2%.

China

Tencent gets a licence to sell mutual funds to WeChat’s 1 billion users in China (SCMP), Rated: AAA

The Shenzhen Bureau of the China Securities Regulatory Commission, the nation’s top securities watchdog, has given Tencent subsidiary Tengan Funds Sales (Shenzhen) the licence to sell funds directly.

Before gaining the licence, the tech giant was only able to act as a platform for fund houses and third-party fund sales companies to sell their products through qian.qq.com, its online wealth managing platform and its popular instant messaging tool, WeChat. Qian.qq.com is for users to access the service on PC, while a similar service on WeChat is for mobile users.

Also on Thursday, the tech giant launched the promotion of a new service that will allow users to pay their credit card bills via using the money-market funds available on Licaitong, or WeChat’s wealth management app.

Users will avoid having to pay a 0.1 per cent charge on a credit card payment of more than 5,000 yuan (US$770) monthly. Tencent is also offering users cash incentives, capped at 88.88 yuan, for those who use the promotal service until February.

Chinese social network’s stock jumps 47% after it says it’s raising money through cryptocurrency (CNBC), Rated: A

The share price of Chinese social network Renren has almost doubled after the company said it was raising money through a digital currency sale.

The company, headquartered in China and listed on the New York Stock Exchange, saw its stock climb 47.39 percent to $18.32 a share by the close of the U.S. trading session Wednesday.

Renren is looking to raise funds through an initial coin offering (ICO), according to a white paper released Tuesday.

WeiyangX Fintech Review (Crowdfund Insider), Rated: A

On January 2, 2018, the Shenzhen Securities Regulatory Bureau issued this year’s first fund sales license to internet giant Tencent Holdings, or more specifically Teng An Information Technology (Shenzhen) Co., Ltd.

The Nansha District Government Affairs Service Center in Guangzhou introduced “WeChat Police Certified” face recognition technology and issued China’s first WeChat ID card on December 26, 2017.

According to Bloomberg News, insiders said some loans on HNA’s P2P platform Jbh.com have been faced with deferred payment since last November. Jbh.com offers products like fixed income, P2P lending, insurance and funds on its app.

European Union

20 of Europe’s hottest fintech start-ups to watch in 2018 (The Finanser), Rated: AAA

Advanon is an online platform for invoice-financing SMEs. The platform enables SMEs to better manage their cash flows and focus on their core business. Founded in 2015 by Philip Kornmann, Phil Lojacono and Stijn Pieper, Advanon has raised $3.9m in funding so far, including a $3.5m Series A round from Btov Partners, VI Partners and Swisscom Ventures.


Circle is a P2P payments platform founded by Sean Neville and Jeremy Allaire. Using the technology – available as an app on iOS and Android devices or even through a Circle app for iMessage – users can send and receive P2P payments with native euro support. Circle also claims to be the first and only cross-border payments platform in the world to make it possible to beam cash from an app into a US bank account at no cost.

Founded by Marc Murphy, Fenergo offers solutions for client life-cycle management, anti-money laundering, regulatory compliance and client data management.

A fast-growing fintech company, ID Finance specialises in online lending in emerging and growing markets.

Regarded as one of Europe’s most valuable fintech firms, Klarnaprovides online payment services for e-commerce sites in order to eliminate the risk for buyer and seller.

Monzo has more than 20,000 current-account holders and the start-up bank has amassed something of a cult-like following in the UK, with almost 500,000 people using its distinctive hot coral cards and thousands more on the waiting list. It was founded in 2015 by Gary Dolman, Tom Blomfield, Jason Bates, Jonas Huckestein and Paul Rippon. Stripe, the payments company founded by Irish brothers Patrick and John Collison in San Francisco, joined Goodwater Capital and investor Michael Moritz (through his charitable investment vehicles) in a recent £71m investment round, joining existing investors Eileen Burbidge’s Passion Capital as well as Orange Digital Ventures and Joshua Kushner’s Thrive Capital in the round.

Founded in 2015 by Nikolay Storonsky and Vlad Yatsenko, Revolut is an app-based banking alternative with a multi-currency card.

TransferMate was founded in 2010 to reduce international payments costs for business customers and has since developed a wide regulatory footprint in Europe. So far, more than $10bn has been sent to more than 100 countries over the TransferMate platform.

TransferWise was founded in 2011 by Taavet Hinrikus and Kristo Käärmann, and provides international money transfer.

Wefox, also known as FinanceFox, is a next-generation insurance app built entirely on the Salesforce platform.

Younited Credit wants to build the biggest crowd-lending platform in continental Europe. Currently live in Spain, France and Italy, consumers can borrow between $1,200 and $48,000 without the need to talk to a bank. So far, it has managed more than $600m in loans. Founded by Charles Egly, Geoffroy Guigou and Thomas Beylot, Younited recently raised $47.8m in a Series F funding round led by Zencap Asset Management.

International

33 Strategies Banks and Credit Unions Must Implement in 2018 (The Financial Brand), Rated: AAA

Below are the top 10 trends identified in the Digital Banking Report entitled, “2018 Retail Banking Trends and Predictions,” sponsored by Kony, Inc.. The comprehensive 106-page report is now available here.

1. Improve the Consumer Experience

2. Expand Use of Data and Analytics

Immediate Strategies:

  1. Break down the barriers within your organization that perpetuate data silos. Only after silos are eliminated can advanced analytics be the most effective.
  2. Establish a data analytics function or partner with an outside organization to provide help in improving the actionability of your data.
  3. Replace timed marketing ‘programs’ with ongoing marketing ‘processes,’ leveraging real-time data to take advantage of immediate opportunities.
  4. Test the use of artificial intelligence (AI) and machine learning (ML) beyond risk and fraud analysis, including offer generation and bundling of services.

4. Embrace Open Banking

Immediate Strategies:

  1. Review existing data privacy mandates and potential changes, determining the risk/benefit appetite for new marketplace opportunities.
  2. Explore data-sharing possibility with fintech and non-financial services firms to be prepared for imminent changes.
  3. Build an API strategy for both third-party data access and potential service offerings outside traditional banking ecosystem.

5. Build Fintech Partnerships

Immediate Strategies:

  1. Foster a top-down culture of innovation, testing and understanding the digital consumer.
  2. Investigate partnerships and/or collaboration with fintech firms for products and processes not currently possible within the banking organization.
  3. Replace all or a portion of legacy systems, integrating new technologies while embracing an agile IT culture. This action step has been put on the back burner for years which is hurting many organizations.
  4. Consider having an online lender power the organization’s online loan application, to using an online lender’s credit model to better underwrite and service bank loan applications.

Marketplace Lending News Roundup – January 6 (Lend Academy), Rated: A

Funding Circle poised for £1bn float from Peer2Peer Finance News – We begin the year with news that Funding Circle is preparing to go public, possibly in Q3.

The Tech Majors are coming? Really? from AltFi – Interesting take from David Stevenson on why Amazon and Google may not come to dominate finance.

How Blockchain Will Revolutionize Invoice-Backed Financing from Let’s Talk Payments – We’re going to hear a lot about blockchain disrupting industries in 2018, here is a take on invoice finance.

Can blockchain technology revive peer-to-peer lending? from American Banker – Blockchain has given rise to a new breed of online lending platforms. Penny Crosman delves into this phenomenon.

VPC continues shift away from P2P with sale of Prosper loans from P2P Finance News – The publicly traded Victory Park fund in the UK has divested its portfolio of Prosper loans.

Finastra bolsters global capital markets team (Asset Servicing Times), Rated: B

Finastra has appointed Pedro Porfirio as global head of capital markets.

Pedro will be responsible for driving the growth of Finastra’s capital markets business line, focusing on treasury, capital markets, and investment management.

Australia/New Zealand

Would you take money advice from a computer? (NZ Herald), Rated: A

Kiwis are set to start getting financial “robo-advice” this year — a move tipped to help those on lower incomes but which some are warning comes with risks.

Investment watchdog the Financial Markets Authority is expected to open applications for exemptions to provide digital advice around KiwiSaver, insurance and mortgages early this year.

Research by the FMA has found most of those who get financial advice in New Zealand have assets of more than $200,000, raising concerns that people with lower incomes and assets are missing out.

India

Consumer loans marketplace Wishfin looks to raise up to $ 50m (Deal Street Asia), Rated: AAA

Online marketplace for consumer loans and other financial products Wishfin will raise up to $50 million in its next round of funding as it looks to make acquisitions in niche segments, a top company official said.

The company claims to have 9 million customers and $3 billion worth of disbursals to date.

Plan to save in 2018? Refer to these new age investment options (siasat.com), Rated: B

The quick returns that one gets through investments in cryptocurrencies have caught everyone’s attention.

Peer-to-peer (P2P) lending in India currently gives a net return of 18-22 percent to lenders.

People are becoming investors and expanding investment portfolio by investing small ticket size in different startups. Venture Catalysts, India’s first integrated incubator, emerging as largest investor of the year with closing 33 investment in this year.

APAC

PLDT’s fintech unit going beyond lending (Inquirer.net), Rated: AAA

FINTQ, the financial technology (fintech) arm of PLDT and Smart’s Voyager Innovations, disbursed more than P12 billion in new loans through its digital lending platform, Lendr, last year or nearly a third higher than the year-ago level.

With more than the P12 billion disbursed last year, total disbursement has reached about P27 billion since Lendr came to market in 2015, Villanueva said.

With Fintech, Pakistan set to dismantle barriers to branchless banking (Tribune), Rated: A

In an effort to promote fintech, the Pakistan Telecommunication Authority (PTA) – the telecom regulator – has decided to award Third Party Service Providers’ licences by June or July 2018, which will pave way for inter-operability between cellular mobile operators and ramp up financial inclusion all over the country.

At present, Telenor’s Easypaisa, Jazz’s Mobicash and United Bank Limited’s Omni are providing mobile-based branchless banking services. However, their customers cannot transfer money from one service to another.

The new platform will help dismantle existing barriers that prevent digital wallets (branchless bank account-holders) from sending money to different bank accounts. Users will be able to make transactions from wallet to wallet or wallet to the bank account.

Fintech firm Avaloq’s chairman streamlines his role to focus on China expansion and possible listing (SCMP), Rated: B

The chairman of Switzerland-based financial technology company Avaloq will focus on expanding business in China and Asia as well as preparing for a possible stock exchange listing, after handing over his chief executive duties.

Authors:

George Popescu
Allen Taylor

Wednesday October 18 2017, Daily News Digest

personal loans

News Comments Today’s main news: LendingHome surpasses $100M in monthly loan volume, secures $57M in Series C-2. KBRA assigns preliminary ratings to Prosper Marketplace Issuance Trust, Series 2017-3. RateSetter says FCA authorization merely a milestone. Qudian raises $900M in biggest listing by Chinese fintech firm. BBVA focuses on U.S.-Mexico remittances with money-transfer app. New Zealand paves path for robos. SoftBank considering second […]

personal loans

News Comments

United States

United Kingdom

China

European Union

International

Australia/New Zealand

India

Asia

Middle East

Canada

News Summary

United States

LendingHome Surpasses $ 100 Million Mark in Monthly Loan Volume & Secures $ 57 Million During Series C-2 Funding Round (Crowdfund Insider), Rated: AAA

Less than a week after announcing its new office in Pittsburgh, real estate marketplace lending platform LendingHome announced it has surpassed $100 million in monthly loan volume and secured $57 million during its Series C-2 funding round, which included participation from Sberbank and Noah Holdings Limited.

The online lender also revealed the closing of the LendingHome Opportunity Fund II, which was managed by LH Capital Management, with $100 million in commitments from more than 40 investors including asset managers, international funds, family offices, and high net worth individuals. An additional credit facility of up to $300 million brings the fund’s total potential assets to $400 million.

2017 shaping up to be the year of the venture capital ‘mega-round’ (Biz Journals), Rated: AAA

Georgia companies scored the most venture dollars in the third quarter, since first quarter 2000. Fintech Kabbage and access management technology firm Core Security raised a combined $450 million, or about 60 percent of total venture capital invested in Atlanta companies in the third quarter.

Goldman Attacks Lending Club & Prosper, Courts Main Street (CB Insights), Rated: AAA

As its bond trading revenue plummets, Goldman has undergone a major strategic shift, looking to grow the revenue opportunity from its consumer digital finance operation.

Goldman Sachs has changed a lot through its 148-year history. But as technology continues to roll through the financial services industry, Goldman is one of the few bulge bracket banks today that is staking its reputation and future on new strategic bets in digital finance.

When Goldman announced it would be entering the online lending business in 2015, Lending Club‘s then-COO Scott Sanborn quipped, “We are looking forward to competing with Goldman Sachs on customer experience.” More recently, when Goldman bought $2.8B worth of bonds held by Venezuela’s struggling central bank at a 70% discount to market price, Ribbit Capital founder Micky Malka tweeted, “This is why @GoldmanSachs won’t become a consumer first brand.”

  • 46% of Goldman Sachs job postings are in technology.
  • Goldman Sachs’ online lending arm Marcus lent $1 billion in the first 8 months of operation. Now it is taking its digital finance brands global.
  • Goldman Sachs is one of the top two most active US bulge bracket banks investing in fintech startups.
  • Goldman has pushed investments into Brazil.
  • Goldman made its first fintech acquisition in 2016 and is looking for more.
  • Goldman’s cryptocurrency patent made headlines, but most of its patents have focused on improving its systems.

BACKGROUND ON CORE GOLDMAN SACHS

Goldman Sachs makes money in five primary areas: investment banking, equities, investment management, investing & lending, and FICC client execution.

Source: CB Insights

Digital finance initiatives

Notably, Goldman seems to believe that its digital consumer lending and deposit platform has as large of a net revenue growth opportunity as its FICC trading unit. This is a remarkable shift in strategy that only materialized in the last three years, and the strategy is still in the extremely early innings of its growth potential for Goldman.

Another advantage Marcus has over other bank incumbents looking to launch a competing initiative is its non-legacy IT architecture and the fact that Goldman does not have an existing consumer credit card business for Marcus to cannibalize.

Marcus reportedly passed $1B in loan origination in its first 8 months and is expected to originate $2B by the end of 2017. While data on number of loans doled out is hard to find, Goldman reached its first billion in consumer loans significantly faster than competing online personal loan companies (Lending Club launched in 2007). At the CB Insights Future of Fintech conference, Talwar noted that Marcus’s average loan size was “around $14,000.”

Source: CB Insights

KBRA Assigns Preliminary Ratings to Prosper Marketplace Issuance Trust, Series 2017-3 (BusinessWire), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Prosper Marketplace Lending Issuance Trust 2017-3 (“PMIT 2017-3”). This is a $501.05 million consumer loan ABS transaction.

This transaction represents the eighth securitization collateralized by unsecured consumer loans originated through the online marketplace lending platform operated by Prosper Funding LLC (“Prosper” or the “Company”).

Preliminary Ratings Assigned: Prosper Marketplace Issuance Trust, Series 2017-3

Class Preliminary Rating Expected Initial Class Principal
A A (sf) $313,500,000
B BBB (sf) $77,000,000
C B+ (sf) $110,550,000

Quicken Loans and eOriginal Partner on Next Phase of the Digital Mortgage Revolution (PR Web), Rated: A

eOriginal, Inc. and Quicken Loans today announced a partnership to complete the final steps of the online mortgage process – to digitally create an electronic note, and securely store it as an authoritative copy with delivery to both custodians and the secondary market. This advancement accelerates the time between origination and replenishment of capital.

Quicken Loans, the country’s largest online mortgage lender, closed more than $7 billion in mortgage volume through Rocket Mortgage, the nation’s first fully online mortgage process, in 2016 – its first full year in market. The rapid growth of Rocket Mortgage comes from its appeal to a new generation of homebuyers. In fact, two-thirds of Rocket Mortgage clients used the online process to finance a home purchase, and 80 percent of those consumers were first-time home buyers.

eOriginal’s platform delivers a fully digital mortgage and supports every type of digital closing strategy. 

Modo Emerges From Reverse Stealth With New Service For Payment Event Data (Business Insider), Rated: A

Modo, the payments fintech working with Bank of America Merrill Lynch, Alliance Data, FIS, Verifone, and Klarna, today announced they’re ready to break their self-imposed silence and discuss the work they have been doing to deliver innovative payment solutions for their clients in Q4 2017.

Modo has already announced support for three payment event types, in diverse areas of payments with Klarna, Verifone and FIS, and Bank of America Merrill Lynch (respectively):

  • Payout Events: Enable your corporate and commercial customers to send money globally using the ever growing number of digital wallets to accelerate the last mile of disbursements.
  • Checkout Events: Checkout anywhere, using any method of payment. Whether you are a merchant or a payment provider, offer consumers any way to pay.
  • Loyalty Events: Earn and burn loyalty in entirely new ways in entirely new experiences. Combine multiple rewards and loyalty programs to make a purchase or send a gift.

J.P. Morgan to buy payments firm WePay in first major fintech acquisition (Fox Business), Rated: A

J.P. Morgan Chase & Co. (JPM) said that it agreed to buy payments company WePay Inc. in the bank’s first sizable acquisition of a financial-technology startup.

The banking giant plans to roll out WePay’s technology to J.P. Morgan’s four million small-business customers, said Matt Kane, CEO of Chase Merchant Services. WePay, which has roughly 200 employees, helps online marketplaces and crowdfunding websites like GoFundMe process payments.

The two companies didn’t disclose terms of the deal. But a person familiar with the matter said the price was above the roughly $220 million valuation that Redwood City, Calif.-based WePay achieved in a 2015 fundraising.

Bank of America processed $ 4 billion in Zelle payments this quarter (Tearsheet), Rated: A

Bank of America processed $4 billion in Zelle transactions in the third quarter of 2017 alone, CEO Brian Moynihan reported on the bank’s earnings call Friday morning. Digital payments volume increased nine percent to $324 million. Within that, person-to-person payments growth was about 67 percent with the addition of Zelle this summer, reporting 13.6 million transactions and $4 billion in volume. The bank recently processed half a billion dollars in a single week, Moynihan said.

The bank’s digital users grew 5.2 percent to 34.5 million on a year-over-year basis. Mobile banking users grew 10.8 percent to 23.6 million.

Over at Wells Fargo, CEO Tim Sloan said during that earning call that third-quarter peer-to-peer payments increased 46 percent, but didn’t provide a Zelle-specific number.

Source: Tearsheet

Digital growth stands out for Bank of America and Wells Fargo (Business Insider), Rated: A

Although the imminent death of the bank branch is being drastically overstated, if the Q3 earnings of Wells Fargo

  • Active digital customers, which include both online and mobile users, grew 2% YoY to reach 27.8 million.
  • Active digital customers, which include both online and mobile users, grew 2% YoY to reach 27.8 million.
Source: Business Insider

Crowdfunding comes to Arizona real estate (Biz Journals), Rated: A

Crowdfunding ventures raise $34 billion annually in the U.S.

Is There Anything New About New Lenders? (Seeking Alpha), Rated: A

At many times in history there have been finance companies that made loans that banks chose not to make. Such finance companies have thrived in good economic times and tended to fail in major recessions. I predict the same will be true of the newer editions.

But second, let us ask why are the banks not making these loans? The answer is simple. The combination of the costs of marketing and administration and the credit risk is too great to make money on a consistent basis. Therefore the banks are funding a large part of the loans by lending to the lenders and taking a senior position, cushioned by the equity of other investors and shielded from the marketing and loan acquisition costs (as well, perhaps, as some of the consumer regulatory risks). Smart banking, it seems to me. The banks have a lower cost of funds than the new lenders, so they can make money at a lower effective interest rate on the money they lend, so long as it is safer.

I have been shocked at the levels of expenses being incurred by some of the new lenders.

P2P mortgage lending could be a game changer for Millennials (The Mortgage Reports), Rated: A

Not finding a mortgage lender you like? Try borrowing from a friend – or several of them – instead. According to reports, a new platform called Celsius could make P2P mortgage lending a viable option.

Using blockchain technology, Celsius is in the process of building a peer-to-peer lending network specifically aimed at the Millennial market. According to Alex Mashinsky, founder of the company, the platform will allow younger buyers to secure funding using their social circle, rather than big banks and financial institutions.

So how will it work? To start, each user creates a digital profile. They’ll need to upload FICO scores, online transaction histories and other non-traditional financial data. Then, Celsius will assign each profile a credit score that’s unique to the site.

To protect lenders, Celsius will offer insurance that covers a percentage of the principal loan amount in case of default.

$ 40 Million: Digital Asset Holdings Closes Series B Fundraising (Coindesk), Rated: A

Digital Asset Holdings LLC has raised $40 million in a Series B round, bringing the enterprise blockchain startup’s total funding so far to $110 million.

AlphaPoint Utilizes Intel Security Technology to Deliver Enterprise-Ready Blockchain Platform (AlphaPoint Email), Rated: A

Today, AlphaPoint announces the AlphaPoint Asset Digitization solution making illiquid assets liquid by facilitating the digitization of assets and launching new markets. AlphaPoint also announces the release of the AlphaPoint TrustedVM, a trusted virtual machine enabled by Intel Software Guard Extensions (Intel SGX) technology which allows smart contracts and blockchain services to run securely.

The latest release of the AlphaPoint Asset Digitization solution with AlphaPoint TrustedVM adds additional enterprise-class capabilities by securing access to information from intermediaries and network participants, thereby enhancing privacy and security to the AlphaPoint Distributed Ledger Platform. AlphaPoint has been working with some of the largest Fortune 100 financial institutions since 2013 to launch markets on blockchain technologies.

Enterprise-ready Blockchain Platform
In collaboration with Intel, the AlphaPoint Asset Digitization solution as designed at its core to help enterprises efficiently deploy blockchain solutions that implement business initiatives with world-class privacy and security. This solution was architected to create Trusted Virtual Machine, or TrustedVM, that leverages the trusted execution environment (TEE) that Intel SGX enables. AlphaPoint’s solution utilizes the security and privacy capabilities of Intel SGX, thereby allowing customers to benefit from several key technology and business advantages:

  • Faster time to market – Quickly develop and deploy blockchain applications with proven technology.
  • Hardwareenforced privacy and secure consensus – Execution and validation inside the TrustedVM, ensuring data is not visible to any unwanted parties.
  • Lower and predictable costs – With linear scalability, this technology improves total cost of ownership (TCO) and operational efficiencies.
  • Simplified development – Smart contracts and applications may be written in TypeScript and JavaScript, instead of highly specialized languages.

IBM is using the technology behind bitcoin to help businesses in countries with weak banking systems (Business Insider), Rated: B

IBM is using the technology behind bitcoin to help farmers and other small businesses in underdeveloped countries participate in global trade.

The companies will use IBM’s blockchain technology to process financial transactions across borders and currencies — a process which is often prohibitively slow and costly for small business owners, especially when they are in developing regions with smaller banking infrastructures.

The project is focused on what Stellar calls “underdeveloped payment corridors” — countries like Samoa and Fiji, where monetary policies, currencies, and economic instability make it difficult for businesses to move money internationally.

Are fintechs charging minorities more for business loans? (American Banker), Rated: A

Minorities are more likely to turn to a financial technology firm when seeking a business loan, but they may pay higher interest rates, according to the preliminary results of a congressional investigation released Monday.

Retiree robo shuns app, still lands $ 8M funding (FinancialPlanning), Rated: A

A fintech startup with no mobile app does a fundraising round. It secures $8 million. How is that even possible?

True Link, a retiree-focused hybrid advice platform, had a simple pitch to investors: elderly clients like the convenience of digital advice, but want to talk on the phone. The firm claims it received 1.6 million client calls last year.

Silicon Valley Vs. Wall Street: Can the New Long-Term Stock Exchange Disrupt Capitalism? (WSJ), Rated: A

Now they are actually doing something about it, by launching a new framework for corporate governance, investing and trading called the Long-Term Stock Exchange. Backed by top Valley figures such as venture capitalist Marc Andreessen and LinkedIn co-founder Reid Hoffman, the LTSE says it plans to seek regulatory approval by the end of this year to become the newest U.S. stock exchange.

Its key feature: a system in which the voting power of shares increases the longer investors own them.

Source: The Wall Street Journal

Block brands (CB Insights Email), Rated: A

Source: CB Insights

Lending Club Sweetens the United Airlines Frequent Flier Promotion (Lend Academy), Rated: B

A year ago Lending Club launched a deal for new investors with United Airlines. New investors could earn 1 MileagePlus frequent flier mile for every $2 invested in a new Lending Club account.

Well last week Lending Club sweetened the deal. They basically doubled the amount of miles you can receive. So, instead of 1 mile for every $2 invested it is now 1 mile for every $1 invested. This deal is only valid until January 9, 2018 whereas the last deal had a three year expiration date.

whoa: blockchain, blockchain, blockchain (CB Insights Email), Rated: B

First, we’ve teamed up with Fortune Magazine for a joint review of Blockchain Trends & Opportunities. Robert Hackett of Fortune will be joined by CBI Intelligence Analyst, Arieh Levi.

United Kingdom

Peer-to-peer lender RateSetter gets stamp of approval from UK financial watchdog (Business Insider), Rated: AAA

RateSetter applied for full authorisation in October 2015 and cofounder and CEO Rhydian Lewis said in a statement the process has been “a long but positive journey during which we have learnt a lot, improved our infrastructure and implemented important changes, notably making the business more transparent.”

RateSetter has increased the amount of market data it makes public and earlier this month announced plans to simplify early access for investors to their money.

“Authorisation is a milestone but not an end in itself and we look forward to working with the regulator and all stakeholders to continue to deliver good customer outcomes and to grow RateSetter.”

The Growth of P2P Lending: Is It Sustainable? (The Market Mogul), Rated: AAA

According to data gathered by AltFi lending volumes through P2P platforms achieved a staggering compounded annual growth rate of 110% between 2011 and 2016 and shows little sign of letting up this year.

However, there are some indications this honeymoon period for the industry may be over as the UK’s inflation rate hit 3.0% last month piling pressure on the Bank of England to raise interest rates. This is an understandable worry for the industry, as much of the lending it facilitates is higher risk than that of the traditional banking sector.

Furthermore, there are several emerging industry trends, which are likely to boost its resilience to deteriorating economic circumstances.

  1. Consolidation- While nearly 100 platforms are operating in the UK a resilient oligopoly is emerging. This is made up of the markets four largest lenders: Zopa; Funding Circle; LendInvest and Rate Setter who cumulatively facilitate over 70% of lending volume.
  2. Securitisation – Previously, P2P platforms lacked the scale to make securitisation economic and this new trend will likely provide a further edge to the industries established participants.
  3. Diversification

Zopa: more risk, same reward (FT Alphaville), Rated: AAA

Zopa, the world’s oldest “peer-to-peer” lender, has long focused on low-risk borrowers. The weighted average interest rate the 12-year-old company charges its British customers has never gone higher than 10 per cent and was as low as 5.6 per cent in 2013. While startups like Wonga focussed on the high returns available from borrowers who are under-served by financial institutions, Zopa has largely competed at the “prime” end of the spectrum with high street banks. The returns are lower, but so too are the risks, including to its reputation.

In recent years, Zopa has added riskier borrowers to help drive growth. (It’s worth saying that it is still miles from Wonga territory.) The weighted average interest rate across its portfolio has grown from 5.8 per cent in 2014 to almost 8.8 per cent in 2017:

Source: Financial Times

Zopa has been taking on more risk to achieve pretty much the same returns as when it made fewer risky loans.

Source: Financial Times

Starting small: what support do small scale housebuilders need? (Prospect Magazine), Rated: A

Britain has seen its population of small housebuilders shrink by 80% in a single generation as market dominance has passed to an entrenched group of major players – among the top 10 UK housebuilders, none was founded after 1990. The disappearance of small and medium-sized housebuilders from the UK – defined as companies that complete between one and 100 units a year – has seen their numbers fall from more than 12,000 in the mid-1980s to about 2,400 today, according to research by the non-bank mortgage lender LendInvest.

China

Qudian raises $ 900 mln in biggest U.S. listing by a Chinese fintech firm (Fidelity), Rated: AAA

Chinese online micro-credit provider Qudian Inc said it raised about $900 million in an IPO that priced above expectations, underscoring robust U.S. investor demand for fast-growing Chinese companies.

The offering from Qudian represents the biggest-ever U.S. listing by a Chinese financial technology firm. It is also the most high-profile company to take part in a resurgence of U.S. listings by Asian firms this year.

Qudian IPO feeds debt-hungry Chinese millennials (The Star), Rated: AAA

Qudian , an online microlender backed by e-commerce giant Alibaba’s financial unit, priced its U.S. listing above its expected range on Tuesday, says Reuters.

It offers fast growth, low default rates and, unlike many tech startups, is already profitable. At $24 per share, the final price represents a 2018 PE of 13.8, compared to 13.0 for smaller U.S.-listed online lender Yirendai.

China’s household debt relative to income is still low, and consumer credit is underpenetrated at 7 percent of gross domestic product, versus 20 percent in the United States, says Goldman Sachs.

Backed by Alibaba’s Ant Financial, Qudian lends cash to young Chinese consumers such as white collar workers, and advances credit so they can buy goods online and pay for them in monthly installments. The company provided $5.6 billion to 7 million active borrowers in the first half of 2017.

The sale of 37.5 million shares in Qudian has already raised about $900 million, making it the biggest U.S.-listing by a Chinese company this year, the report said. The offering values Qudian at as much as $7.9 billion, the report added.

China’s Qudian is about to go public and it could be the largest Chinese listing in the US this year (CNBC), Rated: A

Online micro-lending company Qudian is about to go public at the New York Stock Exchange on Wednesday, and it’s set to be one of the largest U.S.-listed floats by a Chinese company this year.

In its prospectus, Qudian said it was offering 37.5 million American Depository Shares with a float price range of $19-$22 per share. The company said it could offer up to 43.1 million shares if underwriters exercised an option.

LCQ22: Promoting equity crowdfunding activities in Hong Kong (7th Space), Rated: A

Question:

In recent years, raising funds through crowdfunding activities is becoming increasingly popular among enterprises worldwide, and the governments of quite a number of countries have introduced legislation to regulate raising funds through crowdfunding activities. On the other hand, the Financial Services Development Council (FSDC) released on March 18 last year a report entitled Introducing a Regulatory Framework for Equity Crowdfunding in Hong Kong, which explored options for establishing a framework and a regulatory regime to promote and, at the same time, regulate equity crowdfunding activities in Hong Kong. So far, however, the Government has not yet announced any specific measures to promote equity crowdfunding activities.

Reply:

(1) We note that crowdfunding activities might come in different forms, including equity crowdfunding (ECF) and peer-to-peer (P2P) lending. The regulatory approaches towards these activities vary globally across jurisdictions in view of the nascent nature of the business. While some economies have developed dedicated new regimes, others leverage existing rules to regulate such activities.

(2) At present, parties engaging in crowdfunding activities in Hong Kong (e.g. where the activity involves an offer to the public to purchase securities, including shares, debentures or interests in collective investment schemes, or where the platform offers its own funds to borrowers) may be subject to the provisions of the Securities and Futures Ordinance (Cap. 571), the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) and the Money Lenders Ordinance (Cap. 163), depending on the specific structure and features of the relevant arrangement.

European Union

Citi fosters Israeli fintech to meet changing needs of financial sector (The Times of Israel), Rated: AAA

Israeli startup Innovative Assessments (IA) says financial lenders like banks are missing out on huge numbers of potential clients because their criteria for handing out credit are too stringent and do not take the full picture of the client into account.

As a result, banks are effectively cutting themselves off from lending out money to large segments of the population, and many borrowers are denied access to affordable credit.

IA wants to help solve this problem. Banks should not only look at financial information to assess creditworthiness, IA says, but also at personal character, which is a whole new dimension of data that is missing from today’s credit scores. So, IA has come up with an idea to help lenders do this.

IA has developed patent-pending software that uses advanced psychometrics for credit scoring.

“Our algorithms look at people’s preferences towards certain financial behaviors,” added Fine. “And while there are no right or wrong answers, we can also identify people who may be responding insincerely.”

SeerGate, a real-time payments firm, was acquired by MyCheck in May 2015 while Ramat Gan-based Sling, whose platform allows micro-merchants to accept electronic payments from consumers via smartphones, was snapped up by Avante in July last year.

NSKnox has created a Digital Notary based on cooperative software that allows a secure transaction approval for banks and organizations, the company says. The software, which uses algorithms, allows two or more blind witnesses — who are actually financial or other kind of organizations — to help independently authenticate, authorize and detect fraud while verifying business transactions.

A total of 68 startups, including nine in the latest brew, have taken part in Citi’s Israel Accelerator program since it was set up in November 2013 in Tel Aviv.

Citi provides the entrepreneurs access to experts within the company globally to bounce ideas off of and the opportunity to use the bank’s huge infrastructure as beta sites. The banking giant does its mentoring and fostering pro bono, without taking any stakes in the companies it fosters.

The graduates of Citi’s program, which include startups like Paykey, Paybox and Vatbox, have raised a total of $300 million to date, according to data provided by Citi, and there have been two exits, with Sling and SeerGate having been acquired.

International

Spanish bank launches money-transfer app focused initially on US-Mexico remittances (TechCrunch), Rated: AAA

BBVA, Spain’s second-largest bank that snatched up mobile banking startup Simple for $117 million back in 2014, is now entering the mobile money transfer business with today’s launch of a new app called Tuyyo. The app, which is available on both iOS and Android, is focused on the $73 billion annual market for remittances to Latin America and the Caribbean from the U.S.

However, the service is initially launching with money transfers from the U.S. to Mexico, where the average amount sent by U.S. workers is about $1,900 per year, says BBVA. It also notes that the U.S. to Mexico corridor sees over $27 billion flowing between the countries annually, making it one of the world’s largest.

Ripple & the Gates Foundation Team Up to Level the Economic Playing Field for the Poor (Ripple), Rated: A

Many of the world’s poor in developing countries — nearly 2 billion, according to the World Bank — struggle to lift themselves out of poverty simply because they don’t have a bank account or financial services.

However, a new collaboration supported by the Bill & Melinda Gates Foundation will change that. Ripple, in partnership with Dwolla, ModusBox, Software Groupand Crosslake Technologies, with funding and support from the Gates Foundation, developed a new open-source software called Mojaloop for creating a real-time, interoperable payments platform on a national scale to reach the world’s poor with essential financial tools.

Leveraging the power of the Interledger Protocol (ILP), Mojaloop offers a way for financial providers, governments and mobile network operators to simplify and reduce the cost of developing inclusive payments platforms.

Securities markets: standing at the crossroads (Banking Technology), Rated: A

Financial technology has the potential to radically transform the securities industry. The fast pace of change could lead to disintermediation, according to an Iosco study.

Key trends identified in the report include:

  • Greater availability of data
  • Exponential growth in computing power allowing the analysis of ever larger data sets
  • Broader access to and the decreasing cost of goods and services
  • Increasing disintermediation and re-intermediation
  • Demographic and generational changes

Innovative fintech business models are disintermediating and re-intermediating certain regulated activities. For example, online equity crowdfunding platforms intermediate share placements and disintermediate stock exchanges and underwriters; peer to peer lending platforms intermediate or sell loans and disintermediate banks and lenders, and robo-advisers provide automated investment advice and thereby disintermediate traditional advisors.

Beginning with bitcoin in 2009, cryptocurrencies have also seen their prominence rise due to some of the qualities that they share with gold, the most prominent of which is their scarcity.

With the emergence of today’s digital age, a startup called GoldMint is seeking to alter this trend with a new means of exchange for physical gold, with transactions occurring over a blockchain-based platform.

GoldMint’s platform will leverage the private and individual gold trading market, including potentially the management of larger physical stocks such as those in central banks. It will also deliver an electronic payment solution tethered to physical gold, as well as a gold-backed peer-to-peer lending system.

There are two options for trading GOLD for fiat or cryptocurrencies. First, there is a method for seeking a GoldMint-guaranteed buyback. And second, a loan can be requested. For either option, the process is as follows:

  • Through the use of a special app which is not yet available, GOLD can be transferred as collateral to a designated GoldMint account.
  • GoldMint utilizes the current price of gold, as set by the LBMA, to fix the rate of a loan.
  • GoldMint requires the customer to undergo its know-your-customer (KYC) process as well as consent to GoldMint’s loan terms to receive the loan. Various repayment options for the loan amount and the means of repaying it are then offered.
  • If a customer defaults on repayment, their GOLD cryptoassets are transferred to GoldMint.

GoldMint also has a process for converting gold into GOLD tokens and reconverting these tokens into gold for cross-border passages.

Australia/New Zealand

‘Robo’ financial advice on the way (Radio NZ), Rated: AAA

The Financial Markets Authority has decided to allow financial services companies to provide so-called “robo-advice” to individuals.

Such methods are widespread around the world, but New Zealand law requires any financial advice to be given by a human adviser, and law changes to allow advice to be given by a computer programmes are not expected to be passed until 2019.

Companies wanting to offer robo-advice will have to apply to the FMA for an exemption.

FMA fast-tracks personalised robo-advice with exemption (NZ Herald), Rated: A

The Financial Markets Authority will let Kiwis access personalised automated financial advice, known as robo-advice, with an exemption kicking in before a legislative overhaul of the sector.

The market watchdog sought feedback on the proposal in June and today decided to expand the range of products robo-advice can cover to include mortgages and personal insurance, it said in a statement. Providers wanting to offer the service will need FMA approval on the good character of directors and officers and satisfy the regulator of their capability and competence. Another round of consultation is needed to finalise the exemption and the FMA is aiming to start the process early next year.

Banks readying their roboadvisers (Stuff), Rated: A

Big banks are planning roboadvice services, but only BNZ has revealed how far advanced it is.

Westpac and BNZ have both told the Financial Markets Authority (FMA) they expect to launch roboadvice services, which could close the “advice gap” by using artificial intelligence (AI) systems to give customers advice on things like KiwiSaver, insurance and mortgages.

The banks’ intentions were revealed in submissions on whether the FMA should use its “exemption” powers to allow roboadvice services to operate despite current law only allowing personalised advice to be given by a human being.

ANZ and Kiwibank’s intentions were blacked out in their submissions, released by the FMA.

FMA allows personalised robo-advice; applications open early 2018 (FMA), Rated: B

Submissions to the consultation focused on a number of themes:

  • Strong support for an exemption from the current laws preventing personalised robo-advice.
  • Opposition to financial limits and product exclusions.
  • Robo-advice should meet the same standards as those that apply to authorised financial advisers (AFAs).
  • Exemption applicants should be pre-approved or licensed.
  • Exemption conditions should be aligned with new advice regime requirements.

The FMA has decided not to impose financial limits on personalised robo-advice and the eligible product list has been expanded to include mortgages and personal insurance products.

Companies seeking to offer personalised robo-advice will have to provide the FMA with good character declarations for directors and senior managers as well as information showing they have the capability and competence to provide the robo-advice service. The exemption conditions will also be designed so that the robo-advice service is provided in a manner that is consistent with AFA requirements.

A summary of the submissions can be found here. 49 submissions were received by the FMA. 47 are being published.

India

P2P lending platform Lenden Club gets Rs 3.5 cr in equity investment (India Times), Rated: AAA

Mumbai-based peer-to-peer lending platform Lenden Club has raised $500,000 almost Rs 3.5 crore in equity investment from three major investors Venture Catalyst, Anirudh Damani and an Indian venture capital fund. Venture Catalyst and Anirudh Damani had put in seed investment of Rs 1.5 crore in the company as well in May last year.

Whither P2P lending by NBFC’s (Bar and Bench), Rated: A

The Reserve Bank of India’s notification on peer to peer (P2P) lending issued on October 4 this year (“Regulations”) seems to have only added an element of ambiguity in the minds of stakeholders. Eighteen months since the RBI issued the consultation paper and it is not certain how and whether stakeholder comments have been internalised in the paper.

The definition of a “peer to peer lending platform” as an intermediary providing the services of loan facilitation, may unintentionally bring into the purview, a wide variety of operators. As a literal construct, this does not seem to take into cognizance the various types of business operations in the industry simply because it doesn’t clarify whether this excludes a model that doesn’t provide syndication. Theoretically even an internet search engine, business correspondents and lead generators could fall under this definition.

This must be the first category of Non-Banking Financial Company (NBFC) to not function in the manner in which it has been typically designed. The new Regulations set a precedent to regulate entities as NBFC’s that undertake neither lending nor credit enhancement.

The new Regulations also seem to bring into its ambit, an “off-line” P2P: the very essence for P2P start-ups has been low transaction costs thereby resorting to the online medium for such lending.

Asia

SoftBank in talks to raise second, possibly larger than $ 100b, fund (Deal Street Asia), Rated: AAA

Japanese Internet conglomerate SoftBank is in early discussions to launch another fund that can possibly be larger than its existing $100 billion Vision Fund, Recode reported, citing anonymous sources.

The Information, in its report, noted that SoftBank got the right to prevent online lender Kabbage, in which it led a $250-million investment in August, from selling parts of itself, buying other companies, selling stock below a certain price or borrowing money beyond a certain level.

Middle East

S&P says fintech revolution unlikely to hurt GCC bank profitability (The National), Rated: AAA

The fintech revolution sweeping finance will lessen the profitability of banks in the GCC when it comes to parts of consumer banking – such as money transfers and foreign exchange – but overall it is unlikely to hurt the ability of regional lenders to make money.

The rating agency noted that the GCC banks that it assigns ratings to get about a quarter of their revenues from fees and commissions and foreign exchange gains and, while a big portion that is generated from lending and advisory activities, some of that money comes from transfers and currency exchange.

Investments in technology and digitisation are also timely for UAE banks as profitability has been on the wane in the wake of the biggest oil price slump since the 2008 financial crash. Lenders are fortunate that this country has one of the highest smartphone penetration rates in the world.

Fintech threatens Gulf bank jobs (Arab News), Rated: A

The rising influence of financial technology (fintech) firms in the Gulf could eventually threaten jobs and profitability at the region’s banks, warned ratings agency S&P Global.

“This would push some banks to adjust their operations through increased digitalization, branch network reduction, and staff rationalization,” said Mohamed Damak, S&P Global Ratings credit analyst in the report.

Already, the region’s banks are starting to rethink their business model.

In early October, Mashreq launched one of the region’s first full service digital branchless bank — Mashreq Neo — as well as a new new digital mobile wallet service called Mashreq Pay — that can be used to make purchases around the world.

The Dubai-based bank has also started to use robotics in the third quarter to manage open account trade payments, according to the bank’s Q3 statement.

Canada

Lending Loop invests in Canadian board game cafe chain (P2P Finance News), Rated: AAA

LENDING Loop, a Canadian peer-to-peer lending platform, has agreed to finance Snakes & Lattes, a cafe chain where people can play and buy board games.

Amfil Technologies, which owns Snakes & Lattes, said on Tuesday that the financing will be used to fuel the expansion of the brand across North America.

Amfil Technologies Inc. Provides Update on Audit Completion, Uplisting / Dividend, Franchising and General Company Operations (Marketwired), Rated: A

Snakes & Lattes has entered into an EXCLUSIVE partnership with Lending Loop, Canada’s first fully regulated peer-to-peer lending platform focused on small businesses. This partnership will fuel and facilitate the mass expansion of the Snakes and Lattes brand across North America, while simultaneously preserving shareholder value. This is the first time in history that Lending Loop has made a direct partnership to finance a growing company, and they will be conducting a mass marketing/advertising campaign to promote both Lending Loop and Snakes & Lattes.

In contrast, Amfil is collaborating with financial innovator, Lending Loop, to fuel the subsidiary’s growth at a fair market rate with flexible cash repayment terms.

Web’s creator to fintech players: Beware the blockchain Frankenstein (American Banker), Rated: A

Internet pioneer Sir Tim Berners-Lee looks at the fintech landscape today and sees something familiar — a creative ferment that reminds him of the early web. He also sees some mistakes in danger of being repeated.

Authors:

George Popescu
Allen Taylor